A very flawed approach to the Dismissal Process

It’s a recurring issue that many employers seem to struggle with: getting the dismissal process right. It appears simple enough- if an employer has a valid reason for a dismissal and the process is handled with procedural fairness, then there should be no reason for an unfair dismissal claim. But why do so many employers get it wrong?

In a recent FWC[1] case it was held that an employee was unfairly dismissed despite his behavioural, performance and conduct issues which included the downloading and storing of pornographic material on his company phone and laptop. Unfortunately, the disciplinary process and the employee’s dismissal were riddled with errors which resulted in a termination that was found to be harsh, unjust and unreasonable.

Smarter Insurance Brokers, a small business, had mistakenly relied upon a clause in the employee’s contract that it believed meant payment in lieu of notice would relieve it of the obligation to provide a substantive reason for dismissal. Consequently the employer dismissed the employee and paid out the notice period without following the usual process. The FWC found that this was a manifestly invalid and flawed approach to dismissal, and that as a result the employee was denied natural justice.

The FWC found that the employee was deprived of procedural fairness when he was:

  • Summoned into a meeting unaware of its serious nature.
  • Not told of the real reason for the dismissal.
  • Refused the opportunity to have a support person present.
  • Denied any opportunity to respond to any underlying performance and conduct issues.
  • Never told his employer was unhappy with his work performance nor had he ever received a written warning stating his employment was in jeopardy.

Following the dismissal the employer discovered that the employee had accessed and stored pornographic material on his company phone and laptop, which it claimed amounted to misconduct warranting summary dismissal. However, not only was this allegation never addressed with the employee, the FWC referred to the fact that the employer had no policy regarding the use of its equipment being confined to work-related activities. In those circumstances it found that the conduct did not amount to a valid reason for dismissal.

In summary Commissioner Cambridge stated as follows:

“The abrupt processes that the employer adopted for dealing with the dismissal of the applicant was severely flawed, such that the applicant was denied any opportunity to respond to what may have been the underlying reasons for his dismissal. The employer completely failed to deal with the dismissal of the applicant in any fundamentally fair manner.”

The FWC acknowledged the fact that whilst the company was a small business with no HR function, they could have sought legal advice which would have avoided this dismissal disaster.

Lessons for Employers

  • Ensure the exact reasons for the dismissal are sufficiently clear and employees are notified of those reasons.
  • Follow a dismissal process closely. The FWC will consider whether the dismissal was harsh, unjust or unreasonable in light of how the process was handled.
  • Always remember to make note of verbal warnings and keep copies of written warnings.
  • If an employee’s performance begins to slip, plan a meeting and ensure you follow a fair and reasonable process (e.g. providing notice of the meeting, offering to bring a support person, outlining the specific concerns). Performance should be monitored for a reasonable period to allow for improvement.
  • Ensure your company policies are clearly drafted and are regularly communicated to your employees so they are aware of your expectations.
  • Small businesses (fewer than 15 employees) must follow the Small Business Fair Dismissal Code.

A recent case heard by the FWC reminds employers that there must be a valid reason for a dismissal and that the process should be handled with procedural fairness to avoid unfair dismissal claims. When in doubt, it’s always best to seek legal advice before taking any action.


[1] Allan Croft v Smarter Insurance Brokers Pty Ltd [ABN: 15 601 405 323] [2016] FWC 6859 (28 September 2016)

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