Managing HR risk
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The number of unfair dismissal cases brought before Fair Work Australia has increased sharply over the past few years, rising 60% each year from 2009-2010 to 2011-2012. However, Fair Work Australia does not provide a clear definition of unfair dismissal. To address this, employers must ensure any dismissal is for a valid reason, notify the employee of the reason, give the employee a chance to respond, and consider any other relevant factors. Employees can make an unfair dismissal claim if they meet minimum service requirements and earn below $118,100. If successful, they may be reinstated or compensated up to 6 months' pay. Employers must be careful to avoid unlawful dismissals based on attributes like age or religion and follow proper
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Managing HR risk
- 1. Analysing, Determining, Strategising Presented by: Michael Derin, Managing Director, Azure Group 30/03/12 1
- 2. Number of unfair dismissal cases is surging 2009-2010 2010-2011 2011-2012 ⬆60% ⬆62% ⬆60% 30/03/12 2
- 3. Fair Work Australia do not provide a clear definition The following must be addressed: → A valid reason is provided for the dismissal → The employee is notified of the reason → The employee is able to respond → ANY matter FWA believes is relevant 30/03/12 3
- 4. An employee can lodge an unfair dismissal application if they: → Met the minimum service requirements → Are covered by a Modern Award or Agreement OR earning less than the high Income threshold of $118,100 There are no exemptions for small businesses 30/03/12 4
- 5. Employee is reinstated to their former job OR The employee is paid compensation – capped at the lesser of 26 weeks pay of $59,050 (50% of high income threshold) No appeal option 30/03/12 5
- 6. Unlawful dismissals – based on age, sex, religion, unions, etc Adverse/action general protection claims Claims based on discrimination – bullying, harassment, etc As an employer you need to consider all of these before dismissing an employee 30/03/12 6
- 7. 30/03/12 7
- 8. You can NOT stop an employee making a claim but you CAN create the best possible defence: → Ensure you have clear & documented polices and procedures → If you need to discipline an employee give them notice of the meeting and have another person in the meeting → Document any disciplinary action, conversations, agreed outcomes or comments 30/03/12 8
- 9. Ensure your employment contracts comply with the FWA and Modern Awards Change your probationary period to at least six months Ensure you have clear & documented polices and procedures 30/03/12 9
- 10. Things you SHOULD do when dismissing an employee: → Fully consider all possible claims → Document everything! → Follow a clear, fair and reasonable process → Provide the employee with the applicable notice period → Dismiss without notice if appropriate → Pay out all statutory entitlements → Don’t be over generous 30/03/12 10
- 11. 30/03/12 11
- 12. HR Review service 1. Policy review and implementation 2. Legal review 3. Review of recruitment, induction and exit processes 4. Work Health and Safety 30/03/12 12
- 13. 30/03/12 13
Editor's Notes
- Heavy fines apply Re-instatement orders are common A dismissal will be UNFAIR if it is “harsh, unjust or unreasonable” OR the dismissal is called a redundancy, but the redundancy is not ‘genuine’
- Fair Work Australia (FWA) do not provide a definition of unfair dismissal only a list of things to be considered A valid reason is provided for the dismissal Employee is notified of the reason Employee is able to respond ANY other matter FWA believes is relevant
- Minimum service period – 12 months for small business and 6 months for any other business FWA tightened their definition of small business – less than 15 employees FWA have also produced a code of dismissal for small businesses which offers limited protection to businesses
- Adverse/action general protection claims - no maximum compensation cap If the employee has made a complaint about something and then you fire them as a result of that, or The employee has applied for another position within the organisation but didn’t get it and you fire them for it
- You can NOT stop an employee making a claim but you CAN create the best possible defence: Ensure you have clear & documented polices and procedures If you need to discipline an employee give them notice of the meeting and have another person in the meeting Document any disciplinary action, conversations, agreed outcomes or comments – even if it’s just commenting on an employee’s tardiness, appearance or a minor infractions
- Ensure your employment contracts comply with the FWA and the Modern Awards Change your probationary period to at least six months Ensure you have clear & documented polices and procedures – that are available to all employees and include what happens when they are breached
- Things you CAN do when dismissing an employee: Fully consider all possible claims Document everything! Follow a clear, fair and reasonable process – control the process don’t do it in the heat of the moment! Provide the employee with the applicable notice period Dismiss without notice if appropriate Pay out all statutory entitlements Don’t be over generous – this may backfire – eg if the employee is caught stealing and you dismiss them immediately but because they have been with you 5 years you decide to pay notice – the FWA could say you didn’t think that it was so serious and maybe the dismissal was unfair – you cast doubt about the dismissal even if it is in fact FAIR
- If something goes wrong DON’T ring the FWA – it’s the same as ringing the ATO if you haven’t paid your tax on time. They record your name, ABN and trading name in the first instance
- Review of existing employment contracts and recommend required changes Review of existing policy, procedures and HR systems Implementation of relevant employment policies to your business including but not limited to things like: Annual leave, employee benefits, hours of work, unpaid leave, mobile phones, privacy, public holidays, WHS, social networking and many more Implementation of employment related forms including: Expense claim form, leave application form, salary sacrifice form At the end of this phase you will have a clear set of rules and procedures governing business operations and personal conduct of employees Legal review We will work in conjunction with National workplace Lawyers to review and make recommendations around employment contracts to ensure they are in accordance with the Fair Work Act 2009 including the National Employment Standards and the Modern Awards Review any Enterprise Agreements you may have Ensure compliance with current legislation Implementation of recruitment, induction and exit processes Create an efficient process to attract and secure talent – recruiting strategy & selection process Align employee responsibilities to strategic goals of the organisation, measure results and provide constructive feedback – build induction process, set goals, performance management system, how to exit an employee Increase the skills and knowledge of the team and allow people to grow their career while creating loyalty – training budgets, career development, coaching & mentoring, core competency levels Reward and recognise excellent performance – link clear performance goals to rewards, promote flexibility in the work place: financial rewards, recognition & people policies WHS Implement a review of the health and safety policies and training systems to ensure a safe work place for all employees, including: first aid requirements, protective clothing and equipment, WHS committee & representative, employee training and more