by Angela Szczepanski, Senior Associate, NRA Legal
Dismissing an employee can be stressful and is often quoted as the ‘worst part of running a business’. As well as the emotional context, it can be a long and timely process to ensure due process is followed.
In particular, special care needs to be taken to minimise the risk of an unfair dismissal claim in cases where the employee earns below the defined high income threshold (from 1 July 2016 is $138,900), or is covered by an award or enterprise agreement.
Emotional and social impacts aside, this article focuses solely on the legal obligations of an employer considering termination.
What do you need to consider before terminating an employee’s employment?
- You have a valid reason to terminate an employee.
- You need to ensure the employee has been given procedural fairness.
- Follow any applicable rules about dismissal, notice of termination, final pay, accrued untaken annual leave, and long service leave (if applicable).
What are the valid reasons for dismissing an employee?
1. MISCONDUCT
Misconduct can refer to a range of behaviour including breaching company policy and inappropriate behaviour. Serious misconduct is defined under the Fair Work Regulations to include, but not limited to:
- theft
- fraud
- assault
- wilful or deliberate behaviour by an employee that is inconsistent with continuation of the employment
- conduct that causes and serious and imminent risk to health and safety or the reputation, viability or profitability of the employer’s business
Before the decision is made to terminate the employee’s employment:
- you must have evidence that demonstrates that the misconduct occurred and
- the conduct was serious enough to warrant termination of employment (as opposed to a written warning) and
- the employee was afforded due process, that is he/she was given the opportunity to respond to allegations about their conduct.
In cases of serious misconduct, employers do not have to provide any notice of termination.
2. INCAPACITY
Capacity relates to an employee’s ability to carry out the job required to be done by the employer.
In order to rely on incapacity as a legitimate reason to terminate an employee’s employment:
- you must have evidence demonstrating the employee’s incapacity to perform the inherent requirements of their role and
- show that you have taken reasonable measures were taken to find a solution or provide alternative duties.
It is especially important to follow the steps above in the case of disability or medical incapacity.
3. POOR PERFORMANCE
A structured performance management or improvement plan can help in minimising or eliminate the impact a bullying or unfair dismissal claim can have on your business.
- With any performance issues you formally discuss issues/ problems that arise with the employee as soon as it is identified.
- When you speak to the employee you should give him/her accurate examples of poor performance rather than general comments.
- Allow the employee to respond then advise them on how they can improve their performance and give them the time to do so.
- We strongly recommend you document every part of the process.
If you are considering terminating the employee’s employment on the basis of poor performance you need to show that the above plan was followed and any processes followed complied with any of the relevant clauses in the employment contract, agreement, policy or procedure.
4. GENUINE REDUNDANCY
Redundancies are generally the result of a business re-structure, downsizing or sale of a business. In the case of a genuine redundancy, you will need to prove that the employee’s position is no longer required to be performed by anyone due to the operational requirements of your business.
Before the redundancy can occur, you must follow any consultation requirement outlined in the applicable Modern Award or enterprise agreement. You must also show that you have considered whether the employee, who position is being made redundant, could be redeployed to another position within the business (this also includes associated businesses or entities).
For further information or advice, call the National Retail Association Hotline and speak to one of our Workplace Advisors on 1800 RETAIL (1800 738 245).