How to avoid an unfair dismissal claim.

One of the significant factors affecting an employer's exposure to unfair dismissal claims is the confusion that surrounds the mass of rules and jurisdictions in Australia's industrial relations system, as it currently stands. Our existing industrial relations system currently consists of:

* multiple separate unfair dismissal jurisdictions, which allow employees to 'jurisdiction shop' and hinder the ability of employers to simply and accurately respond to dismissal claims, particularly where they operate across states

* six separate systems of industrial awards which replicate competing instruments

* differences in agreement-making between the federal system and differing state workplace relations systems

* over 4000 separate industrial awards in Australia (State and Federal).

Despite this complex legal context, direct employment remains the most common way for Australian employers to engage people to carry out work. As a result, employers have the risk of being subject to unfair dismissal claims. The Workplace Relations Act 1996 (the Act) prohibits unfair dismissals and unlawful terminations.

Bringing an employment relationship to an end

Even the best of staff relationships can break down over time and it may be necessary for an employer to bring an employment relationship to an end. The decision to dismiss an employee may be necessary for a variety of reasons. For instance, operational requirements of the business may have changed so that the position held by the employee is no longer required, or dismissal may be necessary because the employee's performance is below acceptable standards. It may also be necessary to remove an employee because they have carried out a single act of serious and wilful misconduct.

Legal claims about the fairness of a dismissal are frequently made against employers. With few exceptions, these industrial tribunals across Australia are able to compensate and, in some cases, reinstate workers who have been unfairly dismissed from their employment. Therefore, it's not surprising that employers regularly cite unfair dismissal laws as being particularly challenging.

What is an unfair dismissal?

An unfair dismissal claim is one brought by an employee who believes that their employment has been, or is about to be terminated, by the employer in a 'harsh, unreasonable or unjust' manner. The termination needs to be at the initiative of the employer, although it should be noted that a resignation may still be considered to be at the initiative of the employer if there has been pressure exerted on the employee to resign.

When is a dismissal considered unfair?

In unfair dismissal matters, much is made of the principle of a 'fair go all round'. When determining the fairness or otherwise of a dismissal, the general approach adopted by the various commissions around Australia has been to consider two issues:

* Did a valid reason exist to dismiss the employee?

* Was a fair procedure followed by the employer in dismissing the employee?

Valid reason

Mere allegations of misconduct or poor performance are not sufficient to constitute a valid reason. An employer should investigate such allegations to ensure there is a basis in fact for the reason before dismissing the employee. Further, the employer should ensure that dismissal is the appropriate penalty for the employee's transgression.

Fair procedure

A commission may consider a number of factors when determining whether an employer has followed a fair procedure. While the following list is not exhaustive or prescriptive, such factors could include:

* whether the employee was given a reason for the dismissal

* if a reason was given, the nature of the reason and whether the employee was given an opportunity to make out a defence, and

* whether the employee had previously been warned about poor performance or conduct.

It should be noted that in some cases it has been found that while a valid reason did exist to dismiss an employee, the dismissal was still unfair because a fair procedure was not followed by the employer.

If dismissal is found to be unfair, what can an employer expect?

If a dismissal is found to be unfair, an employer could be faced with the following:

* an order to reinstate the dismissed employee to their former position

* an order to re-employ the dismissed employee to another position, if the employee's former position is not available, or it is otherwise impracticable to do so

* if the dismissed employee is reinstated or re-employed an order that the employer pay the employee for some or all of the remuneration the employee would have received had he or she not been dismissed.

* if both reinstatement and re-employment are considered impracticable, an order that the employer pay the dismissed employee compensation up to an equivalent of what the employee had been paid by the employer in the six months prior to being dismissed.

Tips to avoid an unfair dismissal claim

Defending a claim of unfair dismissal can be a time consuming and frustrating exercise for business. It is good risk management practice for employers to ensure that the reasons used to support the dismissal are supported by reliable facts and the employee is given an opportunity to respond to any allegations of misconduct or poor performance.

If the employment is to be terminated due to performance-related reasons, the employer will need to be satisfied that the employee has been given a fair and reasonable opportunity to improve before the decision is made to dismiss.

Warnings

An employer should carefully plan the approach if faced with the prospect of dismissing an employee. Clear and unambiguous written warnings are highly desirable. Warnings should be complemented by counselling if an employee has failed to measure up to the employer's reasonable standards. Written warnings provide the employer with a tangible record of the circumstances leading to employer action.

Warnings give the employer the opportunity to explain the reasoning behind the decision. This can serve the employer's interests if their actions come under scrutiny in legal proceedings.

The benefit of written warnings is not just limited to the defence of unfair dismissal claims. In some jurisdictions, such as New South Wales, a workers compensation claim for psychological injury will be denied if it arises from the reasonable actions of the employer in response to the performance or conduct of the employee. Occupational health and safety considerations may also be relevant to the employer's decision to discipline or dismiss an employee.

Regardless of the location in Australia, statutory laws require that employers provide safe and risk-free workplaces. In New South Wales, the employer must ensure the health and safety of people within the workplace. Therefore, where an employee has acted to place people in the workplace at risk of illness or injury, discipline or even dismissal of that employee may be necessary.

Whatever the cause of the dismissal, it will be in the employer's interests to set out the reasons in writing using clear language.

Recruit right the first time

A number of termination problems can be avoided by setting up a careful and thorough process to recruit the right person for the job, and ensure that the terms of the employment agreement establish the company's expectations of the individual right from the outset.

It also makes sense for every business to regularly review their staffing situation, each staff position and where there is a concern with a staff member, the original terms of their agreement. This should clearly identify the scope of the tasks that staff members were employed to perform, and the processes to follow if issues arise.