Unfair dismissal is a significant exposure for businesses today. If employees believe their termination from their job was harsh, unjust or unreasonable, they can put in an application to the Fair Work Commission. This can result in employers providing monetary or non-monetary compensation and even reinstatement of the employee.
The Fair Work Commission uses the following to consider whether a dismissal is harsh, unjust or unreasonable:
- Was there a valid reason for the dismissal related to the employee’s capacity or conduct?
- Was the employee notified of that reason and given an opportunity to respond?
- If the employer didn’t allow the employee to have a support person present at any discussions about the dismissal, was that unreasonable?
- Whether the employee had been previously warned that their performance was unsatisfactory
- If the size of the business, or lack of dedicated human resource management specialists or expertise impacted on the procedures that the employer followed when they dismissed the employee
- Any other matters that the Fair Work Commission considers relevant
Source: Fair Work website
How can you protect yourself and your business?
Follow the appropriate guidelines and codes, and ensure you’re covered for management and employment practices liabilities
The most important thing is to follow Fair Work’s guidelines for terminating employees. There are rules to follow about dismissal, notice periods and final pay. In addition, there are also different rights and obligations when it comes to redundancy or your business becoming bankrupt.
In addition, small businesses also have a different set of rules when it comes to ending the employment of their employees. The Small Business Fair Dismissal Code provides protection for small businesses against unfair dismissal claims, provided the employer follows the code. Make sure to check the code to see if your business constitutes a small business by Fair Work’s standards.
An important part of your risk management plan, management liability insurance can provide financial protection for yourself, your directors or officers if any incorrect processes were followed in the termination of an employee. A mistake in this area can be costly and interrupt the day to day operations of your business. For more information about management and employment practices liability, get in touch. We can help you with a management liability policy that will suit your needs, just ask us today.
Â
Free resources
- Fair Work Ending Employment website
- Fair Work Small Business Ending Employment website, which includes the Small Business Fair Dismissal Code and other resources
- Small Business Obligations checklist
Â
Interested in Management Liability insurance? Contact us today
McKenzie Ross Insurance Brokers
Â
Â
