When dismissing an employee for poor performance, serious misconduct, redundancy or any other reason, there are three (3) main risks for employers, and each risk is summarised below.

UNFAIR DISMISSAL CLAIM – Highest risk (more than 14,000 claims made each year)

An employee who is is dismissed may file an unfair dismissal claim seeking reinstatement and backpay, or compensation.  In order to be eligible to make this claim, the employee must:

• have completed their 6 or 12 month probationary period (whichever is applicable); and
• earn less than the high income threshold (currently $190,100 per annum), or be covered under a Modern Award or Enterprise Agreement;
• not have been employed under a genuine fixed term contract and been dismissed at the end of that term;
• not have genuinely be made redundant.

Listed below are the main factors taken into account in determining whether a dismissal is unfair:

• 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); and
• whether the person was notified of that reason; and
• whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
• any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and
• if the dismissal related to unsatisfactory performance by the person – whether the person had been warned about that unsatisfactory performance before the dismissal.

Under an unfair dismissal claim, you could be ordered to reinstate the employee and pay ‘back pay’ for lost wages, OR pay up to 6 months’ compensation to the employee (capped at $95,050).

GENERAL PROTECTION CLAIM – Medium Risk (more than 3,700 claims made each year)

There are no eligibility requirements to an employee filing a general protections claim in terms of completing probationary periods, remuneration amounts, and fixed term contracts etc.

An employer must not take adverse action against an employee BECAUSE OF a workplace right that the employee has, has exercised, or proposes to exercise etc.

“Adverse action” includes dismissing the employee, but also includes injuring the employee in his or her employment, altering the position of the employee to the employee’s prejudice, or discriminating between the employee and other employees.  Examples could include transferring the employee to another location further away from where the employee resides, issuing a warning letter to the employee, and changing the employee’s position to a less senior role.

“Workplace right” could be as trivial as an employee making a complaint or enquiry in relation to his / her employment.

In short, an employer may take adverse action against an employee (i.e a warning letter issued if the employee is performing poorly), but they must NOT do so in response to a workplace right (i.e not paying a bonus because the employee has taken too many sick days).

The employer’s exposure in terms of monetary compensation under a general protection claim is UNCAPPED.

UNLAWFUL TERMINATION – Lower Risk (more than 100 claims made each year)

There are no eligibility requirements to an employee filing an unlawful termination claim in terms of completing probationary periods, remuneration amounts, and fixed term contracts etc.

An employer must not terminate an employee’s employment for one or more of the following reasons:

• temporary absence from work because of illness or injury
• race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin
• absence from work during maternity leave or other parental leave

The employer’s exposure in terms of monetary compensation under a unlawful termination claim is UNCAPPED.

SUMMARY

As you can see, almost 18,000 claims are made each year by employees who have been dismissed, and these can presents multiple risks to your business and expose you to many tens of thousands of dollars in compensation.  You should always obtain advice from us PRIOR to taking any steps to dismiss an employee for ANY reason.