Just give me a reason: why an employer should always provide reason/s for terminating employment
A recent decision of the Federal Circuit Court of Australia has reminded employers that it is always a good idea to provide an employee with the reason as to why their employment was terminated, even if the employee is in their probation period.
In Pacheco-Hernandez v Duty Free Stores Gold Coast Pty Ltd  FCCA 3734, a beauty salon supervisor’s employment was terminated during her probation period with no explanation. When the employee asked for a reason, the employer’s Area and HR managers advised that the employer was not legally obligated to give an explanation if they did not wish to do so.
As the employee was given no other reason, the employee lodged a claim of adverse action on the basis that her employment was terminated as a result of the complaints she had made throughout her employment.
The question before the Court was whether the employer had terminated the employee’s employment because she had exercised her workplace rights (i.e. to make the complaints).
Under the Fair Work Act, the employer must prove that the substantial and operative reason(s) for termination did not include the fact that the employee exercised her workplace rights.
As the decision maker was unable to provide any clear evidence as to the reason for the termination, the Court could not be satisfied that the employee’s complaints were not a substantial and operative reason in the employer’s decision to terminate the employee’s employment. Given this, it was found that the employer had contravened the general protections provisions. The employer was ordered to pay $10,000 in compensation to the former employee.
What does this mean for employers?
This decision provides some handy tips for employers:
- Generally speaking, if an employee is terminated during their probation period, they are unable to make a claim for unfair dismissal. However, the employee can make a general protections claim. Under the Fair Work Act, employers are prohibited from engaging in adverse action (e.g. termination of employment) for a prohibited reason (e.g. workplace right to make a complaint).
- Prior to making any decision to terminate an employee’s employment, an employer needs to ensure that it is not for a prohibited reason. These can include: workplace rights (e.g. taking parental leave), industrial activities (e.g. employee is a member of a union), discrimination (e.g. employee is transgender), sham contracting (e.g. forcing an employee to be an independent contractor).
- If an employer is to advise an employee who is in their probation period that the employment is to be terminated, the employee should be advised of the reason. Ensure that the decision and reason to terminate is not on the basis of any prohibited reasons under the Fair Work Act.
Employers are strongly advised to seek advice prior to taking any action during the probation period. Our Seed HR Hub offers resources to employers to assist with the termination process. [click here] to sign up today.
Alternatively, if you’d like to speak to one of our Consultants, contact the Seed People Consulting team today on 02 4967 6695.