Unfair Dismissals and Jurisdictional Objections

Since the beginning of the COVID-19 pandemic, the Fair Work Commission has reported a drastic increase in unfair dismissal applications. As of May 2020, the increase was approximately 70%.[1]  The rise in unfair dismissal matters was inevitable in the wake of mass redundancies and business closures associated with the sudden disruption of the market, as former employees scramble to claim what entitlements they can in an uncertain economic climate.  The rapid and unexpected need to stand down or dismiss employees has also caught employers off-guard, which has contributed to accidental contraventions of industrial law.

Most unfair dismissal matters are resolved in the conciliation phase, with 78.4% of all matters being settled following conciliation in the 2018-2019 period.[2]  The remaining matters tend to move forward to a hearing.  While compensation is capped at 6 months’ salary or wages in the unfair dismissal jurisdiction,[3] a business can accrue significant legal costs in defending its interests, especially where the former employee is unwilling to settle or negotiate.  It is therefore in an employer’s best interests to resolve the matter as quickly as possible.

One potential option available to employers is a jurisdictional objection.  In essence, a jurisdictional objection is a claim that the Fair Work Commission does not have the jurisdiction to hear the unfair dismissal claim and must dismiss the matter as a result.  There are 7 common objections that can be raised, which are:

• The application is out of time (i.e. it was lodged more than 21 days after the dismissal took effect);
• The Applicant was not an employee of the employer;
• The Applicant was not dismissed;
• The dismissal was a case of genuine redundancy;
• The Applicant’s employment does not meet the minimum employment period;
• The Applicant earned more than the high-income threshold ($153,600 for dismissals after 1 July 2020); and
• The employer is a small business employer and complied with the Small Business Fair Dismissal Code.

While some objections are simple to prove, such as a late application, others can be surprisingly complex.  Even proving that an Applicant was not employed by the alleged employer can prove difficult, especially where there is not a clear divide between an independent contractor and a genuine employee.  However, a proactive approach and reliable documentation can be your best ally in succeeding in a jurisdictional objection and dismissing a matter in the early stages.

First and foremost, it is essential to maintain accurate records of your actions, and to take all due care to follow industrial law.  This may be following consultation requirements in the case of a redundancy or providing clear and concise reasons for dismissal along with appropriate documentation in the case of a small business dismissal.  Retaining evidence of your conduct will prove invaluable if you are called to respond to an unfair dismissal claim.

You should ensure your contracts are up to date and clearly reflect the employment relationship.  For independent contractors, your agreements should be drafted to show a clear distinction between a contractor and an employee; this may involve indicating their need to handle their own tax and insurance, the right to pursue work in their own way, and setting out that payment is made via remittance of invoices rather than through a regular pay cycle. 

Likewise, where an employee has a guaranteed salary uplift for work on site, or has work benefits such as a car, laptop or phone, you should clearly indicate their agreed value in an annexure to their employment contract.  An agreed value of an entitlement can be accepted without contest by the Commission,[4] which may allow you to successfully object on the grounds of the high-income threshold.

For casual employees, especially in labour hire, your contracts should stipulate that they will remain employees even when an assignment ends, unless specifically terminated, and avoid the use of terms related to full-time employees (such as restraint of trade or stand down).  This is especially important in the wake of Workpac v Rossato,[5] which has created ambiguity around ‘permanent casuals’ and attracted significant union attention.  A proper contract and record-keeping will allow you to prove that your casuals remain employed after an assignment, or after the end of a roster cycle.

Lastly, if you have in fact terminated an employee, make sure you have provided written confirmation!  A full-time employee is not considered to be terminated until they receive written notice of termination from their employer, which states their last day of work.[6]  If you neglect to provide this notice, an application that appeared to be out of time may be permitted to proceed.  Even where an employee is not a full-time worker, it is good practice to provide written notice, and a standard practice of providing notice can be relied upon to prove an employee was not dismissed in circumstances where they did not receive it.

It is never too early to review and improve your industrial relations processes and documentation.  Businesses without a dedicated HR or IR team should seek legal advice.  By following simple practices like those described here, not only will you minimise the risk of an unfair dismissal claim and other related claims, but you will also maximise your chances of dismissing any claims made with a jurisdictional objection.

[1] Matthew Doran, ‘Unfair dismissal claims shoot up 70pc amid coronavirus, Fair Work Commission says’, 21 May 2020, accessed at <https://www.abc.net.au/news/2020-05-21/coronavirus-unfair-dismissal-claims-shoot-up-70pc/12272306> on 20 October 2020.

[2] Fair Work Commission Annual Report 2018-2019, accessed at <https://www.transparency.gov.au/annual-reports/fair-work-commission/reporting-year/2018-2019-38> on 20 October 2020.

[3] Fair Work Act 2009 (Cth) s392(5).

[4] Fair Work Regulations 2009 (Cth) r3.05(6).

[5] [2020] FCAFC 84.

[6] Fair Work Act 2009 (Cth) s117(1).