Unfair Dismissals, what is the criteria? We Have The Answers

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Dismissals, what are the criteria?

What are the criteria for unfair dismissals, basically outlined as Per s 385 of the Fair Work Act 2009 (Cth) (the Act), a person has been unfairly dismissed if the Fair Work Commission is satisfied that:

  • the person has been dismissed; and
  • the dismissal was harsh, unjust or unreasonable; and
  • the dismissal was not consistent with the Small Business Fair Dismissal Code; and
  • the dismissal was not a case of genuine redundancy.

If an employee can demonstrate these four criteria, they will succeed in their unfair dismissal application and the Commission will then determine the appropriate remedy. These four criteria are discussed in detail below.

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“The person has been dismissed”

Under s.385(a) of the Act, the term dismissed is defined as a situation where: a person’s employment has been terminated at the employer’s initiative, or a person was forced to resign because of the conduct or course of conduct engaged in by the employer.

A dismissal does NOT include where: a person is demoted in his or her employment without a significant reduction in duties or remuneration and remains employed by the employer, a person was employed under a contract for a specified period of time, specified task or for the duration of a specified season and the employment comes to an end at the end of that period, or a person had a training arrangement with their employer which: specified that the employment was limited to the duration of the training arrangement, and whose employment ends at the end of that training arrangement.

“The dismissal was harsh, unjust and unreasonable”

Under s.385(b) of the Act, the dismissal must have been harsh, unjust or unreasonable. It may be that the dismissal is:

  • harsh but not unjust or unreasonable
  • unjust but not harsh or unreasonable, or
  • unreasonable but not harsh or unjust.[1]

The concepts of harsh, unjust or unreasonable may overlap.[2]

A dismissal may be: unjust because the employee was not guilty of the alleged misconduct unreasonable because the evidence or material before the employer did not support the conclusion harsh on the employee due to the economic and personal consequences resulting from being dismissed, or harsh because the outcome is disproportionate to the gravity of the misconduct (the punishment does not fit the crime).[3]

The criteria for determining whether the dismissal was harsh, unjust or unreasonable (also called determining the merits of the unfair dismissal claim), is stated in s.387 of the Act.

Per s 385 of the Fair Work Act 2009 (Cth) (the Act), in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Fair Work Commission must take into account:

  • 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); and
  • whether the person was notified of that reason; and
  • whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
  • any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and
  • if the dismissal related to unsatisfactory performance by the person–whether the person had been warned about that unsatisfactory performance before the dismissal; and
  • the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
  • the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
  • any other matters that FWA considers relevant.
A support person is there to assist in any discussions relating to dismissal.
A support person is there to assist in any discussions relating to dismissal.

Valid Reason

Per s 387(a) of the Fair Work Act 2009 (Cth) (‘the Act’), there needs to be a valid reason for dismissal relating to the person’s capacity or conduct. In order to be a valid reason, the reason for the dismissal should be “sound, defensible or well founded[4] and should not be “capricious, fanciful, spiteful or prejudiced”.[5] However, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer.[6]

In the event that the Commission finds there is a valid reason for dismissal, there is no mandate for giving the valid reason criterion any greater emphasis or weight than any of the other criteria under s 387 of the Act.[7] It is well settled that the statutory requirement to ‘have regard to’ or ‘take into account’ requires the Commission to give the matter(s) weight as a fundamental element in the decision making process. Even if it is found that there was a valid reason for the dismissal, an overall assessment must be made as to whether the dismissal was harsh, unjust or unreasonable.[8]

Notification of the reason for dismissal

Per s 387(b) of the Act, the person needs to be notified of the reason for dismissal. Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made,[9] in explicit terms[10] and in plain and clear terms.[11] In Crozier v Palazzo Corporation Pty Ltd,[12] a Full Bench of the Australian Industrial Relations Commission stated:

“[73] As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. Much like shutting the stable door after the horse has bolted.”[13]

