Disciplinary action and dismissal: Taking the right approach to managing employee underperformance

Holding Redlich


Holding Redlich, a national commercial law firm with offices in Melbourne, Canberra, Sydney, Brisbane, and Cairns, delivers tailored solutions with expert legal thinking and industry knowledge, prioritizing client partnerships.
Article explores four essential considerations for employers when undertaking staff disciplinary action and dismissal.
Australia Employment and HR
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No business employs staff with the intention of firing them or managing their underperformance in future. Realistically however, most businesses will have to manage underperformance at some time. Without the right approach, many employers leave themselves exposed to reputational damage, high staff turnover and loss.

When dealing with underperformance or misconduct, employers must straddle the line between acting in its best interests and giving the employee fairness in the process. Done well, effective disciplinary action can turn around staff performance and lead to a stronger workplace culture. Done poorly, however, the result will be poor culture and defence of legal claims.

In this article, we explore four essential considerations for employers when undertaking staff disciplinary action and dismissal.

It's about improving performance, not setting the employee up to fail

When underperformance is identified, the employer should not conduct disciplinary processes as a witch hunt. The best processes are done with the intent to improve the staff member's performance.

Improving underperformance helps employers in many ways. It reduces staff turnover, which allows for greater consistency in the business' service and operations. It also means less time and money is spent on hiring and onboarding. Less dismissals also means a lower risk of dismissal-related legal claims.

Procedural fairness should underpin the process

Under Australian law, there is no mandated process for how disciplinary action must be undertaken. Having said that, failing to undertake disciplinary action and dismissal processes in a procedurally fair manner is fraught with danger.

It's vital that the manager overseeing the disciplinary action or dismissal is capable of taking an unbiased view when addressing underperformance, as well as be able to fairly implement a performance plan with an appropriate timeline for the staff member to improve.

All disciplinary action procedures should also be well-documented in writing so that the employer has - and can rely on - evidence of its good process.

Casual staff have rights

There is a common misunderstanding that casual workers have no termination rights and are far easier to dismiss than full-time or part-time staff.

Casual workers who regularly accept shifts when offered via an employer-implemented system (e.g. a roster), and have done so for more than six months (or 12 months for businesses with less than 15 employees) have the same unfair dismissal rights as permanent employees. Therefore, underperforming casual workers should be treated the same as underperforming full or part-time workers.

Unfair dismissal - preventing successful claims

Most workers will have unfair dismissal protection. That means if they are dismissed without a valid reason, without procedural fairness, or without having been warned and given an opportunity to improve underperformance, their dismissal may be considered unfair. They may be entitled to reinstatement or compensation.

If an employee believes they have been unfairly dismissed, they can lodge an application with the Fair Work Commission. There is no triage system to determine whether the application has any merit at the outset, so employers will need to respond to all applications made against them. If the application doesn't settle at a conciliation conference, the matter might continue to a time-consuming and often costly formal hearing.

When dismissing an employee, an employer can make an agreement with the employee for them not to bring a dismissal-based claim against the business, usually in return for a sum of money. But without this, a business can't stop an employee from making an application. In that case, the business should ensure that it has a sound, defensible reason and process for dismissal to put itself in the best position to successfully defend the application.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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