With limited time and a seemingly endless number of responsibilities it is not surprising that many small to medium sized practices fail to fully appreciate their legislative responsibilities towards their employees.  That said, ignorance is no excuse.  Depending on the nature of the dispute, organisations and the individual managers within them, risk hefty penalties if found guilty of a breach.

With that in mind, all employers (regardless of their size) should ensure that they understand their responsibilities in each of the following areas:

  • Adverse action
  • Unfair dismissal
  • Equal opportunity
  • OHS Act 2004
  • National Employment Standards
  • Banking, Finance and Insurance Award 2010
  • Unlawful Dismissal

Over the coming weeks I will provide a brief overview of each of these topics, including the measures you can put in place to mitigate the risk of an incident occurring.  So, unless you are absolutely certain of your legal obligations, I would encourage you to read on.

First in this four part series are two distinct areas for potential claims – adverse action and unfair dismissal. Let’s start with adverse action.

Adverse action – Under the Fair Work Act an employer is prohibited from taking ‘negative action’ (such as demotion, dismissal or exclusion) against an employee because they’ve exercised a ‘workplace right’.  Examples of a workplace right include taking leave or even making a complaint.

So, let’s say an employee is constantly absent and you decide you need to terminate their employment. It is critical that you manage the process correctly.  If you don’t, you could find yourself facing an adverse action claim.

What makes adverse action even more concerning is that unlike other claims brought against an employer:

  • The onus of proof is reversed. Essentially this means that an employer is considered guilty of the proposed claim until proven otherwise;
  • There is no minimum employment period. Employees (including those working for a small business of 15 employees or less) can make a claim from day one of their employment; and
  • There is no cap on compensation if the employee wins. In the case of CFMEU v Hail Creek Coal, the employee was awarded $1.3 M, after the employer was found to have undertaken unlawful adverse action by terminating an employee just four days after he was awarded damages for a back injury.

Now let’s consider unfair dismissal.

Unfair Dismissal – This occurs when a person is fired in circumstances that are considered ‘harsh or unjust or unreasonable’. If you think that sounds like a fairly broad definition, you would be right.  Whilst the Fair Work Act contains a list of specific factors which must be considered when deciding whether a dismissal is ‘unfair’ (such as whether or not the employee had a chance to respond before they were fired), the final factor in the list is: “any other matters that the Fair Work Commission considers relevant”.

In the case of Dent v Halliburton Australia Pty Ltd the Commission concluded the dismissal was unfair because Mr Dent was not given sufficient notice of the disciplinary meeting, even though it accepted the fact he was speeding in a company vehicle while on a first and final warning and this was adequate grounds for dismissal.  He was awarded compensation equal to 11 weeks’ wages.

Unlike adverse action however, there are a couple of criterion that you must meet to be eligible to make a claim. Specifically:

  • The employee must have completed the ‘minimum employment period’, which is 12 months in small businesses with fewer than 15 employees and 6 months for all other businesses; and
  • The employee who lodges the claim needs to prove they were unfairly dismissed.

It is also worth noting that if successful, the amount of compensation an employee can be awarded is limited to a maximum of 6 months’ pay or half of the ‘High Income Threshold’ (which currently stands at $138,900, excluding super), whichever is the lesser amount.

So how do you mitigate the risk of these claims occurring?

In both instances, the best course of action are written policies and procedures. Clear procedures for dealing with matters such as termination of employment are vital.  A good process will enhance your ability to ensure all manager’s understand their responsibilities and take a fair, compliant and consistent approach.  Further, if a legal dispute arises between an employee and employer and the employer can point to a policy to show that the employee ought to have known his/her responsibilities, the employer is likely to be in a stronger position, particularly when it comes to unfair dismissal.

If you don’t have policies or procedures in place to deal with these matters, or are unsure about what qualifies as a good policy or process, please contact People Focused. Alternatively, if you would like to understand how well you meet your compliance obligations overall, we can conduct an initial HR Compliance Assessment for $150.

About the Author

Christine Bau is the founder and Principal of People Focused, a HR consulting firm that specialises in working with professional services to improve the performance of their people. Christine works with practices to ensure they meet their risk obligations and have the right tools in place to maximise employee performance. She also runs workshops on how to have meaningful conversations in the workplace. For more information contact Christine on 0434 534 747 or christine@peoplefocused.com.au or visit www.peoplefocused.com.au.