By The Editor
A small business owner has been praised at Fair Work Australia for her efforts to keep her workers employed while keeping her financially troubled business afloat, but at the same time has been ordered to pay eight weeks’ wages to an employee for unfair dismissal and failing to provide procedural fairness.
The owner, who had sought advice from the Fair Work Ombudsman about changing her employees’ employment status from part-time to casual, gave four employees a letter at a meeting which advised their employment would be terminated for operational reasons, and provided a document explaining they would be offered casual employment for the same hours and wage rates.
One employee, who had been in dispute with the owner for some time, lodged an unfair dismissal claim after deciding not to accept the casual offer of employment. Three other employees accepted the new casual employment arrangements with no dispute.
The owner initially thought the new employment arrangements were accepted by all affected employees, however after two weeks without communication with the employee, decided to back fill her role.
The owner acknowledged to Fair Work Australia that she had mistakenly used an employee termination letter template to provide these new employment arrangements to the employees. The employer’s intention was to change the employees’ employment status, not to terminate their employment.
Commissioner David Steel found that the employee was dismissed and stated that there was a valid reason for dismissal, being that the employer had to take action to resolve the financial performance of the business and reduce costs by changing the employees’ employment arrangements. However, the employee was not provided with a fair termination process and therefore the dismissal was deemed harsh and unfair.
The employee said due to her dispute with the owner, which had been ongoing for about a year and stemmed from a successful underpayment claim and reduction in hours, she had no confidence that she would be provided with reliable hours of work.
Commissioner Steel found that it was almost certain that the employment relationship “was not going to endure” in any case due to their dispute, but did define the end of that relationship as dismissal and ruled it to be unfair as it did not provide the employee with due process.
“The (employee) was given notice of dismissal which would come into effect at the end of her shift. It is apparent it was a shock,” Commissioner Steel wrote.
Commissioner Steel noted the newsagency owner was open with her evidence and that she had sought advice on a number of occasions from the Fair Work Ombudsman and other financial advisors to keep her business financially viable. However her process of transferring her employees to new contracts ultimately highlights the extreme levels of care that need to be taken by any small business owner.
VECCI notes that employers contemplating downsizing or changing operations have a range of obligations to consider. Advice should be sought prior to entering into discussions with staff, in order to understand the range of matters that may give rise to a claim against a business in these circumstances.