Have you ever terminated a staff member for misconduct? Or do you think you will in the future? If so, are you confident navigating Unfair Dismissal and General Protections legislation to ensure you don't end up at the Fair Work Commission?
It’s not surprising that employers often struggle when formally managing employee performance. There’s so much to consider! With so many types of situations, types of outcomes, written correspondence, witness meetings, formalised opportunities to respond to allegations, internal consistency considerations, procedural fairness rules, the potential for union involvement, and of course Unfair Dismissal - the list goes on.
Sometimes employers feel it’s just easier to act practically, rather than procedurally when managing poor performance.
In this article, we’ll discuss what happens when you get your processes wrong, how to maintain procedural fairness, and why it’s no longer appropriate to ask someone to resign in today’s workplace.
What is the cost of getting it wrong?
The Fair Work Commission in the 12 months leading to 30 June 2022 received on average more than 76 applications every working day relating to unfair dismissal and general protections resulting from termination in Australia!
Early in 2023, in the case of Kristy Steel v CD Australia Pty Ltd, an employee was awarded $13,500 in damages from her employer who terminated a team member for alleged racist comments. Commissioner Hunt ruled that the employer’s actions were disproportionately harsh, and they failed to follow procedural fairness during their investigation.
For the full decision follow this link.
What is ‘Procedural Fairness’?
In your opinion, is it fair to pull an employee to the side, ask them questions about their performance or behaviour, make an immediate judgement, and terminate their employment on the spot? The short answer is (for small employers under very specific circumstances) yes. However in the vast majority of situations no it is not.
Procedural fairness enforces specific rights and responsibilities on parties when engaging in performance counselling. This includes, among others, the right of the accused to know the accusation in advance, to have adequate time to prepare a response, and the ability to have a witness present. Failing to give your employee these rights, or failing to inform them they have these rights, are grounds to be challenged by the Fair Work Commission for unfair dismissal.
Those like myself with significant experience managing Performance Counselling routinely approach disciplinary topics in a methodical and objective way, satisfying these and other rules for procedural fairness. In most cases, we begin by conducting a formal investigation: meeting the manager and any witnesses, and analysing internal policies and relevant legislation, then formally meeting the accused to allow an opportunity to respond to allegations and give their side of the story. Only after careful consideration of the situation is a formal outcome recommended.
Make sure next time you have an employee situation that may result in disciplinary action up to and including termination of employment, consult your HR professional first.
What is a harsh, unjust or unreasonable dismissal?
When coming to a formal outcome in any investigation, you must ensure it is not harsh, unjust or unreasonable. If an employee believes they have been unfairly dismissed it is these criteria the Fair Work Commission will use to determine if this was the case.
The FWC website examples of these definitions are important for every employer to understand.
For a full description of these criteria by the Fair Work Commission, follow this link.
What constitutes ‘harsh’ is an interesting topic to understand. The Fair Work Commission defines harshness as the outcome being disproportionate to the gravity of the misconduct. In other words, the punishment doesn’t fit the crime.
In our case of Kristy Steel v CD Australia Pty Ltd above, our employee was overheard on the phone making racial slurs in a joking manner about a fellow employee, including mistaking their nationality for a neighbouring country, saying ‘they’re all the same'. The employee’s summary dismissal was deemed by the Commission as unnecessarily harsh. The employer however believed at the time of the incident that it wasn’t.
So how can employers be sure their response is not harsh, unjust or unreasonable in the eyes of the commission?
From our HR perspective, context is everything in these situations. You should undertake an objective and clear investigation, considering the type of action, the recurrence of that or similar actions, its impact on the business and others, and the context around it. It’s only when you consider all relevant elements of your investigation that you can come to a clear outcome proportionate to the employee’s action.
Can you just ask an employee to resign?
Performance counselling can be challenging, particularly in situations where the employer and employee disagree on issues raised in these discussions. When things have become tricky, I cannot tell you how often I have heard the question ‘Is it OK that I just ask them to resign?'
The circumstances in which it has, in the past, been acceptable to ask an employee to resign were very limited. The risk here lies in its challenge or interpretation by courts as a variety of ‘unfair dismissal’ under the Fair Work Act (FWA). This is often referred to as involuntary resignation, forced resignation or constructive dismissal.
In our case early in 2023 of Kristy Steel v CD Australia Pty Ltd, the employee was given a ‘resign or be sacked’ ultimatum by her manager. The employer also did not undergo a formal investigation, resulting in a failure of procedural fairness. Commissioner Hunt made comment in her closing statements that this employer “ought to know that requesting a person resign or be terminated is simply no longer acceptable”, showing that the easy way out is not an excuse for failing to undergo a formalised investigation process.
In our opinion, employers should avoid the ‘resignation conversation’ unless under specific circumstances and with the appropriate HR or legal support.
In Conclusion
In my opinion, we should rely on a clear investigation and outcome process to guide the appropriateness of formal outcomes. When ending employment due to serious misconduct or as part of ongoing performance counselling, focus on ensuring you’re compliant with procedural fairness, and whenever possible do so under the guidance of an adequately qualified Human Resources or legal professional.
Today's article touches on just some of the important considerations when managing the performance of team members. If you need advice or support relating to performance counselling, JAR Consultants and our legal collaborators are available to help in any capacity. We can guide you through the process, investigate on your behalf, or equip your business with the tools, resources and training to successfully manage performance counselling situations.
Get in touch with JAR Consultants to discuss your approach to Performance Management.
Comments