An unfair dismissal claim arises when an employer dismisses an employee in a harsh, unjust, or unreasonable manner.
The Fair Work Act 2009 governs laws relating to employment in the private sector. Hence, a party must lodge an unfair dismissal claim to the Fair Work Commission (FWC), which is Australia's independent employment tribunal in charge of employment claims.
This article deals with unfair dismissal claims in the private sector.
Unfair Dismissal under the Fair Work Act
To make an unfair dismissal claim, one must first understand the following definition of terms:
Under Section 385, some reasons that consider a dismissal unfair is if the FWC finds that:
- the person has been dismissed,
- the dismissal was harsh, unjust or unreasonable,
- the dismissal was not consistent with the Small Business Fair Dismissal Code (for employees in small businesses with less than 15 employees), and
- the dismissal was not a case of genuine redundancy. A genuine redundancy happens when your role is no longer necessary. Additionally, the employer has followed the correct consultation requirements in the award, enterprise agreement or other registered agreement.
An employer “dismissed” an employee if:
- the person's employment has been terminated on the employer's initiative, or
- the person resigned, but had to do so because of conduct of their employer.
An employee has not been dismissed if:
- They chose to resign freely, or
- An employer does not offer a new employment contract when:
- the old contract ends,
- the employee has completed the specified task they were employed to complete, or
- the employee was only employed for seasonal work and the season ends.
“Harsh, unjust, or unreasonable”
Under Section 387, in determining whether the dismissal was “harsh, unjust or unreasonable”, the FWC considers the following:
- whether there was a valid reason for the dismissal related to the person's capacity or conduct (including its effect on the safety and welfare of other employees),
- whether the person was notified of that reason,
- whether the person was given an opportunity to respond,
- any unreasonable refusal by the employer to allow the person to have a support person present to assist during any discussions relating to dismissal,
- if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal,
- the degree to which the size of the employer's enterprise would be likely to impact the procedures followed in effecting the dismissal,
- the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact the procedures followed in effecting the dismissal, and
- any other matters that the FWC considers relevant.
Thus, if you are called into a meeting and are given a list of allegations amounting to serious misconduct, and your employer terminates you on the spot without allowing you to answer the allegations, this constitutes unfair dismissal.
Other common scenarios where an employee may be unfairly dismissed include:
- no valid reason for the dismissal,
- an employee resigns under pressure because of their employer's behaviour,
- the employer did not inform the employee of the reasons for their dismissal, or
- the employee got terminated for poor performance without any warning from the employer of their performance.
A “harsh” dismissal includes situations where the dismissal is an extreme response to the situation, or the dismissal has a disproportionate impact on the employee's economic and personal situation. An “unjust” dismissal occurs when the employee is not guilty of the action or behaviour the employer used as the reason to dismiss them. An “unreasonable” dismissal happens when the evidence does not support the decision to dismiss the employee.
Eligibility for an Unfair Dismissal Claim
To be eligible to make an unfair dismissal claim under the Fair Work Act you must:
- be an employee within the private sector,
- be covered by the national workplace relations system,
- have met the minimum employment period of at least 6 months in a large business or 12 months in a small business.
- have been earning less than the high income threshold, which is currently $162,000,
- have been employed on a regular and systematic basis, and
- have had a reasonable expectation of remaining with your employer.
Your business will fall under the small business rules if the small business employer (and any associated entities) employ fewer than 15 staff. This includes full-time, part-time and permanent employees, but not independent contractors and some casual employees (who do not work on a regular and systemic basis). Employees may also lodge claims regarding constructive dismissal. Common examples of constructive dismissal include:
- demoting employees,
- cutting pay without reason or notice,
- the employer acting unlawfully, such as breaching health and safety rules,
- bullying or harassing employees, and
- changing place of work without notice or reason.
In addition, the Fair Work Act protects eligible employees from losing their job if they're temporarily absent from work due to illness or on grounds of discrimination.
Procedure for an Unfair Dismissal Claim
An employee must make an unfair dismissal application to the FWC within 21 days of their dismissal, unless they have an extension. The application must include:
- contact details for the employee, any representative, and the employer,
- employment details, including the dates the employee started work, was dismissed and finished work,
- reasons given by the employer for dismissal, and
- reasons the employee believes the dismissal was unfair.
The FWC then sends a copy of the application to the employer, to which the employer must respond within 7 days. The response must include:
- the dates the employee started work, the date of dismissal and, date they finished work,
- reasons for the dismissal,
- a response to the employee's claims on unfair dismissal, and
- any jurisdictional objections (why the dismissed employee does not fall within the FWC's jurisdiction).
Unfair Dismissal Remedy
Thereafter, parties can opt for conciliation, a voluntary process that aims to resolve an unfair dismissal claim informally and in private, using an FWC conciliator. Conciliation settlements occur through negotiation between the parties. An unfair dismissal settlement includes:
- continuity (as if the dismissal did not happen),
- payment or wages, entitlements or compensation,
- an apology, or
- a non-disparagement agreement (where the parties agree not to criticise each other).
If the parties did not settle, the matter goes to a conference or formal hearing where a FWC member makes a decision. The possible remedies then would be reinstatement or compensation for lost wages (up to 26 weeks' pay).
However, an employee does not always receive an unfair dismissal payout even if the dismissal was unjust. Before the FWC orders compensation, they first decide whether the employer should reinstate the employee. The FWC may refuse reinstatement if:
- the business no longer operates,
- the employee cannot work due to an illness or injury,
- both the employer and employee cannot work together because their work relationship broke down, or
- there exists a high chance that the employer may dismiss the employee again after reinstatement.
The Fair Work system may not cover state public sector employees and/or local government employees. Hence, they may need to file the appropriate unfair dismissal application in their respective State Industrial Relations Commission or Tribunal.
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.