Unfair Dismissal – Why is Procedural Fairness Important?

By Erin Verzandvoort

Employee Relations Adviser

In the period between October to December 2018, the Fair Work Commission (FWC) received 3521 unfair dismissal applications[1]. Claims from disgruntled employees can be costly, time-consuming and bad for corporate reputation. Employers need to take proactive steps to develop robust policies and procedures to assist in mitigating successful unfair dismissal claims.

When determining whether a dismissal is unfair, unreasonable or harsh, the FWC is requiredto consider certain criteria. This criteria, as outlined under section 387 of the Fair Work Act 2009 (Cth) (the FW Act), constitutes procedural fairness. Employers should consider this criteria when developing and/or reviewing policies, practices and procedures. The details of each criteria are as follows.

Valid Reason

One of the most critical criteria of procedural fairness is the requirement for the employer to have a valid reason for dismissing an employee. The reason for dismissal must be justifiable and based upon an objective review of the employee’s conduct or capacity. An employer is additionally obligated to notify the employee of the reason/s for dismissal relating to their conduct or capacity. The notification must be in clear, explicit and plain terms and must occur prior to making the decision to dismiss.

Right of Response

An employee must be afforded a right of response, by the employer, to provide any mitigating reason/s related to their capacity or conduct in question. To provide an employee a right of response, an employer is required to genuinely consider any response from the employee before taking any action.

Practical Tips:

  • Notify the employee that you wish to meet with them to discuss their conduct or capacity – e.g. 24 hours’ notice of the meeting
  • Provide the employee with reasonable time to respond
  • Holding two separate meetings with the employee can be useful – e.g. one for the employee’s response and one to provide the outcome. Use the time between meetings to genuinely consider the employees response

Support Person

The FW Act states an employer cannot unreasonably refuse a support person requested by an employee, where discussions relate to dismissal. For example, the employee has requested the meeting be postponed a month as their support person isn’t available. It may be reasonable to refuse the employees support person in this instance on the grounds that the employees request is unreasonable in the circumstances. The role of a support person is to provide emotional support to the employee during discussion related to dismissal. A support person is not permitted to act on behalf of the employee, unless a policy, contract or agreement contains a provision that permits this.

Practical Tips:

  • Inform the employee of the support person’s role in discussions relating to dismissal
  • Attempt to accommodate the employees request for a support person if they wish to postpone the meeting due to their availability
  • Remind the support person of their role in discussions relating to dismissal and that any behaviour that contradicts this will not be tolerated  

Warnings

If the reason an employer is looking to dismiss an employee relates to unsatisfactory performance, the FWC will consider whether the employee was warned about the unsatisfactory performance prior to the dismissal. A common myth is that employers must provide three written warnings prior to a dismissal. While there is no legislative requirement for an employer to provide any written warnings, an employer is encouraged to consider the facts of each case and issue warnings as appropriate.

Practical Tips:

  • Consider the following points when deciding how many warnings should be given before dismissal:
    • History of past performance/conduct
    • Seriousness of the performance/conduct
    • Employee’s response
    • Policies and procedures
    • Custom and practice
    • Any other mitigating factors
  • Have a robust procedure on disciplinary action to ensure both employers and employees understand the process and likely outcomes of poor performance/conduct

Size of the Business & HR Team

The FWC will consider the size of the employer’s enterprise and the presence or absence of a dedicated human resources expert. When reviewing these two elements of procedural fairness, the FWC will take into account the company’s policies and procedures and whether the employer has consistently applied them.

Practical Tips:

  • Develop and implement a comprehensive list of policies and procedures
  • Ensure consistent application
  • Consult with a human resources expert, whether internal or external before making a decision to dismiss

Other Considerations

The FWC hold the legislative power to consider any other matters they find relevant to the unfair dismissal case. Other considerations may include (but not limited too):

  • Differential treatment compared to that given to other employees
  • Impact the dismissal has on an employees personal or economic situation
  • History of work performance

A successful unfair dismissal claim, where procedural fairness was not followed, could result in an employer being liable for up to six months of lost wages (currently capped at $72,700) in compensation, as well as the possibility of having to reinstate the dismissed employee. As such, compliance with the criteria for procedural fairness places the employer in a more favourable position to successfully defend a unfair dismissal claim.

