Termination of Employment: Australian Business Lawyers & Advisors Australian Business Level 10, 140 Arthur Street Lawyers & Advisors NORTH SYDNEY NSW 2060 Tel: (02) 9458 7005 Fax: (02) 9954 5029 e-mail: [email protected] website: www.ablawyers.com.au Australian Business Lawyers & Advisors Pty Limited (ACN 146 318 783) is the Trustee of Australian Business Lawyers & Advisors Trust (ABN 76 008 556 595). Liability limited by a scheme approved under Professional Standards Legislation. Legal practitioners employed by or being directors of Australian Business Lawyers & Advisors Pty Limited are members of the scheme. 2nd Edition UpdatEd FEbrUary 2011 rrp $45.00 a new legal framework The Fair Work Act took effect on 1 July 2009. As with the previous legislation, the Fair Work Act provides a framework for dealing with claims of unfair dismissal and provides a means by which unfairly dismissed employees may be compensated or reinstated to their former employment. The Fair Work Act expands the unfair dismissal protections to the majority of employing businesses. Even small businesses are affected by these laws and the Fair Work Act includes a special dismissal code for small business. The relevance of the Fair Work Act is not just confined to unfair dismissal claims. The National Employment Standards as contained in the Fair Work Act provide for minimum periods of notice and minimum severance pay conditions where employment is terminated due to redundancy. The Fair Work Act also provides additional protections from termination for prohibited reasons. our objective Employers need to ensure compliance with existing laws and need to be suitably informed in order to assess the potential effects of laws upon their businesses. Termination of employment is a subject that can be confusing and daunting for employers. Dismissal can expose employers to challenges to the fairness of the dismissal and several other legal actions. It is not possible for a single handbook to deal with everything that is relevant to the subject of termination of employment and this handbook does not purport to be comprehensive. However, the handbook is designed to be an information resource in which key issues are explained and illustrated by example. In keeping with this objective, the handbook contains an overview of unfair dismissal and unlawful termination processes under the Fair Work Act and includes practical checklists for redundancy, counselling and discipline, warnings and pre-dismissal checks. Making business life simpler Our mission is to make business simpler by using everyday scenarios to explain the workplace law issues which frequently confront business. Our team has a wealth of experience in all areas of workplace law. We use the intellectual property from our strategic practice to provide tangible and practical solutions. By promoting how workplace law is understood, we promote compliance. Experts make things simple aUstralian bUsinEss lawyErs & advisors pty ltd Level 10, 140 Arthur Street NORTH SYDNEY NSW 2060 Tel: (02) 9458 7005 Fax: (02) 9954 5029 e-mail: [email protected] AUSTRALIAN BUSINESS LAWYERS & ADVISORS website: www.ablawyers.com.au Australian Business Lawyers & Advisors Pty Ltd is a wholly owned subsidiary of the NSW Business Chamber Contents Contents Chapter 1: Reasons for termination of employment 2 Chapter 1: Reasons for termination of employment 2 Chapter 2: Prohibited reasons 6 Chapter 2: Prohibited reasons 6 Chapter 3: Notice of termination 11 Chapter 3: Notice of termination 11 Chapter 4: Redundancy 15 Chapter 4: Redundancy 15 Chapter 5: Unfair dismissal, unlawful termination 19 Chapter 5: Unfair dismissal, unlawful termination 19 Chapter 6: The Small Business Fair Dismissal Code 29 Chapter 6: The Small Business Fair Dismissal Code 29 Chapter 7: Discrimination claims 30 Chapter 7: Discrimination claims 30 Chapter 8: Checklists 32 Chapter 8: Checklists 32 APPENDIx APPENDIx Form 1 Notice to Centrelink of proposed dismissals 35 Form 1 Notice to Centrelink of proposed dismissals 35 Form 1 Notice to Centrelink of proposed terminations 36 Form 1 Notice to Centrelink of proposed terminations 36 Form F2—Application for Unfair Dismissal Remedy 37 Form F2—Application for Unfair Dismissal Remedy 37 41 Form F3—Employer’s Response to Application for an Unfair Dismissal Remedy 41 44 Form F4—Objection to Application for Unfair Dismissal Remedy 44 45 Form F8—Application for FWA to Deal with a General Protections Dispute 45 Form F8A—Response to Application for FWA to Deal with a General Protections Dispute 49 Form F8A—Response to Application for FWA to Deal with a General Protections Dispute 49 Small Business Fair Dismissal