Simple bipartisan amendment to improve unfair dismissal laws

Has unfair dismissal (“UD”) legislation become unmanageable? Is the Commission ‘lucky dip’ of subjective application making precedent and certainty irrelevant? Many recent UD decisions have found questionable ‘mitigating factors’ which lead to reinstatement of an offending employee, even where he/she was dismissed for violating reasonable company policies.

The unpredictability and subjectivity of the ‘mitigating factors’ which are being found to exist in UD cases, to ‘trump’ a dismissal pursuant to a ‘valid reason’, suggests much more certainty, predictability and, in turn, confidence and trust, can be injected into the FWC through a simple legislative amendment to the Fair Work Act 2009 (Cth) (“FW Act”).

What does the law currently state?

The FW Act, at s 385, currently states:

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

Multiple FWC decisions have applied the law (as it is) to conclude a dismissal was justified, but unfair, based on a range of ‘mitigating factors’. These factors include:

  • Contrition;
  • Employment history;
  • Whether or not bullying remarks were specifically directed at someone or made more generally; and
  • Whether or not the ex-employee set out to “maliciously insult” a co-worker, or he/she was merely impulsively trying to do something acceptable.

The subjective application by the FWC of ‘mitigating factors’ is shredding confidence in the UD system, and creating inconsistent, bizarre and questionable decisions inconsistent with modern society’s expectations. For example:

Mt Arthur Coal Pty Ltd t/a Mt Arthur Coal v Jodie Goodall [2016] FWCFB 5492 (“Mt Arthur Coal”)

In this case, the ex-employee’s misconduct included making islamophobic and homophobic tirades on an open radio channel at the employer’s mine. His conduct also created low-medium safety concerns due to the two-radio system meaning that other could not speak whilst he was using the channel for his ‘commentary’. The FWC Full Bench determined that his comments were merely banter, and Mr Goodall had not been specifically targeting any individual. They also took into account his strong contrition. Consequently, despite having deliberately breached a company policy known to him and for which he had been trained on Mr Goodall’s dismissal was found to be too “harsh”, and he was reinstated.

Starr v Department of Human Services [2016] FWC 1460 (“Starr”)

Secondly, in Starr, the ex-employee had been dismissed for breaching the employer’s policies over a three-year period when he used social media platforms to publicly post negative and inappropriate comments. The FWC found the department had legitimate grounds to dismiss the employee for publicly posting:

  • Comments describing the employer’s clients as “spastics and junkies” and “whingeing junkies“;
  • Assertions that many clients seeking exemptions from having to look for work on medical grounds were disingenuous,
  • Statements that he was “embarrassed” to work at the department, and
  • Declarations that processing times were “utterly disgraceful”.

However, the unpredictable ‘mitigating circumstances’ again reared its head, and owing to:

  • the length and quality of his service,
  • the officer’s conduct bearing no relationship to his actual work performance (and having caused no actual detriment – since when has an employer had to quantify loss in a UD defence?), and
  • the employee having not set out with an intent to damage the employer’s reputation or harass/hurt his colleagues (the FWC finding the misconduct occurred in a “situational” context when he was merely intending to impulsively respond to online comments he considered inaccurate).

The FWC concluded the dismissal was too “harsh”. Reinstatement also followed.

What needs to be done to allow employers to adhere to society’s expectations?

Surely everyone can agree workplace laws and UD matters more specifically need to align with society’s morals and protect workers from abuse by co-workers. Accordingly, given the subjective and highly unpredictable way in which UD legislation is currently being applied (what is the point of precedent if each case, and unique ‘mitigating factors’ can serve as a distinguishing factor) it is time for UD law to evolve, and clearer legislative guidance be provided to the FWC, so that it adequately reflects society’s expectations. We consider the following red insertions will make UD laws more effective at achieving society’s expectations whilst also injecting greater consistency, predictability and public confidence into this area: 

385  What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a)   the person has been dismissed; and

(b)  the dismissal was harsh, unjust or unreasonable; and

(c)   the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d)   the dismissal was not a case of genuine redundancy; and

(e)  the dismissal was not because the employee engaged in misconduct breaching a known workplace policy, if the employee was trained in the known workplace policy within the 12 months prior to the misconduct.

385A  Dismissal for breaching a “known workplace policy

For the purposes of s 385(e), “known workplace policy” means a written policy, promulgated by the employer:

(a) relating to workplace health and safety, anti-discrimination or workplace harassment,

(b) containing reasonable content, and

(c) where the employer can demonstrate the employee was aware of such content.

How will this amendment improve the UD system for all?

This essential legislative update will ensure employers

  • Have confidence in their ability to enforce the workplace policies they have gone to the trouble and expense of creating, and promulgating to their workforce;
  • Take real action to effectively eliminate workplace misconduct or co-worker abuse (without fear of a subjective ‘lucky dip’ decision which reinstates the employee back into the workforce);
  • Feel less pressured to pay ‘go away money’ as a result of the unpredictable and uncertain way in which UD laws are currently being applied for misconduct / policy breach cases.

Furthermore, the amendment outlined above ensures employees will be protected from unfair dismissal due to breaching unreasonable policies or where the employee was not adequately trained in, or otherwise aware of the policy requirements. Given this amendment’s fairness protections for employees, and that it will only apply to ‘weed out’ those knowingly doing the wrong thing at work, we see little reason why this legislative improvement should not receive wide support from trade unions and employee advocates (as well as bi-partisan support in Federal Parliament).

By moving on those misconducting/abusive/unsavoury employees, it is not hard to imagine adopting this change would have tangible benefits at the workplace level like increasing productivity, morale and employee satisfaction, by empowering managers to eliminate inappropriate or unacceptable employee behaviour and know they will be supported in any subsequent UD matter (regardless of whatever spurious, subjective ‘mitigating factors’ might potentially exist).

If you need advice about disciplining and dismissing employees for breaching workplace policies, or need your policies updated, please contact our Managing Director Mark Ritchie on 0458 644 469.

Mark Ritchie

Mark Ritchie

Mark is passionate about helping Australian businesses efficiently resolve their industrial relations issues. Mark has demonstrated proficiency advising managers, executives and boards of small to medium-sized enterprises, as well as some of Australia’s best-known companies, on both litigious and non-litigious matters.

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