Small business employers are subject to the ‘Small Business Fair Dismissal Code’ that contain different rules for procedural fairness when dismissing an employee. For further information regarding the ‘Small Business Fair Dismissal Code’ or any other queries, please contact the CCIWA Employee Relations Advice Centre on (08) 9365 7660 or email advice@cciwa.com


[1] The Fair Work Commission Quarterly Report Oct-Dec 2018. https://www.fwc.gov.au/documents/documents/quarterlyreports/quarterly-report-unfair-dismissals-2nd-qtr-fyr-2018-19.pdf

Employment Records – What are our obligations?

By Erin Verzandvoort

Senior Employee Relations Adviser

The Fair Work Act 2009 (Cth) (FW Act) governs a national system employers’ record keeping obligations when it comes to employees. The FW Act states that an employer must make, and keep, employee records (as prescribed by the Fair Work Regulations 2009 (FW Regs) in relation to each of its employees for 7 years. Employers must make and keep records relating to the following (this list is not exhaustive): 

  • Basis of employment (i.e. full time, part time or casual)
  • Wages
  • Overtime hours worked
  • Averaging of hours arrangements
  • Leave entitlements
  • Superannuation contributions 
  • Individual flexibility arrangements
  • Guarantee of annual earnings
  • Termination of employment
  • Transfer of business  

It is the responsibility of the employer to ensure all records are in a legible form, in the English language and readily accessible. An employee record must be made available for inspection and copying on request by an employee or former employee to whom the record relates. Fair Work inspectors also have the right to inspect and copy employee records.

Payslips

National system employers must ensure pay slips are up-to-date and readily accessible to employees and Fair Work Inspectors. Industrial Awards, Contracts of Employment and Enterprise Agreements should be consulted in conjunction with the FW Act & the FW Regs.

What information is required on a payslip?

  • Employer’s name;
  • Employee’s name;
  • The period to which the pay slip relates;
  • The date on which the payment to which the pay slip relates was made;
  • The gross amount of the payment;
  • The net amount of the payment;
  • The amount paid to the employee that is a bonus, loading, allowance, penalty rate, incentive-based payment or other separately identifiable entitlements; and
  • The ABN of the employer.

Long Service Leave

Employers, in Western Australia, need to be aware there are additional obligations regarding employment records for the purpose of long service leave governed by the Long Service Leave Act 1958 (LSL Act).

An employer must keep records that specify:

  • The employee’s name and if the employee is under 21 years of age, the employee’s date of birth;
  • The date the employee commended employment with the employer;
  • The gross and net amounts paid to the employee including any deductions and the reason for those deductions;
  • All paid and unpaid leave taken by the employee;
  • Details of any agreement between the employee and employer to contract out of long service leave made under section 5 of the LSL Act;
  • Each record must be retained during the employment of the employee and for not less than 7 years thereafter.

The Privacy Act

The Privacy Act 1988 (Cth) (Privacy Act) regulates the collection, use and storage of personal information in Australia. From an employment perspective, the Privacy Act only has application to information collected before the employment relationship has begun or to information collected during the employment relationship that does not relate to the employment relationship itself.

Once an employee has commenced employment and after they have ceased employment, any personal information collected relating to their employment will not be regulated by the Privacy Act. It is therefore primarily the recruitment process that is governed by privacy laws, in particular where an applicant is unsuccessful. In such instances, applicants may wish to access this information as evidence in lodging a general protections or discrimination claim against the business for failure to progress through the recruitment process or failure to employ. 

