"The contract says I can terminate for any reason, or no reason at all, by giving X weeks notice! Why do I need to give a reason?"
It is important to remember that just because a contract allows you to do something as an employer, it doesn't shield you from other types of claims that may arise.
For employees who are protected by unfair dismissal legislation, an employer's contractual right to dismiss an employee (whether or not notice is given) does not bar the employee from challenging the fairness of the dismissal in the Fair Work Commission. This is because unfair dismissals are not focussed on whether a dismissal is consistent with a contract of employment, but rather a "fuzzier" concept about whether the dismissal was "harsh, unjust or unreasonable" (i.e. fair). So an employee doesn't need to establish that you've breached their contract of employment - only that the dismissal itself was unfair. Contracts cannot override rights to bring unfair dismissal claims.
By not providing employees with a reason for their dismissal (both verbally and through a termination letter) you are likely to substantially increase the risks of an unfair dismissal claim. You are providing the employee with ammunition to argue that there was no "valid reason" for their dismissal, and that they were not given an opportunity to improve their performance or address any issues pertaining to their conduct before their dismissal took effect.
It is therefore good practice from an unfair dismissal perspective to not only provide employees with a reason for their dismissal at the time of termination (and in writing) but also prior to same in the context of a performance improvement and/or "show cause" process (see Part 3 of this series for more detail on the latter).
"What about employees in their probationary period and/or who can't bring unfair dismissal claims?"
As a threshold point, in the context of a probationary period, it is important to remember that this is a creature of contract law, and cannot affect the "minimum employment period" for the purposes of unfair dismissal claims (12 months for business with fewer than 15 employees, excluding genuine casuals; 6 months for those with 15 or more on this calculation).
In other words, even if an employee's contract provides for a 3 month probationary period (generally tied to a shorter notice period), they still cannot bring an unfair dismissal claim until after 6/12 months (as applicable).
Coming back to the question above, whether or not an employee is in a probationary period/and or can bring an unfair dismissal claim, it remains good practice to provide an employee with a reason for their dismissal. A failure to do so creates a vacuum, into which an employee may seek to project whatever reason they think assists them in a legal case (for example, "This is about me being a union member isn't it?"). Most often these will lead to general protections or discrimination claims.
Of course, providing an employee with one or more reasons for their dismissal doesn't preclude the employee from caviling with the reason provided (i.e. "I say the real reason you dismissed me is..."), but a failure to provide a reason at all certainly increases the likelihood that they will argue the toss in this regard. It is also poor HR practice.
An employee that "fails" probation should therefore be clearly told of the reasons why (e.g. "Unfortunately, you have not demonstrated the level of performance required of the role during the probationary period"), as opposed to remaining silent.
In other words: "You're fired!" doesn't cut it!
If you require further information or have any queries in relation to this series, please contact Sina Zevari.
This is a series - this article is part 4.
Part 1 can be found here >
Part 2 can be found here >
Part 3 can be found here >