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The number of claims by employees for unfair dismissal is on the rise. Terminating a person’s employment is usually stressful and upsetting for everyone concerned. If an employer needs to terminate an employee, it is important to use best practice to protect the company. The employer should give the employee a proper opportunity to understand why he or she is being terminated, or how to avoid termination. An application for unfair dismissal by a disgruntled employee can be done fairly quickly, and cheaply, and without legal representation. It follows that it is in the employer's interest to understand how to avoid a dispute about unfair dismissal, because disputes can cost time and money better spent on the business.

Who can make an unfair dismissal claim under the Fair Work Act?

Any employee who works for 6 months may apply for unfair dismissal, unless the employer is a small business. In that case, the qualifying period is 12 months. A small business is defined as a business with fewer than 15 employees. A casual employee is eligible to lodge a claim if the period of casual employment was on a "regular and systematic basis", and the employee had a reasonable expectation of continuing employment. An employee is entitled to up to 6 months salary in compensation, if he or she is found to be unfairly dismissed. The criteria for whether a dismissal is harsh, unjust or unreasonable will depend on:

  1. The validity of the reason for the dismissal.
  2. Whether the employee was notified of the reason.
  3. Whether the employee was given an opportunity to respond.
  4. Whether the employee had a support person present during any discussions relating to the dismissal.
  5. Whether the employee had been previously notified that their performance was unsatisfactory.
  6. An employee has 21 days following dismissal to make an application to the Fair Work Commission.

How do I avoid an unfair dismissal claim?

For employers, the best way to avoid unfair dismissal claims is to make sure that your organisation and your employees really understand their obligations under the Fair Work Act. You should consider whether your business has people adequately trained in Human Resources, and even if you do, there are best practice guides published by the Fair Work Ombudsman which provide guidance on how to manage underperformance by your staff. These guides will help you avoid being harsh, unjust or unreasonable. Failure to comply with best practise may lead to your company being involved in months of protracted litigation in the Fair Work Commission and Federal Circuit Court. We recommend that you take legal advice before you terminate an employee. If you have already terminated an employee and are subject to an Unfair Dismissal Claim, please don’t hesitate to contact us for advice and assistance.