Presumption Where Records Not Provided

Section 557C of theFW Actwasintroduced in 2017, imposing reverse onus of proof on employers where they have not made and/or kept relevant employment records. The new provisions provide that, where an employer has not made or kept employment records and/or made these available for inspection, they hold the burden of disproving contravention allegations.

Case Example

A former casual cook and guest services worker of Karriview Management Pty Ltd submitted a claim to the Industrial Magistrates Court for underpayment of working long hours without compensation. In the decision the Court determined the underpayment claim lacked credibility and therefore the employees only worked 18 and 15 hours respectively. The Industrial Magistrates Court ordered the employer to back pay the couple $10,165.

The employees lodged an appeal to the decision, which was heard by Justice Craig Colvin in the Federal Court. Justice Colvin overturned the decision on the finding that the Industrial Magistrates Court misapplied section 557C of the FW Act. Justice Colvin found that, had section 557C been applied correctly, the employees claims should have been accepted due to the fact that Karriview Management Pty Ltd failed to procedure or keep relevant required employment records nor did they appropriately disprove the employees claims. The appealed was upheld on these grounds and Justice Colvin ordered the employer back pay the couple $21,314.

Like to know more? Contact CCIWA’s Employee Relations Advice Centre on (08) 9365 7660 or email advice@cciwa.com

Commission Entitlements for Salespeople That Have Left Your Employment

by Stephen Farrell

Senior Employee Relations Consultant

The entitlement to commission for salespeople who had ended their employment with the employer after a property had been sold but prior to the property being settled is well known.  However, did you know that salespeople who have left your employment are also entitled to commission for the listings that the salesperson brought in prior to ending employment but had not yet been sold when the employment ended?

The Real Estate Industry Award 2010 underwent a review by the Fair Work Commission and in April 2018, the Award was significantly changed.

One of the less notorious provisions inserted into the Award was the entitlement for the first time, of salespeople to a portion of the commission paid to the real estate agent by the vendor for the sale of the property where the salesperson had listed the property, but the property had not been sold prior to the salesperson leaving employment.

There are a few conditions that have to be met first, however.  Firstly, the listing must be on an exclusive agency basis.  If the employer does not have the exclusive right to sell the property (eg where the property is listed on a conjunctional basis between two agents), then there is no entitlement for a portion of the commission to the salesperson who has left employment.  Secondly, both the agency and the vendor have to have entered into a legally enforceable contract for the sale of the property.  Finally, the property must have been sold prior to the expiration of period in which the agency has the exclusive right to sell the property.

The Award provides for the actual amount or portion to be agreed in writing between the employee and employer, however if there is no agreement, then the employee is entitled to the amount they would have received had the employee remained in employment.  Therefore, it is crucial that at the commencement of an employee’s employment, a provision is made in the contract of employment for the amount to be paid in the above situation.  The REEFWA have such a provision and members are able to access the contract templates.  Where employees commenced employment with members prior to April 2018, it is strongly recommended that an agreement is reached on the amount of the portion that the salesperson is entitled to in this situation as soon as possible and certainly prior to the salesperson’s employment ending.

Some FAQs

Q:           What if the listing that the former salesperson was responsible for expires and is then renewed for another period of time at which point it then sells?

A:            The former employee is not entitled to any commission as the property was sold after the expiration date of the exclusive agency period that the former employee was responsible for.

Q:           What if I have dismissed the former employee for serious misconduct?

A:            The employee is only entitled to commission for the sale of properties (settled or not yet settled) that the employee was responsible for prior to or on the date of dismissal.  There is no entitlement to commission for properties sold after the date of dismissal, even if they were properties the employee was            responsible for listing with the employer and were sold in the exclusive agency period.

For the purposes of this article, the following definitions apply:

Exclusive Agency Period – The period of time that the Agent has the exclusive right to sell the listing.

Listing – The entering into a legally enforceable contract between the Agent and the Vendor for the Agent to see the Vendor’s property.

Sale – The entering into a legally enforceable contract between the Vendor and a Buyer for the sale of the Vendor’s property.