Code 51 Small Business Fair Dismissal Code 51 Form F3—Employer’s Response to Application for an Unfair Dismissal Remedy Form F4—Objection to Application for Unfair Dismissal Remedy Form F8—Application for FWA to Deal with a General Protections Dispute © AUSTRALIAN BUSINESS LAWYERS & ADVISORS. This handbook has been prepared for information purposes only. It is a summary and it does not purport to be comprehensive or to render legal advice. It may not be reproduced without the written permission of Australian Business Lawyers & Advisors. © AUSTRALIAN BUSINESS LAWYERS & ADVISORS. This handbook has been prepared for information purposes only. It is a summary and it does not purport to be comprehensive or to render legal advice. It may not be reproduced without the written permission of Australian Business Lawyers & Advisors. Australian | Termination of employment AUSTRALIAN Business BUSINESS Lawyers LAWYERS &| Advisors TERMINATION OF EMPLOYMENT Australian | Termination of employment AUSTRALIAN Business BUSINESS Lawyers LAWYERS &| Advisors TERMINATION OF EMPLOYMENT 1. Reasons for termination of employment 1. Reasons for termination of employment “A contract of employment like any contract can come to an end in a number of ways. Termination can be “by” the employer where an employee “is dismissed” either with notice in accordance with the provisions of the contract or without notice in the event of serious and wilful misconduct. Both the employer and the employee may mutually agree that the contract of employment should come to an end. In other cases the employee may bring about the termination by resigning.” “A contract of employment like any contract can come to an end in a number of ways. Termination can be “by” the employer where an employee “is dismissed” either with notice in accordance with the provisions of the contract or without notice in the event of serious and wilful misconduct. Both the employer and the employee may mutually agree that the contract of employment should come to an end. In other cases the employee may bring about the termination by resigning.” Allison v Bega Valley Council (1995) 63 iR 68 at 72. Allison v Bega Valley Council (1995) 63 iR 68 at 72. There are various ways in which employment can come to an end. If the employer is responsible for bringing the employment to an end, it can be said that the employment has terminated at the initiative of the employer. If the employee is responsible for bringing the employment to an end, it can be said that the employment has terminated at the initiative of the employee. If the employee is employed for a fixed term, the employment ends at the time agreed by the employer and the employee. There are various ways in which employment can come to an end. If the employer is responsible for bringing the employment to an end, it can be said that the employment has terminated at the initiative of the employer. If the employee is responsible for bringing the employment to an end, it can be said that the employment has terminated at the initiative of the employee. If the employee is employed for a fixed term, the employment ends at the time agreed by the employer and the employee. This chapter describes some frequently encountered reasons for termination and some important considerations such as particular responsibilities of the party who initiates the termination. This chapter describes some frequently encountered reasons for termination and some important considerations such as particular responsibilities of the party who initiates the termination. REsignAtion REsignAtion An employee can resign from the employment by giving the employer notice. The period of notice may be stated in a contract; an award; or an enterprise agreement. An employee can resign from the employment by giving the employer notice. The period of notice may be stated in a contract; an award; or an enterprise agreement. Illustrative examples - resignation Illustrative examples - resignation Joe’s written contract of employment requires one month’s notice of termination. Joe wishes to resign. To comply with the terms of his employment, Joe must give his employer one month’s notice. Joe’s written contract of employment requires one month’s notice of termination. Joe wishes to resign. To comply with the terms of his employment, Joe must give his employer one month’s notice. Marie is employed under an enterprise agreement. The agreement requires two weeks notice from an employee with between one year and not more than three years continuous service. Marie has been employed for just over two years. She wishes to resign. Marie will need to give her employer two weeks