Dismissals and Terminations

Fortunately, employees perform their duties well with little need to take corrective action. There are times, however, where an employee is not meeting either performance or behaviour expectations, it is critical to act. Coaching and retraining are often all that is required to bring about an improvement in the employee’s behaviour or performance. There are occasions when this type of supportive action does not result in positive changes leaving a manager to take some form of disciplinary action to correct the less than expected employee output. Disciplinary action is a formal process many managers find difficult and time consuming to implement.

And a word of caution…

Three strikes and you’re out – this is a myth!

From time to time, there are misunderstandings about employer and employee rights and obligations at work. For example:

Myth: As an employer you have to give employees three warnings before terminating their employment.

Fact: There is no legal requirement to give three warnings. The exception may be the inclusion of a disciplinary process within an enterprise agreement and in this case, it is legally binding.

This update focusses on bringing about changes where an employee is not meeting business expectations and coaching and retraining has not brought about the desired improvements. We also seek to dispel the myth of needing to have three warnings in a process leading to termination of employment.

Why should I take disciplinary action?

As difficult as it often is, taking disciplinary action with an employee, who is underperforming or behaving badly, is designed to bring about change. Sometimes we incorrectly mix attitude with performance and behaviour. Attitude is both difficult to measure objectively and difficult to modify whereas assigned tasks and expected behaviours are very easy to measure and apply.

If we fail to take action to bring about change, we are exposing our business to potential harm and expectations start to diminish across the whole workforce becoming quite hard to re-introduce. For example, if we accept poor behaviour, others start to modify their own behaviours to a lower standard and soon, many expectations are lost.  Imagine the pet dog who digs up your garden; if not checked and even disciplined, eventually your garden has lost all its charm and becomes a pile of dirt.

When we engage people, we introduce them to the business through an induction and we talk about expectations and workplace standards. The aim of any good people management approach is to maintain those standards, consistently and fairly.  At times, this may require being quite firm and direct with employees in disciplining them.

Before embarking on disciplinary action, you should consider these two factors carefully:

  • Is the underperformance or unsatisfactory behaviour characteristic of this employee in the past and what actions were taken then?
  • If the current situation is not characteristic or typical of this employee, what additional support and guidance might I need to introduce to bring about improvement?

Your consideration of these may lead to providing more coaching and training for the employee or even allowing the employee more time to improve prior to taking disciplinary action. If you feel these factors have limited application or lack relevance, proceed with taking disciplinary action.

What are some outcomes of a disciplinary process?

The aim of any corrective or disciplinary activity is to bring an employee’s performance or behaviour back to acceptable standards. 

Sadly, and often despite best efforts, an employee may not respond to attempts to correct poor performance or unacceptable behaviour and corrective action in the form of termination of employment may need to be considered. If this is the case, a manager must be certain every attempt has been made to correct the issue and that the underperforming or misbehaving employee understands termination of their employment is a possible outcome if no improvements are made.

Making an employee aware of the possible outcome being termination of employment is termed “issuing a warning”. The aim of a warning is to jolt an employee into making positive change. A warning must be in writing and a copy provided to the employee after the meeting.

Warnings will generally energise an employee into making changes and the resultant improvement is beneficial for both the employee and the employer. Where a warning has been issued and there has not been sustained improvement, you need to review the following:

In your judgement, is there a strong likelihood of improvement by this employee? 

  • If so, grant the employee more time and remind them they need to make improvements. Reinforce your message by indicating you may issue a further warning. Remind the employee that termination of employment is a likely outcome if no improvement is made.
  • If not, is it appropriate to consider termination of employment as the next and most appropriate step?

A further warning won’t have the desired effect; what next?

You may feel that issuing a further warning will have limited or no benefit. This would occur where there has been very little improvement or unsatisfactory attempts at making improvements. In this case, you should consider termination of employment as the possible next step. Before taking any action, you need to ensure your actions comply with any terms of an enterprise agreement (if one applies) or an employment agreement or the requirements of a business policy. If you are not sure, we recommend you obtain HR advice before proceeding further.

Why can’t I just ‘sack’ someone?

This is often asked and the correct answer is that “you can”. However, the more complete response needs to consider the legal and moral frameworks in which we employ people in this country.

There are many factors to consider:

  • Is the employee still in their probationary period?
  • Has the employee been advised they are not meeting business expectations in relation to behaviour and/or performance?
  • Is there a process where an employee’s performance or behaviour has been discussed with them and agreed actions have been put in place?
  • Has the employee been warned about their unsatisfactory performance or behaviour?
  • Is the employee aware that their employment is under scrutiny and that termination of employment is a possible outcome?
  • Has the employee been given an opportunity to respond to allegations of poor performance or behaviour?
  • Has the employee been offered a support person in a potential termination discussion?
  • Has the employee indicated to you why termination would cause them harm; that is, have they had the chance to explain why you should not terminate their employment?
  • Is the employee at an age when I need to consider alternatives to termination, or the amount of notice may need to be checked?

