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Lack of HR advice leads to a small business ordered to pay in excess of $25,000 compensation

Submitted on Thursday, 26th October 2017

The Fair Work Commission (the “Commission”) has found the dismissal of a yard hand by a small business was unfair and awarded the maximum compensation available.

On 6 December 2016, the business director requested the employee come inside and move machinery. An argument ensued resulting in the employee calling the director a “backstabbing ***t”.

The employee was sent home. The following day the director contacted the employee by text message and invited him to her home to discuss the matter. The director “felt sorry for [the employee]” and allowed him to return to work. On 8 December 2016, the employee attended for work.  There was no discussion about the prior disagreement.

On 9 December 2016, the director’s uncle, a part owner of the business’s only customer, attended the workplace and had a “loud disagreement” with the director. Based on the director’s evidence her uncle told her the employee was an unsafe worker and “he shouldn’t be there anymore”. 

Shortly after the disagreement, the director approached the employee and told him “[her uncle] had directed her to dismiss [him]”.  The employee collected his belongings and left.

An unfair dismissal claim was filed. In assessing the validity of the claim, the Commission scrutinised whether the termination was in line with the Small Business Fair Dismissal Code (“Code”) and whether it was unfair within the meaning of the Fair Work Act 2009 (Cwth) (“Fair Work Act”).

The business only employed 2 employees at the relevant time and as such was a small business employer within the meaning of the Fair Work Act.

In applying the Code, the Commission noted, “I must be satisfied the [employer] held a belief that the reason for dismissal was conduct sufficiently serious to justify summary dismissal.  Further I must be satisfied that, if the [employee] held that belief, that is was based on reasonable grounds”.

Noting the evidence and chronology of events, the Commission was not satisfied the employee’s employment was terminated because of “language, intimidation, bullying and serious safety breaches”. The Commission considered the reason for dismissal was the direction from the director’s uncle to dismiss him because “[the employee] [doesn’t] listen”.  The Commission accepted “[t]his put her in a difficult position, but she obliged.”  The Commission nonetheless concluded the reason for the decision to dismiss was not within the scope of the Code and therefore the dismissal was not consistent with the Code.

When considering whether the dismissal was harsh, unjust or unreasonable as required the by Fair Work Act, the Commission noted the dismissal was not due to the employee’s conduct or capacity, but rather, the advice of a customer. The Commission did note a threat from a customer may be grounds for action. However, in this case there was no explicit threat of losing the customer’s business. In view of this, the Commission concluded there was no valid reason for dismissal.  In addition, the Commission concluded that the employee was not sufficiently notified of the reason for dismissal and was not given an opportunity to respond. Given the dismissal failed to comply with the Code or the criteria contained in the Fair Work Act, the Commission found the dismissal to be unfair and awarded compensation.

In accordance with the Fair Work Act the amount of compensation ordered by the Commission to be paid to a successful applicant must not exceed the lessor of: half of the high income threshold (which at the time of dismissal was $138,900); or the amount the applicant would have earned in the 26 week period prior to the dismissal. 

At the time of the employee’s dismissal he earned $51,530.44 per annum.  The employee was awarded $25,765.22 being a sum equal to 26 weeks’ pay.

Under current employment legislation, costly consequences await organisations found to be recruiting, managing or terminating staff incorrectly. Attend our Managing Termination, Redundancy and Unfair Dismissals to increase your knowledge of counselling and discipline processes, and how to best manage an unfair dismissal claim.

Written by Stephanie Beckett

Fair Work Australia Decision (U2016/15558)

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