Have You Been Unfairly Dismissed? Know Your Rights.

When does employment termination constitute unfair or unlawful dismissal and how are you protected?

Employers have the right to terminate the employment of a person for a range of different reasons. However, the Fair Work Act 2009 (the Act) and the Fair Work Ombudsman provides protection to employees from unfair or unlawful dismissal in circumstances where an employer has not conducted the termination fairly. This article aims to inform employers and employees about the situations where unfair dismissals can occur and whether employees are eligible to make a claim against an employer.

What is unfair dismissal?

Under section 385 of the Act, to be unfair, the dismissal must be:

·         harsh, unjust or unreasonable; and

·         not consistent with the Small Business Fair Dismissal Code (if employment was with a small business); and 

·         not a case of genuine redundancy.

This applies to full time and part time employees, and may apply to casual staff where they are working on either a regular or repetitive basis (regardless of the amount of work, so long as it is generally repetitive).

A dismissal may be considered ‘harsh’ where it is an unreasonable or unnecessary response by the employer to a situation, or where the termination has a disproportionate impact on the economic and personal life of the employee.

A dismissal may be ‘unjust’ where an employer has put blame on the employee for something they have not done. If an event occurs which the employee is not guilty of, an employer cannot terminate the employee without proof.

Finally, a dismissal can be ‘unreasonable’ where there is a lack of cause and evidence to terminate an employee. An employer must provide a reasonable explanation with facts to dismiss, without which the situation may be ‘unreasonable.’    

Additionally, the Fair Work Ombudsman protects employees from a range of dismissals if they are due to any of the following:

·         harassment;

·         discrimination;

·         temporary leave from work due to illness;

·         adverse action;

·         coercion;

·         undue influence or pressure; or

·         misrepresentation.

There is a range of instances where any of these unfair actions may occur, so it is always important as an employee to examine the circumstances under which they are dismissed.  

Application for reinstatement or compensation

If an employee feels they have been unfairly dismissed, they can make a claim to the Fair Work Commission for either reinstatement or compensation.

If there is a claim for reinstatement which is upheld, an employer must reinstate the employee to a position that is the same or no less favorable as the previous position the employee held. Additionally, the Fair Work Commission may make an order for the continuity of the employees position in the company and also may make an order to restore lost pay for the employees time out of the position.

If the claim is for compensation, compensation may be paid instead of reinstatement to the position held previously. Compensation is decided based on variables including:

·         the effect of the compensation on the employer’s business;

·         length of employment;

·         the amount the employee would have received if they had not been dismissed;

·         the efforts of the employee to mitigate any loses they incurred;

·         the amount earned by the employee for work done under other employment during the time of dismissal; and

·         the reasonable amount that the employee will earn during the period between submitting the compensation claim and receiving the compensation.

A claim for compensation can also be affected by any misconduct of the employee that lead to their termination, however the compensation amount will not include considerations of shock, distress or humiliation caused by the termination.

Any claims for unfair dismissal, whether in the Fair Work Commission or the NSW Industrial Relations Commission, need to be submitted within 21 days of a dismissal taking effect.

Where does unfair dismissal not apply?

Where an employee believes they have been dismissed for unfair reasons, it is important to examine whether there are any reasons for an employer to object to unfair dismissal. The following circumstances do not constitute unfair dismissal:

·         the application was made late;

·         termination was due to a genuine redundancy;

·         the employee was employed for a specific period of time or task which has been met;

·         the employee did not work for the minimum employment period;

·         the person was a casual employee who worked irregularly or inconsistently;

·         the employer is a small business and complied with the Code; and

·         the employee was not covered by a modern award or enterprise agreement and earned over the high-income threshold.

What are the prospects of success in an unfair dismissal claim?

The Fair Work Commission will examine applications of unfair dismissal that fall under the Act. If the Commission does agree that there is the possibility for unfair dismissal, they will examine the Act and the directions from the Fair Work Ombudsman in order to make a decision.

Although majority of unfair dismissal claims do not result in reinstatement or a formal order against employers, most cases are settled during conciliation between the parties. For employees, they must prove that they were unfairly dismissed and if they can do so using sound legal principles, they have a chance to be compensated if not formally, then through settlement with their employer. For employers, it is vital that they are aware of the risks of misconduct towards employees when terminating employment, so it always best to take time and follow proper process when letting an employee go.

For advice as an employer or employee in regard to an unfair dismissal case, feel free to get in touch and we will be happy to assist you!  

By Harry Turner