Small business matters: Procedural problems did not make dismissal unfair

The Fair Work Commission’s (FWC) recent decision in CA v Lane Cove Retirement Units Association Ltd t/as Pottery Gardens Retirement Village [2016] FWC 7504 put the small business fair dismissal code (the Code) in the spotlight.

Since the Code came into effect in 2010, there have been varied responses from the FWC decisions about the Code.  Some decisions have criticised the Code, with some commentators calling for the Code to be removed completely.

Under the Fair Work Act 2009 (Cth) (FW Act), small business employers (those employers with less than 15 employees) who terminate employees in accordance with the Code can rely on this exemption should an ex-employee lodge an unfair dismissal application.

In this matter the Applicant was unsuccessful in convincing the FWC that the termination of her employment was harsh, unjust or unreasonable.  The Applicant’s employment was terminated on the basis of her performance and her failure to improve despite ongoing assistance and training.

The process adopted by the employer was that the Applicant was called into a meeting (with no prior notice) to discuss her performance issues, however, she did not respond to the allegations as she felt it was “pointless.”  The Applicant misunderstood the meeting and believed she had the opportunity to respond in writing subsequent to the meeting.  However, she received confirmation in writing that her employment had been terminated.

The Applicant submitted that her dismissal was unfair because:

  • the reasons for her dismissal were fabricated and she denied them;
  • she was not given a meaningful opportunity to respond to the allegations and she only knew of the allegations at the meeting; and
  • she had received no previous warnings about her performance.

Despite this, Commissioner McKenna found that there was a valid reason for dismissal, in particular to the Applicant’s capacity to perform her role and that she could not undertake the basic routine aspects of her role. 

In addition, this case was unique as previous warnings were not given to the Applicant about her performance. However, the FWC did not consider this to be a fatal blow to the employer’s defence because the working environment was small and the Chair of the Board supported a “training and encouragement” approach in order to maintain office “harmony” rather than commence disciplinary action against the Applicant.

There was evidence that the Administration Manager had concerns about the Applicant’s ability to perform her role but could not act based on advice from the Chair of the Board.  In addition to this, the Applicant admitted that she knew that the Administration Manager was horrified by what he discovered about the company’s financial records prior to her dismissal (where she failed to keep appropriate records and doing proper bank reconciliations). This showed that she was aware and had knowledge of her poor performance.

The size of the enterprise was also considered, noting that the organisation is run by two part time employees and a volunteer board of management.  This had a significant impact on the FWC’s consideration of the dismissal process.

Commissioner McKenna found there was a valid reason for dismissal and commented that whilst there were procedural errors, they were not sufficient to make the dismissal unfair.

If you would like to read more about disciplinary procedure please read our other blog posts — Codes and Keys: Small Business Employers and the Small Business Fai... and It’s all about the Process: What to Consider in the Disciplinary Pr....

Shane Koelmeyer is a leading workplace relations lawyer and Director at Workplace Law. Workplace Law is a specialist law firm providing employers with legal advice, training and representation in all aspects of workplace relations, employment-related matters and WH&S.

02 9256 7500 | sydney@workplacelaw.com.au

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