Ending a person’s employment can be a bit of a minefield. You know, disagreements, high emotions, unfair dismissal claims that can lead to conciliation or court cases - the sorts of things all employers dearly want to avoid.
At MyHR we’ve seen plenty of stuff-ups in dismissal and termination procedures, whether by pure accident, miscalculation or haste. We’re all about making good choices, so when it comes to ending an employment relationship we’re here to help you weigh up the risks of each option and manage the situation accordingly.
With that in mind, we’ve created this article to highlight common mistakes Australian employers make when ending employment and ways you can prevent them.
Hit the road, Jack!
Sure, you can tell an employee to clear their desk without further ado. We get it: the person may be a major disruption, unproductive, exasperating, and you can see no way to salvage the employment relationship.
But it’s not legal to fire someone without following fair process, and dealing with employee claims of unfair dismissal, even informally, can soak up a lot of time and money.
To start the dismissal process you need a valid reason (more on this in a moment), and you need to inform the employee, give them a reasonable opportunity to respond, and consider their response before determining an appropriate outcome, which may include termination.
If the person’s poor performance was the reason for your actions, you need to give them an official warning and provide time (and support) for them to improve their performance before you can move to dismiss them.
If you are challenged, the Fair Work Commission will look at three things: was the employee fired in a harsh, unjust, or unreasonable manner.
In our experience, many employers or managers focus solely on the reason and skip a step or don’t provide the employee warning or time to improve, which creates procedural unfairness.
It’s not uncommon for penalties and costs to exceed $20,000, plus you may have to reinstate the person you fired to their former role.
Any old cause will do
This one is worth its own entry, because you can’t fire someone just because they kept putting too much milk in their tea or some other minor infraction.
For a dismissal to hold up to scrutiny, the response must be proportionate to the seriousness of the person’s conduct or performance (i.e. your response can’t be extreme or “harsh”), and it also must be just and reasonable.
This means your justification can’t be personal. “I want to fire this person because they have blue hair,” isn't fair or reasonable. “I want to sack this person because they are a woman or Aboriginal,” is straight-up discriminatory and violates the Human Rights Commission Act.
While employee behaviour can feel personal, remember it’s not, and reasons for dismissal can’t be either. It’s about the behaviour or performance, not the person.
In cases of serious misconduct, it has to be serious, e.g. the person deliberately put other workers in danger, took drugs at work, or sabotaged relationships with your clients. The legal threshold here is that it’s something that damages the relationship beyond repair - something which causes you to lose faith, trust, and confidence in the employee.
We quite often see managers wanting to fire someone for behaviour which, on the surface, isn’t that bad, e.g. a person not replying to their emails in a timely manner. What’s usually happening is that the unsatisfactory behaviour has been going on for months, the manager is at their wits’ end, and wants to jump straight to dismissal.
But there is a process here, which usually starts with an informal conversation about the employee’s behaviour and why it’s an issue (like, clients are complaining about not hearing back).
Our advice? Address things early and often so you don’t get yourself so frustrated you just want them out.
My mind's made up (or, I haven't got time for this)
There are times when a situation appears so cut-and-dried, that termination of employment is a given. Money or company property may have gone missing and only one person could’ve been responsible. Two employees may have had a serious brawl that others saw and said one person deliberately started it.
But even in the most obvious cases of serious misconduct that warrant dismissal without notice (summary dismissal), you can’t make a judgement that leads to termination without investigating and then consulting with the employee.
Don’t approach the situation thinking you already know the facts. Look into things objectively to uncover what went, or is going, on. Talk to witnesses. Then when you have the facts (and evidence to back them up), present your concerns to the employee and consider their feedback in making your decision.
It’s important to not predetermine anything and consider not only the facts you have pulled together, but the employee’s explanation before making a decision.
If you just give them a formal warning or dismiss them without undergoing proper process, the employee could have a very strong case for unfair dismissal.
You also need to give the employee time to consider the fairness of the termination terms and for you to consider their response before confirming the outcome.
The same goes if it appears the employee has abandoned their position - you have to make all reasonable efforts to contact them, record those attempts, and advise them of your intent to dismiss them before moving to do so.
If a person has been seriously injured and may not be able to return to work, you need to work with them to fully get to the bottom of their medical situation and prospects before you can propose dismissal on the grounds of medical incapacity or medical retirement.
Surprise! You’re being made redundant
Nothing screams “unfair dismissal” quite like cooking up a redundancy situation to get rid of a troublesome employee!
Many employers misguidedly see redundancy as a short-cut to ending an employment relationship, but the Fair Work Act is very clear that for a redundancy to be legal it must be genuine.
Redundancies aren’t about the person but rather the position, and they occur at the end of the restructuring process, so you must have a sound business case, consult with affected employees on your proposal, consider their feedback in your decision-making, and explore options for deploying the person (or people) in other roles.
The Fair Work Commission isn’t shy about awarding chunky settlements to employees because employers have made them redundant rather than following correct termination procedures. These sizable pay-outs are accompanied by legal fees and the time it takes to deal with the case, so what was initially viewed as a short-cut becomes a really costly exercise.
