Employment Law - When is an employee no longer an employee?
We have recently had an influx of employment disputes acrossa variety of job industries. Despite no two cases ever being the same, itappears that there are recurring themes that are plaguing employers.
Concerningly, it appears that employers are unaware as towhen an employee ceases being an employee. Especially after a notice oftermination of the employment has been given (by either the employer oremployee).
Further, employers appear unsure of which obligations and rights[1](both contractual and statutory) are enforceable during the notice period (theperiod between the day notice of termination is given and the day on which theemployment contract concludes). This includes whether action can be takenagainst an employee for serious misconduct during the notice period.
As an employer, it is imperative that you understand what obligationsand rights you have when it comes to the termination of an employee, and what obligationsand rights your employee has during the notice period.[2]
When is an employee no longer an employee?
If a valid notice of termination is given, the employmentconcludes on the date at which the notice period expires or is due to expire,unless the contract is ended by some other independent cause.[3]
This position was recently confirmed by Deputy PresidentAnderson in the Fair Work Commission matter ChristopherPatterson v Re-engage Youth Services Incorporated T/A Re-Engage Youth Services[4], where the Deputy President stated “there was still a relationship to terminate”after Mr Patterson had provided his notice of termination.
What contractual or statutory rights exist during the notice period?
As discussed above, the end of an employment contract is thedate on which the notice of termination expires. This means that the employmentcontract, and the terms, rights and obligations contained in same, remain ineffect until the expiry of the notice of termination.
So, what happens if the employee neglects or fails to complywith their employment obligations during the notice period?
Serious Misconduct[5]
The notice period can often be an awkward time for both theemployer and the employee. Unfortunately, it is not uncommon for an employee(particularly if they were not expecting to receive a notice of termination) toact improperly during the notice period.
An issue which may arise is that an employee may engage in serious misconduct after a notice of termination is given to them. For example, a disgruntled (soon-to-be-former) employee may attempt to sabotage the employer’s business or verbally or physically assault another employee. In these circumstances, an employer can terminate the employee without notice, notwithstanding the fact that the employee is already in the notice period.
So why would you terminate an employee who has already receivedor given notice of termination?
For one, you are not required to provide a period of notice for employees who are terminated for serious misconduct.[6] As such, you will not need to pay the employee for that period (you are still required to pay the employee their accrued rights and entitlements, such as annual leave).
Terminating an employee for serious misconduct also removesthe employee from the workplace immediately, which minimises the risk of anyfurther damage being caused by the employee to the business and reputation ofthe employer.
It needs to be noted though, if an employer does decide totake action against an employee for serious misconduct, the employee should beafforded procedural fairness with respect to the allegations.
Procedural Fairness
As a general rule, procedural fairness should always beafforded to an employee prior to terminating the employee for seriousmisconduct, even if they had previously given or received a notice oftermination.
In order to provide an employee procedural fairness, anemployer would:
- Notify the employee of the serious misconductthey are accused of, in clear and explicit terms, prior to termination[7];and
- Provide the employee an opportunity to respondto the alleged serious misconduct, prior to the termination[8].
Even in circumstances where the alleged serious misconductappears plain and obvious, the Fair Work Commission may consider the dismissalto be unfair where employees were not afforded procedural fairness [9].As such, we strongly recommend employers provide procedural fairness to all employeesaccused of serious misconduct, instead of running the gauntlet with the FairWork Commission.
Important Considerations
When considering whether to take further action against anemployee during the notice period, it is important consider the practicaleffect of the decision.
Whilst you may have a “slam dunk” right of termination forserious misconduct, the reality is that it is not always practical to dismissan employee on that basis, especially after they have already been given anotice of termination.
For example, if the notice period is short (1-2 weeks) itmay not be economically viable to terminate the employee to save one week’s paycompared to the potential legal costs associated with defending unfairdismissal proceedings (which are sometimes commenced by aggrieved employees,irrespective of the strength of their case).
However, in circumstances where the employment contractprovides for a longer notice period, it may be financially viable to dismissthe employee for serious misconduct during the notice period.
The decision to take action against the employee for theserious misconduct is ultimately the employer’s, who should consider a varietyof factors, including:
- The financial impact of the decision;
- The risk to the employer if the employee is notdismissed;
- The impact of the employee returning to theworkplace;
- The likelihood of the employee commencingproceedings for unfair dismissal; and
- Any other relevant consideration.
Takeaway Points
As an employer, you should have a full and properunderstanding of any and all employment obligations and rights, both you and youremployees may have. You should understand that both the employee’s and theemployer’s obligations and rights remain in effect until the conclusion of the employment.
If an employee engages in serious misconduct during thenotice period, you can terminate the employee, notwithstanding the originalnotice of termination. However, you should always afford the employeeprocedural fairness with respect to the alleged serious misconduct (regardlessof how damning the case may be).
The decision to terminate the employee in the notice periodfor serious misconduct should not be automatic. The employer should considerthe likely impact of the decision and consider the repercussions, prior tomaking same.
If you fail to comply with your contractual and statutoryobligations and Fair Work Commission proceedings are commenced, ignorance willnot be considered a defence.
If you are unsure, you should always seek legal adviceregarding your contractual and statutory rights and obligations to preventlitigation in the future.
If you require assistance regarding decisions to be made inyour workplace, contact Active Law for concise and pragmatic legal advice.
[1]The obligations and rights of employers and employees are governed by acombination of the Fair Work Act 2009 (Cth), the employment contract, and anAward or Agreement (if applicable).
[2]For the purpose of this article, employee means part-time or full-time employeeand not a casual employee, unless otherwise stated.
[3]McCarry G.J. (1986), “Termination of Employment Contracts by Notice”.
[4][2018] FWC 20 at [83].
[5]For the purpose of this article, assume for any reference to serious misconductthat the conduct satisfies the requirements under the Fair Work Act 2009 (Cth) and relevant case authorities
[6] Fair Work Act 2009 (Cth), s123 (1)(b).
[7] Fair Work Act 2009 (Cth), s387 (b).
[8] Fair Work Act 2009 (Cth), s387 (c).
[9] Sabeto v Waterloo Car Centre Pty Ltd (2003) 123 IR 222 and Slavin v Horizon Holdings Pty Ltd [2012] FWA 5588.
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The material distributed is general information only. The information supplied is not and is not intended to be, legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.