Opportunity to respond

Per s 387(c) of the Act, the person needs to be given an opportunity to respond to any reason related to the capacity or conduct of the person. Such a requirement will be satisfied where the employee is aware of the precise nature of the employer’s concern about his or her conduct or performance and has a full opportunity to respond to this concern.[14] This criterion is to be applied in a common sense way to ensure the employee is treated fairly and should not be burdened with formality.[15] In Wadey v YMCA Canberra,[16] Moore J held that

[t]he opportunity to defend, implies an opportunity that might result in the employer deciding not to terminate the employment if the defence is of substance. An employer may simply go through the motions of giving the employee an opportunity to deal with allegations concerning conduct when, in substance, a firm decision to terminate had already been made which would be adhered to irrespective of anything the employee might say in his or her defence. That, in my opinion, does not constitute an opportunity to defend”.[17]

Support Person

Per s 387(e) of the Act, the employer must not unreasonably refuse the person to have a support person present to assist in the discussion relating the dismissal. There is no positive obligation on an employer to offer an employee the opportunity to have a support person.

This factor will only be a relevant consideration when an employee asks to have a support person present in a discussion relating to dismissal and the employer unreasonably refuses.[18] It does not impose a positive obligation on employers to offer an employee the opportunity to have a support person present when they are considering dismissing them.[19] A support person does not act as an advocate – a support person does not present or defend a case on behalf of the employee.[20]

However, it has been held that an employer may be found to have unreasonably refused to allow a person to have a support person if they gave the person no reasonable time-frame to access one.[21]

Warnings

Per s 387(e) of the Act, the person needs to have been warned about their unsatisfactory performance before the dismissal. A warning for the purposes of this section, must clearly identify:

  1. the areas of deficiency in the employee’s performance;
  2. the assistance or training that might be provided;
  3. the standards required; and
  4. a reasonable timeframe within which the employee is required to meet such standards.[22]

The warning must also “make it clear that the employee’s employment is at risk unless the performance issue identified is addressed”.[23]

Size of employer’s enterprise and human resources specialists

Per s 387(f) and (g) of the Act, there are a number of factors that might have impacted the ability of the employer to follow a fair process in effecting a dismissal. Whether the employer was a small business or a larger employer will be relevant. For example, a small business may not have the same resources on hand as a larger business which may employ managers or specialist human resources staff.

While there is acknowledgement that small businesses are genuinely different in nature both organizationally and operationally, the procedures followed in dismissing a person cannot be ‘devoid of any fairness’.[24]  The Commission has observed that ‘no employer should ever consider’ that ss.387(f) and (g) could ‘be used as a shield behind which to hide when they had engaged in conduct which was improper, belligerent and bullying’.[25] The Commission has commented that ‘[c]ommon sense courtesies of conduct ought to exist in any workplace, whatever the size’.[26]

Other Relevant Matters

Per s.387(h) of the Act, the Commission may consider any other relevant matters such as differential treatment between employees,[27] the impact of the dismissal on the employee’s personal or economic situation[28] or their long or satisfactory work performance or history.[29] The Commission has the discretion to determine which factors they consider or deem relevant as not every submission that is made has to be dealt with. Those which are centrally relevant to the consideration of whether a dismissal was unfair should be given adequate consideration.

“The dismissal was not consistent with the Small Business Fair Dismissal Code”

Under s.385(c) of the Act, a person has not been unfairly dismissed if the Fair Work Commission is satisfied that the dismissal was consistent with the Small Business Fair Dismissal Code (the Code).

An employer is a small business employer if it employs fewer than 15 employees (by headcount) at the relevant time. All employees employed by the employer at the time (including the dismissed employee, any other employees dismissed at the same time and those employed by associated entities), are to be counted. Casual employees are not counted unless they are regular casual employees. For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.[30]

A person’s dismissal is consistent with the Code if:

  • immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happens first), the person’s employer was a small business employer, and
  • the employer complied with the Code in relation to the dismissal.

