Occasionally, you will need to terminate an employee of your business. However, you may leave yourself open to unfair dismissal claims if the termination isn’t legal. This can expose you to serious financial and legal consequences so it is crucial you know about unfair dismissals to protect yourself and your business.

What is Unfair Dismissal?

Unfair dismissal is when an employee is dismissed in an unreasonable, harsh or unjust manner. In a successful claim, you will usually have to compensate your former employee. However, in some cases, you may even have to rehire your former employee. Furthermore, different standards will apply if you are classified as a small business (less than 15 employees). The Fair Work Commission (FWC) has responsibility for regulating and enforcing unfair dismissal legislation.

Who does it cover?

Despite being a national framework, unfair dismissal laws apply differently depending on which state you are in. Moreover, it does not apply in cases of genuine redundancy. In addition, employees must have been working at your business for at least six months, twelve if you are a small business, before being able to apply for unfair dismissal.   

Can I exclude the claim?

If an employee claims against you with the FWC, you may be able to have dismissed on jurisdictional grounds. This means that the employee is unable to claim because they have not met the claim’s requirements. For example, if the employee resigned, they are ineligible for unfair dismissal claims. Furthermore, if employed as a contractor they will be ineligible for an unfair dismissal claim. You can also exclude applications that are not based on reasonable grounds. Other circumstances may also exist that allows you to exclude the claim on jurisdictional grounds.

How do I protect myself?

Chiefly, having genuine reasons for terminating an employee will protect you from unfair dismissal claims. Furthermore, having a performance management policy, can give you an objective criteria to assess employee’s performance and will protect you from unwanted claims.

How do I respond?

Besides asking for it to be excluded on jurisdiction grounds, you will be given the opportunity to exclude it on written grounds. A member of the Fair Work Commission has the authority to determine whether there is an unfair dismissal claim, and may call you into a hearing. You can also always accept it if you think that the claim is genuine. Before doing anything, it is best to get in contact with a lawyer to assess the options available to you.

Conclusion

Thus it is important to keep in mind the law regarding unfair dismissals when terminating an employee. Always make sure you have reasonable grounds if you wish to terminate an employee and make sure their dismissal is in line with their employment contract.

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Lachlan Ward

Lachlan is an intern at LawPath as part of the content team. He is currently studying a Juris Doctor at the University of Sydney. Lachlan has a keen interest in corporate law and commercial litigation.