Settlement – The transfer of ownership of the property from the Vendor to the Buyer.

REEFWA members are able to call the Employee Relations Advice Line (ERAC) on 9365 7660 if they have any questions in relation to the above.

Employees returning from unpaid parental leave – How to mitigate discrimination and general protection claims

By Jenny Thomas 

Employee Relations Adviser

An employee’s entitlements to return to work after unpaid parental leave (UPPL) are often not given much thought until an employee is due to return. Being aware of your obligations as an employer is instrumental to making sure you are able mitigate potential discrimination and general protections claims.

Section 84 of the Fair Work Act 2009 (Cth) (FW Act) states that upon ending UPPL, an employee is entitled to return to their pre-parental leave position. It also states that, if an employee’s position no longer exists, they must be offered an available job they are qualified and suited for, which is of similar status and pay to the pre‑parental leave position. It is important to note that any reduction in hours or transfer to a ‘safe job’, to accommodate the employee’s pregnancy whilst working, does not constitute the employees pre-parental leave position. Putting it simply, an employee returning to work after a period of UPPL, is entitled to, and has a right to, the position they had before commencing UPPL.

So what happens if my employee wants to return to work on a different basis?

An employee’s return to work can become complicated when an employee requests to return on a modified basis, otherwise known as a flexible working arrangement (FWA). FWA’s can only be requested on specific grounds. An employee who has the caring responsibilities of a child (school age or younger), can for this reason request an FWA, as long as the employee has completed 12 months continuous service with the employer. The request must be in writing, clearly outline the changes sought and the reason for the changes. The FWA requested will differ from employee to employee, as it will depend on individual circumstances, however, a FWA could include changes such as:

  • changes to start and finish times;
  • patterns of work, such as working split shifts and job sharing;
  • or could include working from a different location, such as working from home.

Do I have to accept these new changes?

If your employee wants to change their working arrangements, they have a right to request changes, but they do not have a unilateral right to be granted any changes. Employers can refuse FWA requests if they have reasonable business grounds, as outlined in section 65(5A) of the FW Act. When determining if the FWA can be accommodated, employers need to consider:

  • the cost associated with accommodating the FWA request;
  • whether changing other employees’ arrangements or employment of a new employee would be practical in the circumstances; and
  • what effect the requested arrangements would be on productivity, efficiency and customer service.

Your employee can be directed to return to their pre-parental leave position if you refuse the FWA request on reasonable business grounds. A refusal must outline the reasons why the FWA cannot be accommodated, including the reasonable business grounds for which the employer made their decision. The refusal must be in writing and must be given to the employee no later than 21 days after receiving the request from the employee. Employers should also be aware of any additional requirements under a modern award, enterprise agreement, contract of employment, or policy that provides FWA entitlements more beneficial than the FW Act.  If you are unsure what award your employees are covered by, you can contact CCIWA’s Employee Relations Advice Centre on 9365 7660 or advice@cciwa.com

Case Example – Fair Work Ombudsman v A Dalley Holdings Pty Ltd

A Dalley Holdings Pty Ltd (A Dalley), operated an aged care facility in Geelong where an employee held a part time personal care assistant position. Prior to going on UPPL, the employee worked six afternoon shifts and one sleepover shift per fortnight. While the employee was on UPPL, a new roster was introduced reallocating the employee’s afternoon shifts to other workers, without the employee being consulted. Issues arose when the employee attempted to return to work, initially being told the facility had no hours to give her. After making complaints to the employer, the employee was subsequently offered two sleepover shifts per fortnight. When the employee brought up concerns about her inability to do these shifts, because of her family and carer responsibilities, the employer said that if she refused to accept the shifts, they would take her refusal as resignation. A Dalley found to have breached the FW Act on multiple grounds and was fined $27,720. Andrew Dalley, who manages and part-owns the centre, was personally fined a further $3,168. The company was also ordered to compensation the affected employee $5,000.

