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Stringent processes for employee dismissal are ‘absolutely essential’ - Lawyers Weekly

By Alan J. McDonald

Stringent processes for employee dismissal are ‘absolutely essential’

The recent awarding of $1.2 million to former James Cook University professor Peter Ridd shows that law firms must engage in “exhaustive consultation” with employees about the issues warranting dismissal.

Speaking in the wake of Professor Ridd being awarded $1.2 million in damages from JCU following his successful unfair dismissal case, McDonald Murholme managing director Alan McDonald said the win should be seen as a lesson to employers “who cause significant reputational damage” to an employee.

“The $1.2 million award of damages to Professor Ridd shows that the law has teeth when dealing with wrongful dismissal [and] that there are uncapped damages in GP claims, proving a necessary and valued deterrent for employers against wrongfully dismissed employees,” he said.

“The Court has the power in wrongful dismissal cases to compensate for long-term loss of income and for hurt and suffering cause to an employee. It has the power also to show its disapproval of the employers’ conduct using heavy penalties, without such laws, Australian workers have no chance to exercise democratic freedoms which have been part of the Australian way of life and Aussie attitudes since our convict days.”

In conversation with Lawyers Weekly, Mr McDonald said that “nothing short of exhaustive consultation” by a law firm with an employee will suffice when it comes to discussions about the issues warranting their dismissal.

“Where the situation remains problematic, a generous deed of release offered to the employee is usually an easy way out. Law firms tend to be inherently litigious and do not expect that employees will challenge a decision to terminate their employment. They also rely upon the fact that an employee may suffer reputational damage by suing. It may be more difficult for that employee to find alternative employment with other law firms,” he explained.

“Therefore, there is a level of comfort for law firms in the dismissal process regardless of the merits of the matter. Nevertheless, the management issues that law firms deal with since law has moved from a professional status to an industry status means that they are as likely as any other employer to breach the Fair Work Act (Cth) 2009 General Protection Provisions.”

When asked about how best law firms can advise clients on such matters, Mr McDonald said that law firms usually want quick resolutions to employee disputes, but he suspects that “many do not see the same urgency for their clients”.

“There appears to be a temptation to litigate a matter to ensure that the employee needs to fight for every dollar. Too often employer/employee disputes are emotional and too many employers can easily be made enthusiastic in the fight against the ex-employee who in most cases they dislike,” he mused.

“They often ignore that the employee’s lawyer will recognise the benefit of an early settlement and is not driven to achieve a result, which both parties perceive to be good only for the lawyers. Many law firms tend to fear that they will lose the client if they fail to play hardball. However, some of Melbourne’s leading and most successful law firms drive early settlements and hold the most prestigious clients.”

The “irrationality of playing hardball should be obvious”, he continued, given that so few cases ever reach judgement.

“So, why would a client want to play hardball when they are not going to want to go to judgement? What damage do they do to their reputation by playing hardball against their most valuable human resources? There is no doubt that employment disputes create anxiety disorder, sometimes escalating to depression,” Mr McDonald posited.

“That level of anxiety disorder increases for both parties as litigation escalates. Judgements such as Professor Ridd and Keenan demonstrate that the Court will now punish employers who play hardball.”

Reference: ‘Stringent processes for employee dismissal are ‘absolutely essential’ , Lawyers Weekly, Thursday 12th September 2019.