Termination & Unfair Dismissals

What Obligations Arise?

Unfair dismissal laws, which are set out in the Fair Work Act 2009 (Cth) (FWA), apply to a large number of Australian employees and generally give those employees the broadest protection from having their employment terminated. Therefore a good starting point is to consider whether or not an employee is covered by unfair dismissal laws.

Who is covered by unfair dismissal laws?

Employees who are earning up to $123,300 excluding superannuation and incentive bonuses or payments (indexed for CPI each year) are covered by unfair dismissal laws. In addition, employees who are covered by awards or enterprise agreements made under the FWA or its predecessor, irrespective of their earnings, will be covered by the unfair dismissal laws.

This is the case except for: 

• Certain casual employees
• Employees who were dismissed during their first six months of employment (or 12 months in the case of stipulated small employers)
• Employees engaged on a specified term contract if ending of the employment is due to the contract not being renewed at its expiry
• Certain employees engaged under traineeships.

Key Points

If considering dismissing an employee, ask what obligations will impact upon the decision. Comply with any unfair dismissal laws applicable and any workplace policies, industrial agreements or contractual provisions that may impact upon dismissal or discipline of employees. Identify any payments employee is entitled to on ending of employment.

What Do Unfair Dismissal Laws Require?

Under unfair dismissal laws, an employer cannot dismiss an employee unless they have a valid reason connected with the employee’s conduct, capacity or because of a genuine redundancy.

In addition, if the dismissal is related to conduct or capacity, it may still be unfair if the employee is not notified of the reason for their dismissal, not given an adequate opportunity to respond to those reasons, not provided with a warning in certain circumstances, not allowed a support person to assist them in discussions about the hearing or if the dismissal was otherwise procedurally unfair.

A valid reason is one that is sound and defensible and related to the employment. Except for serious misconduct (eg theft), if dismissing an employee because of inadequate performance or misconduct, an employer may need to establish more than one incident of misconduct or poor performance to justify the dismissal. In addition, the existence of prior warnings about the employee’s misconduct or poor performance will normally be necessary in the sense that the employee has been made aware that failure to improve their performance or conduct may jeopardise their ongoing employment.

In the case of the valid reason, employers need to establish the misconduct on the ‘balance of probabilities’. A rigorous investigation of the circumstances is often a key element of satisfying that burden of proof.

Employers need to ensure that they have sought and taken into account all relevant evidence and properly tested it and that, prior to any dismissal decision, they have given the employee an opportunity to respond to any allegations against them, including having given them sufficient detail of the matters that may form the basis for dismissal.

An employer should also take into account the employee’s length of service, employment record and relevant personal circumstances before making the decision to dismiss.