Employees: To terminate or not to terminate?

Business Services, Litigation & Dispute Resolution

How to ‘deal’ with employees has, in recent history, become confusing and dare we say, polarising. The old Australian Industrial Relations Commission now Fair Work Australia has been given significant powers to deal with issues in the workplace. The Howard Government era of Work Choices had a major impact on the workplace and dealing with employees, but this has now been somewhat watered down during the term of the Labour Government. The changes make it more difficult for the employer to maximise their earnings and alter its workforce as they see fit.

Employers need to be familiar with the Fair Work Act (FWA) and the National Employment Standards (NES):

Redundancy and Retrenchment

Redundancy occurs when an employer no longer requires a particular job to be performed by anyone due to changes in the operational requirements of the business. Whereas retrenchment occurs when an employee is terminated because the job they hold has become redundant.

There are generally 3 core reasons for redundancy:

1) Downsize;

2) Structural changes;

3) Organisation changes.

There is significant case law in relation to the issue of general redundancy and procedures for selecting employees for redundancy.

Entitlements

As a general rule, if an employee is made redundant they are entitled to the following statutory payments:

Redundancy pay between a minimum of 4 weeks up to a maximum of 16 weeks.
Notice period or payment in lieu of the notice period.
Annual leave, overtime, long service leave and superannuation.

Unfair dismissal

Unfair dismissal laws enable disgruntled dismissed employees the right to compensation if they can show that their termination was harsh, unjust or unreasonable.

There are general do’s and don’ts that you should be aware of to avoid a claim for unfair dismissal. Even if you comply with each of these it does not mean an employee won’t make a claim for unfair dismissal but it certainly makes it harder for them to succeed.

1) Don’t simply rely on general instructions to staff.

2) Do tell the employee why their work output is unsatisfactory.

3) Do ensure that the employee is aware that their employment is in jeopardy.

4) Do enable the employee to have a witness when discussing their employment.

5) Do document all warnings to the employee.

6) Don’t pre-empt any warning letters prior to discussions with the employee.

Unlawful termination

A disgruntled employee may make an application for unlawful termination if they are terminated for the following reasons:

1) Temporary absence from work due to illness or injury.

2) Trade union membership.

3) Filing a complaint against an employee.

4) Discrimination.

5) Refusal of Australian Workplace Agreement.

6) Parental leave.

7) Temporary absence due to voluntary emergency activity.

Compensation

There are generally 2 main types of ‘compensation’ the Court may order:

1) Pay a sum to the employee.

2) Reinstate the employee.

Generally, reinstatement is uncommon. As a general rule any ‘compensation’ to an employee is up to a maximum of 6 months (26 weeks) pay and this is capped.