These above points stem from current Australian employment laws such as the Fair Work Act 2009 and the many hundreds of cases where employers have needed to defend their decision to terminate an employee’s employment in the Fair Work Commission, the Federal Court and similar jurisdictions.

In addition, there are other factors to consider such as the impact a decision to terminate employment may have on the workplace, the nearby community and the potential impacts on reputation of the company and financial implications.  Whilst these may be quite secondary, they are important factors to consider and, in some cases, a termination of employment may lead to workplace disharmony or even industrial action.  These factors should not prevent a proper decision being made; they may require putting contingencies in place to minimise further business risk.

What about a situation that is really bad; can I sack an offending employee more easily?

There are some employee actions that are deemed as ‘serious misconduct’. These are behaviours that are totally unacceptable and include but are not limited to theft, serious safety breaches, fighting at work, fraudulent activity, sexual harassment, refusing to perform reasonable tasks assigned to them and similar behaviour problems.

Serious misconduct is a class of behaviour(s) where the employment relationship between the employee and the employer becomes very fragile (or damaged) and for it to continue would be unreasonable. 

There are still procedural steps to be taken when dealing with serious misconduct. 

These are:

  • the employee is made fully aware of the allegation of serious unacceptable behaviour and is given an opportunity to respond to the allegation
  • the employee is made aware that the termination of their employment is a very real possibility
  • the employee has had the opportunity to have a support person present in the meeting with the employer about the serious misconduct
  • the employee has the opportunity to “show cause”.That is, they are given opportunity to explain why they feel termination of employment is too harsh and that the employer seriously considers their show cause response (this can be best handled, for example, by asking the employee “Tell me why I shouldn’t terminate you?”)

In most cases, termination of employment resulting from serious misconduct means the employee is not paid notice of termination. They will still receive other entitlements such as payment of accrued annual leave. Again, before taking any action, you need to ensure your actions comply with any terms of an enterprise agreement or the requirements of a business policy. We recommend you obtain HR advice before terminating an employee’s employment.

If demotion is the desired action to be taken, what else do I need to consider?

An employer may be faced with the prospect of demoting an employee, be it for example, for disciplinary reasons or because an employee’s position has become redundant. While this may be viewed by the employer as preferable to the dismissal of an employee, there are a number of implications of which an employer should be aware when considering the demotion of an employee. 

If you are considering demotion as an option, we strongly urge you to seek advice by calling AAT HR Advice powered by AB Phillips so we can provide advice and processes to follow on how best to manage this change based on your unique situation.

So, how many warnings are necessary?

There is sometimes the mistake made of creating unnecessary disciplinary restrictions in workplace policies. Some employers mistakenly include a process of ‘three warnings’ in workplace policies as well-intentioned guidance for their managers to follow and because of this, the process can easily become stuck because of the need to comply with an internal policy or procedure at all times. For example, a restriction like needing to issue three warnings could leave a manager without any ability to take action when faced with serious misconduct or a serious underperformance situation. As indicated above, sometimes an enterprise agreement may specify the need for three warnings; in this case it would need to occur.

The Fair Work Act does not indicate any minimum amount of warnings; the focus of this legislation with unsatisfactory performance or unacceptable behaviour relates to the potential end point of dismissal and whether or not it was fair. The number of warnings given to an employee (if there is a need for more than one) will depend on the nature of the unsatisfactory performance or unacceptable behaviour.

In considering unfair dismissal applications, the Fair Work Commission is required to take into account whether a dismissed employee had been warned about the unsatisfactory performance/conduct before the dismissal. The number of warnings that are appropriate before an employer may dismiss a misbehaving or underperforming employee, will depend on the facts and circumstances of each case.

Needing advice and help?

If you would like assistance with managing performance issues including termination of employment or if you are interested in introducing terms and conditions of employment to support workplace standards, please contact our team of advisors at AB Phillips, Monday to Friday between 9:00 am and 5:00 pm AEST by phone on 1300 208 828 or email advice@abphillips.com.au or subscribe to AAT HR advice powered by AB Phillips.

Please note that the above information is provided as comment and should not be relied on as a substitute for detailed professional advice from AB Phillips or professional legal or financial advice on any particular matter. Where you would like additional information and support about the content in this document please contact AB Phillips.