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Ten Key Lessons From This Year’s Most Important Unfair Dismissal Cases

Ten Key Lessons From This Year’s Most Important Unfair Dismissal Cases

Ever held on to a bad employee? Because you were afraid of an unfair dismissal claim?

Without human resources teams behind them, small business owners can be left unsure how to terminate or mange a troublesome employee without ending up before the Fair Work Commission.

The good news is, if you have a valid reason for dismissal and run a fair process in dealing with your staff’s conduct and performance, at the end of the day you will either make a fair dismissal or find the right solution to deal with the employee.

SmartCompany takes a look a few of the important unfair dismissal judgments from the last 12 months to give you ten important lessons on how and when its OK or not OK to let a staff member go.


1. Have policies and make them clear through training

Having clear staff policies in place, such as social media or company credit card expenditure guidelines, is the first line of defence an employer has to deal with staff who misuse their responsibilties.

But it’s not only important to show the Fair Work Commission you have these policies, it’s also imperative to show you’ve properly and thoroughly communicated those guidelines to staff.

Recently, a Adelaide plumbing manager lost an unfair dismissal case after he was let go for purchasing two slabs of beer for a company Christmas party with the company’ credit card.

James Farrelly was entrusted with a company credit card by his employer and given specific training and guidelines on how the card should and should not be used, its strict limitations were also explained, including that any questionable expenditures should be first checked with his manger.

After Farrelly asked his manager if he could have a separate Christmas function for the plumbing department and was turned down, he went ahead and purchased two cartons of beer,
costing $114.98, with his company credit card. He was terminated for unauthorised and inappropriate expenditures on the card.

The commission supported the dismissal, finding Farrelly had clearly been instructed not to have a second Christmas party and had been given comprehensive and relatively recent induction briefing on how to use the credit card.

Employment lawyer Peter Vitale told SmartCompany once an employer has made clear what the permissible use of a company credit is, a breach of that use will usually justify termination.

In general, Vitale recommends employers set clear policies and demonstrate they have clearly communicated the policies to employees to cover themselves from unfair dismissal claims.


2. Provide procedural fairness

Procedural fairness is critical to how the Fair Work Australia decides an unfair dismissal case. If you fail to show you have applied procedural fairness before you dismiss an
employee, it will usually result in a finding that the dismissal was unfair.

A recent case that involved an employee who was fired for allegedly turning up drunk to work and “smothering” 50 chickens with heavy machinery that she was responisble for, shows that even if you think you have valid grounds for dismissal, you must follow procedures and provide the employee with procedural fairness.

Heidi Cannon was dismissed from the Mornington Peninsula-based Poultry Harvesting last year after she was found asleep while on the job the morning after the Melbourne Cup.

She was ultimately sacked for being intoxicated at work, but the Commissioner found Poultry Harvesting did not have or provide sufficient evidence to prove the Cannon was infact drunk and they did not give her an opportunity to respond to the allegation made against her. Cannon won the case and was awarded a sum of around $7000 in compensation.

Employment lawyer and M+K Lawyers partner Andrew Douglas told SmartCompany while being intoxicated at work represented serious misconduct under Fair Work regulations, the onus falls upon the employer to prove the allegation and provide procedural fairness in the investigation.

“Even if there is a valid reason for termination, a breach of procedural fairness will fundamentally undermine the fairness of the determination,” says Douglas.

Procedural fairness includes:

Having a valid reason to dismiss someone;
Providing the allegation to someone in writing;
Providing them with the opportunity to respond;
Allowing them to have a support person present;
Asking the employee if there was any relevant circumstance that should inform the decision; and
If the dismissal relates to poor performance, giving someone appropriate warnings.


3. Casual workers can be covered by unfair dismissal laws

You may be under the assumption that your casual staff are not covered by unfair dismissal laws because they are not full or part time employees. Well, think again, because you may be wrong to make such an assumption.

The Fair Work Act does provide unfair dismissal protection for ‘long-term casual workers who have a expectation of continued employment’.

