Unfair dismissal – What does an employer need to be aware of?

Effectively managing the dismissal of an employee, regardless of the reason behind the dismissal, can be difficult and challenging for most employers.

When dismissing an employee an employer must be cognisant of the potential legal and financial consequences on their organisation of poorly managing the dismissal.

In Australia, eligible employees can bring a claim of unfair dismissal against their employer in circumstances where their employment is terminated and the termination was harsh, unjust, or unreasonable and, if relevant, the termination was not a case of genuine redundancy.

Depending on whether you are classified as a small or large business, the minimum period an employee must have been employed with your organisation to be eligible to make such a claim is 12 months and 6 months respectively.

An employee has 21 days from the date of termination to make their application to the relevant Court or Commission. Employees usually make a claim for monetary compensation and in some cases reinstatement to their position.

In determining whether a dismissal is harsh, unjust or unreasonable the following non-exhaustive factors are considered:

  • Where there is no valid reason for dismissing an employee;
  • Where the employee is not notified of the reason for their dismissal;
  • Where the employee is not given an opportunity to respond to the reason for their dismissal;
  • The size of the employer and their human resources capabilities;
  • Warning given to the employee; and
  • Offering or allowing support persons to an employee during meetings with them concerning their dismissal.

‘Small business employers’ are also required to comply with the Small Business Fair Dismissal Code when dismissing an employee.

It is imperative that you obtain legal advice at all stages of the employment cycle, including for the preparation of the employment contract, to protect your business from these claims.