There are numerous risks that decision-makers should be aware of when contemplating termination of employment. The below list sets out some of the most common risks to keep in mind, including:
- Unfair Dismissal Claims
- General Protections Claims
- Potential Penalties under the WHS Act
Let’s take a brief look at the abovementioned claims.
A successful unfair dismissal claim can result in an award of compensation of up to six months’ of the employee’s salary. Furthermore, the Fair Work Commission can make non-monetary orders, such as reinstatement of the employee.
Termination of employment – Unfair Dismissal Claims
There is no course of action that will eliminate the risk of an employee bringing a claim against their former employer in respect of any termination of employment. Therefore, the key is to minimise the risks of any such claim being successful.
An unfair dismissal claim hinges on an employee showing that the termination was “harsh” “unjust” or “unreasonable”. This means that the process leading to any termination of employment is just as important as the grounds for the dismissal itself.
Termination of employment – General Protections Claims
The significance of a general protections (GP) claim is that the quantum of compensation that can be awarded is uncapped. This means that if the GP claim is successful, then the financial impact of the claim may be potentially very significant. A GP claim hinges on the premise that the employer has taken adverse action (including termination) against an employee on the basis of a protected attribute or due to the exercise of a workplace right or because the employee engaged in industrial activities, and it requires that the employer discharge a reverse onus of proof to disprove the claim that the termination was decided on grounds that are specifically prohibited under the Fair Work Act (FW Act).
Under the FW Act, adverse action includes:
- Dismissing an employee.
- Injuring the employee in their employment.
- Altering the position of the employee to their detriment.
- Discriminating between the employee and other employees.
Protected attributes include, but are not limited to:
- Race, colour, sex, sexual orientation, age, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction, and social origin.
Risks Associated with a GP Claim include:
- Legal and Financial Risks, including:a. Compensationb. Penaltiesc. Reinstatement of the employee
- Reputational Risks:a. Adverse publicity resulting from a GP claim can damage the employer’s reputation and affect relationships with other employees, customers, and stakeholders.
- Operational Risks:a. The time and resources required to respond to a GP claim can disrupt business operations and divert attention from core business activities.
Potential penalties under the WHS Act
Employees cannot be dismissed in connection with a work-related injury for a specified period from the commencement of the injury giving rise to the Worker’s Compensation Claim (6 months in NSW; 12 months in Qld). Employers who contravene the provisions of the WHS Act in their State risk incurring financial penalty.
If you’re considering termination of an employee’s engagement, get in touch with our team before taking steps, so you can ensure your business is protected and the risks have been mitigated.
Get in touch to discuss your options with our team.