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Unfair dismissal after performance warning

The Small Business Fair Dismissal Code provides small business employers with a much more simple defence to unfair dismissal cases than is available to business employers which are not small businesses under the Fair Work Act when it comes to dismissing members of staff. This extract from a recent decision of the Fair Work Commission in such a case deals with the requirements of one such defence which can be made out for the jurisdictional defence to apply.

“Relevant provisions of the Act

A person has not been unfairly dismissed where the dismissal is consistent with the Code. Section 388 of the Act reads:

388 The Small Business Fair Dismissal Code

(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.

(2) A person’s dismissal was consistent with the Small Business Fair Dismissal Code if:

(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and

(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.

The Code is only relevant if the employer is a small business as defined in s 23 of the Act.

The Code provides:

Summary Dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other Dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement. The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Procedural Matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.


“Compliance with the Code

[31] If Ms Thurston’s dismissal was consistent with the Code, it cannot be ‘unfair’ within the meaning of the Act.

The ‘Other Dismissal’ part of the Code is clear in its terms. It states that an employee must be warned verbally or preferably in writing, that she or he risks being dismissed if there is no improvement. The employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem.

The Code requires me to have regard to whether BMI gave warning to Ms Thurston about the unsatisfactory work performance, as held to exist at a time before her dismissal. A warning must have been conveyed (with an appropriate level of gravity) so as to leave Ms Thurston in no doubt that BMI anticipated change in one particular area of performance or another. In short, Ms Thurston must have effectively been put on notice prior to her dismissal that BMI held genuine and substantial concerns about her performance. Further, a chance to rectify the performance problem(s), should have been provided.

Mr Boima gave evidence that he spoke to Ms Thurston about her poor work performance in November 2020. Ms Thurston contends this was not the case. Nevertheless, Dr Boima’s evidence did not suggest that he had warned Ms Thurston about her performance, and while a business review had been conducted in the latter part of 2019, it would be wrong to suggest that it had culminated in Ms Thurston being informed of her problematic work performance. The evidence does not support such a finding.

From the purported conversation in November 2020 until the time Ms Thurston received the letter of termination on 10 February 2020, there was no evidence that lent itself to finding Ms Thurston had been warned and provided with the opportunity to rectify the performance problem.

The picture presented is that Mr Boima was completely dissatisfied with Ms Thurston’s work performance but did little, if not anything, to address it. Dr Boima couched his indifference in managing Ms Thurston’s work performance as some sort of protective or softened approach. The Code is clear in what it requires, and there was no evidence before me to suggest that Ms Thurston was so compromised in her fitness for work that she lacked capacity to look after her own interests, or would, for fitness reasons, have been unable to rectify problems in her performance if informed of the same.

Having considered BMI’s compliance with the Code, I can only conclude it was non-compliant. BMI has not succeeded with its jurisdictional objection and therefore consideration is now given to whether the dismissal of Ms Thurston was harsh, unjust or unreasonable, as those terms are understood by reference to s 387 of the Act.”

Thurston v Bunbury Medical Imaging (2020) FWC 3962 delivered 24 August 2020 per Beaumont DP

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