Unfair Dismissal: Greater risks from 1 July 2020

From 1 July 2020 employees can be awarded more money when they succeed in an unfair dismissal case.

Unfair dismissal claims are a serious issue faced by many businesses, with some 13,000 to 14,000 applications being made each year in recent times. NatRoad helps members with issues relating to termination of employment each week.Workplace laws set out rules about terminating employment. These rules establish whether the termination of the employment was unfair (harsh, unjust or unreasonable) or unlawful, what entitlements an employee is owed at the end of their employment, and what steps an employer should take when an employee is to be dismissed because of genuine redundancy.

Unfair dismissal applications are the most common form of action taken against employers when an employee’s employment has been ended.  Employees can apply to the Fair Work Commission (Commission) for an unfair dismissal remedy if they have been terminated by their employer, or forced to resign, and they have worked the minimum employment period.  That period is 12 months for a small business (defined as a business with fewer than 15 employees) and 6 months for other businesses.  Some ex-employees are excluded from being able to make an unfair dismissal claim.  A former employee that was not covered by an award or enterprise agreement and had annual earnings above a set limit is one such type of excluded employee. From 1 July 2020 that annual earnings limit is  $153,600.

From 1 July 2020 the maximum compensation an employee can obtain is $76,800 for unfair dismissals occurring on or after 1 July 2020.

If a general protections action is taken against an employer these limits don’t apply.  To understand an employee’s right to take a general protection action, members should reach out to a NatRoad adviser.

Unfair dismissals and general protections cases are determined by the Commission. For unfair dismissal, the Commission will decide if a dismissal is harsh, unjust or unreasonable.  The Commission considers several matters.  They look at whether there was a valid reason for the dismissal relating to the employee’s capacity to do the job or their conduct.  They look at whether the employee had an opportunity to respond and whether the employee was notified of the reason for the dismissal .  They look at any prior warnings that the employee’s performance was unsatisfactory and a number of other issues that employers should document.

Systems for dealing with employee performance should be put in place so that employees are aware of the standards of performance and conduct that they must adopt. NatRoad can help members put those systems in place.  

NatRoad’s professional staff have extensive experience in coaching employers on disciplinary matters, and in representing employers in unfair dismissal conciliation conferences and hearings.  Reach out to us on (02) 6295 3000.