Productivity report puts spotlight on procedural errors

Analysis

Productivity report puts spotlight on procedural errors

The Productivity Commission has recommended changes to the unfair dismissal process, including the removal of reinstatement or compensation as remedies for procedural errors. Paul Munro looks at the current status quo regarding procedural errors in unfair dismissal matters.

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As reported in WorkplaceInfo yesterday, the Productivity Commission has recommended changes to the unfair dismissal process, including the removal of reinstatement or compensation as remedies for procedural errors. Instead, it suggested the Fair Work Commission could recommend counselling and education of employers, or financial penalties.

But what does the Fair Work Commission have to consider under the current legislation, with respect to procedural errors, when determining if a dismissal was harsh, unjust or unreasonable? 

What’s harsh, unjust or unreasonable?

 
Each of these terms means: 
  • harsh – because of its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the alleged offence
  • unjust – because the employee was not guilty of the alleged offence on which the employer acted, or
  • unreasonable – because it was decided on inferences which would not reasonably have been drawn from the material before the employer.  
It may be that a termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, a termination of employment may be unjust because the employee was not guilty of misconduct on which the employer acted, may be unreasonable because it was decided on inferences which could not reasonably have been drawn from the material before the employer, and may be harsh because of the consequences for the personal and economic situation of the employee, or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.
 
In determining whether an employee’s dismissal was harsh, unjust or unreasonable, the Fair Work Act (s387) provides the criteria that the Fair Work Commission must take into account when determining the harshness, etc. of a person’s dismissal:
  •  whether there was a valid reason for the termination related to the employee’s capacity or conduct (including its effect on the welfare and safety of other employees)
  • whether the employee was notified of that reason
  • whether the employee was given an opportunity to respond to any reason related to the capacity or conduct of the person
  • any unreasonable refusal by the employer to allow the employee to have a support person present to assist at any discussions relating to dismissal
  • if the termination related to unsatisfactory performance by the employee – whether the employee had been warned about that unsatisfactory performance before the dismissal
  • the degree to which the size of the employer’s business would be likely to impact on the procedures followed in effecting the dismissal
  • the degree to which the absence of dedicated HR personnel would be likely to impact on the procedures followed in effecting the dismissal, and
  • any other matters that the Fair Work Commission considers relevant.
 The phrase ‘must take into account’ means that each of the criteria in the Fair Work Act (s387) are mandatory and must be considered when determining whether a dismissal is harsh, unjust or unreasonable. The criteria need only be taken into account to the extent that they are relevant. Failure to take account of each of the criteria is a significant error in law (and may provide a basis for appeal).
 
The consideration of whether there was a valid reason for termination is a separate issue from the determination of whether a termination was harsh, unjust or unreasonable. 

Procedural fairness


Not all procedural defects, either singularly, or in combination, will result in the tribunal finding that a particular dismissal is ‘harsh, unjust or unreasonable’. The seriousness of (say) proven misconduct may not necessarily be outweighed by any identified procedural fault/s. Any fault in the process must be of such significance such as to:
  • have denied the employee natural justice
  • have altered, or likely to have altered, the outcome for the employee, and/or
  • outweigh the seriousness of the misconduct proven against the employee.
 See Farquarson v Qantas Airways Limited [2006] AIRC 488; Byrne & Frew v Australian Airlines Ltd [1995] HCA 24

Absence of procedural fairness – exceptional circumstances

 
The criteria in establishing exceptional cases where an absence of procedural fairness might be excused include:
  •  circumstances where the application of the appropriate procedures would provide only a slim chance to an employee of persuading an employer not to dismiss
  • where the dismissal was inevitable
  • where the application of the procedures would be utterly useless
  • where the application of the procedures would be futile and would not have altered the decision to dismiss, or
  • where the conduct was so gross, or where the conduct was so obvious.
 See Dickinson v Woolworths Safeway Pty Ltd (1995) 6 VIR 161. 

Summary

 
The current unfair dismissal system means that all procedural factors must be taken into account by the Fair Work Commission when determining the fairness, or otherwise, of a dismissal. However, there can be circumstances where an absence of procedural fairness might be excused, at the discretion of the Fair Work Commission.

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