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Navigating Fair Termination: An All-Inclusive Employers’ Manual

In an ideal workplace, employees strive to deliver their best and contribute positively to the organization. However, in certain circumstances, it becomes unavoidable to terminate an employee’s tenure. The key here is to manage this process responsibly to avoid any detrimental outcomes. In particular, it’s vital to prevent ‘unjust termination,’ which occurs when the dismissal process is mismanaged or if the termination’s consequences are deemed too severe, despite having solid grounds for dismissal.

Respecting the Rights of Employees

As an employer, it is of utmost importance to uphold employee rights during a dismissal process. It’s legally unacceptable to terminate or disadvantage an employee for:

  • Reasons related to discrimination
  • Short-term absence due to personal health issues or injury (within a span of three months of unpaid personal leave)
  • Raising an inquiry or filing a complaint related to their employment
  • Exercising a legal workplace right, such as availing carer’s or parental leave
  • Being absent due to a workplace injury (for a span of 12 months)

These protections are applicable regardless of the employee’s eligibility for an unjust termination claim.

Conditions for an Unjust Termination Claim

An employee may lodge an unjust termination claim if they:

  • Have been employed with your company for at least 12 months (for small businesses with less than 15 employees) or six months (for other employers)
  • Are covered by a Modern Award or enterprise agreement
  • Are not protected by an Award or agreement but earn a salary less than $169,500 (as per the rate on 1 July 2023)

Even casual employees who have consistent work and a reasonable expectation of continued employment may lodge an unjust termination claim.

Factors Assessed by the Fair Work Commission

The Fair Work Commission (FWC) scrutinizes a variety of factors to determine if a termination was unjust. This includes the effect of termination on the employee, considering their age, familial duties, and prospects of securing a new job. Moreover, the FWC evaluates:

  • If a valid reason for dismissal existed, related to the employee’s competency or behavior
  • Whether the employee was notified of the reason for termination
  • If the employee was given an opportunity to defend against the accusations
  • If the employee was unreasonably denied a support person
  • If prior warnings were issued (relevant to performance)
  • If an alternative to termination would have been more fitting in the given situation

Fair Termination in Small Businesses

Businesses with less than 15 employees (including associated companies) can substantiate the fairness of a dismissal by adhering to the Small Business Fair Dismissal Code. While compliance is not obligatory, if the FWC is convinced that the termination is in line with the code, it can safeguard against unjust termination claims. You can obtain the code from the Fair Work Commission’s website.

Recognizing Serious Misconduct

Small business proprietors can immediately terminate an employee without notice or warning if they reasonably believe the employee has been involved in serious misconduct. This could include instances of theft, fraud, violence, or major breaches of occupational health and safety procedures.

In such scenarios, while it’s not mandatory to report the misconduct to the police, doing so can fortify the fairness of the dismissal, provided there are reasonable grounds for the report.

Mastering the intricacies of employee management and termination, without breaching general protections, can be a daunting task.

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