Is honesty always the best policy?

Small businesses need to follow the rules when letting someone go.

It was just like any other Monday morning when Angela Manderson walked into the office.

However, she hadn't even sat down when she was tapped on the shoulder.

It's not fair that an employer can decide they mightn't like you, and then dismiss you 'fairly' just because you're within a probationary period. 

She was called into the bosses' office.

“I was told that I was being formally cautioned, and he handed me a letter.”

The letter stated that her energy levels seemed low and that she appeared uninterested in the role.

It surprised her, because her father had worked for the company for 30 years, and he loved working there. She was also an experienced payroll officer, having held similar roles elsewhere for years with no issues.

The 30-year-old approached the HR department and asked what the letter meant. She offered to go to the doctor about her apparent health issues. She was told that the letter was nothing more than a documented conversation.

“Three days after I was given that letter, they sacked me, telling me I didn't pass the probation period. I was completely shocked.”

After the meeting, she returned to her desk to find IT staff were disabling her computer access. She was escorted out of the building.

“I had no idea it was coming. They did the same thing to a male colleague two days later, who had also been there for eight weeks,” she says.

“I felt I was going really well in the job, and was developing a good working relationship with my colleagues. I hadn't been given any formal warnings, and I had complied with the informal feedback I had been given.”

Manderson doesn't have a case for unfair dismissal because it only comes into play once you've been employed for six months. She's now hunting for work.

“It's not fair that an employer can decide they mightn't like you, and then dismiss you 'fairly' just because you're within a probationary period.”

But Manderson isn't alone.

According to the Fair Work Commission, 3508 unfair dismissal claims were finalised in the first quarter of FY2014. A massive 80 per cent of these claims were settled either prior to or during the FWC conciliation process. Only 5 per cent of the claims were decided in court, which is the last resort. The primary aim of the Fair Work Commission is to settle as many claims as it can to avoid expensive and time-consuming court processes.

Terminating is straightforward if an employee is still within their probationary period, according to Sydney recruitment expert Pam KcKean.

“As a general rule, a small business will know within the first year if a candidate is unsuitable. It's likely that if you're unhappy with their performance, they may also have changed their mind about working for the organisation, and quite often, one or two frank conversations will do the trick,” the managing director of JSS Recruiting says.

“However, as the laws surrounding unfair dismissal are complex and quite often appear subjective, care must be taken when going through this process.”

Poor performers are one thing, but toxic employees are another kettle of fish altogether, she says.

“If you've been stuck with a toxic person, they can be impossible to rehabilitate and aren't usually interesting in improving their performance anyway, she says.

“These employees need to be managed out, which requires a work or performance plan that is clear and to the point. Terminating these employees is worth the gamble as the cost to your company by keeping them on can be massive.”

Employers should say as little as possible during the termination meeting to avoid a backlash, she says.

“Keep it short, to the point and show them the door. Though this would not apply to anyone who has been made redundant, or experiencing issues outside their control that is affecting their performance.”

Official warnings or notifications aren't mandatory, but are good evidence that the performance is not meeting standards and setting a timeframe for that to be cured, according to Guy Biddle, from law firm Finlaysons.

Employers should also put it on the record that the worker has a black mark against their name, and that similar issues will lead to more significant disciplinary action.

Avoid strife when terminating staff by understanding the law, says HR expert Natasha Hawker.

If a staff member is underperforming, you need to counsel them and attempt to bring the performance up to the required level, the director of Sydney HR firm Employee Matters says.

“Often the reason the employer wants to end an employment contract is valid, but they end up in trouble because they haven't managed the employee out correctly,” she says.

If there's a performance issue, you need to allow the employee to bring a support person to a meeting, where you explain your concerns and ask for their feedback. If a valid reason is given, such as their partner being ill, an employee needs to offer support, such as an Employee Assistance Program, Hawker explains.