Employees of retail chain Riot Art & Craft were recently terminated after the company went into liquidation. The 300 odd employees from the company's 56 stores are reported to have learned about their dismissal by a group text message sent by a director after weeks of assurances from management that new stock was coming in and everything would be back to business as usual.
It's an all too familiar story and an issue that our reliance on technology is allowing to become more prevalent.
- In 2011, a retail worker was terminated by text message without notice. Although the text message stated some reasons for the dismissal, the Fair Work Commission accepted that it was "pretty appalling for an employee to be terminated by SMS". In finding that the employee had been unfairly dismissed, the Commission also held that in the absence of a compelling reason not to, dismissal should be communicated by direct face-to-face conversation.
- In 2013, an employee who had worked for a company for 19 years was terminated without warning by text message. In that case, the Commission also found the employee had been unfairly dismissed and went on to criticise the method of dismissal stating "the means of communicating her dismissal, by a brief SMS message was brutal, gutless and outrageous".
- In 2015, Hutchison Ports sacked almost 100 workers without warning using a combination of emails and text messages.
- In 2016, a child care worker was terminated by text message without warning. In finding that the employee was eligible to make a claim for unfair dismissal, the Fair Work Deputy President Sams of the Fair Work Commission stated "I am appalled that Ms Rahim was dismissed by text message. It was at best, inappropriate and, at worst, a gutless abrogation of an employer's obligation to act reasonably and decently when ending an employee's employment."
- In 2018, a restaurant cook was terminated by text message without notice for taking one day of sick leave. The employee's subsequent complaint to the Fair Work Ombudsman led to an investigation which discovered substantial compliance breaches by the restaurant owners resulting in the Federal Circuit Court imposing penalties against the company and its directors of almost $200,000.
- Also in 2018, an apprentice was terminated by text message after failing to turn up to work. Again, the Fair Work Commission considered the company's method of communicating the dismissal and found that it was unreasonable.
- In 2019, a casual security guard was terminated by text message without warning. In finding the employee had been unfairly dismissed, the Commission stated "Notification of dismissal should not be made by text message or other electronic communication... To do otherwise is unnecessarily callous".
What do all these cases have in common?
It should be pretty simple to see the pattern. In each case:
- one or more employees were terminated by text message;
- there was an adverse finding by the Fair Work Commission or a Court in relation to the mode of dismissal; and,
- the employer received a scathing rebuke and, in most instances, extremely negative publicity in the media.
But is it legal?
Each case will be different, however, a text message satisfies the requirement that termination must be in writing so provided the company and the employee routinely communicate by text message, the short answer is probably 'yes'.
Is it ever a good idea?
The short answer is probably 'no'. In fact, if the colourful language used by the Fair Work Commission to describe termination by text message, including gutless, callous, outrageous and appalling is anything to go by, termination by text message should probably be avoided.
It is possible that SMS is the only conceivable way of communicating with someone but it's hard to imagine the circumstances where that might arise. Even in the current COVID-19 environment, full trials are being run by videolink in courts around the country every day. Against that backdrop, it would be hard to convince a court that a simple video call or even a series of video meetings for multiple staff was genuinely impractical.
Is there a better alternative?
If a face-to-face or video meeting is genuinely impossible, I would recommend that employers do three things when summarily terminating an employee:
- Pick up the phone (if possible) and have a conversation, making sure to let the employee know when they can expect to receive confirmation in writing;
- Send a copy of the termination letter by email to the employee's personal email address; and
- Send a further copy of the termination letter by registered post to their home.
By taking these steps, businesses can at least show that they have made an effort to communicate directly with the employee and can also satisfy the requirement under the Fair Work Act 2009 that notice of termination be given in writing. It is no use sending a written notice if you can't know whether the document will be brought to the attention of the employee.
But we have gone into liquidation and need to terminate 300 people immediately?
- Liquidation of a company usually causes employment contracts to come to an end. However, it is up to the liquidators whether they keep the company trading after going into liquidation, even for a short period in order to wind up the affairs of the company. Therefore, giving formal 'notice' of termination can and should probably be left to the liquidators.
- The chances of a company not knowing it was heading for liquidation before it happened are remote so businesses in this situation should use every channel it has to inform staff of the impending liquidation and the effect it may have on their employment.
- Provided you have up to date records of your employees' personal email and residential addresses, you should be able to batch letters by email and by post without much difficulty. This should be preferred to SMS because at the very least, employees will receive notice from the company rather than informal notice from an individual director or officer.
- And of course, obtain legal advice as early as possible.
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