UNFAIR DISMISSAL BENCHBOOK SUMMARY
This news article summarises parts of the Fair Work Commission’s recently released Unfair Dismissal Benchbook. It is not intended to outline the specific Fair Work Act legal structures in place, but to widely illustrate recent trends, case law and findings. Specific advice should be sought before each possible termination.
THE NITTY GRITTY
Eligibility for Unfair Dismissal
To be eligible for unfair dismissal, the employee must:
Be a national system employee (not a public servant); and
Have worked for more than the qualifying period (as separate and markedly different to a probation period); and
Be paid less than the high-income threshold, or be covered by a Modern Award or Enterprise Agreement; and
Not have been genuinely dismissed; and
Not be covered by the Small Business Fair Dismissal Code*; and
Have lodged the unfair dismissal application within 21 days.
….and, what makes a dismissal unfair?
If it is harsh, unjust or unreasonable - It does not have to be all three, but only one of these points, as well as:
There was no valid reason for dismissal, the employee was not notified of that reason, and was not given an opportunity to have a support person present
There was no opportunity for the employee to respond to the issue before a decision was made
Was the employee given a previous warning/s if the dismissal related to performance?
Did the lack of a HR specialist and size of the employer impact on the process followed?
And finally.. the catch-all …. “any other matters that the Commission considers relevant”. This is often where the Commission will consider the age of the employee and their location of employment (in terms of ability to find other employment).
NOTE:
High income threshold - it is important to carefully calculate what “earnings” are when reviewing an employee’s income for the high-income threshold test (currently $148,700 p/a). For instance:
commission / bonuses that are not guaranteed and cannot be pre-determined are not earnings, nor is Superannuation. Overtime is generally not considered to be earnings in this instance, but if the overtime is pre-determined and relatively static, then it will need to be taken into account. There is now plenty of case law on this topic.
things get complicated when talking about vehicles. The amount of private use of a business vehicle is relevant (and calculable) when looking at the high-income threshold and must be taken into account as part of earnings; and the amount of time an employee uses a company-provided laptop / mobile phone for personal use should be calculated.
Small businesses (15 employees or fewer) are covered under a different Unfair Dismissal code where the qualifying period is 12 months with less onerous process requirements.
Eligibility can include those who only work one hour a week, who have a right to due process. The Commission makes reference to a specific case of a pelican feeder in July 2019 who worked 1 hr a week, swore at this employer, was dismissed without a process, and was found to be unfairly dismissed.
SERIOUS MISCONDUCT
Serious misconduct can mean “instant” dismissal - but due process must still be followed. Case Law is littered with valid reasons for dismissing an employee for serious misconduct (i.e., theft) but found to be unfair due to a lack of process. This can be soul destroying for an employer - avoid it by taking a little time to get the process right.
The devil’s in the detail
In looking at eligibility for unfair dismissals, it is important to note that if an employee is covered by the coverage clause of a modern Award, or an applicable Enterprise Agreement, then even if that employee is over the high-income threshold, they are still eligible for unfair dismissal protections.
There was a specific case that dealt with that very issue: Most people would assume that a CEO who earnt more than the high-income threshold would not be eligible for unfair dismissal, but this CEO successfully argued that a modern Award classification actually applied to her very senior managerial role, and hence she could apply for unfair dismissal regardless of her income. See Cubillo v North Australian Aboriginal Family Violence Legal Service [2011] FWA 6818 (Deegan C, 5 October 2011)
Independent contractors
These cannot be ‘sham contracts’ – Fair Work does not look kindly on employers engaging people as contractors, when they really are employees. This is not a loop-hole and there are strict provisions listed and tested by case law to define a contractor vs an employee.
Note our Facebook post showing an easy-to-read definition table provided by the FWC on this very topic.
Volunteers and not-for-profit
Volunteers If you have volunteers working in your organisation, the relationship is more moral, than legal. You may “pay” them in-kind with lodgings / board / expenses, but that does not nullify the definition of a volunteer. However, the minute you pay an hourly rate or likewise of any kind, you enter into an employer-employee relationship. You should also be careful about the length of volunteer services – in most organisations it will be for a defined time with a defined mutual benefit. Only in a few cases should it be an on-going, long-term arrangement.