If you have someone who isn’t behaving or performing as expected, you need to lean on the correct disciplinary and dismissal process - a sham restructure will end up costing you more!
Read more about how restructuring to dismiss an employee can backfire.
Either jump or get pushed!
Another classic is grinding an employee down until they have no choice but to hand in their notice.
This is known as forced resignation (or constructive dismissal) and while it's not defined as such in the Fair Work Act, it has been well established by case law.
Getting rid of the person doesn’t have to be the direct aim. What matters is whether the employee can prove their resignation wasn’t voluntary and that their employer forced their resignation by taking action “with the intent (or which had the probable result) of bringing the relationship to an end” - in the words of the Fair Work Commission.
Employees who believe they have been forced to resign can raise an unfair dismissal or adverse action claim and seek compensation for lost salary or wages.
To put your organisation on solid ground, always try to resolve issues early, use appropriate processes for addressing poor performance or behaviour, and try to stay objective, even if the employment relationship has really gone south.
Also tread carefully when an employee resigns while you’re in the middle of a disciplinary process, performance management, and/or they have raised concerns that you have addressed. We generally recommend a “cooling off” period to ensure the employee cannot claim forced resignation.
It’s worth noting, however, that case law has established that if an employee very clearly states their resignation, especially in writing, you can take that at face value.
If you think an employee may have a case for a forced resignation, we recommend seeking expert advice.
I warned you!
As mentioned, if an employee isn’t performing as expected, you can warn them that they need to improve or face dismissal.
In a busy workplace, it’s not unusual for employers and managers to give verbal warnings during or after an informal discussion with an employee. But you don’t want any confusion or ambiguity around it, so the employee knows the matter is serious.
If you issue a verbal warning, make sure you are clear that it is an official warning. We recommend you provide the worker with a formal warning letter that describes what the issue is, what you need done differently, and the potential consequences e.g. if your performance doesn’t improve, we will terminate your employment.
Not keeping records
Good note-keeping is a manager’s best friend! Typically, before jumping into a disciplinary process you’ll have informal conversations with an employee. Keeping a record of these discussions is incredibly useful and could be the difference between the unwanted behaviour or performance continuing for weeks vs months.
Always remember that to take disciplinary action, you need a good reason and follow a good process. Using an earlier example, someone adding too much milk to their tea one time would not be a good reason. However, if you learned that this person was doing it purposely to waste resources, you may have a good reason. Even so, you can't move straight into issuing a warning. You would need to discuss this with the person, ask them to correct their behaviour, and outline any potential consequences.
If it continues happening, then you may be able to go into a disciplinary - as long as you have a clear pattern of events, documented times you have tried to correct the behaviour/provide support etc, and you’ve given them a fair and reasonable time to improve.
With seemingly minor or petty infractions this is so important, as they usually escalate and cause managers a huge amount of frustration and energy. Documenting this behaviour whenever it happens ensures you know clearly what’s going on, you have a record, and can deal with it effectively.
This is where the notes section on MyHR is so incredibly helpful. It’s time and date stamped so you can easily upload notes of your conversation, which could be useful in a future disciplinary process.
What say we settle this?
So what if you really want someone out of the business but don’t want to go through a lengthy formal process? What then?
This all depends on why you want them out? Usually, employers want to terminate a person’s employment for these reasons:
- They aren’t good at their job (capacity).
- No one likes them or they kinda suck (conduct).
- We don't really know what they do and their role seems ineffective (restructure).
Because of this, you can almost always initiate an appropriate formal process with an employee. But if you can’t - or don’t want to - there are other options. Often referred to as a “without prejudice” conversation, this is an invitation for an employee to discuss an “off-the-record” exit package with you. This means you probably need to front up with some cash.
Many employers think that because it’s an “off-the-record” discussion, they can say whatever they like without fear of a legal challenge, but this is not the case. There are also a bunch of legal fish hooks. We have seen employees claiming they didn't understand the process and terminology, and therefore successfully raising an adverse action claim.
If things end up in a “without prejudice” discussion, having begun a formal process can help you lower the settlement amount. It is also useful if the person involved is litigious or generally difficult. Using a “without prejudice” can speed up the overall process and get this person out of your business faster - but it will cost you.
Settling this way is not something we recommend, and you should get advice before initiating anything.
Didn't you read the company policy?
You may well have legal grounds for firing an employee because they repeatedly violated your organisation’s dress code, internet usage policy or code of conduct, but if they didn’t know about them (and the consequences for breaches) they could have a strong case to dispute it.
Company policies and procedures are no use to anyone if they sit in a file somewhere and no one reads them. And everyone needs to clearly understand their contents.
We’ve seen plenty of policies (and employment contracts) that are gruellingly long and written with so much legal jargon (or pure “legalese”), that an average person can't understand them.
Keep your policies clear, concise, and relevant, and ensure every employee receives them when they start work. We also recommend getting them to sign the polices once they read them to verify they’ve done so (be on-hand to answer any questions). Do the same any time a policy is updated.
Using the MyHR digital document acceptance tool ensures you can send policies to all your employees and monitor who has read and signed them.
