By Alana Paterson and Emily Baxter

A dismissed employee may apply to the Fair Work Commission ("the Commission") for an unfair dismissal remedy arguing that the termination was harsh, unjust or unreasonable. Although the employer may have a valid reason for termination, the Commission may still order compensation for a dismissed employee because the employer did not follow a fair process when making a decision to terminate.

What does this mean for your business?

Business should ensure that they follow a fair process when making a decision to terminate. This could, for example, include:

  • Providing the employee an opportunity to respond to the allegations of misconduct or poor performance;
  • Allowing the employee to have a support person at any meetings discussing misconduct or poor performance;
  • Advising employees of outcomes of investigations into allegations of misconduct so far as they involve the employee;
  • Giving employees an opportunity to show cause why their employment should not be terminated prior to a final decision being made by the business.

A recent case highlights the importance of following a thorough procedure prior to terminating an employee for misconduct.

George Szentpaly v Basin Sands Logistics Pty Ltd [2013] FWC 4213

In this case, Mr Szentpaly was employed by Basin Sands Logistics (BSL) to perform work under a labour hire arrangement with Bemax Resources Pty Ltd (Bemax), primarily driving a loader. On 7 February 2013 Mr Szentpaly commenced his rostered 12 hour night shift at Bemax's mine site. After carting loads to various stockpiles he said he found the hydraulic ride control on the loader was not operating correctly, causing the bucket to drop without warning. He turned the ride control off which then made the ride very bumpy. He said this problem was exacerbated by the air inflated driver's seat in the loader gradually deflating every 15 to 20 minutes.
After documenting the issue following proper safety procedures Mr Szentpaly stopped work and returned to the crib room. This occurred only 5½ hours into his shift and he remained in the crib room for the next 6½ hours.

The following evening, Mr Szentpaly was asked by a Bemax manager why so few loads had been carted the previous night. Mr Szentpaly explained the situation and when questioned by the manager why he had not reported the problem he explained that he had assumed Bemax was aware of the safety concerns as it had been documented a few times.

BSL subsequently terminated Mr Szentpaly's employment stating: "You have failed to meet specific goals and targets and therefore Basin Sands Logistics Management issue you with this Employment Termination Letter with immediate effect." Mr Szentpaly had previously received a warning concerning a collision.

Although Commissioner Gregory found that BSL may well have had a valid reason to dismiss Mr Szentpaly, BSL had not given Mr Szentpaly reasonable opportunity to respond to the allegations and that the questioning by the Bemax manager was not enough for BSL to rely on in making a decision to terminate. Further, while BSL had not denied Mr Szentpaly a support person, there was no discussion about the opportunity to have a support person. BSL had a dedicated HR professional and so lack of knowledge of the procedure on the part of the Company could not be an excuse.

While BSL had a valid reason to terminate Mr Szentpaly's employment they had fallen down on the process with a lack of procedural fairness and ultimately, Mr Szentpaly was unfairly dismissed. BSL was ordered to pay Mr Szentpaly $7,769.41 in compensation for the unfairness that arose from the dismissal.

To avoid a finding by the Commission in an application for Unfair Dismissal Remedy that a termination was harsh, unjust or unreasonable, an employer needs to not only have a valid reason for the termination of employment, but also have afforded the employee procedural fairness in relation to the termination. Otherwise the employer is at risk of an order for reinstatement or payment of compensation for an unfairness that arose from the termination of employment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.