Can you be dismissed without formal communication or warnings? FWC decides

A recent case before the Fair Work Commission (FWC) has highlighted the importance of clarity when dismissing an employee after a national sales manager, aged 72, said his employer failed to formally communicate with him regarding his termination. 

After more than 16 years of service, the employee said he was left unaware if he was being dismissed after receiving a text message saying, “You don’t need to come in anymore.” At the time of the dismissal, he was the second most senior person in the noodle manufacturing business and reported to the general manager. 

In its defence, the employer argued that a cultural duty to show respect for older persons in the ethnic Chinese culture meant that it was inappropriate for the general manager, a younger Chinese person, to use direct or formal language by way of warning to the employee, an older person.

Indirect communication of performance issues and dismissal

Following a review of the performance of the business and its employees, the general manager formed the opinion that there were issues with the sales manager’s performance. The employer alleged the worker’s attitude towards work was poor and the quality of their work was low, making their overall performance “below acceptable level”.

The employee’s performance was informally monitored for four months before the business ultimately decided it could not afford to continue to employ the sales manager, given financial pressures and performance issues.  

Upon returning from a period of leave, the employee was taken for a private discussion away from the business and told to return the keys to the company car. Three days later, he received a text message from the general manager saying, “Per our discussion on Monday, you don’t need to come in anymore”, to which the employee replied, “Are you dismissing me?”.

Having not received a response, the employee followed up two days later and received a response, stating that their role was being “reduced to an honorary role”. When the worker again asked if he was still employed, the general manager did not reply. 

Compliance with the Small Business Fair Dismissal Code

In his claim, the employee stated that his dismissal was unfair because he was not issued any formal warning regarding his performance or the risk of being dismissed.

The employer argued that as a small business employer, there is no requirement to give formal written warnings per the Small Business Fair Dismissal Code (the Code) and that the performance discussions reasonably put the employee on notice that their employment was at risk.

While the Code provides some flexibility by considering verbal warnings for performance-based dismissals and not requiring written warnings, the FWC did not find that the employee was sufficiently warned of the risk to their employment within the meaning of the Code.

The FWC decision

All factors considered, the FWC ultimately found that while the employer had a valid reason for dismissing the employee due to the financial pressures on the business and underperformance concerns, the dismissal was harsh and unfair because it lacked procedural fairness. Importantly, the FWC noted if the performance concerns and dismissal had “been managed with the necessary measure of procedural fairness the dismissal would have been fair”.

After consideration of the valid performance concerns, notice already paid, and loss mitigated by the employee securing new work, compensation was ordered in the amount of $2,019.22 less tax plus applicable superannuation.

In reaching its decision, the FWC took into account the cultural reasons for the indirect and non-specific communication when seeking to manage the employee’s exit from the business but noted “the obligations under Australian law, including to communicate important matters concerning a person’s employment directly and clearly, do not make an exception for cryptic, riddled or inferential communication no matter how well intentioned or culturally awkward.”  

Further adding, “Some things need to be clearly communicated and the termination of one’s employment is one such matter”.

Trent Hancock is a principal and co-founder of Jewell Hancock Employment Lawyers.