The most effective and misunderstood tool for employers to eliminate the risk of unfair dismissal claims… guaranteed!
To their own emotional and out of pocket cost, many employers do not understand the ‘minimum employment period’ that applies to their employees…
That statement is proven by the regularity of enquiry we receive from employers about how to manage the risks of dismissing an employee whose employment started 27 weeks or 53 weeks before. We usually have to gently explain that, had they called us 2 weeks earlier, things would have been much simpler!
Risk of unfair dismissal claims
Those employers are well aware most employees can apply to the Fair Work Commission for unfair dismissal if they have been terminated by their employer, or forced to resign because of something the employer did. However, they are not aware:
- Why an employee who is still within their minimum employment period is not eligible to claim for unfair dismissal.
- How to calculate the minimum employment period for their employees.
- How to manage the minimum employment period for other employees.
Why an employee who is still within their minimum employment period is not eligible to claim for unfair dismissal
An employee is ineligible to apply for unfair dismissal if they are still within their minimum employment period. The Fair Work Commission does not have jurisdiction to hear an unfair dismissal claim.
In that case, the employer simply has to defend the claim by raising the jurisdictional defence which is stated in the Form 3 Employer Response as:
2. Jurisdictional objections
2.1 Do you have any jurisdictional or other objection(s) to the application?
Jurisdictional objections relate to why an employee is not eligible to make an application to the Commission. An objection is not simply that you think that the employee’s dismissal was unfair. The Commission’s Unfair Dismissals Benchbook has more information on jurisdictional objections.
[X] Yes [ ] No
2.2 On what basis do you object? If you object on multiple grounds you can select more than one from the list below:
The application is out of time (i.e. lodged more than 21 days after the dismissal took effect)
[ ] The Applicant was not an employee
[ ] The Applicant was not dismissed
[ ] The dismissal was a case of genuine redundancy
[X] The Applicant’s employment does not meet the minimum employment period
[ ] The Applicant earned more than the high income threshold (currently $142,000 per annum)
[ ] The business is a small business, and the dismissal was consistent with the Small Business Fair Dismissal Code Other
In that situation the employer has a complete jurisdictional defence to the claim.
The only exception is if the employer had waived the minimum employment period. However, merely stating a shorter ‘probation period’ in an employment contract does not usually waive the minimum employment period. Also, failing to refer to the minimum employment period in a written employment agreement does not usually waive the minimum employment period. In those situations the employer can still rely upon the minimum employment period to defend the claim and have it discontinued by the Fair Work Commission.
How to calculate the minimum employment period
The minimum employment period is:
- 12 months for employees employed in a small business
- 6 months for employees employed in a larger business
A small business is defined as any business with fewer than 15 employees on a simple head count of all employees who are employed on a regular and systematic basis, when the person is given notice of the dismissal or immediately before the dismissal.
How to manage the minimum employment period
Small business employers should diarise 10 months from start of employment and decide if the employee is the right fit. If a right fit, the employment can be allowed to continue. If not, the employer should consider ending the employment before 12 months.
Other business employers should diarise 4 or 5 months from start of employment and decide if the employee is the right fit. If yes, the employment can be allowed to continue. If not, the employer should consider ending the employment before 6 months.
Getting it wrong
We also see many examples of employers incorrectly calculating the minimum employment period.
Remember that the head count of employees is carried out when the person is given notice of the dismissal or immediately before the dismissal. This can cause problems for growing businesses. A small business that is growing quickly might prudently forecast that by the time an employee has been employed for nearly 12 months, the business will have grown to more than 15 regular and systematic employees. That business should consider doing its ‘right fit’ review of the employee before 6 months.
The employer must end the employment within the minimum employment period. If an employer (not a small business) gives termination notice before the minimum employment period ends, but the employment does not end until after the 6 months because the employee took leave or worked out their notice period, then the employee is eligible to apply for unfair dismissal.
In a recent case before the Fair Work Commission (FWC) the Commonwealth Bank defended a claim for unfair dismissal by a bank manager who the bank claimed was terminated within the employee’s minimum employment period of 6 months. The employee admitted that there was a meeting about their position before the 6 months ended but said that employment termination was not notified in the meeting. Surprisingly, the bank had failed to give the employee an employment termination letter in the meeting. The bank posted the letter notifying employment termination before the 6 month period but the letter was not received by the employee until after the 6 month period. Ultimately the FWC accepted that the employee was given verbal termination notice (effective that day) in the meeting which was within the minimum employment period, and dismissed the unfair dismissal claim, but not until after a time consuming and stressful case.
Also, the minimum employment period does not protect against claims for dismissal for unlawful reasons such as:
- A person’s race, colour, sex, sexual orientation, age, mental or physical disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction or social origin (some exceptions apply, such as where it is based on the inherent requirements of the job).
- Temporary absence from work because of illness or injury.
- Trade union membership or non-membership or participation in industrial activities.
- Being absent from work during maternity leave or other parental leave.
- Temporary absence from work to engage in a voluntary emergency management activity.
- An employee exercising or purporting to exercise a workplace right by making a complaint or enquiry in relation to their employment, or participating in proceedings against the employer.
The employer has to take particular care in these situations, particularly with their decision-making processes and documentation records. An employer faced with this kind of claim may have the onus to prove that the termination was not for an unlawful reason. That is much harder to do when the decision-making process to terminate the employment was confused and undocumented.
What to do next
If your business is having difficulty with an employee:
- Keep simple records of the problems.
- Check that the employee’s minimum employment period reminder is in your calendar.
- At that date, conduct your right fit review.
- If you have any lingering concerns, call us to discuss before the minimum employment has ended.
- Give a letter of termination notice that states a last day of employment before the minimum employment period has ended.
For assistance with employee performance and conduct issues, please contact us.