This month the Federal Circuit Court handed down a penalty to an employer and its internal human resources manager after they failed to provide the requisite notice of termination to an employee, writes AMMA employee relations lawyer, Lindsay Carroll.
IN Cerin v ACI Operations Pty Ltd & Ors  FCCA 2762, the employer provided notice of termination to an employee of 16 years that was two days short of the minimum period prescribed by the National Employment Standards. Three years before his termination the employee sustained a work injury, received workers’ compensation and upon return to work, performed modified duties in accordance with rehabilitation and return to work plans.
In terminating the employee, the employer relied upon advice from the state workers’ compensation authority, WorkCover SA, that the company would no longer be required to provide work for the injured employee in accordance with the workers’ compensation legislation on the basis of its assessment that there was no longer suitable employment available at the company that fit the employee’s injury limitations.
What went wrong?
A decision pursuant to the application of the relevant provision in the workers’ compensation legislation required the giving of 28 days’ notice of termination of employment. In relying on the advice of WorkCover SA, the employer did not give consideration to the requirements of the Fair Work Act 2009 (Cth).
The Court accepted that the contravention by the company and the HR manager was deliberate and intentional. The Court found that the HR manager had many years of experience, was responsible for day-to-day management of human resources issues at the workplace and was aware that the Fair Work Act includes minimum employment standards, known as the National Employment Standards, which ordinarily would apply to all of the employees.
The Court also concluded that the HR manager was aware that those standards include requirements about the amount of notice to be given on the termination of employment and that the amount of notice varies dependent on the length of service of the employee concerned.
Both the company and the HR manager were ordered to pay a penalty of $20,400 and $1,020 respectively. In determining the penalty, the Court intended to ensure the penalty was high enough to serve as a warning to employers of the need to ‘comply with the legislation to the letter’. Penalties imposed, in this case and others, are often substantial so as to deter employers from seeking to unlawfully avoid their obligation to provide the correct notice of termination.
What can employers learn from this decision?
Employers should always refer to the Fair Work Act to ensure you are complying with minimum standards.
The Fair Work Act underpins the National Employment Standards comprising of the minimum standards and conditions of employment. In no circumstances are employers waived from complying with minimum requirements under the Fair Work Act, with the Court noting that ‘compliance with minimum standards is an important consideration in all industrial disputes such as this one’.
Similarly, employers should seek advice before affecting termination. Had the HR manager in this case sought external guidance, the penalties and costs associated with the litigation could have been avoided. This was highlighted by the Court which stated that ‘the Applicant suffered the loss of $181.66. This miniscule sum pails into insignificance when compared with the time and expense that must have resulted from this litigation… [from] the Court’s point of view, it would seem to be a storm in a tea cup that should have been resolved at a very early stage’.
For assistance with any matters relating to termination of employment, contact an AMMA Legal Services or Workplace Consulting professional at your local AMMA office.