Unfair dismissal

What is unfair dismissal? 

Section 385 of the Fair Work Act 2009 (Cth) provides that a person has been unfairly dismissed if the Fair Work Commission is satisfied that: 

1. the person has been dismissed; and 
2. the dismissal was harsh, unjust or unreasonable; and 
3. the dismissal not consistent with the Small Business Fair Dismissal Code; and 
4. the dismissal was not a case of genuine redundancy. 

In determining whether a termination was harsh, unjust or unreasonable, the Fair Work Commission will have regard to the following: 

1. whether there was a valid reason for the termination relating to the employee’s capacity or conduct, including its effect on the safety and welfare of other employees. 
2. Whether the employee was notified of that reason. 
3. Whether the employee was given an opportunity to respond to any reason related to the capacity or conduct of the employee. 
4. Any unreasonable refusal by the employer to allow the employee to have a support person present to assist at any discussions relating to the dismissal. 
5. If the dismissal related to unsatisfactory performance by the employee, whether the employee had been warned about the unsatisfactory performance before the dismissal. 
6. The degree to which the size of the employer’s business would be likely to impact on the procedures followed in affecting the termination of the employee’s employment. 
7. The degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal. 
8. Any other matters the Fair Work Commission considers relevant. 

Examples of unfair dismissal

In Welsby v Artis Group Pty Ltd [2016] FWC 2251 the Fair Work Commission held that the failure of Artis Group to warn the employee that his employment was in jeopardy as a result of his branch’s continued poor financial performance denied him an opportunity to improve and/or respond to the allegations and therefore rendered the dismissal as hard, unjust or unreasonable. 

In Camilleri v IBM Australia Limited [2014] FWC 5894 an internal audit revealed that Mr Camilleri had made 141 improper expense claims. Mr Camilleri was subsequently terminated. The Fair Work Commission found that the termination was unjust, notwithstanding that IBM had a valid reason to terminate Mr Camilleri’s employment. It found that it was unjust because IBM did not adequately consider the employee’s 17 years of service and his offer to reimburse IBM the value of the improper expense claims. 

In Cannon v Poultry Harvesting Pty Ltd [2015] FWC 3126 the former employee, Ms Cannon, was employed as a machine operator / chicken harvester. On 4 November 2014 Ms Cannon attended the Melbourne Cup and consumed a number of glasses of wine throughout the day. She subsequently attended work for a midnight shift. During her shift she fell asleep in a truck and, as a result, 50-60 chickens had been run over. Ms Cannon was immediately dismissed on the basis that she had attended work intoxicated, albeit she was allowed to work the remainder of her shift. The Fair Work Commission found that there was no valid reason for the termination of Ms Cannon’s employment as the employer did not take any steps to investigate the allegation that Ms Cannon was intoxicated and unable to perform her duties; Ms Cannon had not been provided with an opportunity to respond to the allegations made against her; and Ms Cannon was not afforded the opportunity to have a support person present. This case stresses the need for employers to afford employees with procedural fairness before making a decision to terminate their employment for cause. 

Can I make an unfair dismissal claim? 

In order to be eligible to make an unfair dismissal claim: 

1. You must have completed at the least minimum employment period, that is 12 months if you work in a small business or 6 months for other employees. 
2. One or more of the following apply to you: 
   1. You are covered by a modern award; 
   2. You are covered by an enterprise agreement; and 
   3. Your income does not exceed the high-income threshold. 

Can I make an unfair dismissal claim if I was made redundant? 

In short – yes, provided that the redundancy was not a genuine redundancy. 

Employees who have been dismissed due to a genuine redundancy cannot bring a claim for unfair dismissal. Section 389(1) of the Fair Work Act 2009 (Cth) provides that an employee’s dismissal will be a case of genuine redundancy if: 

1. The person’s employer no longer required the person’s job to be performed by anyone because of changes in the operation requirements of the employer’s enterprise; and 
2. The employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy. 

Moreover, section 389(2) of the Fair Work Act 2009 provides that a person’s dismissal was not a cause of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise; or the enterprise of an associated entity of the employer. 

It is best practice for an employer to be able to demonstrate that the person’s job was made redundant for any or a combination of the following reasons: 

• A downturn in business. 
• The business or part of the business closing down. 
• Outsourcing. 
• Efficiency improvements as a result of redistributing employee responsibilities/restructures. 

How do I make an unfair dismissal claim? 

Broadly speaking, the unfair dismissal application process can be summarised as follows:

1. The former employee will file an unfair dismissal application with the Fair Work Commission which the Fair Work Commission will then send to the employer. 
2. The employer is then required to respond to the application. The employer will send their response to the former employee and to the Fair Work Commission. 
3. Once the response has been filed, the Fair Work Commission will assign a conciliator to the matter who will then try and help the employer and the former employee resolve the dispute through a conciliation conference. The conciliation is usually conducted by telephone. 
4. If the matter fails to resolve, the case will proceed to a formal hearing where it will be decided by a Member of the Fair Work Commission. 

If you believe that you have been unfairly dismissed or a former employee has made an unfair dismissal claim against you, we recommend that you contact an experienced employment lawyer.

What are the time limits for making an unfair dismissal claim? 

An employee must make an application to the Fair Work Commission within 21 days of the dismissal taking effect. The Fair Work Commission has discretion to extend this timeframe if there are exceptional circumstances. 

If you believe that you have been unfairly dismissed or a former employee has made an unfair dismissal claim against you, we recommend that you contact an experienced employment lawyer as soon as possible.

What kind of remedies are available to an employee for unfair dismissal? 

