Avoiding Termination Pitfalls

In a 2013 survey, hiring and firing staff was one of the ten big issues facing small business owners in 2014. There’s nothing easy about employing staff and you need to negotiate your way through the minefield of awards and overlapping legislation. Some employers feel they would be better off contracting people rather than employing them, however, this can be fraught with danger as their ‘contractors’ may turn out to be employees in any case.

Employees can be full-time, part-time, casual or a fixed-term contract. All of these are employment relationships and the employees themselves will fall under one of two categories, award-based employees and non-award employees. An award-based employee may still be given a contract of employment, outlining the terms and conditions of their employment however, these must not be less than the requirements under the award. Just because you pay an employee above award pay rates, does not mean you are exempt from award clauses.

If you already use or are considering bringing in independent contractors, you must ensure they are, in fact, contractors and not just an employee with an ABN. Fair Work Australia’s website has a contractor versus employee quiz that can help determine the correct category.

General employment factors to be aware of

  • Do you know what award your staff are employed under? The Modern Award system changed considerably in 2010, previous employment conditions and old award requirements may not even exist anymore.
  • Strong HR policies must be in place, such as code of conduct and a health and safety policy. They must also be enforced. It is no good just having the written policy if on a day to day basis these policies are ignored.
  • Company policy statements must be fair and reasonable, particularly if breaches may result in termination of employment.
  • Your employees have more information regarding their rights at their fingertips than they have ever had before – make sure you are on top of them! Subscribe to industry updates and free email publications from workplace lawyers and other advisors to keep up to date with the latest employment news.
  • ALL discussions with your staff need to be documented. Even a diary note is better than nothing but without documentation you haven’t a leg to stand on.

This employee has to go!

If you are fed up with your administration person strolling in at 9.15 for a 9 o’clock start, mis-filing the invoices and being rude to clients it could be time to give them their marching orders. However, you cannot just have a ‘straw that broke the camel’s back’ moment. Only where there has been an instance of serious misconduct (for example theft, fraud or assault) can the employee be terminated relatively quickly. This would be deemed summary dismissal and no notice is required for this type of termination.

Employees that are not performing to your standards must have their misdemeanours discussed, documented and an action plan to remedy the breach implemented. Do they fully understand the requirements of the job? Do they require more training? Have they been given the opportunity to improve their behaviour? Timeframes and warnings must be documented and signed by the employee in question so that there is no confusion. A ‘don’t be late again or else’ does not qualify as a warning. All terminations must follow due process, even summary dismissals. Evidence must exist of following a disciplinary process, meetings held, investigations documented, notes and formal letters.

Quick departures tend to increase your risk that a termination will be deemed harsh, unjust or unreasonable and classed as an unfair dismissal under the Fair Work Act. Fines can apply but the damage to your reputation if a claim is upheld must also be considered. An employee has 21 days to lodge a claim directly with the Fair Work Commission. You, as the employer, will not know about a claim until the Commission decides to investigate you.

Other articles in this edition:

IMPORTANT DISCLAIMER: This newsletter is issued as a guide to clients and for their private information. This newsletter does not constitute advice. Clients should not act solely on the basis of the material contained in this newsletter. Items herein are general comments only and do not convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of these areas.