Recently a case was presented involving a casual bottle shop worker who was unfairly sacked for not cleaning up a broken sign. This demonstrated that a casual worker can be covered by unfair dismissal protection if they can prove they work regular shifts.

James McKinnon was awarded $7000 in compensation from The Crest Hotel in Sylvania, after the Fair Work Commission ruled he was infact covered by unfair dismissal laws because he worked on a regular and systematic roster and could reasonably expect to work the same shifts each week.

“Some employers who have casuals who work regular part-time or full-time hours and have done so for a long time, need to be aware, whether designated as casual or not, they may have rights for unfair dismissal claims or even long service leave,” says Vitale.

4. The definition of workplace is expanding

It’s no longer as simple as ‘the office is a workplace, but after work drinks at a bar are not’. Several cases in the last year have shown courts and the Fair Work Commission are increasingly willing to accept an expanded on the definition of what constitutes the workplace.

In February, the definition was put under the microscope when an employee was sacked for groping a bartender while staying at a hotel paid for by his employer lodged an unfair dismissal claim.

The employee was given accomodation in a hotel the company regularly used to accommodate its employees as part of their employment. While he was there, he groped the buttocks of a female waitress and was subsequently terminated for bringing the company into disrepute.

The sacked employee attempted to argue his dismissal was unfair because his actions had occurred outside of the workplace. But the commission found the grounds of his termination resonable to make a connection between his actions and his place of work, given the existing relationship between the employer and the hotel.

Douglas says the case is representative of a larger change happening in employment law where it takes into account how an employee’s actions impact the employer’s reputation, inside and outside of the workplace.

“There is a brand and reputational relationship between a business and the person,” he says.

“If you do something that damages the brand and reputation that has some natural connection to the business, you can be reprimanded.”


5. Be careful when sacking on the spot

One of the most important lessons an employer can learn is to give staff ample warning if they are going to dismiss them – sacking someone on the spot can lead to big disputes.

The Small Business Fair Dismissal Code states, it is only fair for an employer to dismiss an employee without notice or warning when the employer reasonably believes the employee’s conduct was “sufficiently serious” to justify a dismissal.

In March, a Melbourne woman was awarded over $4000 compensation by the Fair Work Commission after she was unfairly sacked on the spot by a company that specialises in renting out adult entertainment buses.

Diana Menabue, an administration assistant at V Bus in Altona, was sacked after she forewarned an enquiring schoolteacher the buses the school were looking at booking for students had stripper poles inside them. V Bus sacked Menabue for attempting to sabotage the business by cancelling bookings.

But the commission found although the company directors believed her conduct was serious enough to justify immediate dismissal, the belief was not based on reasonable grounds, gathered through a reasonable investigation into the matter.

Vitale says the case highlighted the need for business owners to follow due processes and conduct a proper investigation if they suspect misconduct has occurred.

“In cases where an employee is dismissed for serious conduct the employer has to have a reasonably based belief that the conduct occurred,” Vitale says.

“That puts an onus on the employer to conduct some reasonable investigation.”


6. Don’t treat employees differently

It’s very important to show the commission that you follow your policies by making sure each employee is treated the same.

In May last year, a public servant successfully argued he was unfairly dismissed for groping the breasts of five women at the work Christmas party.

The NSW Industrial Relations Commission found Andrew McCaskill, a project officer with the Department of Justice, was dealt with more harshly than a senior manager who only recieved a demotion for groping another women’s breasts at the party.

Commissioner Tabbaa dismissed the argument that McCaskill’s conduct should be distinguished from that of the senior manager because it involved more women and found the penalty of dismissal was harsh when assessed against the penalty handed out to his senior colleague.

Vitale says businesses need to demonstrate they are serious about implementation of policies such as equal opportunity policies and sexual harassment policies.

“One of the ways you do that is by applying them equally to different employees,” he says.


7. If you encourage something, you can’t sack someone for it

A recent case, saw an insurance broker awarded $300,000 after he was dismissed for passing out drunk in a hotel corridor, shows employers can’t sack someone for behaviour they are seen to encourage.

