A person can make an unfair dismissal claim if they have:
- completed the minimum employment period; and
- are covered by a modern award (or award-based transitional instrument) or an enterprise agreement (or agreement-based transitional instrument) applies to the person.
In some situations, high earning employees will be excluded from unfair dismissal protections. All employees who are covered by an award (or award-based transitional instrument) or who have an enterprise agreement (or agreement-based transitional instrument) applying to their employment will have access to unfair dismissal remedies. However, if neither of these criteria applies, a person will only be able to bring an unfair dismissal claim if the sum of their annual rate of earnings and any other amounts worked out in accordance with the regulations is less than the high income threshold ($142 000 for full-time employees, as at 1 July 2017 and indexed annually each year on 1 July).
What are the minimum employment periods?
Employees must have served a minimum employment period before they can make an unfair dismissal claim. The minimum employment periods are:
- one year for employees of a small businesses (fewer than 15 employees based on a head count of total employees)
- six months if the employer is not a small business [s 383].
The head count test
The head count involves counting all employees employed by the employer at the time of dismissal or notice of dismissal (whichever is the earliest). Casual employees are not to be included in the count unless they have been employed by the employer on a regular and systematic basis. Employees of associated entities are also counted. A small business, for the purpose of unfair dismissals is a business with fewer than 15 employees based on a simple head count.
How is a period of employment defined?
An employee’s period of employment is based on the employee’s continuous service with the employer.
Service as a casual employee can count towards the period of employment as long as it was on a regular and systematic basis and the employee had a reasonable expectation of continuing work on a regular and systematic basis [s 384].
Any unauthorised absences and most periods of unpaid leave do not count as service; however these do not break an employee’s continuity of service [s 22].
Example of how continuity of service is calculated where there are periods of unpaid leave
John worked for 6 months as a full-time permanent employee. He then took leave without pay for 2 months and returned to work for a further 6 months. John’s total period of continuous service is 12 months, which is the total period worked before and after the period of leave without pay.
How is the minimum employment period assessed?
Whether an employee has served the minimum employment period is assessed either when the person is given notice of dismissal, or when the dismissal actually takes effect, whichever happens first [s 383].
What happens to the period of employment when the business is transferred to a new owner?
In a transfer of business, a new employer can choose not to recognise the employee’s service under the old employer for the purposes of unfair dismissal provisions. However, they must inform the employee in writing before the new employment starts.
Associated (related) entities [s 384].
This does not apply if the transfer of business was between associated entities. In this circumstance service with the first employer will always count towards service with the second employer for the purposes of unfair dismissal provisions.
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