Top tips for avoiding employee claims
When an employment relationship goes bad, an ex employee may well try to explore any legal avenues of action against their former employer to obtain redress for the injustice they have suffered, whether it be real or perceived. This may take the form of a claim for back pay or entitlements, an audit by the Fair Work Ombudsman, a claim of unfair dismissal or breach of workplace protections or discrimination or claims for breach of the Australian Consumer Law or emerging implied common law terms of the employment relationship. As an employer, your business can be put to considerable expense and inconvenience in resolving these matters, which invariably leave a bad taste in the mouth of all concerned.
Given this background, it is worthwhile to recap some basic ground rules for avoiding such claims:
1. Always, always have a written contract of employment
This may be a simple letter of appointment or a very detailed document. Whilst the general rule is that the greater the detail, the greater the protection, you should at least have a basic agreement in place for every employee setting out their role, hours of work and pay rates.
2. Ensure there is a clear, accurate position description
It goes without saying that employees should have a clear description of their position when they start work. Whilst the expectations of a role will not always be met, setting out these expectations in advance can go a long way to minimising job dissatisfaction and subsequent poor performance. Position descriptions should be reviewed on a periodic basis and updated to make sure they are keeping pace with changes in the organisation.
3. Ensure that new employees acknowledge policies in writing
Many operational issues can be addressed in the policies of a business. It is not generally necessary or desirable to include this material in the employment contract itself. But in order to rely on the contents of a policy (eg, regarding internet usage), an employer must show that the employee was aware of and understood the policy. So, employees should receive an induction session in relation to policies when they commence, work, be provided with access to an up to date copy of policies and required to sign a record of having read and understood the policies. This will pay dividends when it comes time for the employer to rely upon the policy.
4. Ensure that correct entitlements are paid
Employers should ensure that they are familiar with applicable statutory and award requirements before an employee commences work. This includes checking off legislative entitlements (eg personal leave and compassionate leave) and knowing whether there is an industrial award or enterprise agreement covering the employee and what its requirements are (eg lunch breaks and overtime). Employers should also be careful to ensure that their systems meet these requirements. Often, employees are inadvertently not paid their proper entitlements and this paves the way for a disgruntled former employee to complain to the Fair Work Ombudsman about alleged underpayment.
5. Be aware of the minimum employment/probation period
Many employers forget that employment can be terminated within the minimum employment/probationary period (normally six months but 12 months for businesses with less than 15 employees) without fear of an unfair dismissal claim. Whilst it is still desirable to give reasons for termination during this period, these do not need to be detailed and full procedural fairness is not required. However, it is necessary to ensure that there is no unlawful component to the termination (ie reliance upon a discriminatory reason to terminate) or breach of employee protections (eg part of the reason for termination is that the employee has become a union official). This is because the statutory restrictions on unfair dismissal claims do not generally apply to claims for breach of workplace protections and unlawful dismissal claims. Whether an employee is going to be retained should be reviewed well before the end of the minimum employment/probationary period.
6. Ensure that there is a regular performance review process
Breakdown in communication is often a reason for breakdowns in employment relationships. Whilst a formal performance appraisal process is desirable, it is practically advisable to maintain a regular dialogue with employees about their performance (eg, about things they are doing well, things they are not doing well and how they can be improved). Many employers fail to observe this basic discipline with unfortunate results.
7. Keep records, notes of meetings etc
It is wise to ensure that there is a paper trail on the employee’s personnel file about their performance and steps which have been taken to address issues. All meetings should be carefully minuted in case there is a need for future reference, particularly where there has been a change of responsible staff. Formal letters should be written to the employee where appropriate. These records provide important corroborative evidence in the case of a later dispute about what was said or agreed.
8. Give the employee a chance to respond to allegations
If there are performance concerns about an employee or allegations about their conduct, details of the allegations and any supporting evidence should be put to the employee and a chance provided for them to respond. Any response should be taken into account before a final decision is made about termination. The Fair Work Commission generally takes a strong position on procedural fairness and many an otherwise justified dismissal has been criticised for the failure to provide employees with an opportunity to respond.
9. Don’t delay
There is often not much to be gained by putting off the inevitable and it will often get harder to justify terminating an employee in legal terms the longer a problem goes on for. You should be honest with yourself in assessing whether there is a problem and addressing it in a timely way.
10. If in doubt, get advice
Lastly, a false economy is no economy at all. It may cost you some money in the short term but getting advice may well help to clarify and shorten processes and save you money in the long term.
Observing these tips will not rule out all post employment legal claims but will minimise their occurrence.