Terminating an Employee
Why does it take so long to terminate an employee?
Well basically, the reason for this is that one of the highest areas of risk for any business when terminating employment is the risk that the employee will claim Unfair Dismissal. For that reason, performance management can be a lengthy process – after all, there isn’t much point in terminating an employee quickly if the employee could apply to have their employment reinstated!
The risks to business of Unfair Dismissal claims are twofold – firstly, the average Unfair Dismissal claim costs an employer approximately $50,000, and secondly, the outcome of such claims can include orders to reinstate the employee.
So what is Unfair Dismissal? An unfair dismissal occurs where an employee’s employment is terminated and the termination was harsh, unjust or unreasonable. What does this mean? Well, the Commission considers factors such as:
- whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees), and
- whether the person was notified of that reason, and
- whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person, and
- any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal, and
- if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal, and
- the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal, and
- the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal, and
- any other matters that the Commission considers relevant.
When can an employee claim Unfair Dismissal? Well in a nutshell, an employee is only eligible to claim Unfair Dismissal if they:
- Were employed longer than 6 months (12 months for small business employers);
- Are employed under an Award, or, earn under the high income threshold (currently $133,000) if not covered by an Award.
If the above criteria are met, then an employee has 21 days from the date their employment is terminated to lodge an Unfair Dismissal claim.
To help mitigate the risk of claims such as the above to your business, seek specialist advice, and contact Talent Code’s HR On-Demand hotline on 1300 55 99 62.