It is important how to defend an unfair dismissal claim if your business employs staff. Unfair dismissal claims can impact employers financially and their reputation. Understanding the legal process, documentation and preparing an effective defence can help to protect employers.
Unfair dismissal occurs when an employee is terminated from their position in a way that is harsh, unjust or unreasonable. For example, where employment is ended by an employer without a valid reason or without proper procedure. In Australia, eligible employees are protected by laws that require employers to provide valid reasons for dismissal, including:
- misconduct
- genuine redundancy
- poor work performance
This article, written by our unfair dismissal lawyers, provides insights into how employers can successfully defend unlawful dismissal.
Key Takeaways
- familiarise yourself with the laws on unfair dismissal to ensure compliance
- maintain detailed records of employee performance, disciplinary actions, and any incidents leading to dismissal to support your defence
- comply with internal policies and fair processes when terminating an employee to avoid claims of unfairness
- ensure that employees understand the reasons for their dismissal and the processes involved
- consult with an experienced employer lawyer to help you understand your options and prepare a strong defence
- consider reasonable settlement options if they will provide a more favourable outcome than a prolonged dispute
Valid Reasons for Dismissal
A key defence to an employee’s unfair dismissal claim is that the dismissal was not unfairly instigated by the business. To do this, employers must demonstrate that the dismissal was based on a legitimate, valid reason.
Set out below are some of the valid reasons that an employer can end their staff’s employment.
Serious Misconduct
Termination of employment may be justified if an employee has engaged in behaviour that is a serious breach of company policy. For this type of dismissal, documenting incidents of misconduct and following disciplinary procedures is fundamental for employers to prove the dismissal was fair.
Examples of serious misconduct can include:
- physical violence
- fraud or theft
- breach of health and safety laws
Genuine Redundancy
Another fair reason for dismissal is genuine redundancy. Employers may need to show that the dismissal was part of a legitimate business restructure or downsize of operations.
This involves following proper redundancy processes and ensuring that:
- the role is genuinely no longer required to be performed by any one person
- the role no longer exists
- any consultation requirements have been followed
You can learn more about genuine redundancy and restructuring by reading our article.
Incapacity
Termination can also occur if an employee is unable to perform their job due to illness or injury. This must be handled sensitively and in compliance with applicable laws.
We recommend that employees are offered a suitable alternative role if one is available.
Employers need to be careful that they’re not showing discriminatory behaviour when dismissing employees for this reason. The dismissal must only arise because of the inability to perform the requirements of the role.
Small Business Fair Dismissal Code
Small businesses are treated differently from large businesses under the Fair Work Act. Dismissal is likely to be considered fair if a small business has complied with the Code.
Procedural Fairness
Even if a dismissal is based on a valid reason, it can still be considered unfair if the employer fails to follow proper procedures and the employee is not afforded “procedural fairness”.
We have set out some guidance below on what it looks like to provide procedural fairness.
Consistent Treatment
Employers should apply their policies consistently across all employees. For example, if similar cases of misconduct have been handled differently by the business, this may undermine the validity of the dismissal.
When defending a case of unfair dismissal, businesses can use previous examples (if any) of dismissal in similar circumstances. This will help to demonstrate that they have consistently treated employees, and that the dismissal was not unfair.
Thorough Investigation
Where a workplace investigation outcome recommends dismissal, businesses will need to be able to prove that:
- they conducted a thorough, impartial, investigation into any allegations of misconduct or underperformance
- the investigation was carried out before deciding to dismiss the employee
- the process followed aligns with any current workplace policies
Employers should keep clear records of the allegations and investigation processes (such as file notes and transcripts of meetings) and provide these records to the employee. This will help you track the process and ensure you have complied with your legal obligations in deciding to terminate employment.
You can learn more about unfair workplace investigations in our article.
Disciplinary Meetings
Businesses must remember to allow the employee a reasonable opportunity to respond to any allegations. This includes permitting a support person to be present at any disciplinary meetings. It also includes providing evidence to the employee to substantiate the allegations put forward by the employer.
Employees should not be ‘ambushed’ or rushed to defend themselves. It can be helpful to allow the employee time to respond in writing to the allegations and evidence as well.
Business needs to ensure they have documented these processes when defending an unfair dismissal claim.
Right to Appeal
If you determine dismissal is the appropriate outcome, employers must make this clear to the employee in writing. Further, employers may wish to provide a clear process for the employee to appeal the decision to ensure transparency and fairness.
You should also consider the impact to a dismissed employee, for example the effect of a loss of income and their age. It might help to provide a letter of reference to help the employee find future work. However, this may not always be appropriate.
