Unfair dismissal

Issues surrounding termination of employment are usually complex and confronting, and must be dealt with in a fair, reasonable and lawful manner to avoid unfair dismissal claims.

Members who are considering counselling, warning or terminating an employee should contact Master Builders to ensure they follow the correct process. Master Builders can provide advice and representation on all termination of employment matters, including any representation before Fair Work Australia (FWA) or other tribunals. This service is included in your membership – there is no extra cost.

What is unfair dismissal?

A person has been unfairly dismissed when FWA is satisfied that:

  • The person has been dismissed
  • The dismissal was harsh, unjust or unreasonable
  • The dismissal was not a case of genuine redundancy
  • Where the employer is a small business, the dismissal was not consistent with the Small Business Fair Dismissal Code.

An employee has been dismissed if the employee’s employment was terminated by the employer or if the employee resigns because he or she was forced to do so by the conduct of the employer (known as constructive dismissal).

A person is not formally dismissed if:

  • The person was employed for a specified period, a specified task or a specified season and the employee had their employment terminated at the end of that period, task or season.
  • The person was employed for a specified period of time under a training arrangement (such as a traineeship or apprenticeship).
  • The person was demoted without a significant reduction in pay or duties and they remained with the same employer.

What constitutes harsh, unjust or unreasonable?

Employers need to ensure that there is procedural fairness when dismissing an employee.

When considering whether a dismissal was harsh, unjust or unreasonable FWA will look at:

  1. 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).
  2. Whether the person was notified of that reason.
  3. Whether the person was given any opportunity to respond to that reason.
  4. Any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to the dismissal.
  5. If the dismissal was related to unsatisfactory performance by the person – whether the person had been warned about the unsatisfactory performance before the dismissal.
  6. The degree to which the size of the employer's enterprise would be likely to impact on the procedures followed in making the dismissal.
  7. The degree to which the absence of dedicated human resource management specialists or expertise in the employer's enterprise would be likely to impact on the procedures followed in the dismissal.
  8. Any other matters that FWA considers relevant.

These factors are substantially the same as those applying under the previous workplace relations law other than (4) above. The Fair Work Act 2009 does not define ‘support person’; it can be any person that the employee wants present.

This doesn't mean that an employer is required to offer an employee the opportunity to have a person present. However, it is one factor that FWA must consider when deciding whether a dismissal was unfair, taking into account the capacity of the employee to respond to allegations put to him or her without such a support person being present.

Read more about unfair dismissal claims and remedies.

What is a genuine redundancy?

A redundancy is a genuine redundancy and not unfair dismissal if:

  • An employee’s job is no longer required to be performed by anyone because of changes in the operational requirements of the business
  • The employer has complied with any requirement in a modern award or enterprise agreement to consult about the redundancy.

The term ‘operational requirements’ is not defined in the Fair Work Act and is distinct from the ‘operational reasons’ that applied in the previous workplace relations legislation.

Examples of changes in the operational requirements of an enterprise could include:

  • A machine is now available to do the job performed by the employee
  • The employer’s business is experiencing a downturn, for example the employer only needs three people to do a particular task or duty instead of five
  • The employer is restructuring their business to improve efficiency and the tasks done by a particular employee are distributed between several other employees and therefore the person’s job no longer exists.

A redundancy is not considered to be a genuine redundancy if it was reasonable for the employer to redeploy the person in another position within the business or with an associated entity of the employer.

Employers in the building and construction industry are encouraged to seek advice from Master Builders on how to apply the redundancy requirements in their business. Phone us or email us your enquiry.