As a general rule we like to make our blog posts positive in nature. However, business life is not always like this and sometimes we find ourselves in a position where we need to dismiss a team member.
Such dismissals can occur for a number of reasons including:
- Advances in technology
- Significant change in a business model
- Merger or takeover
- Business functions being outsourced
- Business downturn
These dismissals may result in a team member being made redundant.
Other reasons may include:
- Poor performance
- Bad behaviour
These dismissals may result in a team member being terminated.
It is important that if a decision is made to terminate someone, that the appropriate processes and procedures have been properly followed. Further, it is important that it can be adequately demonstrated that these processes and procedures have been followed. Failure to do so can potentially result in the business facing an unfair dismissal claim or adverse action claim under the Fair Work Act.
It can be very costly to replace a team member so it may be more cost effective to invest further in an individual through training and coaching to improve behaviour or attitude issues rather than to dismiss and rehire. In fact, many subpar performance issues have arisen due to poor culture caused by inadequate induction, training and coaching rather than inherently bad attitudes or incompetence.
As redundancy and dismissal arise from different circumstances, as outlined above, the processes for each also differ.
To make an employee redundant, employers first need to undertake a review to determine whether the redundancy is legitimate.
To be redundant, the position really needs to be no longer required. A simple or non significant change to a role would not be legitimate in arguing that a position is redundant.
To determine whether a position is redundant, you need to ask the following questions:
- Where is the business heading when it removes the current role?
- Will there be a requirement for this kind of role in the business moving forward?
- Is the business establishing any other positions as a consequence of disestablishing the role?
Once it is decided that a position is no longer needed and that there is a legitimate redundancy, an employer needs to discuss to all affected employees outlining why their work will no longer be required. Consultation requirements for each individual will depend on the terms of employment with the business and include:
- Existence of any contracts of employment
- An award under Fair Work
- Statutory obligations
- Industrial Relations guidelines
- Terms of any Enterprise Agreements
The consultation with the employee should discuss the proposals to remove them and whether there are any other options for employment in the organisation. Further, the employee should be open to offer their own thoughts. This process may result in a decision not to proceed with the redundancy or take an alternative approach.
Any performance concerns with the employee should be clearly articulated well in advance of any termination. These should be in writing and recorded and signed by the individual and employer so that concerns of employee performance are clear.
The employee should then be given a reasonable opportunity to improve as well as provide an opportunity to respond to any concerns as their view may be contrary to the employer’s.
The employee’s feedback and reaction in respect of this process may change your approach to the dismissal. Being consultative is key to this process.
Before any dismissal, a performance management plan should be put in place to assess any performance deficiencies – employees should have input into the development of the performance plan.
If, following on from the performance management process, their performance is not up to the agreed standard, an employee may be terminated.
Consequences of Termination
If an employee is made redundant, there are minimum entitlements payable under the Fair Work Act that apply to most Australian employees. These include:
- Entitlements without notice pay of up to five weeks
- If an employee is over 45 and been employed by you for more than two years, pursuant to the Fair Work Act there are additional severance payments.
- If they have been employed for more than 12 months and the employer has more than 15 employees, then it’s up to 16 weeks pay
There may also be additional payments pursuant to their contract of employment, award or employment agreement.
Once terminated, the employee should return all confidential information, passes to properties and other keys and removal of any remote access to computers, if applicable.
Access to emails and phones should not be switched off before the decision to terminate an individual’s employment. The employee should understand the termination process and how they will be managed. This should include the provision of a termination letter, how and when access to company resources will be switched off and when company property should be returned.
The process should be handled with empathy with clear communication.
Termination can have a major negative impact on company morale. It’s important that remaining employees see that the process is handled fairly and with compassion. That said, it also provides an opportunity to demonstrate that bad behaviour will not be tolerated. In some cases, it will be a relief to the team as the terminated employee may have been a key factor in the creation of a toxic environment.
In summary, this is just an outline. Please do not assume that this is a step by step guide through the process. Correctly handling an employee termination is crucial in ensuring that unintended consequences do not arise from the process – such as unfair dismissal.
We suggest that you contact your trade or professional organisation for assistance. Further, contact should be made with Fair Work to seek information as to how to handle the process. Finally, you should seek legal advice if you are still unsure.