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Man holding up "You are Fired" business card

Debate is raging about whether small businesses should be subject to the Fair Work Act’s unfair dismissal provisions, but the more important question is how many business owners really understand how to go about fairly dismissing an employee? 

Let’s start with the three ways in which a dismissal might be deemed to be unfair:

  • It’s unjust, which means that due process has not been followed at some point
  • It’s unreasonable, which means that there is a flaw in the reasoning used to justify the dismissal so that, in the circumstances, it is not a reasonable outcome and
  • It’s harsh, which means that the penalty doesn’t fit the offence, the circumstances or the effect on the dismissed person.

The ‘3 tents’

Before you make a decision on whether there is a case for dismissal of an employee, you must visit what’s called ‘the 3 tents’. These are:

  • Content: What effect did the act or omission in performance or conduct (or the sum of these) have on the business (performance or reputation) or people (staff, customers or others)? Was this sufficient to warrant dismissal or some other form of disciplinary action?
  • Intent: Was the act or omission by the employee deliberate or seriously neglectful? Were there any extenuating circumstances which could have contributed to the unsatisfactory performance or conduct? Was this consistent with the individual’s normal performance or conduct or was it out of character?
  • Extent: Turning the mirror on yourself, to what lengths have you gone to ensure proper standards of performance and conduct by your people? Has the employee been provided with a clear understanding of expectations re performance and conduct? Has the employee been provided with the time, resources and training needed to meet those expectations?

The 6 steps

Now keeping the ‘3 tent’s in mind at each step of the process, take the following 6 steps:

  1. Advise the employee that you need to meet to discuss issues with their performance or conduct and offer the opportunity to have a support person present
  2. Present the employee with the issues and the evidence of underperformance or misconduct inviting them to respond in relation to anything they dispute or any extenuating circumstances
  3. Consider the employee’s response, ensuring that you establish the facts in relation to any disputed or extenuating aspects raised by the employee.
  4. If you believe that dismissal is still warranted, advise the employee of that intention asking if there is a reason why you should not dismiss them.
  5. Consider their response and particularly whether termination would be harsh in the circumstances.
  6. If you still believe that dismissal is warranted, advise the employee of that decision and provide written notice of termination including the reasons as soon as possible (this is a legal requirement).

The dismissed employee might still lodge an unfair dismissal claim regardless of how well you have managed the process but this will help you to defend such a claim. It will also stand you in good stead with your other employees for managing the issues professionally and fairly.

Reflect and learn

Take time to think about how this situation came about and how you can minimise the potential for similar cases in future. Does it indicate a need to improve the way that you recruit, manage or train your people? What else have you learned from this experience?

This article does not constitute legal advice and is purely intended as a general guide to good practice in the professional opinion of the author.