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News

Can you stop the rising tide of unfair dismissal claims

Monday, July 30, 2012

Is defending an unfair dismissal claim becoming too difficult? A recent research study conducted by Professor Oslington, of the Australian Catholic University and Assistant Professor of Economics, Benoit Freyens, of the University of Canberra, gives weight to this claim. The study conducted by the pair, compared unfair dismissal data under the last three major versions of workplace law. The research highlighted that 17,000 unfair dismissal claims are now being processed each year compared to around 6,000 under Work Choices and 7,000 under the previous Workplace Relations Act. Not only did the research show that unfair dismissal claims are on the rise, but the number of successful claims has also increased.

Specifically the study identified the following:

  • Workplace Relations Act (1993 – 2006) 48 per cent of claims were successful, 35 per cent of cases won compensation and 13 per cent of claimants were reinstated in the company
  • WorkChoices (2006-2009) Only 33 per cent of cases were successful with 21 per cent of claimants receiving compensation and 12 per cent were reinstated in the workplace
  • Fair Work Act (2009 – present) 51 per cent of cases were successful, 42 per cent won compensation with only 8 per cent of claimants returning to their position.

This rise has principally been attributed to two things. Firstly the inclusion of small businesses in the system and secondly, claims being pursued under adverse action, thereby increasing the total number of claims. In considering this research, we need to ask: What does an employer need to do if they only have a 50:50 chance of success? What can be done to mitigate the risk in the first place?

In the majority of cases that come before the tribunals, employers have a valid reason for the dismissal of an employee but time and time again we see employers failing to give reasonable and due consideration to the broader issues. These are issues that can impact on the dismissal being seen by the tribunal as ‘harsh, unjust or unreasonable’. The case of Lambley v DP World Sydney Ltd FWA March 2012 clearly demonstrates this. Mr. Lambley was involved in a physical altercation which took place in the car park of his employer’s premises and he was subsequently dismissed for serious misconduct, resulting in him bringing a claim for unfair dismissal. At the hearing Mr. Lambley claimed he was set up; that in his 30 years of employment with the company he had never had so much as a warning or been involved in any type of altercation. An investigation was conducted by the employer and witnesses gave evidence Mr. Lambley was taunted by the other employee to meet him in the carpark. CCTV was also viewed but appeared to have been tampered with. Whilst the employer agreed the actions of the employee were “out of character”, it stuck to its position of zero tolerance in relation to the behaviour, not wanting to send a message that this type of behaviour was acceptable. FWA however agreed with the employee that the dismissal was “manifestly unjust”. In coming to this decision they gave consideration to broader issues in relation to the case:

  • The employees remorse;
  • His clean employment record;
  • The employee being taunted by the other employee;
  • That the behaviour of the employee to react like this was out of character; and
  • The fact that the other employee involved no longer worked for the company.

FWA acknowledged that Mr. Lambley had breached policy yet he was reinstated.

As employers we need to be mindful of our broader obligations when making decisions in respect to terminations. Not only to be procedurally fair but to give consideration when there are potentially mitigating circumstances because if they are played out in a tribunal we need to ask, does it have the potential to make the decision appear unfair.

For advice on challenging performance management or potential termination situations, please feel free to contact us or on 02 4963 7373