In regards to summary dismissal, the Code states that:

  • It is fair to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal.[31]

The Code defines serious misconduct as including ‘theft, fraud, violence, serious breaches of occupational health and safety procedures and sexual harassment.[32] The Commission does not have to make a finding, on the evidence, whether the conduct occurred.[33]

The Commission needs to find whether the employer had a reasonable belief that the conduct of the employee was serious enough to warrant immediate dismissal.[34] It is not necessary for the Commission to determine whether the employer was correct in the belief that it held.[35]

For an employer to believe on reasonable grounds that the conduct of the employee was serious enough to justify immediate dismissal, the employer must establish that they did in fact hold the belief that: the conduct was by the employee the conduct was serious, and the conduct justified immediate dismissal.[36]

The employer must establish that they had reasonable grounds to hold the belief, which could be established by providing evidence of inquiries or investigations the employer undertook to establish their belief.[37]

In non-summary dismissal cases, the employee must be warned that if there is no improvement to their conduct or capacity, they could be dismissed.[38] The employee must be given a reason as to why their employment is at risk and the reason must be a valid reason based on their conduct or capacity to do the job.[39] The employer must give the employee an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.[40]

A small business employer is also obliged to afford their employees a degree of procedural fairness. During discussions between the employer and employee about matters where dismissal is possible, the employer must allow the employee to have another person present to assist them. However, this person cannot be a lawyer acting in a professional capacity.[41] If an employee claims to the Commission that they have been unfairly dismissed, the employer will have to prove that they have complied with the Code.[42]

The dismissal was not a case of genuine redundancy

Under s.385(d) of the Act, an unfair dismissal application cannot be made if the dismissal was a case of genuine redundancy. In order to determine whether a dismissal was a case of genuine redundancy, the Fair Work Commission will look to s.389 of the Act. This sections dictates that a dismissal is a case of genuine redundancy when: the employer no longer requires the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise, AND the employer has complied with any obligation imposed by an applicable modern award or enterprise agreement to consult about the redundancy.

A dismissal is NOT a case of genuine redundancy if it would have been reasonable in all of the circumstances to redeploy the person within the employer’s enterprise, or the enterprise of an associated entity of the employer.

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References:

[1] Byrne v Australian Airlines Ltd [1995] HCA 24 (11 October 1995) at para. 128 (McHugh and Gummow JJ), [(1995) 185 CLR 410 at p. 465].

[2] Ibid.

[3] Ibid; See also Australia Meat Holdings Pty Ltd v McLauchlan, Print Q1625 (AIRCFB, Ross VP, Polites SDP, Hoffman C, 5 June 1998), [(1998) 84 IR 1 at p. 10].

[4] Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371, 373.

[5] Ibid.

[6] Walton v Mermaid Dry Cleaners Pty Ltd (1996) 142 ALR 681, 685.

[7] O’Brien v Ventia Pty Limited [2021] FWC 5916 at [67].

[8] Ibid.

[9] Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41].

[10] Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151.

[11] Previsic v Australian Quarantine Inspection Services Print Q3730.

[12] (2000) 98 IR 137.

[13] Ibid at 151.

[14] Gibson v Bosmac Pty Ltd (1995) 60 IR 1, 7.

[15] RMIT v Asher (2010) 194 IR 1, 14-15.

[16] [1996] IRCA 568.

[17] Ibid; cited in Dover-Ray v Real Insurance Pty Ltd [2010] FWA 8544 (Thatcher C, 5 November 2010) at para. 85, [(2010) 204 IR 399].

[18] Explanatory Memorandum to Fair Work Bill 2008 at para. 1542.

[19] Ibid.

[20] Victorian Association for the Teaching of English Inc v de Laps [2014] FWCFB 613 (Acton SDP, Hamilton DP, Blair C, 19 February 2014) at para. 52, [(2014) 241 IR 1].

[21] McCouaig v Colliers International (SA) Pty Ltd T/A Colliers International [2019] FWC 1517 at [155]

[22] McCarron v Commercial Facilities Management Pty Ltd t/a CFM Air Conditioning Pty Ltd [2013] FWC 3034, [32].

[23] Fastidia Pty Ltd v Goodwin Print S9280 (AIRCFB, Ross VP, Williams SDP, Blair C, 21 August 2000), [43]-[44].

