Unfair Dismissal

Under the previous Workchoices system, many small and medium enterprises were exempt from employee claims for unfair dismissal, as claims could not be made against an employer with 100 or fewer employees. This exemption has been removed.

Under the new system, an employee cannot make a claim for unfair dismissal in the first 12 months of employment against an employer with less than 15 employees at the time of dismissal. Where the employer has 15 or more employees, an employee cannot make a claim in the first six months.

The method for determining the number of employees that an employer has for this purpose is quite complicated. The total number of number of ordinary weekly hours worked in the business (averaged over the four weeks prior to the dismissal) is divided by 38 to determine “equivalent full time positions”. Associated entities are treated as a single employer for the purpose of making the calculation. Employers should seek legal advice if they are uncertain about whether they fall below the 15 employee limit.

Businesses that employ employees in less than 15 “equivalent full time positions”, can also prevent unfair dismissal claims by complying with the practices set out in the Small Business Fair Dismissal Code (the Code), a document available from the new Federal Workplace agency, Fair Work Australia. If an employer complies with the Code when dismissing an employee, the dismissal will not be found unfair and the employee will be unsuccessful in any claim for unfair dismissal. The Code comes with a checklist and it is recommended that employers complete the checklist to note that they have completed each step to comply with the Code, and keep the checklist as a record. Whilst this will not guarantee that the employer will not be liable for unfair dismissal, in the event of a claim, it is likely to be of assistance to demonstrate that the employer has complied with the Code.

Previously, it was impossible for an employee on a fixed term, fixed task or seasonal contract to claim for unfair dismissal. This is no longer the case, however if such employees are not rehired at the end of their engagement they will not have been “dismissed” and cannot make a claim, irrespective of the circumstances.

Previously, it was not possible for an employee to make a claim for unfair dismissal if the dismissal was for “genuine operational reasons”. This is no longer the case, however if the dismissal was a case of “genuine redundancy” then an unfair dismissal claim cannot be made. To establish that a “genuine redundancy” occurred, the employer must show that it has complied with any consultation requirements in any applicable award or enterprise agreement prior to dismissal for redundancy and that there was no reasonable opportunity for the employee to be redeployed within the employer’s business or that of any associated entity. Whilst the scope of this exception is narrower than under the previous system, it seems that an employee still cannot make an unfair dismissal claim on the basis that they were unfairly selected for redundancy.

Employees claiming unfair dismissal must file an application with Fair Work Australia within 14 days of dismissal, a shorter period than the 21 days previously permitted, although an extension of time may be granted in certain circumstances by Fair Work Australia.

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