3 reasons for the increase in unfair dismissal claims

The FWC has seen a huge increase in unfair dismissal claims. HRM asks an expert why this might be and what HR should be doing.

Last week the FWC revealed it is seeking additional resources after unfair dismissal claims jumped by sixty per cent compared to this time last year.

In a webinar convened by the Australian Labour Law Association's Queensland chapter, Justice Ian Ross announced a surge in unfair dismissal claims and general protections cases involving dismissals.

JobKeeper doesn't seem to be to blame. The number of disputes involving JobKeeper actually decreased. 60 per cent of the roughly two-hundred filed have already been withdrawn. Ross suggests this is largely due to recent clarifications outlining FWC jurisdiction in JobKeeper matters.

So what is going on with unfair dismissals and how can HR avoid having their organisation facing a claim?

HRM asked Michael Byrnes, the employment law partner at Swaab. His answers be can be broken down into three areas:

  1. Higher unemployment
  2. Nervous employees
  3. Dubious employers

1. Higher Unemployment

Byrnes says one reason for the surge could simply be the numbers.

"Statistically, if you've got a higher number of terminations as we have seen in the last month, you're going to have a spike in the number of unfair dismissal matters."

The number of Australian's unemployed has risen dramatically in the past months. The ABS reports the total number of employee jobs decreased by 7.5 per cent between 14 March and 18 April.

The hardest hit has been the arts industry (a decrease of 27.4 per cent of jobs) and the accommodation and food services (decrease of 33.4 per cent of jobs).

The number of jobs being advertised has decreased also. Seek reports that new jobs posted on its platform have dropped by over 68 per cent in the week ending 12 April, compared to this time last year.

2. Nervous Employees

If an employee loses their job, regardless of whether they were terminated for performance or made redundant, in most cases they don't question why and instead just try and find another job.

Unfortunately, in the current climate, there is no job to move on to. As the job market dries up, the recently unemployed may look to their former employers to secure cash.

"Given the prospect of not being readily able to find alternative work they are going to find other ways to get money to tide them over. So that might also be a factor in bringing proceedings."

Byrnes says this could also be the reason why the number of voluntary settlements has declined, as claimants try to get bigger settlements.

"The way some employees approach unfair dismissal, and the compensation they should receive, is with reference to the money they need, as opposed to the amount the claim is objectively worth.

"There is some linkage between the two, no doubt the loss of income by the unfair dismissal is taken into account by the commission. But those numbers don't always match up."

Of course, it's not always on the employees, sometimes the claims are legitimate and they're victims of the Byrnes' next theory.

3. Dodgy Employers

Byrnes says it's possible some employers see themselves as invincible or untouchable at the moment and are using COVID-19 as a cover to terminate long-standing employees who they believe are troublesome.

"Whether they're problematic because of conduct or, more likely, due to performance, the employer doesn't want to go through the proper procedures so employers say 'here's our opportunity to move this person on.'"

It's unfortunate but some employers will use the pandemic as cover for unscrupulous behaviour, as HRM covered in an article on JobKeeper abuse.

However, as in more normal times, it's also possible an employee might misunderstand a situation and believe they're being terminated under false conditions.

"Some employees might actually perceive it to be the case that their employer has acted with unseemly opportunism and is using the crisis to terminate their employment and if that's their belief, they're understandably aggrieved by that and look for an opportunity to challenge it."

What can HR do?

Byrnes says HR should remember that the usual procedures haven't gone out the window. An organisation that has kept adequate records and undertook all necessary steps before terminating an employee will be treated by the commission in exactly the same way as before the pandemic. Hence why it's asking for more resources.

"The usual principles of in relation to procedural fairness in respect to performance-based terminations and conduct based terminations still apply. The crisis hasn't impacted any of that in any way.

"When it comes to terminations based on redundancy there is the genuine redundancy exception that can be relied upon, provided of course that the relevant boxes are ticked."

Byrnes recommends HR remain transparent. Employees often feel something malicious is happening when they are fired even though they believe the company is doing well.

"Business sometimes only put out the good news and conceal the bad news. So when they have to make cuts its almost as if, 'this can't be right' or 'this is a false pretence because we've just heard how well you're doing'.

"If there is the possibility of redundancies, employers need to be upfront about where the business stands."

Finding the balance between good and bad news, and emphasising uncertainty, were just a few of the pointers in HRM's article on communicating job insecurity during COVID-19.

What about JobKeeper?

As mentioned above, JobKeeper dispute applications have reduced but they haven't gone away. What happens if an employee files for unfair dismissal because their employer didn't apply for JobKeeper?

Unfortunately, Byrnes says the answer to that isn't crystal clear yet.

"I don't think the Fair Work Commission would rule that an organisation was derelict in some way because they didn't apply for JobKeeper.

"Where this will come into play is when an employer makes an application to the FWC seeking a reduction in redundancy payments.

"Where the employer has an incapacity to pay redundancies, in the examination of that issue, JobKeeper will have a part to play. I think they'll look at whether or not the employer looked at JobKeeper eligibility and the impact that has had on the business' capacity to pay redundancies."

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