Not-for-profit The crux of whether a company is a not-for-profit or not (and hence its employees are eligible for unfair dismissal under the national system), comes down to whether it is classified as a trading corporation or not – irrespective of whether the company was originally formed to trade or not.
You may be surprised to learn that the Red Cross and RSPCA, although both “charitable” organisations in lay-man’s terms, were both actually found by the Commission to be trading corporations earning substantial income even if that income did not create a profit due to the manner in which they used it.
Communicating a dismissal
You need to ensure you effectively communicate a dismissal to an employee for the dismissal to take effect - the Commission states only when the communication is received by the employee is it in effect (this can be verbally or in writing).
If you pay an employee “in lieu of notice”, then the dismissal is deemed as effective immediately from the last day actually worked. If the employee has to work out their notice, then naturally the dismissal is effective from the last day of duty.
Forced resignations
A forced resignation, or undue pressure to ensure an employee resigns, if proven, are considered ‘constructive dismissals’ and are hence treated the same as unfair dismissals. The onus of proof is on the employee in this instance.
However, best practice is to ensure you keep any proof that an employee resigned – either verbally (get witness statements), text messages, emails or letters. If an employee resigns in the “heat of the moment”, you can take that as a resignation… however, there are always special circumstances with case law to consider what is reasonable – especially if the employee continues to present themselves for work.
The Bad & The Ugly – lessons to be learnt from case law
There are countless cases on casuals with regular & systematic hours over 12 months being dismissed by employers without due process. Regular casuals over 12 months service are basically deemed as permanent employees and should be treated as such for instances of dismissal.
A pregnant employee and employer agreed to transfer her employment to a less onerous role, however, the employer then decided to reduce her salary, to which the employee disagreed = termination of employment by employer = unfair dismissal.
An employee was deemed to be part of a transfer of business when a café changed hands, and the employee was then dismissed. There was a transfer of assets, so hence a transfer of employment. The new employer did not advise the employee in writing that the previous service would not be recognised, therefore the previous service was taken into account.
An employer dismissed an employee, after consultation, for losing his license for an extended period of time for drink driving. Conduct that is outside of work must have a relevant link to employment to be considered a valid reason for dismissal. In this instance, having a license was not relevant to the employee’s role, and therefore dismissal was deemed unfair. If having a license was integral to an employee’s responsibilities, then dismissal may well be reasonable.
An employee was made redundant, yet the employer hired someone else (albeit with a different job title) for the role and unsuccessfully argued it was not the same role, and additionally this “new” role may well have been a redeployment option for the redundant employee.
A genuine redundancy means an unfair dismissal will be unsuccessful, but the onus of proof is on the employer – and you must meaningfully consult on the change before you action it. If you do not, the redundancy will be not genuine, and hence possibly an unfair dismissal.
Frivolous or vexatious?
The Commission does reject unfair dismissal applications more than you may think on the following basis. The application:
does not fall under the jurisdiction of the Fair Work Act;
is frivolous or vexatious;
has no reasonable prospect of success.
For example, an applicant who does not deny there was a serious cardinal safety breach and due process was followed, may well have a case dismissed as frivolous or vexatious. Equally, an applicant who does not comply with requests for evidence of an unfair dismissal, or fails to comply with Directions or attend hearings, is likely to have a case dismissed.
Multiple applications - unfair dismissals
A person cannot make multiple applications in different jurisdictions for the same dismissal. An applicant must choose at the outset as to where they are going to lodge a claim for their termination – be it unfair dismissal or a general protections claim (both with the Fair Work Commission), or a claim with the Anti-Discrimination Council or equivalent.
“As always, please contact us at the start of any complex HR process so we can guide you on how you can stay within legal parameters and keep yourself and your business form unwarranted unfair dismissal claims.”