UNFAIR DISMISSAL – THE CURRENT STATE AND FEDERAL LAWS

Considerable confusion now exists among small business owners as to what the position is when the business owner may be considering the termination of an employee’s services. The Howard government in January 1997 introduced the Workplace Relations Act. This act repealed the previous law in relation to termination, which had caused considerable controversy with owners of small business because of the ease with which dismissed employees were obtaining awards of compensation if the employer failed to follow certain procedures in terminating an employee. These procedural fairness requirements required the employer to give warnings and to give the employee an opportunity to be heard. The current legislation has two basic regimes. One of these regimes applies to employees of the Commonwealth and persons employed under Federal awards. The other regime applies to all employees. Under either regime it is not permissible to dismiss an employee on grounds such as race, sex, religious beliefs. Termination based on these grounds is prohibited. Under the regime which applies to Federal award employees and employees of the Commonwealth, the requirement to follow the same basic procedural requirements as were contained in the previous legislation still exist, failure to do so results in the termination being deemed to be harsh or wrongful. In relation to non award employees, these provisions do not apply, however, the law now requires a minimum giving of notice, which is increased if the employee is over the age of 45 years and varies as well depending on the period of service of the employee. It is allowable to pay money in lieu of giving the required period of notice. For further information on the period of notice, contact Peter Gell. The State scheme exists under the Industrial Relations Act 1996 and gives two possible alternatives to an aggrieved employee, provided the employee was a employed under a state award or no award (if he earns less than $62,500.00 in the later case). If an employee believes he has been unfairly dismissed, the employee can sue for unfair dismissal. The maximum amount of compensation is 6 months salary. It is possible as well for reinstatement to be ordered. The Commission, in deciding whether a dismissal has been unfair, looks at whether a reason was given for the dismissal, if given its basis in fact, whether warnings were given, the nature of the employees duties etc. This is much like the Federal scheme as it was. The other possibility under the State scheme is suing on the basis that the contract or arrangement under which the employee was employed was unfair in an industrial sense. An action by an employee on this basis will be the subject of a separate paper as the topic is extensive and worthy of separate treatment. This route is the one taken by the highly paid executives (Jana Wendt being the prime example) and provides a powerful and flexible remedy. WHAT TO DO TO MINIMISE RISK? Apart from employing persons on short term contracts or on a probationary basis, which employees are excluded from the legislation, the alternative is prevention. Employment is a two way street and the essence of a good employment relationship is clear communication. The duties of the employee should be spelt out in the initial letter of engagement or in a comprehensive job description annexed. The letter of engagement could itself set out the relevant terms of the employment or there can be a separate contract of employment. The contract of employment needs to refer to the job description as forming the description of the duties of the employee and should refer to performance appraisals and rights of termination. It is only fair to your staff and good management practice to have regular reviews of an employees performance. This process can be helped by the employee first evaluating his or her own performance taking into account some key criteria. The performance appraisal can then be approached from an analysis of performance taking into account matters that both employer and employee have identified as requiring attention, with mutually agreed courses to be followed and goals to be achieved. These documents then form a record which can be important for both the employer and the employee down the track, provided the employer has been candid and frank in the appraisal. It is no good giving a glowing appraisal if the employer is dissatisfied and has it firmly in mind to terminate down the track anyway. If you need assistance with employment contracts, letters of engagement, appraisal documents or job descriptions please call either Peter Gell (peterg@gells.com.au) or Maria Townsend (mariat@gells.com.au) of this office.

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