When a small South Australian bakery sacked one of its employees a couple of years ago, the business’ owners believed they had every right to do so. The baker had been fiddling his time sheets and lied about it; had brought his wife and child into the bakery in breach of instructions and occupational health and safety legislation; and had already been warned about threatening behaviour towards the bakery’s managers.
The employee made an unfair dismissal claim to Fair Work Australia and won, despite the judge finding that the termination “was neither unjust nor unreasonable”. The downfall of the bakery – whose name was not revealed in the judgement – was that it did not properly follow the procedures set out in the Small Business Dismissal Code. Specifically, it didn’t offer the employee the opportunity to have a support person present when his performance was being discussed, despite the employee not requesting one.
The mistake – which cost the bakery two weeks’ salary, legal fees and a lot of time – demonstrates how careful businesses have to be when sacking staff, even if they have a good reason.
FAIR DISMISSAL CODE
There is a common misconception that unfair dismissal provisions don’t apply to small businesses. But businesses with 15 or fewer employees still have to treat employees fairly and abide by the provisions of the Small Business Dismissal Code, which was introduced by the Labor government in July 2009.
Brad Swebeck, a workplace relations lawyer at Hicksons Lawyers, says if a small business can demonstrate it has followed the code, it has a good defence against an unfair dismissal claim. “If you don’t follow that then you’re leaving yourself open to potential successful applications being made and someone being reinstated or compensation being paid,” he says.
If an employee is not doing their job properly, they can’t just be sacked. They need to be called to a meeting and told what is lacking in their performance and given an adequate opportunity to fix it.
Employees need to be warned well in advance of the meeting about their performance and given an outline of what will be discussed, as well as the opportunity to bring a representative or support person to the meeting. At the meeting, the employee needs to be told what they are doing wrong and given the chance to explain if there are any issues
“At the end of the meeting if you aren’t satisfied with the employee’s responses then you would inform them the issues remain live and the employee has a certain period of time to fix those issues,” says Swebeck.
These meetings should be documented, in case it is needed for evidence if an unfair dismissal claim is made, Swebeck says.
Employees can’t claim for unfair dismissal if they’re sacked in their first 12 months of employment at as small business, but they still have to be treated fairly. Any employee, regardless of when they were terminated, can use what’s known as the general protection provisions of the Fair Work Act, which deal with any “adverse action” by an employer. “I would always recommend following the code,” says Swebeck.
Underperformance or misconduct by staff can be upsetting for a small business owner, who can see it damaging the business they’ve worked so hard to build up. But Joe Murphy, a director at Australian Business Lawyers, says it’s crucial business owners don’t let their emotions take over.
“They need to try and step back from it and as best as they can and try and put yourself in a third party’s shoes and think what would a reasonable person do in these circumstances,” says Murphy.
This is particularly true when it comes to summary dismissal. In these cases it is fair for an employer to dismiss an employee without notice or warning in the case of serious misconduct, such as theft, fraud, violence and serious breaches of occupational health and safety procedures.
If a staff member has been given warnings about their performance – and there’s no required number of warnings – and still hasn’t improved then it might be time to dismiss them.
Grace Collier, owner of Australian Dismissal Services, says the business owner should tell the employee that concerns remain about their performance and the owner is planning to terminate their employment. The employee then needs to be given time to consider their position and return the next day with the chance of explaining if there are any factors that are hindering their performance before a final decision is made.
The business owner needs to consider what the employee has to say at the subsequent meeting rather than moving straight to sacking them. “You don’t just do it all in one go; you need to step it out a bit,” says Collier. “The important thing is not to pre-empt the process.”
Remaining staff need to be told honestly what’s happened, because they’re likely to have a pretty good idea of what was going on anyway.
“That does two things: one, it gives you a lot of credibility as a manager, and two, it lets staff know there are standards and expectations.”