[EP 009] Tips for Avoiding Unfair Dismissal Claims

We want to talk today about all of the things that you can do differently. The small things that you can put in place in your business to try and set it up into the position that you’re able to avoid the risk of unfair dismissal claims or at least reduce the risk as much as possible.



0:45 Risks in Terminating Employees

1:45 The Disgruntled Employee

3:02 Dodging An Unfair Dismissal Claim

3:15 Redundancy or Termination

3:48 Poor Conduct or Performance

6:14 The Case with Resignation

6:47 Four Action Steps

9:58 Unfair Dismissal vs Breach of Contract Claim

10:49 Who has the power to hire and fire?

11:20 Importance of a Clear Record Keeping Process

11:48 Train the Management Team

12:08 Avoid On-the-Spot Dismissals

12:50 Don't Delay Your Decisions for Too Long

14:18 Give Them a Chance to Respond

14:40 When in Doubt, Get Advice

14:59 Quick Recap


Hi! It’s Joanna Oakey here. Welcome back to Talking Law.

Today we're talking about tips for avoiding unfair dismissal claims. Why is this area important for businesses?

The Risks in Terminating Employees

I find that often businesses don’t understand the risks involved in terminating employees until they find themselves sitting at the end of an unfair dismissal claim by an employee that they’ve just terminated. I’ve had clients who come to us in this situation where wasted time and money could have easily been avoided just by doing a few things differently.

We want to talk today about all of the things that you can do differently. The small things that you can put in place in your business to try and set it up into the position that you’re able to avoid the risk of unfair dismissal claims or at least reduce the risk as much as possible.

There’s lots of legal firms out there that tap for business from disgruntled employees so you just need to be aware that if termination isn’t managed correctly, there’s a lot of risks on the table and a lot of people who are happy to exploit that risks.

So what is this all about?

The Disgruntled Employee

What does a disgruntled employee have to do to make a claim against you if you terminate them?

The first thing for you to understand is that the process is very simple. A disgruntled employee simply has to fill in the form with the Fair Work Commission. Pay a small fee, which is currently seventy dollars. Lodge it. There you go, an unfair dismissal claims process is on its way.

Alternatively, they could just do simple Google search and find the mountains of lawyers that are touting for their work in this area because it’s big business for lawyers out there acting for disgruntled employees, helping them make claims against their previous employers.

  • The terminated employee has twenty-one days to make an application for an unfair dismissal.
  • They need to have been employed for more than six months before the dismissal. But for some businesses who fit in to the small business heading, that is extended to twelve months. Therefore, if you dismiss an employee during that period, the employee can’t bring an unfair dismissal claim.
  • Finally, the employee needs to show that the dismissal was unfair. Soon we’ll talk about what that actually means.

Avoid the risks of unfair dismissal claims, know your rights as an employer

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Dodging An Unfair Dismissal Claim

How do you ensure that you don’t end up with a claim against your business? Or if there is a claim, then lessen likelihood that you’ll be found to have acted unfairly in the situation?

Redundancy or Termination

  • You need to consider whether the dismissal is really a redundancy. By that I mean the work that they are doing doesn’t need to be done anymore.

If in fact what you’re dealing with is a redundancy rather than a termination, say for example a termination on the basis of poor performance, then you’ll need to deal with this in a different way. We’re not talking about redundancy situations today but certainly we’ll have that in future episodes. So the first thing: consider whether or not the dismissal is really redundancy.

Poor Conduct or Performance

  • If the dismissal is due to poor conduct or performance you need to have warned the employee about the issues and have given them clear instructions that they need to improve their conduct or performance otherwise they will be dismissed.

You need to have this warning process set up in the background. To do that, you need to then be monitoring the performance of your employees and have systems that pick up problems with the performance of your employees before things gets so bad that you’re at the point of considering dismissal.

If you have systems in place that help you identify performance issues before they get out of control, this also gives you the ability to potentially remedy the situation so that you don’t end up in the situation when you need to terminate them.

