Fair Work Act Update – Is it really fair?

Given the economic climate there is little room for failure of performance by employees, especially where it may be damaging to the business. How Employers terminate an employee can be risky and many finding themselves before the Fair Work Commission because they got it wrong. A claim for unfair dismissal is an accessible and cheap process for many employees and can end up costing employers a lot of time and money. Below we review some of the tips, traps, and various risk management measures available to Employers.

Should employers have a Social Media Policy?

The dramatic increase in use of social media platforms poses significant challenges in the workplace. If employers want to restrict potentially damaging comments by employees on social media about their organisation, they need to write and implement a suitable social media policy.

Glen Stutsel v Linfox Australia Pty Ltd [2011] FWA 8444

The employer terminated the employee for serious misconduct following the employee and friends making racially derogatory and sexually discriminatory comments about managers on his Facebook page.

The sexual comments about one manager were not made by the employee and the Commission considered it strange to hold the employee accountable for the comments of others. It was relevant that the employer did not have a social media policy and no other employees who made derogatory comments were the subject of any sanction by the employer. The Commission concluded the employee was not guilty of serious misconduct and there was no valid reason for termination, and therefore he had been unfairly dismissed. The Commission ordered he be reinstated and receive lost wages following termination. The case is currently the subject of appeal.

The Commissioner was critical of the employer for not having a social media policy.

Is the termination a Genuine Redundancy?

Employers who fail to observe the Fair Work Act 2009 (Cth) (the Act) redundancy requirements can find themselves exposed to unfair dismissal claims. A recent decision before the Fair Work Commission highlights these legal requirements which include the need to consider alternative positions and to consult with the affected employee about the redundancy.

Horn v Mastermyne Engineering Pty Ltd [2012] FWA 10846

The employee claimed he was not genuinely redundant because:

• there was no consultation or any demonstrated effort to identify alternative positions in the employer’s business;
• after termination, his duties were allocated to other employees not qualified to undertake the work; and
• the employer subsequently advertised positions the employee was qualified for.

The employer claimed employee’s role was no longer required to be undertaken by anyone due to changed operational requirements, in response to a downturn in the coal industry. Senior Deputy President Richards considered it did not matter whether the employer redistributed the employee’s former duties to other employees, who were not qualified, as that was a matter for the employer.

The employer established it had investigated the availability of alternative positions in the employers group of companies; however, those investigations were unsuccessful. The positions advertised after the employee was terminated, were for fitters undertaking underground work – which the employee did not meet the regulatory requirements for. Richards SDP determined that there was no obligation on the company on this occasion to overcome the difference in skill and experience by retraining the employee.

The employer had held a “pre-start meeting” with employees at which the organisation review was explained, the record of that meeting was publicly available and employees had been invited to proffer suggestions to offset, avert or mitigate the proposed changes. Thus the employer had complied with the consultation provisions of the relevant Award.

Richards SDP concluded that the employee had been made genuinely redundant and the employee’s application was dismissed.

Is a system of employee warnings advisable?

A failure to document performance management procedures such as communicating expectations and issuing warnings properly, may expose an employer to an unfair dismissal claim if the employee is later terminated for poor performance.

Moumtzis v Dolina Fashion Group Pty Ltd [2013] FWC 501

In a business that has a large amount of creativity and experience as part of the role, it is difficult to define the boundaries of employment agreement. The employee in this case was terminated on the basis she was unfit for her position as a designer of women’s clothing. The employer had informed her that she had not achieved the required profit margins for the business and was purchasing expensive fabrics.

The employer did not put forward any evidence concerning performance discussions had prior to the termination and Vice President Watson was left to consider the uncontested evidence of the employee. She did not have any KPI’s, budgets or annual reviews and therefore her employer’s perception she was not performing, did not amount to a valid reason for termination.

The evidence did not establish that the employee had been warned of unsatisfactory performance prior to the termination. The fact there was no valid reason for termination, no chance for the employee to respond and no prior warnings, led to the conclusion the employee was dismissed unfairly. VP Watson ordered the employer pay the employee 22 weeks remuneration as compensation. Ouch!

Termination without an investigation is dangerous

Employers must keep clear records of all investigation processes particularly if they may have disciplinary consequences such as termination. Employers must warn employees that the specific conduct may lead to dismissal. The case of Read shows following proper procedures in the investigative stage and during disciplinary action is vital.

Read v Gordon Square Childcare Centre Inc T/A Gordon Square Early Learning Centre [2012] FWA 7680

Here the employee at a childcare centre had a parental complaint against them. The substance was their child was left unattended when upset by the employee, was not given breakfast, and on another occasion had been allowed to play with electrical outlets. This was investigated by the childcare centre management.

The evidence found that the employee had admitted she left the child unattended and that this was a failure to supervise and was a significant breach of childcare regulations. This was deemed serious misconduct which was not so serious that the employee’s employment should not continue and they were summarily dismissed..

It was significant that the employee was not warned that her conduct could result in termination. The Commissioner concluded the employee did leave the child unattended and unsupervised. This was a breach of the National Law and the Supervision Policy of the Centre. It was accepted, that the employee had previously allowed children to play under her reception desk where there were dangerous wires.

The employee was informed that her failure to supervise of a child was the reason for termination of employment. The childcare centre afforded the employee procedural fairness in the process of investigation because they had presented the allegations, allowed her to respond and then made a finding which in turn was communicated to her. The employee was also allowed a support person at both meetings with the employer. While previous discussions about performance did not constitute warnings, ultimately the Commissioner concluded that summary dismissal was fair.

Attend Fair Work Commission Proceedings

If a former employee brings an unfair dismissal claim before the Fair Work Commission, employers cannot afford to ignore such a claim. Regardless of size, time and resources, employers who ignore a claim run the risk of the Commission making adverse findings against them in their absence.

Bargmann v Stilnovo Pty Ltd T/AMurano and Gullotti [2013] FWC 1080

In this case the employer did not attend the scheduled telephone conference or provide submissions on request from the Commission. On that basis the Commissioner accepted the applicant employee’s evidence unchallenged and found that the employee had been unfairly dismissed.

What does this mean to Employers?

The following points must be noted:

• Implement a suitable social media policy– without it, you are lacking a valuable system in managing the social media behaviour of your workforce;
• Redundancy may not mean redundancy under the Fair Work Act unless you stick to the rules;
• Failure to implement and document a warning process will damage your ability to defend performance based terminations;
• Appropriate investigation, and compliance with natural justice requirements, can significantly assist in the defence of unfair dismissal proceedings;
• Do not fail to respond to  the Fair Work Commission as it will find against an employer in absence of submissions

We have identified some common sense points arising from dealing with employees and the Commission but keep in mind the utmost effort is given to support employees if they file a claim. There are no cost consequences generally so you must factor in the time and expense of responding and representation if allowed.

Always keep your records clear and ask for the employee to sign an acknowledgement of the meeting record if possible. Seek assistance and try to mediate any emotional situations by always having a witness present in any discussions.