Failure to provide reasons for dismissal proves fatal

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Failure to provide reasons for dismissal proves fatal

It is imperative that when making a decision to terminate an employee, the reasons are provided to the employee, and except in situations that warrant summary dismissal, that there has been counselling given or warnings issued during the term of employment. To do otherwise is likely to lead to a potentially lawful dismissal being overturned by the courts, or the employee being awarded compensation as recently evidenced in the recent case of Madden v Ultra Tune Australia Pty Ltd.

The employee was employed by Ultra Tune, a national chain of automobile services, as Training Manager from 21 August 2017 until 26 November 2019. He claimed to have been given no reason for his dismissal nor any warnings during his employment, with both claims, upheld by FWC McKinnon. The employer’s major concerns were that he did not deliver face to face training and that he chose largely to avoid directly dealing with franchisees who comprise the majority of his clients. Again, their claims were also upheld by the FWC, but did not negate his claim.

Shortly after he commenced employment, he was involved in the development and launch of a software program which proved ineffectual and resulted in considerable financial losses to the employer. A consultant was engaged to transition the program to the Cloud, and the Training Manager became focused on this transition.

To the dissatisfaction of his employer, he chose to focus on building a training manual, messenger servicing and additional training videos rather than conducting face to face training or directly engaging with franchisees. There was some attempt to encourage him to alter his focus towards engaging more directly with franchisees.

As described by Commissioner McKinnon, there were two valid reasons to dismiss him being his reluctance to engage directly with franchisees, and his contribution to the failed launch of the program. Unfortunately, no discussions occurred with him regarding their concerns.

Quite clearly as detailed by Commissioner McKinnon, the employee “was not told of the reasons for his dismissal. Mr Buckley told Mr Cott to finish him up and he followed that instruction straight away”. In addition, he “was never given any actual counselling or warnings about his performance in the role of National Training Manager. No allegations were formally put to him and there was no discussion or opportunity to respond to the allegations before the dismissal took effect”.

The dismissal was found to be unfair, although the compensation awarded was reasonably low, representing four weeks wages. The amount reflected the relatively short period of employment, combined with the failings of the employee during his tenure.

Nevertheless, it was clearly a situation that could have been better handled by following reasoned and logical procedures prior to the ultimate dismissal decision.

The Commissioner made the following observation regarding the size of the business operating, mainly through its franchisees with only 20 in head office. Neither the size of the business nor the absence of dedicated human resources staff were likely to have impacted on the procedures followed in effecting the dismissal.  The Commission noted the business employs three in-house lawyers and seven or eight accountants making it capable of acquiring information that is readily available in the public domain about fair procedures for termination of employment.

Madden v Ultra Tune Australia Pty Ltd [2020] FWC 4036 31 July 2020

For queries about unsatisfactory performance or other employment questions, please contact Dean Cameron at Workforce Advisory Lawyers – We Know Employment Law on 0417 622 178 or via email to dean.cameron@workforceadvisory.com.au

Disclaimer: This information is provided as general advice on workplace relations and employment law. It does not constitute legal advice, and it is always advisable to seek further information regarding specific workplace issues. Liability limited by a scheme approved under professional standards legislation.

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