Mark Cox, Director & Joanna Knoth, Senior Associate

Dismissing an employee can be stressful and complex process. It is a significant decision that carries legal risks and can take a significant amount of time, resources and effort.

Especially in cases of employees who earn below the defined high income threshold, or who are covered by an award or enterprise agreement, care needs to be taken to minimise the risk of an unfair dismissal claim in a state or federal industrial commission.

To protect your business, ensure that you have a valid reason to terminate an employee. Before you terminate, make sure you have given the employee procedural fairness. Follow any applicable rules about dismissal, notice of termination, and final pay, including accrued untaken annual leave. With a legitimate reason, a proper procedure, and quality legal advice, you can feel secure in terminating an employee with minimised risk.

Below are four valid reasons for dismissing an employee.

  1. Misconduct

Misconduct can refer to a range of behaviour including breaching company policy and inappropriate behaviour. Serious misconduct includes theft, fraud, assault, other unlawful activity and any wilful or deliberate conduct that is fundamentally inconsistent with continuation of the employment, and conduct that causes and serious and imminent risk to health and safety or the reputation, viability or profitability of the employer’s business.

Company policy should be clearly set out so you have grounds to take action.

You need to have evidence that misconduct occurred and that efforts were made to formally warn the employee about their misconduct. You don’t need to give any warnings in the case of serious misconduct before you can terminate, but you do need evidence and procedural fairness.

Due process or procedural fairness means giving the employee the opportunity to respond to allegations about their conduct.

In cases of serious misconduct, employers do not have to provide any notice of termination. However, as this is a drastic measure, you need to be sure you have a sound basis and valid reason, having afforded procedural fairness.

  1. Incapacity

Capacity relates to an employee’s ability to carry out the requirements of the job. In order to use incapacity as a legitimate reason to terminate an employee, you need to identify the core duties of the job position and assess the employee’s ability to perform them. In doing so, you must ensure that you are not unlawfully discriminating against the employee by reason of illness or some other incapacity.

Once again, you need evidence that a lack of capacity exists and that reasonable measures were taken to find a solution or provide alternative duties. This is especially important in the case of disability or medical incapacity.

  1. Poor Performance

Managing poor performance can be a risky process. A structured and well-prepared performance management plan or improvement procedure can protect you from ending up on the receiving end of a bullying or unfair dismissal claim.

Identify the performance problem and formally discuss it with the employee. You need to give concrete examples of poor performance rather than general comments about their productivity. Give them the opportunity to respond, advise them on how they can improve their performance and give them time to do so. Most importantly, you need to document the process.

Ensure that you can demonstrate a well-established performance management process in case a claim is made against you. Check contracts, industrial agreements, policies and procedures to ensure you are complying with any relevant rules or procedures. Verify your facts, ensure you have evidence and again, above all, document everything.

  1. Genuine Redundancy

Redundancy is a valid reason for termination. You need to prove that the employee’s position is no longer required to be performed by anyone because of changes in the operational requirements of your business.

Protect your business from an unfair dismissal claim by making sure you follow any consultation requirements outlined in an applicable award or registered agreement. You should also have explored all reasonable opportunity to redeploy the employee in another position. It is best practice to consult employees about redundancy and redeployment regardless of the right to be consulted under an award or enterprise agreement. Affording empathy to employees who are adversely affected by redundancies goes a long way in minimising the risk of claims.

Contact MDC Legal if you need to speak with employment lawyers in Perth, especially if it’s about how to lawfully dismiss an employee. Our workplace lawyers are experienced in HR legal issues and understand the laws governing dismissals. We can safeguard your business from costly, reputation-damaging, and time-consuming disputes with dismissed employees.