notice. Marie is employed under an enterprise agreement. The agreement requires two weeks notice from an employee with between one year and not more than three years continuous service. Marie has been employed for just over two years. She wishes to resign. Marie will need to give her employer two weeks notice. If the employee does not resign voluntarily, but is forced to do so because of the employer’s conduct, the termination can be considered to be at the employer’s initiative. This situation is often described as ‘constructive dismissal’. If the employee does not resign voluntarily, but is forced to do so because of the employer’s conduct, the termination can be considered to be at the employer’s initiative. This situation is often described as ‘constructive dismissal’. 2 2 Reasons for termination of employment Reasons for termination of employment Business &| Advisors | Termination of employment AUSTRALIAN Australian AUSTRALIAN BUSINESS LAWYERS BUSINESS | Lawyers LAWYERS TERMINATION TERMINATION OF EMPLOYMENT OF EMPLOYMENT Australian | Termination of employment AUSTRALIAN Business BUSINESS Lawyers LAWYERS &| Advisors TERMINATION OF EMPLOYMENT 1. Reasons for termination Illustrative example - constructive dismissal of employment An employee who is constructively dismissed could gain access to the unfair dismissal jurisdiction - subject to satisfying any other relevant conditions for gaining access to that jurisdiction. Unfair dismissal is covered in chapter 5 of this handbook. An employee who is constructively dismissed could gain access to the unfair dismissal jurisdiction - subject to satisfying any other relevant conditions for gaining access to that jurisdiction. Unfair dismissal is covered in chapter 5 of this handbook. Illustrative example - constructive dismissal Michael is the quality control manager of a small department store. He has been employed for “A contractsix ofyears. employment likeinany contract canreveals come to an an enditem in aof number of missing. ways. Termination An audit Michael’s store that stock is There is no record can be “by” employer whereofanthe employee “is dismissed” either with noticethe in accordance with tothe show the location item. Without any further investigation employer concludes that the provisions of the contract or without notice in the event of serious and wilful misconduct. Michael stole the item. Michael’s supervisor tells Michael that, unless he resigns, the police will Both the employer the employee mutuallythen agree thatMichael the contract of employment be calledand to investigate. Themay supervisor gives a letter of resignationshould previously come to anprepared end. In other the employee may bring about termination by resigning.” by thecases supervisor. Even though he does notthe really wish to resign, Michael signs the resignation because he feels pressured and thinks that he will be dismissed if he does not sign. Allison v Bega Valley Council (1995) 63 iR 68 at 72. In this example, the resignation letter does not represent Michael’s free consent. The conduct of Michael’s employer is the principal contributing factor leading to the termination of the employment so the dismissal iscan at the initiative Michael’s employer.is responsible There are various ways and in which employment come to an of end. If the employer for bringing the employment to an end, it can be said that the employment has terminated at the initiative of the employer. If the employee is responsible for bringing the employment to an end, it sUMMARy disMissAL has (instAnt disMissAL) can be said that the employment terminated at the initiative of the employee. If the employee is employed for a fixed term, the employment ends at the time agreed by the employer and the If the conduct of the employee is sufficiently serious, an employer can dismiss the employee employee. without giving notice. This right is reserved for very serious circumstances. The employee’s conduct demonstrates wilful encountered or deliberatereasons behaviour inconsistentand with the important continuation of the This chapter describes some frequently for termination some contract employment. Examples are:ofphysical violence; fraud; the theft; refusal to carry out a lawful considerations suchofas particular responsibilities the party who initiates termination. and reasonable instruction. REsignAtion Illustrative example - summary dismissal Michael is the quality control manager of a small department store. He has been employed for six years. An audit in Michael’s store reveals that an item of stock is missing. There is no record to show the location of the item. Without any further investigation the