Dismissing an employee in NSW

1. DISMISSING AN EMPLOYEE IN NSW

2. Dismissing an employee can be distressing and upsetting for all concerned and therefore ensuring that the dismissal is done in a fair and appropriate manner is important to both the employee and the employer.

3. At the same time, the FW Act, sets out the circumstances where an employee is entitled to make unfair dismissal claimsagainst the employer. • In NSW, the Fair Work Act 2009 (“FW Act”) sets out the legal obligations of the employer in ensuring that an employee is fairly terminated and provides certain protections against unfair dismissal of an employee. • At the same time, the FW Act, sets out the circumstances where an employee is entitled to make unfair dismissal claimsagainst the employer. • The FW Act under Chapter 5, (Parts 5-1 and 5-2),establishes two government bodies which are responsible for its administration. • The Fair Work Commission (“FWC”) • The Fair Work Ombudsman (“FWO”) • These separate entities perform different roles and work within the national legal framework in Australia. • The FWC and the FWO provide the means and processes through which employee rights and conditions in the workplace are protected and managed.

4. In particular, this is done by: • The FWC (the main national tribunal) having jurisdiction over, wages and wage entitlements, unfair dismissal disputes, unlawful termination, general protections and anti bullying. • The FWO (the employment advocate) determines issues of wages and workplace entitlements, provides general advice, education and training to both employees and employers and provides dispute resolution services. • Both provide resources and services of mediation, conciliation hearing swhichassist in the resolving of disputes between employees and employers prior to escalating to a court.

5. What are important considerations for the employer when dismissing an employee?

6. The FWC looks at whether there was a valid reason for terminating an employment contract. The reason, can’t just be a far-fetched or impulsive act of termination by the employer. • Is there a justifiable reason relating to the employee’s performance that has led to the decision to dismiss the employee? • Is there some form of misconduct that is evident and is the primary reason for dismissing the employee. There needs to be a substantive reason, once established the FWC then looks to whether there has been procedural fairness associated with the dismissal.

7. The considerations are normally: • Did the employee, have the opportunity to respond? • Was the employee given the opportunity to prove they could improve their performance? The FWC is looking toestablish that the employee has been given a “fair go” in terms of having the chance to improve as well as having input into the decision making process.

8. Is the size of the employer’s business a factor in the process of dismissing an employee in NSW? No, an employee may bring an action of unfair dismissal against a business no matter its size. However, there are additional requirementsfor ‘Small Businesses’ with 15 or less employeesto follow the Small Business ‘Fair’ Dismissal Code. A small business must follow a checklist in determining each of the below: • Summary Dismissal Dismissal of this type is deemed ‘fair’ where the employer has reasonable grounds to terminate an employee’s employment immediately and without notice on the basis of serious misconduct. • Other Types In all other cases the employer must have valid reasons of dismissing an employee based on the employee’s conduct and/or capacity to perform their job. • This follows a process where warnings must be given in writing or verbally and the employee must be aware of pending dismissal in the event that the conduct is not rectified

9. Employees of a Small Business cannot make a claim for ‘unfair dismissal’ within the first 12 monthsof their employment with the employer. • After this period if the Small Business employer has followed the Code, then the dismissal will be deemed to have been fair. • If after this period the employer did not follow the Code then the dismissal would be deemed ‘unfair’ and the employee may bring an unfair dismissal claim against the employer. • Where there has been a downturn in the business of the small business employer and a valid and genuine reason exists for the redundancy of the position of the employee, then the dismissal will be deemed fair and a claim for unfair dismissal cannot be brought against the employer.

10. What employee rights does an employer have to be aware of when making the decision to dismiss an employee ? An employee cannot be dismissed or forced to resign their position entirely at the initiative or conduct of the employer. The FWC looks for procedural fairness being applied by the employer in dismissing the employee. The employer is required to provide reasonable notice stating reasons and /or warnings of dismissal pending the opportunity for the employee to rectify the issue related to their conduct or performance. In the event where this has not occurred then the employee may make an application to the FWC for ‘unfair dismissal’ against the employer.

11. Employees who are excluded from making an unfair dismissal claim are : • Fixed term employees. • Apprentices and trainees where employment ends at end of the arrangement • High income earners (over $142000) • Genuine redundancies • Employees who are demoted and whose remuneration has not had a significant decrease Claims must be filed by the employee within 21 days of the dismissal. The employer on receiving the claim from the FWC has 7 days to respond including any objection as to the FWC’s jurisdiction of the matter.

12. In what circumstances is conduct by the employer likely to be harsh unjust or unreasonable in the dismissal of an employee? The FWC will consider the following areas: • Was there a valid reason for dismissal related to the employee’s capacity or conduct? • Was the employee notified of that reason? • Did the employer provide to the employee an opportunity to respond? • Was there any unreasonable refusal by the employer to allow a support person to assistthe employee with any discussions related to dismissal. • In the event of unsatisfactory performance by the employee, was there warning that continued unsatisfactory performance would lead to dismissal. • The degree to which the size of the employer’s business would be likely to effect the procedures followed in effecting the dismissal.

13. What should a business (whether large or small) do to ensure a employee is dismissed fairly? • It is not about, as most perceive – being 3 warnings and you are out! • The employee needs to be placed on notice that their performance is not meeting the required standard and they must be given a reasonable opportunity to improve that performance. • The best way to avoid claims for unfair dismissal is to make sure that the people in your business understand their obligations and responsibilities under the FW Act when terminating someone’s employment.

14. What are some tips for employers and employees ? • Make sure decisions are transparent, fair and reasonable. • Ensure the employee is provided with a written letter of termination stating the reasons for dismissal and clearly set these out. • Carefully consider if there are grounds for summary dismissal as dismissal without noticeneeds to be for serious misconduct, theft, violence and breaches related to safety. • Retain all file notes of meetings and performance criteria expected and met and full and detailed employment records in good form. • corporate law firms sydney