Unfair Dismissal or General Protection? A high pressure choice facing employee litigants

When National system employees are unlawfully dismissed from employment they will generally have a choice of which section under the Fair Work Act to make their application.  Was it an Unfair Dismissal, or was it a contravention of a General Protection involving dismissal?  There is considerable overlap in these actions, but the Fair Work Act insists that only one may be chosen, the choice must be made within 21 days, and the choice is final.   In employment law practice, coming upon a case where an inappropriate choice has been made is a weekly occurrence.  If settled at conciliation this mistake has no consequences, however if the matter proceeds, often this error can be the difference between success and failure.

At first glance the actions seem similar.  A dismissal is ‘unfair’ if the Commission hold it to be ‘harsh, unjust or unreasonable’.  A General Protection, on the other hand, is contravened if an employer takes any type of adverse action against an employee on unlawful grounds, which includes because of the employee the exercising, or proposing to exercise, a workplace right.

But despite the fact that the contextual factors giving rise to these actions are similar, the causes of actions themselves are radically different.

Unfair Dismissal is constrained by strict jurisdictional parameters – parliament very clearly intended this provision to be only open to a specific class of employees.  It is not available to people earning over $138,900 per annum, to people that have been employed less than six months (or one year in the case of small business employers), the person must be ‘dismissed’ in accordance with a specific statutory definition, it is not available in the case of a ‘genuine redundancy’, and it is not available to casual employees unless they have been engaged on a ‘regular and systematic basis’. These parameters are strictly enforced at the Commission.  In legal terms, they have no jurisdiction to do otherwise.

But once the jurisdictional hurdles are overcome, the Commission have a broad discretion to assess the dismissal holistically, and it is only required that the dismissal be ‘harsh’, ‘unjust’, OR ‘unreasonable’. In the often quoted words of High Court Justices Gummow and McHugh “a termination may be harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust.”   These concepts pre-date the Fair Work Act, and at common law it is well understood that an ‘unjust’ dismissal is one in which the employer lacked a valid reason, or in which the employee was not guilty of the misconduct alleged.  An ‘unreasonable’ dismissal is one in which the employer acted unreasonably in coming to the decision to dismiss, or the employee was not afforded adequate procedural fairness.  A ‘harsh’ dismissal is one in which the decision to terminate the employment, within all of the circumstances, is disproportionate to the gravity of the misconduct.   This common law meaning is neatly codified by s 387 of the Act.  Generally, a case will get over the line if the Commission finds any significant fault of this type.

These jurisdictional hurdles are absent for a General Protection application, however in contrast to Unfair Dismissal each of the elements must be proved. If adverse action is alleged in response to the exercise of a workplace right, the employee must clearly identify the workplace right, and demonstrate that they exercised, or proposed to exercise that right.  If this is done, the onus then falls on the employer to prove that the exercise of workplace right was not one of the reasons for the adverse action.  Significantly, however, the reverse onus in itself does not make the employee’s case.  If the employer can prove that the exercise of a workplace right was not a factor in the mind of the decision maker, as a question of subjective fact, then the case will fail.

Many cases would satisfy both, and many would satisfy neither.  In my experience the choice to go with a General Protections application is made either because of the jurisdictional limitations of Unfair Dismissal, or because of the limited scope of compensation available in an Unfair Dismissal application (capped at 26 weeks).  For these reasons, but in particular the high income threshold, General Protections have become the default stomping ground for disgruntled executives.  But in the chase for a larger compensation, many litigants don’t realise that their case may become harder to prove.

On the other hand, lower paid workers, especially those without representation, often rush to file an unfair dismissal application within the 21-day time limit without ever knowing or getting legal advice that the General Protection provisions may be more appropriate for their case.

In James Morphett v Pearcedale Egg Farm [2016] FWC 1940, the employee was dismissed for aggressive behaviour and offensive language during a workplace meeting.  The employee brought an unfair Dismissal application.  The employee had been angry because he had injured himself at work, and had been threatened with termination because the employer had not wanted the injury to go through work cover.  During the meeting he lost his temper and threatened the employer, resulting in his dismissal.  The Commission held that while the employee’s anger was ‘understandable’ the conduct was not, and ruled that the dismissal was not unfair.  But from the limited facts available, it is very clear that the earlier threat to dismiss was in response to a proposal to exercise a workplace right.  This breach would not have been cured by the employee later losing his temper and being dismissed.  Had he brought a General Protection application, he would have had a much greater chance of success.

CFMEU v Anglo Coal (Dawson Services) Pty Ltd [2015] FCAFC 157, is an example of the exact opposite.   The employee had applied for two days’ annual leave which was refused, and then threatened the employer that he would take sick leave instead.  Coincidentally, on the date in question the employee was genuinely sick.  The employee was sacked, due to the employer’s genuine mistaken belief that the employee was being dishonest in taking the leave.  The employee brought a General Protections application but failed, due to the fact that because the mistake of the employer was genuine, it could not be shown that they made the decision to dismiss him for the prohibited reason.  In spite of the onus, the employer was able to prove that there was no causal connection between the exercise of a workplace right and the decision to take adverse action.   The federal court noted the injustice, but specifically mentioned that an unfair dismissal action had been available to the applicant. Had the action  been brought this way a remedy would have resulted.  It was the applicant’s litigation strategy which had denied him relief.

In summary, an unfair outcome, irrespective of the reason, is almost always best dealt with in the Unfair Dismissal jurisdiction. However, unfair or unlawful intentions on the part of an employer often will be punished more thoroughly under the General Protections provisions. But each case will depend on its own facts. These two recent cases illustrate the dangers of making this assessment incorrectly.  Given the difficulties in this area, and the trouble many employees face in accessing expert legal advice, these won’t be the last.