There was no birthday cake and it otherwise seemed to pass without acknowledgment, but 2022 marked the 50th anniversary of access to an unfair dismissal jurisdiction for South Australian employees. Over the following decade, many other Australian states and territories followed suite, with the Federal unfair dismissal regime taking shape in 1984.
Today, unfair dismissal applications have become a ubiquitous part of the employment law landscape. With indexation, each year an increasing proportion of the employees are likely to become eligible to access the jurisdiction (from 1 July 2023, the high income threshold will increase to $167,500).
While unfair dismissal laws have varied at the edges over time, since the federalisation of employment laws in 2006, most employers have at least developed a working understanding that when dismissing an employee:
- There needs to be a valid reason, and the employee needs to be notified of that reason.
- The employee needs to have been given an opportunity to respond to any reason related to their capacity or conduct.
- An unreasonable refusal to allow a support person is likely to render the dismissal "unfair".
- If the dismissal relates to unsatisfactory performance, the employee needs to be warned about the unsatisfactory performance before the dismissal.
Everyone will have their own views as to the purpose and contribution of the jurisdiction, but what does the data tell us?
Each quarter, the Fair Work Commission publishes a wide range of data regarding their caseload and activities throughout that quarter. There's some difficulty analysing the data within the context of unfair dismissal applications (given that an application filed within a quarter is not necessarily resolved within the same quarter), but for present purposes a review of the first quarters for FY23 provides at least a flavour of how the jurisdiction works. The data suggests that each quarter, on average:
- Approximately 2,600 unfair dismissal applications are filed with the Fair Work Commission.
- The time taken between an application being filed, and a judgment being issued is around 4 – 5 months.
- Around 93% of unfair dismissal applications are settled.
- Around 2.5% of applications are dismissed because the Fair Work Commission does not have jurisdiction to deal with them.
- Approximately 33% of dismissals that were the subject of a judgement are found to have been "fair".
- Approximately 15% of dismissals that were the subject of a judgement are found to have been "unfair".
- Of those dismissals found to be "unfair", around 17% of applicants are reinstated.
Across all quarters, costs were not awarded.
The data unfortunately doesn't tell us the real story behind each statistic, but as an employer there's a few observations that can readily be drawn.
Firstly, if you receive an unfair dismissal application, there's a high likelihood that it will be settled, rather than being subject to a judgment. That's something that's within the control of the parties.
Secondly, if the application ultimately becomes the subject of a judgement, there is more of likelihood that the dismissal will be found to be "fair", than "unfair". That's something that was in the control of the employer.
Thirdly, if you're the subject of a judgement that finds the dismissal to be unfair, you're more likely to be required to pay compensation, but there's still a significant possibility that the employee will be reinstated.
Finally, if paid representation is permitted by the FWC, both parties will be paying their own costs.
So, what's in a dismissal? Well, whatever way you cut it, investing the time and resources into 'getting it right' is likely to pay dividends if an unfair dismissal application is made. Why? Well, if you do it right:
- You'll be in a better position to settle, and to settle for a more reasonable amount.
- If you can't settle, you're more likely to have a finding that the dismissal was "fair".
- If you happen to get a finding that the dismissal was "unfair", there's more likelihood of the outcome being compensation only.
And of course, the more you get it "wrong", the more likely you are to be facing an order for reinstatement.