The rules around when staff can be terminated while they are on leave can be a source of consternation for management and human resources professionals.
The consequences of getting it wrong are demonstrated in the recent Fair Work Commission decision of Tuan Nguyen v Adelaide Fencing and Steel Supplies Pty Ltd [2020] FWC 79 (30 January 2020).
In this case, the employer was ordered to pay compensation to an employee deemed to have been unfairly terminated.
The Facts of the matter
Mr Nguyen was a business manager for Adelaide Fencing and Steel Supplies who was dismissed from his employment following allegations of fraud and dishonesty associated with the supply of products to a customer.
Following his termination, he lodged an application for unfair dismissal, arguing that the seriousness of the allegations levelled against him were not supported by the available evidence.
Although the Commission found that there was legitimate cause for concern about Mr Nguyen’s reckless conduct, and he had been validly terminated, it was ultimately held that due process had not been followed in effecting the termination.
This was because Mr Nguyen was found not to have been given prior warning or a “genuine opportunity” to deal with the serious substance of the allegations, particularly given as Mr Nguyen was on extended sick leave at the time of the termination.
Accordingly, the dismissal was found to have been harsh, unreasonable and unfair, with the Commission ordering compensation in the sum of $10,000.
key lessons employers can learn
Employers should take note of a few key principles which underpinned the decision in Nguyen, namely:
- The Commission expects employers to provide a “fair go all round”. In practice, this means that decisions in relation to employment status cannot be made arbitrarily. Instead, they must take into account a balanced, practical and common sense method to ensure that both the employer and the employee are treated fairly. Notably, this includes an opportunity to respond to allegations made against the employee by the business.
- Procedural fairness is king. Although it is certainly understandable that employers wish to exit staff who are underperforming or otherwise breaching workplace practices or even the law as expeditiously as possible, there is no excuse to “rush” the process, at the cost of following due process. This means providing employees with clearly articulated warnings, notice of the reasons for dismissal, ensuring a legitimate and practical opportunity has been given for them to respond, and permitting the employee to have a support person of their choosing attend any interviews.
- In addition, objectivity is crucial. When making decisions as to ongoing employment, it is essential that the results of any investigation can stand up to objective standards of evidence, and will not be undermined by allegations of subjectivity or bias.
- Take your time. Unless there are urgent reasons to immediately terminate employees (such as serious criminal activity), there is no benefit in terminating too quickly. This is especially the case when employees are on sick leave, as in most cases the Commission will determine that due process has not been followed in dealing with those staff.
- Engage in performance management early. Although there may be a concern that a documented performance management process will further alienate an unhappy or recalcitrant employee, engaging in this process at appropriate times and in a correct fashion will bolster any ultimate termination, should this become necessary. It also affords the employer a reasonable management defence when challenged.
In unfair dismissal claims, the Commission will prioritise “a fair go all round” and not hesitate to find in favour of an applicant (notwithstanding that they may have engaged in legitimate misconduct) if procedural fairness is not followed. To ensure procedural fairness when dealing with misconduct, contact WISE for resources, expert advice and independent, unbiased investigation services.