[24] Williams v The Chuang Family Trust t/a Top Hair Design [2012] FWA 9517 (Cloghan C, 12 November 2012) at para. 40.

[25] Sykes v Heatly Pty Ltd t/a Heatly Sports PR914149 (AIRC, Grainger C, 6 February 2002) at para. 20.

[26] Ibid.

[27] Sexton v Pacific National (ACT) Pty Ltd PR931440 (AIRC, Lawler VP, 14 May 2003) at para. 33.

[28] Ricegrowers Co-operative Limited v Schliebs PR908351 (AIRCFB, Duncan SDP, Cartwright SDP, Larkin C, 31 August 2001) at para. 26; citing Byrne v Australian Airlines Ltd [1995] HCA 24 (11 October 1995), [(1995) 185 CLR 410]; Gasz v Mobil Refinery Australia Pty Ltd PR960826 (AIRCFB, Watson SDP, Hamilton DP, Lewin C, 1 August 2005) at para. 17; Ashley v Statewide Autistic Services Inc PR959835 (AIRCFB, Ross VP, O’Callaghan SDP, Cribb C, 7 July 2005) at para. 110.

[29] Streeter v Telstra Corporation Limited [2008] AIRCFB 15 (Acton SDP, Cartwright SDP, Larkin C, 24 January 2008) at para. 25, [(2008) 170 IR 1]; Cunningham v Australian Bureau of Statistics PR963720 (AIRCFB, Giudice J, Watson SDP, Simmonds C, 10 October 2005), [(2005) 148 IR 20]; Gasz v Mobil Refinery Australia Pty Ltd PR960826 (AIRCFB, Watson SDP, Hamilton DP, Lewin C, 1 August 2005) at para. 17.

[30] See also s.50AAA of the Corporations Act 2001 (Cth).

[31] See the “Small Business Fair Dismissal Code” <https://www.fwc.gov.au/about-us/legislation-regulations/small-business-fair-dismissal-code>.

[32] Ibid.

[33] Khammaneechan v Nanakhon Pty Ltd ATF Nanakhon Trading Trust T/A Banana Tree Cafe [2010] FWA 7891 (Bartel DP, 14 October 2010) at para. 60, [(2010) 204 IR 39]; cited with approval in Pinawin T/A RoseVi.Hair.Face.Body v Domingo [2012] FWAFB 1359 (Watson VP, Richards SDP, Cloghan C, 21 March 2012) at paras 27, 29, [(2012) 219 IR 128]; Steri-Flow Filtration (Aust) Pty Ltd v Erskine [2013] FWCFB 1943 (Acton SDP, Smith DP, Roe C, 24 April 2013).

[34] Ibid.

[35] Pinawin T/A RoseVi.Hair.Face.Body v Domingo [2012] FWAFB 1359 (Watson VP, Richards SDP, Cloghan C, 21 March 2012) at para. 29, [(2012) 219 IR 128].

[36] Harley v Rosecrest Asset Pty Ltd T/A Can Do International [2011] FWA 3922 (McCarthy DP, 21 June 2011) at para. 8; cited with approval in Pinawin T/A RoseVi.Hair.Face.Body v Domingo [2012] FWAFB 1359 (Watson VP, Richards SDP, Cloghan C, 21 March 2012) at paras 28–29, [(2012) 219 IR 128].

[37] Harley v Rosecrest Asset Pty Ltd T/A Can Do International [2011] FWA 3922 (McCarthy DP, 21 June 2011) at para. 9; cited with approval in Pinawin T/A RoseVi.Hair.Face.Body v Domingo [2012] FWAFB 1359 (Watson VP, Richards SDP, Cloghan C, 21 March 2012) at paras 28–29, [(2012) 219 IR 128].

[38] See the “Small Business Fair Dismissal Code” <https://www.fwc.gov.au/about-us/legislation-regulations/small-business-fair-dismissal-code>.

[39] Ibid.

[40] Ibid.

[41] Ibid.

[42] Ibid.