|
|
Executive Termination vs. Procedural Fairness |
It is well known that employees covered by statutory unfair dismissal laws must be afforded certain rights of procedural fairness prior to the termination of their employment. Such rights generally include an obligation on an employer to:
1. present allegations of misconduct or poor performance to an employee;
2. providing an opportunity to respond; and
3. allowing an employee the opportunity to comment on proposed disciplinary action.
|
| However, in the recent common law case of Intico (Vic) Pty Ltd and Ors v Walmsley, the Victorian Supreme Court of Appeal decided that an employee, who earned more than the statutory limit of $90,400 contained in the Workplace Relations Act (as of 1 July 2004), could be terminated at common law without observing procedural fairness or the rules of natural justice, thereby not applying the principles of fairness and reasonableness that usually apply to decisions made under statutory unfair dismissal schemes. |
It is also an important decision because the implied term of mutual trust and confidence, which is frequently claimed as a basis for damages, was also not implied into the contract of Employment. |
The trial judge had held that the termination of the employee was unlawful because he was denied the opportunity of answering allegations which were relied upon for his summary dismissal. The Court of Appeal held that if the opportunity to be heard is not a term of the employment contract then it is not ordinarily to be implied. Further, Justice Buchanan stated:
"The employer is exercising a contractual right in dismissing an employee for misconduct. The employer is not bound to act reasonably, or to give reasons or accord the employee an opportunity to be heard."
|
| The decision is a serious setback for executives who are under the common law. However, employers should first check the executive's employment contract before proceeding to terminate their employment. They should also note that the law is far from certain in jurisdictions outside the state of Victoria, in which the States' unfair contract laws may apply. |
peter.mcnamara@cml.com.au
|