employer concludes that Michael stole the item. Michael’s supervisor tells Michael that, unless he resigns, the police will be called to investigate. The supervisor then gives Michael a letter of resignation previously prepared by the supervisor. Even though he does not really wish to resign, Michael signs the resignation because he feels pressured and thinks that he will be dismissed if he does not sign. In this example, the resignation letter does not represent Michael’s free consent. The conduct of Michael’s employer is the principal contributing factor leading to the termination of the employment and so the dismissal is at the initiative of Michael’s employer. sUMMARy disMissAL (instAnt disMissAL) If the conduct of the employee is sufficiently serious, an employer can dismiss the employee without giving notice. This right is reserved for very serious circumstances. The employee’s conduct demonstrates wilful or deliberate behaviour inconsistent with the continuation of the contract of employment. Examples are: physical violence; fraud; theft; refusal to carry out a lawful and reasonable instruction. Illustrative example - summary dismissal An employee can resign from the employment by giving the employer notice. The period of notice may be stated a contract; an award; an enterprise Peterinhas been employed for or eight years and agreement. occupies a supervisory position. His contract requires four weeks notice of termination. As part of his job, he is responsible for a petty cash float of $1,000. There is a detailed procedure for the proper use of petty cash. Peter is well aware of that procedure. Despite this, Peter uses the petty cash for his own personal Joe’s written contractand of employment month’sfrom notice termination. Joe wishes to purchases attempts to requires conceal one his actions theof employer by misleading behaviour resign. To and comply with the terms of his employment, Joe must give his employer one month’s explanations. However, the employer finds out about Peter’s conduct and his attempts notice. to conceal the facts. The employer is satisfied that Peter has misappropriated its funds and Peter’s employment is terminated withoutThe notice. In this example, Peter has conducted himself Marie is employed under an enterprise agreement. agreement requires two weeks notice in a manner contrary to his duty of honesty towards his employer. This dishonest behaviour is from an employee with between one year and not more than three years continuous service. inconsistent with the continuation of the employment. Marie has been employed for just over two years. She wishes to resign. Marie will need to give her employer two weeks notice. Illustrative examples - resignation Peter has been employed for eight years and occupies a supervisory position. His contract requires four weeks notice of termination. As part of his job, he is responsible for a petty cash float of $1,000. There is a detailed procedure for the proper use of petty cash. Peter is well aware of that procedure. Despite this, Peter uses the petty cash for his own personal purchases and attempts to conceal his actions from the employer by misleading behaviour and explanations. However, the employer finds out about Peter’s conduct and his attempts to conceal the facts. The employer is satisfied that Peter has misappropriated its funds and Peter’s employment is terminated without notice. In this example, Peter has conducted himself in a manner contrary to his duty of honesty towards his employer. This dishonest behaviour is inconsistent with the continuation of the employment. If the employee does not resign voluntarily, but is forced to do so because of the employer’s conduct, the termination can be considered to be at the employer’s initiative. This situation is often described as ‘constructive dismissal’. 2 Reasons for termination Reasons of employment for termination of employment 3 Reasons for termination of employment 3 Termination of Employment: Australian Business Lawyers & Advisors Australian Business Level 10, 140 Arthur Street Lawyers & Advisors NORTH SYDNEY NSW 2060 Tel: (02) 9458 7005 Fax: (02) 9954 5029 e-mail: [email protected] website: www.ablawyers.com.au Australian Business Lawyers & Advisors Pty Limited (ACN 146 318 783) is the Trustee of Australian Business Lawyers & Advisors Trust (ABN 76 008 556 595). Liability limited by a scheme approved under Professional Standards Legislation. Legal practitioners employed by or being directors of Australian Business Lawyers & Advisors Pty Limited are members of the scheme. 2nd Edition UpdatEd FEbrUary 2011 rrp $45.00
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