It’s really important when you do have these meetings about conduct and performance that you are clear about what they can do to improve their conduct or performance and that you document these meetings because you need to be able to, at the end of the day, prove that you have complied with this requirement, that you have provided a warning to the employee about their conduct and performance and given them instructions about how they can remedy that performance and ensure that they are aware that their job may be terminated if they don’t fix the issues.

  • You need to provide a reasonable amount of time for the employee to improve their performance or conduct.
  • You need to provide assistance, if necessary, to help them improve their performance or conduct.
  • If the poor performance or conduct continues, you then need to give the employee a reason for the dismissal and give them an opportunity to respond.
  • My final point here is, you need to keep a record of warnings made and how the conduct or performance could be improved. I talked about that above, but it’s so important that I’ve included it again as another step.

Here’s all of the things that you should be doing to ensure that you don’t have the risk of an unfair dismissal claim being brought against your organisation.

The case with resignation

What if there have been issues and then your employee resigns? I’ve had this question post me in the past and it’s important that you’re very careful in this area because we've seen actual cases where what appeared to be resignation on the surface ended up in the disgruntled employee still claiming that there had been a dismissal by the employer. t’s reaIlly important to understand what the warning signs are and to get legal advice as soon as problems start appearing.

Four Action Steps

We talked earlier about what unfair dismissal claims are and the basis upon which a disgruntled employee could make an unfair dismissal claim against you. But now I just want to go through some action steps about what you can do from a whole business perspective in terms of protecting yourself against the situation of an employee bringing an unfair dismissal allegation.

10 Step Guide to building the business environment to avoid unfair dismissal claims

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I’ve created a guide to help you in this area if you’d like something in hard copy. I’ve got a Ten Step Guide to Building the Business Environment to Avoid Unfair Dismissal claims. You’ll find that at our website talkinglaw.com.au under this particular episode.

Now I just want to give you these top tips:

  1. It begins right when you employ your new employees. You need to have the right communications in place and then right employment agreement in place. When you first hire your employees, you have to be clear and specify what you expect from them and make sure your company policies are clearly written and easily understood and available and well known to employees so they understand what your expectations are.
  1. You need to have the right employment agreement in place making sure that it‘s up to date with current legislation and that it is clear about what the requirements for your business.
  1. Ensure that your contracts don’t create excessive limitations on your relationship with your employees. We’ve seen many employment contracts that unnecessarily reduce the employer’s rights due to being used in the wrong ways. But we’ve also, on the flip side, seen many employment contracts that unnecessarily complicate the termination process. Just make sure your employment contracts don’t fall into either of these traps and that it’s clear for you and for the employee what the termination process is (i.e. your rights to terminate the employee) and also make sure that their obligations during the term of the employment are clear.
  1. Make sure you set the right probation period for your new employees. It’s standard to provide a probationary period for your new employees. As I’ve said earlier in this podcast, an employee can’t bring an unfair dismissal claim against your business if they have been dismissed within the first six months. They might bring another claim, like for example unlawful termination, which we won’t go through today, or termination on the basis of other things. But those are much higher buzz for an employee to bring a claim under.

Today we’re just talking about the area of unfair dismissal which is a broader and easier claim for an employee to bring. But they can’t bring that type of claim if it is within the first six months of their employment with you or if you qualify as a small business, then within the first twelve months.

Unfair Dismissal vs Breach of Contract Claim

But if in your contract with your employee you don’t have a right to terminate, then say for example you’ve set out a fixed term contract or you haven’t given yourself any particular right of termination within the probationary period, an employee, even though they may not have the right for an unfair dismissal claim, might have a right in a contract breach claim if what you have done in the termination is in breach of the clauses that you’ve set out in your employment contracts.

That’s another trick for the unwary and something to bear in mind to make sure that you’re not making your obligations more difficult for your business by the sort of clausing that you’re adopting in your employment contracts.

Who has the power to hire and fire?

Another tip for business is to determine who has the power to hire and fire. Here is where it’s really important to have good communication with your managers and be clear about who has the responsibility when it comes to recruitment, discipline and termination and make sure you have documentation in place that sets out these delegations and a process for what you do if the responsible staff is away when an issue occurs and that’s something that’s often forgotten in this process.

