Unfair dismissal laws still unclear

Small businesses are underestimating the scope of new unfair dismissal laws, according to an industry expert.

Workforce Guardian, an online employment relations service, says the new laws have reduced the number of small businesses protected from unfair dismissal claims.

Adrienne Unkovich, Workforce Guardian managing director, says the changes mean part-time and casual employees are now treated as full-time, regardless of their work hours.

“Businesses with fewer than 15 employees are considered to be small businesses and have some protection when it comes to unfair dismissal claims as employees must work for at least 12 months before they can take action for unfair dismissal,” he says.

“But with part-time and job-sharing workers now considered as one employee in that headcount, the risk of unfair dismissal action suddenly widens, potentially affecting thousands more small businesses.”

“Our discussions with business owners indicate many are unaware and unprepared.”

For companies that do qualify as small businesses, employers must follow the Small Business Fair Dismissal Code.

Under the code, employees who have been dismissed because of a business downturn, or their position is no longer needed, cannot bring a claim for unfair dismissal.

However, the redundancy needs to be genuine – refilling the position with a new employee is not a genuine redundancy. The requirements for determining whether a dismissal is a genuine redundancy are contained in the Fair Work Act.

The Small Business Fair Dismissal Code Checklist can also assist in determining whether a redundancy is genuine. Other key points of the code include:

Summary dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal.

Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures.

For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police.

Other dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response.

Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Procedural matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given, except in cases of summary dismissal.

Evidence may include a completed checklist, copies of written warnings, a statement of termination or signed witness statements.