Summary Dismissal in Australia

Summary dismissal can be justified in the event of serious misconduct

Get informed about summary dismissal laws in Australia

Summary Dismissal

Employment Law

Summary dismissal is the harshest form of employment termination as it constitutes dismissal without notice.

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Summary Dismissal in Australia

Many employment contracts in Australia contain statements that an employee may be summarily dismissed in particular circumstances, usually concerning “serious misconduct”.

Summary dismissal has real consequences. An employee who is summarily dismissed will only be paid for work performed up to the time of dismissal, in addition to accrued entitlements. This means any usual termination notice period covered by the National Employment Standards or relevant modern award, enterprise agreement, or employment contract will not be paid, which can be worth a lot of money.

One of the reasons an employer may be reluctant to summarily dismiss an employee is the prospect of an employee challenging the decision. For this reason, employers contemplating the summary dismissal of an employee are recommended to seek legal advice before making such decisions.

There are a number of frequently asked questions with respect to summary dismissals in Australia:

  1. What is ‘summary dismissal’?
  2. How does summary dismissal differ to termination?
  3. When can an employee be summarily dismissed?
  4. What is ‘serious misconduct’ in Australia?
  5. Can small businesses summarily dismiss staff?
  6. What is the process for a summary dismissal?
  7. How can employees challenge summary dismissal?

1. What is ‘summary dismissal’?

Summary dismissal is the harshest form of termination of employment. It suggests the employee has engaged in serious misconduct, and their dismissal without any notice or payment in lieu of notice is justified.

Except in cases of serious misconduct, most employers are required to give notice to employees if they are dismissed from their job. The applicable notice period can vary based on the length of service and age of the employee and may be extended by agreement under an employment contract. It is common for executives to have lengthy notice periods for the termination of an employment contract.

2. How does summary dismissal differ to termination?

Ordinarily, permanent employees are provided notice that they will be dismissed from their job. While the notice period is often calculated by weeks, some executives have notice periods involving many months. On the other hand, summary dismissal is instant, meaning no notice (or payments in lieu of notice) is given.

3. When can an employee be summarily dismissed?

For an employee to be summarily dismissed, it is generally required that their conduct is believed to be sufficiently serious to justify immediate dismissal (serious misconduct). The term ‘serious misconduct’ is defined in the Fair Work Regulations (see below: What is ‘serious misconduct’ in Australia?)

An employee can be summarily dismissed at any stage of their employment. However, given the real prospect an employee may be motivated to challenge summary dismissal, it is crucial for employers to follow the correct procedures (see below: What is the process for a summary dismissal?).

4. What is ‘serious misconduct’ in Australia?

Serious misconduct includes wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the employment contract or conduct that causes a serious and imminent risk to the health and safety of a person or the reputation, viability, or profitability of the employer’s business. Examples of serious misconduct include theft, fraud, assault, sexual harassment, being intoxicated at work, or a refusal by the employee to carry out a lawful and reasonable instruction.

The above meaning of ‘serious misconduct’ is reflected in the Fair Work Regulations 2009 (Cth), where the definition of serious misconduct is outlined:

Meaning of serious misconduct

(1) For the definition of serious misconduct in section 12 of the Act, serious misconduct has its ordinary meaning.

(2) For subregulation (1), conduct that is serious misconduct includes both of the following:

(a) wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;

(b) conduct that causes serious and imminent risk to:

(i) the health or safety of a person; or

(ii) the reputation, viability or profitability of the employer’s business.

(3) For subregulation (1), conduct that is serious misconduct includes each of the following:

(a) the employee, in the course of the employee’s employment, engaging in:

(i) theft; or

(ii) fraud; or

(iii) assault; or

(iv) assault; or

(iv) sexual harassment;

(b) the employee being intoxicated at work;

(c) the employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment.

(4) Subregulation (3) does not apply if the employee is able to show that, in the circumstances, the conduct engaged in by the employee was not conduct that made employment in the period of notice unreasonable.

(5) For paragraph (3)(b), an employee is taken to be intoxicated if the employee’s faculties are, by reason of the employee being under the influence of intoxicating liquor or a drug (except a drug administered by, or taken in accordance with the directions of, a person lawfully authorised to administer the drug), so impaired that the employee is unfit to be entrusted with the employee’s duties or with any duty that the employee may be called upon to perform.

5. Can small businesses summarily dismiss staff?

The Small Business Fair Dismissal Code states:

“It is fair to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal.”

If an employee brings an unfair dismissal application before the Fair Work Commission, the Commission examines whether the employer held a reasonable belief that the employee’s conduct was serious enough to warrant instant dismissal.

For the belief to be held on reasonable grounds, it needs to be shown:

  • Conduct occurred by the employee;
  • It was serious; and,
  • It justified immediate dismissal.

An employer may establish the belief was held on reasonable grounds by reference to the inquiries or investigations made into the issue, including the availability of any plausible alternative explanations for what occurred (such as any explanations given by the employee summarily dismissed).

If summary dismissal by an employer is judged to be harsh, unjust or unreasonable, the employee may be successful in seeking reinstatement or compensation. Any small business contemplating the dismissal of an employee, particularly summary dismissal, ought to obtain advice about how to mitigate the risk of a successful unfair dismissal or another claim.

6. What is the process for a summary dismissal?

There is no defined process for summarily dismissing an employee. Failing to afford procedural fairness can be a defect that results in a court, commission, or tribunal overturning the decision.

The steps in a disciplinary process usually involve some or all of the following steps:

  1. Define the complaint or grievance
  2. Undertake investigations
  3. Allow an opportunity to respond
  4. Make findings about the issues
  5. Decide on disciplinary action
  6. Deal with any disputed decisions

While an employer may wish to act immediately in a situation involving potentially serious misconduct, it is essential to ensure proper processes are followed to minimise the risk of a successful challenge to a disciplinary decision.

If an employer summarily dismisses an employee, the test for whether the employer had a valid reason for the dismissal does not change. However, even if there was a valid reason for the dismissal, the Fair Work Commission may still find summary dismissal was a disproportionate response and is, therefore, ‘harsh’. For this reason, employers who fail to follow correct processes put themselves at risk of successful claims following the summary dismissal of an employee.

7. How can employees challenge summary dismissal?

There are several actions an employee may take to challenge summary dismissal. This includes:

  • Internal appeals against summary dismissal, as may be provided for in a modern award, enterprise agreement, employment contract, or the policies and procedures of a workplace;
  • Filing an unfair dismissal claim in the Fair Work Commission;
  • Filing a general protections claim in the Fair Work Commission;
  • Filing a discrimination claim in anti-discrimination commission or tribunal, such as the Australian Human Rights Commission; or,
  • Filing a breach of contract claim in a court.

Claims brought by a former employee can create legal, financial and reputational risks to businesses and organisations. It is the reason why business operators, executives and managers tasked with making a disciplinary decision must be mindful of the risks involved in summarily dismissing an employee.

Anderson Legal provides expert advice and guidance concerning employment law issues, including issues arising from summary dismissals. Contact this firm for a free, confidential, no-obligation consultation if you are dealing with a summary dismissal issue.

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