A Hole in One - Fair Ways to Fire

Unlike golf, the employment relationship is not a game or a sport – but like golf, the employment relationship is fraught with hazards which need to be effectively negotiated, and which have a number of “additional rules of play” to remain fair.

In the employment relationship, one of the primary hazards occurs when employers and employees are contemplating bringing the employment relationship to an end.

Ending an employment relationship (or indeed ending any relationship) can, just like negotiating any trap in golf, be very problematic.

If an employer wants to bring an employment relationship to an end with minimum financial loss and damage to workplace morale, they need to play fair with the employee at risk of losing their employment.

What does playing fair in the employment arena look like? Certainly not like clubbing the hapless employee with a three-iron.

In Australia, the rules of the employment end-game for small business are found in a legislative instrument called the Small Business Fair Dismissal Code (the Code).

The Code provides that small business employers (that is any business with fewer than 15 employees) may fairly dismiss an employee without notice or warning (that is, summarily dismiss an employee) when the employer has reasonable grounds to believe that the employee was guilty of serious misconduct.

Serious misconduct is defined in the Fair Work Regulations 2009 (Cth) at Regulation 1.07. It includes both (a) wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment; and (b) conduct that causes serious and imminent risk to: (i) the health or safety of a person; or (ii) the reputation, viability or profitability of the employer’s business.

Serious misconduct includes the employee, in the course of the employee’s employment, engaging in theft, fraud, or assault, being intoxicated at work, refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment.

However, such behaviour does not count for summary dismissal purposes if the employee is able to show that, in the circumstances, the conduct engaged in was not conduct that made employment during the period of notice, unreasonable.

Note that an employee is taken to be intoxicated if the employee’s faculties are, by reason of the employee being under the influence of intoxicating liquor or a drug (except a drug administered by, or taken in accordance with the directions of, a person lawfully authorised to administer the drug), so impaired that the employee is unfit to be entrusted with the employee’s duties or with any duty that the employee may be called upon to perform.

Where an employee is not summarily dismissed because of serious misconduct, a small business employer must give the employee a valid reason, based on their capacity to do the job, or their performance or conduct on the job, if they are at risk of being dismissed.

The employee must be warned verbally (or preferably in writing), that they risk being dismissed if there is no improvement in their work performance or behaviour.

In addition, the employer must give the employee an opportunity to respond to the warning and a reasonable chance to rectify the problem, having regard to the employee’s response.

Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Where an employee is at risk of being dismissed, the employee can have another person present to assist them in discussions. However, the other person cannot be a lawyer acting in a professional capacity.

If an employee is dismissed, the employee may (with certain exceptions) make an unfair dismissal application to the Fair Work Commission.

Should this happen the small business employer will be required to provide evidence to the Commission that they have complied with the Code.

This evidence may include proof that a warning has been given (except in cases of summary dismissal) to the employee, a completed Code checklist, copies of written warning(s), a statement of termination, and signed witness statements.

So long as the employer has properly followed the Code, the dismissal will be deemed fair.

Employees who have been dismissed because of a business downturn or because their job is no longer needed cannot make an unfair dismissal application. However, such a “redundancy” needs to be genuine – not just a strategy the employer is using to remove the employee in question.

If an employer wishes to fairly end the employment relationship because of an employees’ unsatisfactory conduct, performance or capacity to do the job, they should consider taking the following six steps:

The 3 Tees and the 3 Rs

  1. Tell– warn the employee verbally or in writing that they are not doing the job properly and that they must improve their conduct/performance or risk being terminated
  2. Time – provide the employee with a reasonable amount of time to lift their game
  3. Train– provide the employee with the training and opportunity to develop their skills and knowledge
  4. Reflect– ask yourself if the employee who was given adequate time and training was able to subsequently improve his or her work performance, conduct, or capacity
  5. Respond – before dismissing the employee, tell them the reason for the impending dismissal and give him or her a chance to respond
  6. Records – keep records of warnings, discussions, training, etc geared towards improving the employee’s conduct, performance or capacity.

If you play fair, chances are you’re more likely to escape the hazards and pitfalls of the employment relationship, and hit a hole in one – that is, to either safely lose a problem employee or, better still, turn a problem employee into a success story and an asset to your business. Remember it is more cost-effective to retain and retrain existing workers than to recruit new ones.

Contact our Specialist Employment & Workplace Relations Team for more information.