What is an unfair dismissal claim, and how to avoid it

Read time: 2 mins

Dismissing an employee can put you at risk of facing an unfair dismissal claim, no matter how careful you are.

Unfair dismissal is where you end employment harshly, unjustly or unreasonably. If the unfair dismissal claim against you is successful, you may be liable to pay a fine of up to $79,250.

Here are ten straightforward steps to avoid an unfair dismissal claim when terminating employment.

  1. Have a valid reason for the dismissal: You cannot dismiss an employee simply because it is not working out or they are not performing. Instead, you must have a valid reason for your employee’s inability to safely perform their duties or their engaging in misconduct in the workplace.
  2. Issue a warning to your employee: If your employee is underperforming in the workplace, you should give them a written warning. The warning should explain what you expect from your employee in their role and outline the potential consequences should your employee maintain their unsatisfactory conduct.
  3. Allow your employee to respond: Once you raise an issue with your employee, you should give them an opportunity to respond and explain their actions before deciding on a disciplinary outcome.
  4. Keep a written record: Maintaining a written record is essential to record your employee’s performance. By maintaining a written record, allows you to later prove that you have undertaken a proper and fair disciplinary process if need be.
  5. Follow the Small Business Fair Dismissal Code: If you have 15 or fewer employees, you must dismiss an employee per the Small Business Fair Dismissal Code.
  6. Have a performance management process: You should have a performance management process in place to monitor and manage your employee’s work performance; by making them aware of your expectations and providing them with a reasonable opportunity to improve before taking disciplinary action.
  7. Provide procedural fairness: The Fair Work Commission will consider whether you provided procedural fairness in your dismissal. This means that you gave your employee a fair warning and a chance to respond.
  8. Ensure consistency: You should ensure that you treat all employees consistently when terminating employment. You should follow the same process for all employees, regardless of their position in the company.
  9. Get advice: Speak to a NatRoad Advisor or consult with an employment lawyer where any alleged discrimination, workplace rights or workplace injury may be involved. Seeking legal advice before you terminate your employee’s employment would be wise.
  10. Have an employee handbook: You should have an employee handbook outlining your workplace’s policies and procedures. This should include your disciplinary process.

If you have 15 or fewer employees, you must dismiss an employee per the Small Business Fair Dismissal Code. This states that you can dismiss an employee without a warning where your employee has committed serious misconduct, i.e., theft, violence, fraud, and serious breaches of occupational health and safety procedures.

Additionally, small business owners with less than 15 employees can terminate employment without notice if an employee commits serious misconduct.

In conclusion, dismissing an employee can be risky for an employer. Following these ten straightforward steps can minimise the risk of facing an unfair dismissal claim. Remember that seeking legal advice before terminating your employee’s employment is always a good idea. If you have any questions, speak to a NatRoad Advisor or email [email protected]