Donald Mitchell-Innes worked for risk and insurance company Willis when he was sacked for falling asleep outside of his hotel room and attending a work conference hung over.

But the NSW District Court found alcohol consumption, in a work context, was not uncommon amongst employees at Willis. Staff were regularly expected to socialise and consume alcohol with clients and Willis routinely reimbursed alcohol expenses resulting from employee gatherings or entertaining clients.

The court subsequently found the dismissal was a harsh reaction, given there was a common manifestation of low-level intoxication, without other consequences of behaviour of significance in the workplace.

TressCox partner Rachel Drew told SmartCompany employers need to ensure if they are concerned about the workers drinking they have a policy in place that makes it clear it is unacceptable and connect intoxication with performance of work.

Drew says if employers have a policy on alcohol consumption it is important for them to comply with that policy as well.

“If the employer is going to conduct a training conference that includes alcohol at dinner and paying for alcohol at a venue afterwards the employer needs to accept some degree of responsibility,” Drew says.


8. Put the allegations to the employee in writing

Even if you are found to have had a valid reason to dismiss an employee, it is still important you conduct an appropriate investigation and disciplinary procedure.

In July last year, the Fair Work Commission found a Bunnings employee was unfairly dismissed following a brawl with his co-worker because the company had failed to follow correct procedure.

The fight started when Michael Fitzpatrick told a colleague to “go and get f—ed” and ended in a physical altercation between the two. The incident was partly overheard by other Bunnings employees and the pair were suspended on the day. But in the investigation following the fight the Commissioner was not satisfied all the allegations were properly put to Fitzpatrick and in particular he made the observation that the allegation should have been put in writing.

Vitale says the case shows even where employers think they have a clear cut case for termination, the commission will still look at the process that is followed prior to termination.

“The employer, particularly a large employer with a dedicated human resources department, needs to ensure its process is spot on,” he says.

Even if you are a small employer, it is well worth your while to show you’ve followed a fair process.


9. Keep up to date with WHS laws

Under state and territory Workplace Health and Safety laws, employers have a legal obligation to provide a safe workplace.

If you provide an employee with a lawful and reasonable direction to adhere to WHS laws and they breach them, it may be reasonable to terminate them – by following the correct procedures.

A recent case involving a BHP Billiton worker who was sacked for not shaving his beard acts a ‘how to’ for fairly dismissing an employee who flouts workplace safety.

James Felton was sacked after repeated directions and warnings from the mining giant to shave his beard because it inferred with the proper use of his face mask respirator.

BHP had been advised particles in the air of the underground mine where Felton worked were carcinogen, and directed all employees to present to work clean shaven to wear the masks, but Felton refused, asserting his goatee beard and moustache were a “personal attribute”.

But the commissioner found the dismissal was not unfair in light of Felton’s refusal to comply with the WHS policy.

“It was his right to maintain his appearance however this was in conflict with a reasonable and lawful direction and for reasons outlined above, made future employment for him at BHP Billiton at Olympic Dam untenable,” said Commissioner Peter Hampton in his judgment.

Douglas says the direction to shave was both lawful and reasonable because a company has an obligation to provide a safe place of work and Felton’s failure to comply represented a breach of WHS laws and a serious breach of the company’s policy.


10. Changing a job description can be seen as a termination

In December, a Sydney retail manager won an unfair dismissal case after she refused to accept a $26,000 pay reduction.

Angela Johnson was sacked from fashion retailer URBRANDS in April after she was presented with a new contract and refused to accept a decrease in remuneration from a base salary of $80,000 plus a car, to a base salary of $54,000 and no car.

The commission found Johnson’s refusal to accept the proposed reduction in remuneration did not provide the Employer a valid reason for Johnson’s termination.

Douglas says a business employs a worker as a job, not a person. As such, any change to the job can be seen as a termination.

“It usually isn’t a problem because it usually happens as a promotion,” says Douglas. “But when you demote someone, they cease to have the same job and that is termination.”

While Douglas says there are clauses that allow employers to alter job descriptions, it is never something that can be put in a contract, and an employer must seek to fairly renegotiate a contract with an employee.

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