Three Strikes and You’re Out!

by Victoria Hiley

Getting problem employees dismissed is not just a matter of three warnings.

The three-warnings rule holds that if the employer is able to show that they gave an employee three warnings (preferably in writing) in relation to his or her performance prior to termination then the employee can not claim unfair dismissal. In reality there is no guarantee that everything will be all right or, indeed, that the employee won’t decide to contest the dismissal. Also many employers do not know that a redundancy can lead to a claim for unfair dismissal.

The fact that three warnings were given is but one of a number of factors that the Industrial Relations Commission (the Commission) can take into account in determining whether an employee has been unfairly dismissed.

The Federal legislation applying to claims for unfair dismissal stipulates that the Commission can take the following matters into account when deciding whether an employee has been unfairly dismissed whether:
  1. There was a valid reason for the termination;

  2. The employee was notified of the reason;

  3. The employee was given any opportunity to respond to any reason;

  4. If there was unsatisfactory performance, the employee was notified of this;

  5. The degree to which the size of the employer's undertaking would be likely to impact on the procedure for implementing a termination;

  6. The degree to which lack of human resource management would be likely to impact on the procedures followed; and

  7. Other matters as the Commission considers relevant - a catch-all phrase allowing the consideration of other matters.
Three warnings and evidence of poor performance without making it clear to an employee that their job is on the line and without an opportunity to reply and/ or improve won’t get an employer over the line.

But, even in the case of misconduct, the Commission may still decide that the termination was unfair after it has taken all the circumstances of the case into account.

The myth of three warnings

A recent case in the Industrial Relations Commission of New South Wales illustrates the myth of the three warnings rule.

Mr Duggan was employed by BHP Steel for 11 years as an operator in its packaging products area. In early January 2003, Mr Duggan received a warning letter that referred to his "poor performance and ongoing behavioural issues" and stated that if the situation did not improve then his employment would be terminated.

He was suspended from work for two days.

Two months later, he received a "final warning" letter in relation to the numerous issues that the company had with his work performance. One of those issues was absenteeism. Mr Duggan often took Mondays off so that he could attend Children's Court in relation to his daughter's drug habit.

After receiving the final warning letter, Mr Duggan proceeded to take two days sick leave so that he could participate in a bowling contest. The allegation was put to him by his employer that he had been playing bowls and was not sick. Mr Duggan conceded that had been playing bowls.

In court, Mr Duggan claimed that he was sick on the relevant days but the bowling club had contacted him as it was desperate to find a replacement team leader for the bowls contest.

The Commission noted Mr Duggan's "colourful" history at BHP but held that, in the absence of hard evidence that Mr Duggan was not actually sick, BHP had no grounds to terminate his employment. The Commission ordered that Mr Duggan be reinstated and paid for the entire period that he was off work.

The Duggan scenario is but one in a long list of unfair dismal cases where the warnings rule has not been sufficient in justifying the termination of an employee. Unfair dismissal laws are not as simple or clear cut as many employers would like to assume. The complexities of these laws are such that specialist legal advice from the outset often saves employers time, money and grief in the long run.

Victoria Hiley, a solicitor at industrial relations and employment law firm Toomey Pegg Drevikovsky, is an accredited specialist in employment law and industrial relations.


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