This case highlights that it is a serious breach of workplace laws to discriminate against employees on the grounds of pregnancy and family and caring responsibilities. The employer was found to have failed within its obligation to;

  • consult with the employee about changes to her pre-parental leave position;
  • not allow the employee to resume her previous position or another similar position, on return from parental leave; and
  • the employer took adverse action against the employee because they have accessed a workplace right to UPPL.

Practical tips

  • Employees returning from UPPL have a right to return to their pre-parental leave position or if no longer available, a similar position in status and pay.
  • FWA’s can be requested, but employees are not automatically entitled to change/s in their employment.
  • Employers should make sure all FWA requests are in writing, outline the changes sought and the reason for requesting the changes so it’s clear what the employer needs to consider when looking into whether accommodations can be made.
  • If the employees request cannot be accommodated, it’s recommended that you try negotiating with the employee to see if an alternative arrangement can be made before refusing the request to mitigate risks of discrimination or unlawful adverse action.
  • FWA requests can only be refused on reasonable business grounds.
  • Any acceptance or refusal of a FWA request, should be given in writing to the employee within 21 days from the receipt of the initial FWA request.

If you would like to know more  you can contact CCIWA’s Employee Relations Advice Centre on 9365 7660 or advice@cciwa.com

Fair Work Ombudsman v A Dalley Holdings Pty Ltd [2013] FCA 509

In the absence of an employer contract 

An often felt emotion for small business owners, particularly in real estate,  is a strong attachment to the operations of their business and the staff that they employ. 

This strong relationship can be conducive to success because both parties are motivated to succeed due to the close attachment to the business. 

When things are tough and the relationship sours though, that same emotion can cloud the judgement of small business employers and can result in decisions being made on an emotional basis rather than being made objectively with disastrous results. 

So what mistakes can be made? 

The first one is not having a contract of employment with your employee.  It seems obvious doesn’t it.  Of course you should have a contract of employment.  However, it is amazing how often this is not the case.  You know the drill.  You’ve found someone to help you in your business, you go for a coffee, get to know and like them and you start the employment relationship with a handshake.  No need to formalise the arrangement right? 

The problem arises when one party has an expectation of what was agreed to that the other party doesn’t.  When that expectation isn’t fulfilled, disappointment and anger can arise.  Now, we are off to the races as the relationship sours, disputes occur and that strong bond and attachment that I mention earlier starts to disappear. 

Always ensure that you reduce what you and your employee agree to writing.  Subject to any legislation, industrial awards or legally binding statutory enforceable agreements the parties to a contract are free to agree to any terms that they wish to impose upon themselves – subject to those terms not being unlawful.  To avoid doubt at a later stage, a written contract should be entered into. 

Another problem is that the Real Estate Award requires you to enter into a written arrangement with your staff.  By not having a contract of employment you are breaching the award. 

The second mistake that small business employers can make is not knowing what is contained in their contracts with employees or awards and legislation that cover them.  This can be very costly because it is usual for the lack of compliance to only come to light when an employee leaves or there is a dispute or breakdown in the relationship and the non-compliance has gone on for some time.  Don’t guess what your obligations are, know them! 

If your sales representatives are on a retainer/commission contract, the retainer must be paid regardless of their performance.  This does not mean that poor performing employees cannot be performance managed.  It does mean, however, that they cannot be ‘punished’ for poor performance by not being paid their entitlements. 

The final mistake discussed today resulting from an emotional decision is when small business employers suspect employees have misconducted themselves, particularly serious misconduct such as theft.  Usually these suspicions arise during periods where the business is not performing well.  Quite often, quick emotional decisions are made to dismiss the employee without due process resulting in unfair dismissal claims.  A recent example of this is illustrated in a decision from the Fair Work Commission. 

In this case, a small business employer was ordered to pay an employee it had dismissed $30,000 in compensation.    The employer, whose sales and income was declining, after being told the employee had been printing sales reports, came to conclusion without any corroborating evidence, that the employee had been stealing money from the business.  Instead of taking the time to consider and properly investigate the suspicions, whilst providing the employee with procedural fairness, the employer summarily dismissed her.  It was clear from the summary of facts contained in the Commission’s decision that the employer had made a decision based on his emotions. 

