Why it’s harder to sack bad workers

HR managers say they are finding it increasingly difficult to dismiss employees even when they have fair and valid reasons because of provisions protecting staff who exercise workplace rights.

Euan BlackWork and careers reporter

May 16, 2024 – 5.00am

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Employees are on track to lodge a record number of applications claiming they were dismissed for exercising a workplace right this financial year.

Workers have filed an average of 1316 dismissal-related general protections claims each quarter in 2023-2024, which – if maintained in the final quarter – would be the highest quarterly average ever recorded.

These provisions, which were inserted into the Fair Work Act in 2009, protect employees from adverse actions such as being fired or demoted for exercising workplace rights, including the right to join a union, the right to make a complaint, or right to take time off when injured or sick.

But employment lawyers representing large organisations argue that these provisions, which the Australian Industry Group once called a “de facto unfair dismissal system” for senior managers, are increasingly being used to challenge dismissals linked to underperformance or misconduct. (Employees on $167,500 or more each year cannot bring an unfair dismissal claim and must instead use general protections provisions, unless they are covered by an award.)

HR managers say they are finding it increasingly difficult to dismiss employees even when they have fair and valid reasons, meaning the “deadwood” in their workforce is sticking around longer.

An expected increase in union activities and shifting employee expectations since the pandemic have made it harder to dismiss employees as well.

This is not the result of tighter dismissal processes, but because the deterrent to dismissal is growing, and employees are getting better at linking dismissals to the exercise of workplace rights and their list of rights is expanding.

Lawyers representing the other side, however, point to high corporate profits and rolling coverage of underpayment scandals at large companies as evidence that the pendulum has not swung too far in favour of disgruntled employees. The recent uptick in general protections claims, they argue, might just be the result of employees fighting back against corporate wrongdoing.

Either way, employment lawyers seem busier than ever.

‘You have to look around corners’

Gadens partner George Haros says it is becoming much harder for employers to sack underperforming or misbehaving workers.

He says this is because employers are being deterred by the increasing number of legal options available to employees seeking to challenge a dismissal.

“You have to try and look around corners to make sure that when you’re terminating [someone’s employment], you’re not walking into a pitfall,” Haros says, adding it only costs an employee $83.30 to lodge an unfair dismissal or dismissal-related general protections claim.

He tells BOSS workers are increasingly bringing general protections claims against their employers by suggesting they were sacked for a past complaint.

“Let’s say you have a situation where someone has complained about a certain situation, maybe about their bonuses or entitlements, some time ago, and then they have some issues in their employment,” Haros explains.

Declining job vacancies and rising living costs mean employees who may have chosen to leave jobs are holding on to them. Tamara Voninski

“The employee can go back to that complaint that they made some time ago, [and use this as the] basis for a general protections claim.

“So something that might have been quite innocuous some time ago leaves the door open for the employee to bring a claim, even when the employer has done everything they can to exit that employee fairly and in accordance with good process.”

Haros says employers are consequently signing more “deeds of release” – agreements that create legally enforceable terms for a termination of employment – to protect themselves from claims being brought against them following a dismissal.

Right to disconnect will complicate matters

Holding Redlich partner Charles Power, who specialises in workplace relations and safety law, agrees that “innovative” lawyers acting for employees are getting better at connecting performance and misconduct issues to the exercise of workplace rights.

Power says employers can expect this trend to heighten when the Labor government’s Closing Loopholes legislation grants workers more rights in August, including a right to disconnect that will enable employees to ignore calls, emails or messages from their boss after work hours, where reasonable, without fear of punishment.

“You can imagine in a [performance-related dismissal], it wouldn’t be hard to connect [that] to the fact that an employee didn’t pick up [a call] or wasn’t showing the right attitude after hours or something,” Power tells BOSS.

Members of the Australian HR Institute’s industrial relations panel, which include lawyers and workplace consultants, say recent changes to psychosocial safety regulations, an expected increase in union activities and shifting employee expectations since the pandemic have made it harder to dismiss employees as well.

“On the employer side, the Advisory Panel is seeing a rise in deeds of separation and settlements being used to exit underperforming employees from the organisation,” AHRI chief executive Sarah McCann-Bartlett says.

Gadens partner George Haros says employers are being deterred from sacking underperforming workers. Eamon Gallagher

“This may occur due to the cost and time of having to defend an unfair dismissal claim in the [Fair Work] Commission.”

Declining job vacancies and rising living costs also mean employees who may have otherwise chosen to leave jobs are holding on to them begrudgingly, says Aaron McEwan, vice president of research and advisory at consultancy Gartner.

“A reasonable percentage of our clients are complaining or concerned about attrition not being high enough,” McEwan says. “It blocks career pathways [for more junior staff]. It has some flow-on impacts like that. But, mostly, they don’t say it, but they’re worried about deadwood.”

GP claims crucial for whistleblowers

Josh Bornstein, national head of employment law at Maurice Blackburn, is not convinced that workers are becoming more sophisticated in linking dismissals to the exercise of workplace rights, though.

He says most employees don’t understand general protections enough to “engineer some sort of connection” to misconduct or underperformance. And he dismisses any suggestion the playing field is tilting too heavily in favour of axe-grinding employees.

“It doesn’t seem to me that we’re in any danger of kicking the balance too far the other way,” Bornstein says, pointing to high corporate profits and numerous underpayment scandals at major corporations as evidence to support his claim.

Bornstein says general protections provisions also provide “a very important measure of redress for whistleblowers who are victimised”.

“I have many cases of employees blowing the whistle about asbestos, bullying, underpayments, corporate misconduct and falsification of corporate records or reports to regulators,” Bornstein says.

“That’s more of a typical [general protections claim] in my experience than a case about underperformance allegations.”