Unfair dismissal refers to the termination of an employee’s contract without a valid reason or in a way that breaches their employment rights. A case of unfair dismissal is something all companies want to avoid. The process of responding to an unfair dismissal claim is long and not only is it time-consuming but it can be expensive. In the 2018-2019 financial year, the Australian Fair Work Commission received 13,928 applications of unfair dismissal. Of those that were finalised, only 50% ended within 39 days, with the other dragging on to over 3 months. 

An unfair dismissal is not beneficial for the company or the employee. It is essential for employers to understand why they need to avoid an unfair dismissal claim to minimise the impact on their business and ensure that it does not happen unintentionally. 

Unfair dismissal process

In Australia, after an employee is terminated without a clear reason, they have 21 days to apply for unfair dismissal. What follows is:

  • The business receives a copy of the application and the claims made
  • They can respond or object to the application 
  • The company and the employee meet with a conciliator 
  • The fastest way to resolve this is through a conciliator. However, in cases where the employer objects to the unfair dismissal claim, the case goes to a jurisdictional hearing. 
  • The Commission Member who carried out the hearing will come to a decision but resolving the issue at the hearing stage is a lengthier process

Once a decision is made, either party can appeal within 21 days but a favourable outcome is not guaranteed. This whole process highlights why unfair dismissal cases should be avoided at all costs. Even if it cannot be avoided, employers should ensure that they are acting in a reasonable, fair and ethical manner and there is nothing that can prove otherwise. 

How to avoid cases of unfair dismissal

Unfair dismissal cases are not hard to avoid if the company is ethical and respects its employees. The main ways to avoid unfair dismissal are:

  • Follow a disciplinary procedure
  • Ensure contracts are clear
  • Conduct performance reviews 
  • Create a positive work culture
  • Seek legal advice if unsure
  • Have an acceptable reason

Follow a disciplinary procedure

Termination should not be the first choice. Depending on the employee’s conduct, employees should be given warnings, both verbal and written, that will alert them of poor performance or conflicts. Employees should be given support and resources to improve so they can have a chance to redeem themselves. Managers should check if something is going on and if the employee is experiencing temporary hardship. If nothing works, only then should termination be considered as the final option. This will show that the company took steps to assist the employee and does not view them in a negative or unfavourable way. 

Ensure contracts are clear 

Well-constructed contracts can prevent unfair dismissal cases by laying out the expectations the company has of the employee. A good job description needs to be included that clearly explains what the responsibilities of the employee are. The contract should also outline any potential reasons that the employee could be terminated. For example, it should state that false references or a conflict of interest may lead to a potential dismissal.

Conduct performance reviews 

Performance reviews are a great way for companies to communicate and remind employees of what the company’s expectations are. Employees are able to highlight their strengths and achievements, and managers can then respond appropriately. If employees are not performing up to the standard that has been set, managers can give them feedback on what they can improve on. This feedback gives them a chance to reevaluate their performance and identify what can be done to achieve the new goals set for the year. 

Performance reviews show that the company makes attempts to notify employees of potential poor performance rather than give them a sudden termination notice. Giving time to the employee to understand where things went wrong can contribute to avoiding cases of unfair dismissal. 

Create a positive work culture

Cases of unfair dismissal may stem from bad relationships between co-workers. If misunderstandings arise, then it can be difficult to figure out which employee did what. Fostering a positive work culture where employees can feel valued, respected and develop a feeling of belonging is extremely important. It helps not only with avoiding unfair dismissal cases but ensuring that employees are treated equally and they have a better time at the workplace. A feeling of belonging is critical to a business’s success. Employees can build up confidence, care more about their work and their colleagues and it contributes to better wellbeing. 

If employees feel welcomed and fairly treated during their employment, they are less likely to submit a case of unfair dismissal. They are more likely to  understand that managers communicated with them at every stage they could and the termination was solely based on performance rather than personal feelings or situations out of their control. 

Seek legal advice if unsure

Unfortunately, Google can’t help with every termination. Each situation is different so legal counsel may be required if an employer is unsure of whether the employee has a claim for an unfair dismissal case. Legal advice can point out the right steps the business can take in their unique scenario and how to communicate effectively before, during and after the termination. When in doubt, it is always wise to use the advice of professionals. While the company’s HR team may be ready to deal with the situation, if there is doubt then the organisation should seek external help. 

Have an acceptable reason

It sounds simple, but if it was then unfair dismissal cases would not be a thing. When deciding whether or not an employee needs to be fired, consider the reasons for the termination:

  • Are they affecting the team’s or company’s performance?
  • Have attempts been made to address the problem?
  • Have they committed some type of misconduct?
  • Is there evidence to prove potential unethical behaviour?

These questions set a base for what employers need to think about before going through with the dismissal.

An effective termination meeting should also be helpful in answering any questions the employee has or clearing up any confusion. As stated multiple times, communication is important. If the reasoning is clearly explained to the employee and they fully understand it, then they are less likely to retaliate. 

unfair dismissal

Consequences of unfair dismissal

An unfair dismissal case is not a pleasant situation for the employee or the employer. When an employee is fired, they lose their source of income, which can be a very stressful time. They need to come to terms with an unjustifiable termination and a new financial situation which may cause many struggles and mental health problems.  If the commission deems their termination unreasonable, then this can have great consequences for the company. The usual consequences include:

  • Expensive compensation 
  • Bad reputation
  • Lower work productivity

There are three outcomes of an unfair dismissal case:

  • Reinstatement 
  • Compensation
  • No action

If the employee wins the case, the organisation will need to provide them with compensation and depending on the reasoning found (e.g. discrimination), they may be subject to heavy fines. This means a lot of unnecessary costs for something that could be easily prevented. The compensation will depend on the agreement that was reached between the parties. However, even if no further action needs to be taken, if legal advice was taken on the matter, then this also accounts as extra expenses. 

Depending on its size, the news of the unfair dismissal may go public. Many consumers do not want to purchase from companies that mistreat or undervalue their employees. They want ethical businesses that ensure employees are only terminated for viable reasons. If customers refuse to buy from the company temporarily, then this can reduce sales in the short term. 

Lower work productivity can be the result of lower employee morale as well as disruption because of employees needing to deal with the case. Staff may hear about the unfair dismissal and think that the company does not have their best interests in mind. The overall reaction will depend on how the case was handled and if the company had given chances to the employee before terminating them. Managers and supervisors will need to provide evidence for the dismissal, which will take time away from other tasks, resulting in lower outputs. 

Investigating a case of unfair dismissal?

Polonious provides a full audit trail with gated decision points and evidence storage to ensure that all disciplinary decisions are able to be justified in the event that they are questioned by a court or a regulator. Polonious can help investigators improve their workflows and remove admin hassles by making reporting easy. All evidence is digitally stored securely in our cloud, and our system provides teams with automated updates and reminders, to reduce manual errors and missing files. Are you interested in improving your investigation and achieving a faster turnaround? Reach out today and book a free demo.