The Commission found that there was no basis for the employer’s assertions that the employee had been stealing and the accusations had been fabricated. 

REEFWA can help employers avoid the pitfalls associated with termination and drafting of contracts of employment. For expert advice regarding these matters or for representation at unfair dismissal proceedings please contact the Employee Relations Advice Centre on (08) 9365 7660 or advice@cciwa.com 

Elton v Acupuncture Australia Pty Ltd [2015] FWC 864 (Feb 4) 

Meeting the Minimum Income Threshold Amount – What Employers Need to Know Before 2 April 2019

By Erin Verzandvoort,
Employee Relations Adviser

Following a broad review of modern awards by the Fair Work Commission (FWC), employers in the real estate industry should start preparing for an important upcoming deadline, ending 2 April 2019. Currently, the Real Estate Industry Award 2010 (the award) prevents employers from allowing employees to remain on commission only arrangements if they do not meet the minimum income threshold amount (MITA) after an annual review period.

Employees who were engaged as commission only employees prior to 2 April 2018, need to have their gross income reviewed to establish if they achieved the MITA in the previous twelve-month period commencing 2 April 2018. For employees engaged after 2 April 2018, the review must not occur later than 12 months from the anniversary of their commencement on a commission only arrangement. The MITA is equal to 125% of the minimum wage for the employee’s applicable classification under the award. This amount is calculated as an annual gross amount, excluding statutory superannuation. Acceptable evidence of the employee having met the MITA may include; individual payment summaries, pay slips and/or commission statement records or other sales records.

It is important for employers to consider their options if it appears an employee will not meet the MITA by 2 April 2019. While the award simply states the commission only arrangement must cease, it does not provide any practical pathways for employers to choose in this event. The following options are available for consideration.

Termination

One option available to employers is to terminate the employee’s employment. This may be an appropriate solution where the contract of employment contains a provision to terminate employment if the MITA is not met. Even so, employers who terminate an employee may be at risk of an unfair dismissal  claim as well as possible claims for breaching the contract of employment. To carry out a fair and lawful termination, in accordance with the Fair Work Act 2009, employers should ensure there is a valid reason to terminate employment and a procedurally fair process is followed. Leading up to 2 April 2019, employers should monitor and manage the performance of commission only employees. Where appropriate and where it can be demonstrated that key KPIs have not been met, warning letters may need to be issued.

Change of contract

Changing the employment arrangement is an alternative option to termination of employment. If an employee fails to meet the MITA, they can no longer be employed on a commission only arrangement. However, they may still be eligible to be employed on other arrangements, such as a retainer/commission arrangement. This approach allows employers to retain employees who can no longer remain on a commission only arrangement by changing their employment conditions. An employer should not change the contract of employment without the express agreement from the employee and ideally any variation should be recorded in writing. Failure to do so could result in the employer breaching the employment contract and attract pecuniary penalties in the FWC or Federal Court.

Employers who continue to employ employees on a commission only arrangement who do not meet the MITA may be considered in breach of the award and could be liable penalties of up to $63,000 for the body corporate and $12,600 for individuals per breach. For serious breaches, under the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017, employers who deliberately and systematically breach an obligation, could be liable for penalties up to $630,000 for the body corporate and up to $126,000 for individuals for serious contraventions. 

Accordingly, it is important for employers who engaged employees on commission only arrangement prior to 2 April 2018 to consider the likelihood of their commission only employees not meeting the MITA by 2 April 2019 and what options are the most appropriate for the business.

If you are considering any of the options discussed we recommend you contact the CCIWA Employee Relations Advice Centre on (08) 9365 7660 or email advice@cciwa.com

Please Note! – The Membership fees will pro-rata depending on the day you join, to get today’s rate please contact us on 9365 7510.