The following remedies are available to employees for unfair dismissal: 

• Reinstatement, that is an order to reappoint the person to the position they had immediately before the dismissal or to another position that has terms and conditions no less favorable than the position they held previously.
• If the Fair Work Commission makes an order for reinstatement, it may also make any other order it considers appropriate to maintain continuity of the person’s employment and the period of the person’s continuous service with the employer. 
• If the Fair Work Commission makes an order for reinstatement, the Fair Work Commission can also make any other order it considers appropriate for an employer to pay an amount for remuneration lost or likely to have been lost because of the dismissal. For example, this could include any money that a person would have earned during the period since their dismissal. 
• Lastly, the Fair Work Commission can make an order for payment of compensation in lieu of reinstatement if it is satisfied that reinstatement is inappropriate and that compensation is appropriate. 

How much compensation can an employee get for unfair dismissal? 

Under section 392 of the Fair Work Act 2009 there is a cap on the maximum amount of compensation an employee can receive for unfair dismissal. The maximum an employee can receive is the lesser of: 

• Half of the amount of the high income threshold;
• The amount of remuneration received by the person, or that they were entitled to receive, in the 26 weeks before the dismissal. 

Pursuant to section 392(2) of the Fair Work Act 2009, in determining the amount of compensation to award, the Fair Work Commission must take into account all the circumstances of the case including: 

1. the effect of the order on the viability of the employer’s enterprise; and 
2. the length of the person’s service with the employer; and 
3. the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and 
4. the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and 
5. the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and 
6. the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and 
7. any other matter that the Fair Work Commission considers relevant. 

Unlawful termination 

What is unlawful termination? 

Section 772(1) of the Fair Work Act 2009 provides that an employer must not terminate an employee’s employment for one or more of the following reasons, or for reasons including one or more of the following reasons: 

1. temporary absence from work because of illness or injury of a kind prescribed by the regulations; 
2. trade union membership or participation in trade union activities outside working hours or, with the employer’s consent, during working hours; 
3. non-membership of a trade union; 
4. seeking office as, or acting or having acted in the capacity of, a representative of employees; 
5. the filing of a complaint, or the participation in proceedings, against an employer involving alleged violation of laws or regulations or recourse to competent administrative authorities;
6. race, colour, sex, sexual preference, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin; 
7. absence from work during maternity leave or other parental leave; or
8. temporary absence from work for the purpose of engaging in a voluntary emergency management activity, where the absence is reasonable having regard to all the circumstances. 

General Protections 

The Fair Work Act 2009 provides general protections to national system employees to protect workplace rights, freedom of association, and to protect employees from workplace discrimination. It also provides protections for prospective employees; employers; independent contractors and those engaging independent contractors however, the protections are most commonly relied on by employees. 

The Fair Work Act 2009 contains the following protections: 

• protection from adverse action in relation to a workplace right and such workplace right being or not being exercised.
• protection from adverse action against adverse action because a person is or is not, or was or was not, an officer or member of an industrial association or because of engagement or non-engagement in industrial activities. 
• Protection from adverse action which is taken against a person who is an employee, or prospective employee, of the employer because of the person’s 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. 
• Protection from dismissal because an employee is temporarily absent from work due to illness or injury. 

Section 342 of the Fair Work Act 2009 sets out circumstances in which a person takes adverse action against another person. 

Adverse action is taken by an employer against an employee if the employer: 

1. Dismisses the employee; or 
2. Injures the employee in his or her employment; or 
3. Alters the position of the employee to the employee’s prejudice; or 
4. Discriminates between the employee and other employees of the employer. 

Adverse action is taken by a prospective employer against a prospective employee if the prospective employer: 

1. Refuses to employ the prospective employee; or 
2. Discriminates against the prospective employee in the terms or conditions on which the prospective employer offers to employ the prospective employee. 

What kind of remedies are available for contravention of a general protection? 

If an application is made to the Federal Circuit Court or Federal Court, the Court has the power to: 

• Impose a civil penalty of 60 penalty units, or a pecuniary penalty of five times that amount if the contravention is by a body corporate. 
• Make an order granting an injunction to prevent, stop or remedy the effects of the contravention. 
• Order compensation to be paid to the person who has suffered loss because of the contravention. 
• Order reinstatement of a person. 

Restraint of trade and non-competition clauses 

What is a restraint of trade clause? 

Restraint of trade clauses may prevent employees from using their employer’s confidential information; soliciting clients and staff from the employer; and working for a competitor of the employer. The main type of restraint of trade clause that employees are concerned with are non-competition clauses, that is clauses that prevent the employee from working for a competitor or setting up a business in competition with their former employer. 

Can an employer prevent an employee from working for a competitor? 

Once an employment relationship is over, an employee will be free to compete with their former employer unless they are bound by a valid restraint of trade clause. Restraint of trade clauses will be void and unenforceable if they do not satisfy the test of reasonableness. 

A valid restraint of trade clause must seek to protect legitimate interests of the employer and cannot merely seek to prevent competition. 

In determining whether the restraint of trade clause is enforceable, the Court must balance between an employee’s right to use their skills and know how to earn a living and an employer’s right to protect its legitimate business interest. In that regard, the Court will look at matters such as: 

• The employer’s and the employee’s respective bargaining positions – An imbalance of bargaining power can impact on the enforceability of a restraint of trade clause. Evidence of the employee having obtained legal advice with respect to the restraint of trade clause will assist in supporting that the employee had an understanding of the said clause. 
• The nature of the employee’s employment and the employee’s business – for example, the Court will look at what the employee does and who the employee has contact with. 
• Whether the employee received compensation or remuneration for the restraint. 
• The duration of the restraint of trade clause and the geographical area that it covers – to be reasonable, a restraint of trade clause must be limited with respect to duration and geographical location and extent. 

If you are an employee concerned with a restraint of trade clause in your employment agreement or if you are an employer seeking to rely on or include a restraint of trade clause in your employment agreement, please do not hesitate to contact our office.