Importance of A Clear Record Keeping Process

My next tip is to have a clear process about records and record keeping. You need to have a process in place that ensures that all staff that are involved in recruitment, discipline and termination take and keep appropriate notes of all relevant discussions with employees that could affect the employment relationship in the future and you need to have a clear way of saving these records so that you can find them if you need them in the future.

Train the Management Team

My next tip is to make sure you give your managers and supervisors’ adequate training. Some dismissals arise due to personality clashes and can't be avoided. However, giving your management team education and knowledge about the risks and the best practices that should be followed will reduce the risk of any future unfair dismissal claims.

Avoid On-the-Spot Dismissals

My next tip is to try to avoid on-the-spot dismissals. An employee who commits a gross breach of their contract won’t be able to substantiate an unfair dismissal claim. However, where the employee’s actions are not deliberate but rather the result of poor judgment, summary dismissal may not be justified even if a valid reason exists for termination.

Should you practice on the spot dismissals?

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The case law in this area is littered with the examples of organisations that found themselves in trouble after trying to use the on-the-spot dismissal process. The decision to implement an on-the-spot dismissal should only be taken after careful consultation with someone who understands this area of the law.

Don't delay your decisions for too long

But my next tip is do not overly delay your decision. It’s really important that if you have followed the process of provided warnings and you’ve documented those warnings you need to follow through quickly because if action issues have been occurring over a long period of time and you haven’t been taking any action and you suddenly one day take action without any warning, then that is likely to be something that would create an issue for you moving forward in terms of an unfair dismissal claim.

So while I recommend avoiding on-the-spot dismissals, you also should ensure you don’t delay your decision for too long. You need to make sure you issue warning letters when needed. Keep a record and follow up. There’s no absolute rule, but I advise that you should give two warning letters followed by a final warning and ultimately dismissal if there is no improvement. Of course these warning letters should also be accompanied by a meeting with the employee that deals with some of those things that we talked about earlier in terms of giving the employee insight into what the poor performance or issues consist of and how they can go about improving and the fact that if they don’t improve then you would be considering termination.

Give them a chance to respond

And finally, before you dismiss an employee, give them a chance to state their case. Put forward your reason for the proposed dismissal and give the employee a chance to respond. You don’t necessarily have to use this to change your mind about the dismissal but the important thing is to at least give them the opportunity to respond.

When in Doubt, Get Advice

If you’re in a situation that is looking like might be leading to a dismissal, I recommend getting advice quickly if you’re not sure what you’re doing in the area, if you’re not absolutely sure if you followed the right processes.

Quick recap

In this episode we talked about:

  • Tips for avoiding unfair dismissal claims
  • Why this area is important
  • How easy it is for an employee to potentially bring an unfair dismissal claim
  • The sorts of things that would have to be proven to show that there was an unfair dismissal
  • A range of tips to avoid the situation where you need to get into the area of needing to make dismissals; and
  • If you are in that difficult situation, then the tips for how you can ensure that you’ve done the right things and documented the right things to protect yourself as much as possible if indeed an unfair dismissal claim is made.

If you’d like more information about this topic, just head over to our website at talkinglaw.com.au for our free download on the simple tips to avoiding unfair dismissal claims. Also, through that website you’ll be able to download a transcript to this podcast if you’d like to read it in more detail and you’d also find details on how to contact our lawyers at Aspect Legal, if you’d like help with any of the issues that we talk about today or if you would like to talk through the process that you’re adopting at the moment within your organisation.

I'd also like to find out what you’re interested in hearing about. If you have any questions, we'd love for you to head over to our website at talkinglaw.com.au and leave us a message via our website there or pop us an email to aspectlegal.com.au and just let us know what you’d like to hear about. We’ll be answering listener questions in future episodes. And finally, if you enjoyed what you heard here today, please pop over to iTunes and leave us a review. We’d be very thankful.

Thanks again for listening in and hopefully we’ll see you next time.