The referral by the States of their industrial relations powers to the Commonwealth, earlier this year, means for pharmacy that the employer/employee relationship in most if not all cases is governed by the Commonwealth Fair Work Act 2009 and the Pharmacy Industrial Award 2010.

While its Work Choices predecessor precluded unfair dismissal claims against the employer employing 100 or less employees, the Fair Work Act has restored that remedy for employees.

Under the Act an employee is unfairly dismissed if:

  • The employee was dismissed (either by termination or forced resignation); and
  • The dismissal was harsh, unjust or unreasonable; and
  • The dismissal was not a genuine redundancy.

Harsh Unjust Unreasonable

The term “harsh, unjust or unreasonable” is not exhaustively defined.  Each case will depend on its own unique facts however Fair Work Australia will consider a number of matters including the following:

  • Is there a valid reason for the dismissal related to the capacity or conduct of the employee?
  • Was the ultimate reason for the dismissal notified to the employee and a warning of the consequences given?
  • Were alternatives to dismissal such as additional training considered?
  • Was the employee given a reasonable opportunity to respond and appropriate assistance to formulate that response?

Genuine Redundancy

A dismissal will be held to be a genuine redundancy if:

  • The employee’s job is no longer required to be performed by anyone because of changes in the operational requirements of the business; and
  • The employer has complied with the Pharmacy Industry Award; and
  • It is not reasonable for the employer or an associated entity to redeploy the employee.

If the circumstances establishing a genuine redundancy can be made out caution will still need to be exercised in selecting the employee to be dismissed if a number of employees have similar duties.

Who May Apply

An employee is eligible to apply if that employee:

  • Has completed the Minimum Employment Period; and
  • Is covered by the Pharmacy Industry Award.

In relation to the latter requirement most if not all employees, including those who exceed the high income threshold will be covered by that Award.

Minimum Employment Period

In the case of a small business employer, that is one with less than 15 fulltime equivalent employees, the Minimum Employment Period is one year.  For other employers it is six months.

Currently fulltime equivalents are calculated on an hourly basis but after January 2011 they will be calculated on a head count of all employees excluding genuine casuals so it is reasonable to expect that a considerable number of pharmacy employers even if considered small business employers now will not be next year.

Small Business Fair Dismissal Code

A dismissal by a small business employer if consistent with this Code will be considered fair.  The Code basically reflects the requirements of the Act but contains a checklist to be completed in the event of any dismissal.

Unfair Dismissal Application

The Act provides that an application must be brought within 14 days of the dismissal taking effect but that time period can be extended in exceptional circumstances.

Settlement of these disputes by informal conferences is the preferred option but if the matter proceeds to hearing the parties have limited rights to representation.  Powers to award costs against a party to the action or against lawyers representing those parties appear to be significantly greater than most of the previous State Acts.

While reinstatement remains the primary remedy, as it was under most State Acts the practical difficulties associated with it particularly in a small business environment make it an unlikely remedy in most cases.  The principle alternative remedy is an award of compensation which is capped at the lesser of one half of the high income threshold (currently $108,300.00 per annum) or the level or remuneration in the 26 weeks before the dismissal.

Avoiding Claims

It is a frequently and quite validly made claim that while steps can be taken to minimise the prospects of success of an unfair dismissal claim there is very little that can be done to avoid the claim being made.  Once the claim is made even the most indignant employer is forced to consider the commerciality of the action rather than the merits to minimise the considerable time and cost involved in one of these actions.

For pharmacists acquiring a business the one practical step that can be taken is to give written notice to transferring employees that you do not recognise service under the old employer or employers in the calculation of the Minimum Employment Period.  This effectively gives you a period of 12 months from the date of settlement before the Minimum Employment Period is served.

Once the Minimum Employment Period is served if there is a valid reason for dismissal the prudent employer should:

  • Notify the employee of any problems relating to capacity or conduct and consider not just the possibility of dismissal but other available remedies such as additional training;
  • Give the employee sufficient time and assistance if necessary to respond;
  • Keep contemporaneous notes of all conversations relating to the procedure and ensure that all notifications are in writing or are confirmed in writing.

Steven Holzberger
Maunsell Pennington Solicitors
Incorporating McCarthy Holzberger
Find out more about Maunsell Pennington at www.mpsolicitors.com.au