Unfair dismissal claims during COVID-19

With the coronavirus pandemic now entering into the second half of the year, it is fair to say that most businesses, if not all, are feeling the effects. For many businesses this has meant the need to dramatically downsize their business and make staff redundant simply to remain operational. According to the Australian Bureau of Statistics, 594,000 Australians lost their jobs in the month of April alone as the pandemic squeezed the Australian economy.

Unfortunately, this increased number of redundancies makes many businesses open to the risk of unfair dismissal claims being levelled against them. In fact, throughout the pandemic, unfair dismissal claims have increased by 70 percent, with general manager of the Fair Work Commission Bernadette O’Neill saying the rate of applications coming through her agency was “significantly higher than any other period”.

So just how have unfair dismissal laws changed during the pandemic and what can employers do to ensure they are following best practice to keep them and their business safe from preventable risks?

Procedural fairness still applies

As it stands, the legislation surrounding employee dismissal still applies. Apart from the JobKeeper provisions, the Fair Work Act remains unaffected. This means that businesses are required to ensure procedural fairness is applied at all times, whether the dismissal is a matter of redundancy or employee performance. To avoid the risk of unfair dismissal claims, employers must ensure good practice and follow the necessary procedures associated with the valid reason for termination.

In the instance of a redundancy, an employer may need to give the worker redundancy pay, along with any outstanding entitlements owed to them, such as untaken annual leave. The Fair Work Act has requirements that employers have to meet before they can terminate a worker’s employment, such as providing notice periods and, in the case of redundancy, also providing consultation about proposed changes, as well as offering any available redeployment opportunities to affected workers. Employers should also check the applicable award, enterprise agreement, employment contract or workplace policy for any additional obligations they may need to meet.

It is important to remember that under the Fair Work Act, an employee is protected from being dismissed because of a temporary absence due to illness or injury (provided such absence does not exceed three months if they aren’t on personal leave), so if they have taken time off due to contracting COVID-19, this is not a valid reason for dismissal. If redundancy due to financial hardship is the given reason for termination, the business must ensure they can produce documentation or evidence proving this fact, along with the consultation and redeployment obligations previously mentioned.

COVID-19 is not an opportunity

One of the main reasons why an employee may file an unfair dismissal claim is if they feel their employer is using the pandemic as an opportunity to terminate employees without following the correct termination procedures.

In the instance of termination due to performance issues during coronavirus, it is imperative that employers ensure they still adhere to the performance management process as laid out by their policies and procedures. They must also produce the well documented procedural fairness elements the FWC requires to ensure such dismissals are considered fair. For instance, the employer should take actions including:

  • notifying the employee of the reason for dismissal and provided them with an opportunity to respond;
  • giving the employee prior warnings of the unsatisfactory conduct; and
  • allowing the employee to bring a support person with them to discussions relating to their dismissal.

The Fair Work Act also includes protections against being dismissed because of a protected attribute which forms the basis for discrimination, known as a General Protections or ‘adverse action’ claim. These protections continue to operate in relation to employees impacted by coronavirus.

Employee stand down during coronavirus

Employers may choose to stand down employees temporarily if they can no longer continue employment because of reasons beyond their control – in this case, the impact of the COVID-19 pandemic. Under the Fair Work Act, employers may be able to stand their employees down during the coronavirus outbreak for a number of different reasons. These can include where:

  • The business has closed because of an enforceable government direction (which means the employee can’t be usefully employed, even from another location).
  • There is a stoppage of work due to lack of supply for which the employer can’t be held responsible.
  • A ‘qualifying employer’ is using a JobKeeper enabling stand down direction under the new temporary JobKeeper changes to the Fair Work Act.

What’s important for employers to remember is that standing down employees is not the same as making them redundant. So while your employees will not be paid during the stand down period (unless you are receiving a subsidy such as JobKeeper to pay them), they will still need to be offered entitlements such as accrual of annual leave.

The Australian Government has introduced the JobKeeper wage subsidy scheme to support businesses significantly affected by the coronavirus. Qualifying employers can claim a reimbursement of $1500 per fortnight (from the fortnight starting on 30 March 2020) for each eligible employee.

Award and agreement flexibility during the COVID-19 pandemic

A number of unions and employer associations have applied to the FWC to increase award flexibility in some awards. As a result, the Commission has varied a number of provisions in those awards, including the Hospitality Award, Restaurant Award, Clerks Award and Vehicle Award, to give employers and employees extra flexibility to agree on alternative working arrangements.

The employer and its employees who are covered by an enterprise agreement can agree to an award variation to insert into their existing agreement; however employers must ensure that this follows best practice as outlined by the FWC.

For example, any award variation that the employer wants implemented must be approved by the majority of employees who vote for the variation. Before employees vote on a variation to their agreement, the employer must take some of the same steps as required to make a new enterprise agreement. This includes that the employees must have been given access to a copy of the variation for seven days before they vote.

An employer wanting to vary their agreement with employees should make themselves familiar with the specific award and the steps needed to ensure best practice is adhered to.

If your business needs assistance in ensuring procedural fairness and best practice during this time, contact Bayside Group Workplace Relations today. Our professionals can help reduce your risk of unfair dismissal claims and keep your business safe.