Preparing a Defence
Employers can strengthen their defence by:
- ensuring a dismissal is for valid reasons
- adhering to proper procedures
- consistently applying workplace policies
Proactive measures, including regular training and consultations with HR staff and managers, can further enhance an employer’s defensible position. This may also help to reduce the likelihood of facing unfair dismissal claims in the future.
When facing an unfair dismissal claim, employers should take the following steps to prepare their defence.
Gather Evidence
Record keeping is important to help you defend your actions if you face an unfair dismissal claim. Collect all relevant documentation, including:
- employment contracts
- employee handbooks and policies
- records of performance reviews and disciplinary actions
- contemporaneous (written around the time of the conversation) file notes
- witness statements from other staff
- correspondence related to the dismissal, such as documents provided to the dismissed employee
Consult Legal Counsel
Engaging early with a lawyer can provide valuable guidance on the specific legal requirements and nuances of the case. They can help formulate a strong defence strategy tailored to the situation.
Review Policies and Procedures
Ensure that your businesses internal policies are up to date and in compliance with current employment laws. Again, regular training for HR and management staff on these policies or procedures to follow can help prevent unfair dismissal claims.
Consider Settlement Options
In some cases, it may be better to settle the claim rather than go through a lengthy legal process. Employers should weigh the potential costs and reputational risks.
If you have any questions about unfair dismissal claims or need assistance with an ongoing case, please do not hesitate to contact us. Our experienced legal team is here to help you navigate employment law issues effectively.
Case Law Examples
Kevin Emery v City of Stirling - procedurally unfair
Mr Emery applied to the Fair Work Commission under section 394 of Fair Work Act. He alleged he was unfairly dismissed by the City of Stirling.
The City of Stirling dismissed Mr Emery after he allegedly modified the air-conditioning units in two City of Stirling vehicles without permission. Mr Emery said that he had permission and that the investigation leading to his dismissal was procedurally defective.
The Commission found that even if Mr Emery’s conduct constituted a valid reason for his dismissal by the City of Stirling, the lack of procedural fairness made his dismissal unjust and unreasonable.
The employer was ordered to reinstate Mr Emery and restore lost pay.
Julie Budgen v Verifact Traffic Pty Ltd – afforded fair procedures
Ms Budgen claimed she was unfairly dismissed from Verifact Traffic.
Ms Budgen worked for Verifact Traffic as a Traffic Controller. Verifact Traffic terminated her employment following an investigation which identified discrepancies in the recording of her shift data. She was terminated following a show cause process for serious misconduct.
Ms Budgen claimed that:
- the dismissal was harsh
- there were flaws in the investigation
- she was not afforded procedural fairness
- she did not have an opportunity to address the allegations
The Commission found that she was afforded procedural fairness, that she did not deny the incorrect time recording and was not remorseful.
No remedy was awarded to Ms Budgen.
David Sharp v Patrick Stevedores Holdings Pty Ltd – not a genuine redundancy and unfair
Mr Sharp’s position was made ‘redundant’ by his employer.
The employer asserted that Mr Sharp’s dismissal was a case of genuine redundancy. They claimed that it would not have been reasonable for Mr Sharp to have been redeployed into another position as suitable positions had been filled.
The Commission established that this was false. In fact, the employer did have suitable positions for Mr Sharp to be reasonably deployed. His dismissal was made in contravention of the employer’s policies and procedures and made the dismissal unreasonable. The dismissal of Mr Sharp was not a case of genuine redundancy, and was found to be unfair.
The employer was ordered to reinstate Mr Sharp and restore lost pay.
Frequently Asked Questions
What is unfair dismissal?
Unfair dismissal typically occurs when an employee is terminated without a valid reason or without following the appropriate procedures established by law.
You can learn more about unfair dismissal cases and eligibility in our article.
How can I determine if a dismissal was fair?
To determine if a dismissal was fair, consider whether there was a valid reason (e.g., misconduct, redundancy) and whether proper procedures were followed.
Check out our article on 6 fair reasons for dismissing an employee.
What should I do if an employee files an unfair dismissal claim?
Immediately consult with an experienced unfair dismissal lawyers to understand your rights and obligations. You should also begin gathering relevant documentation to support your defence.
Can I dismiss an employee without prior warnings?
While it is possible in cases of serious misconduct, it is generally advisable to follow a warning process to demonstrate fairness and due diligence.
What are the potential consequences of losing an unfair dismissal claim?
Consequences of losing a dismissal claim can include financial compensation for the employee, reinstatement. It can also damage your company’s reputation.