How to manage an unfair dismissal claim against your business

How can food service businesses protect themselves?

Whether or not the claim is accurate, the time and cost that goes into defending an unfair dismissal claim can have a substantial impact on any business.

It pays to have a solid awareness of your obligations as an employer: an unfair dismissal is when an employee is let go from their job in a harsh, unjust or unreasonable manner; or the dismissal is not a case of genuine redundancy.

Employers in the restaurant and catering industry need to ensure there is a valid reason for the dismissal and, it may sound obvious, but employees should be told of the reason before they are dismissed.

Certain aspects of unfair dismissal are based on the size of your operation.

For businesses with fewer than 15 employees, unfair dismissal can only be claimed by staff who have worked at the organisation for over 12 months. In larger businesses this limitation is only six months.

Businesses with fewer than 15 employees should follow the Small Business Dismissal Code.

In some instances, performance management may be the best way to forward. Make sure you are clear on the areas an employee needs to work on and give them the opportunity to improve.

Employees should always be given a chance to respond to any allegations or issues. Even if you are planning to dismiss them you still need to give them a chance to take your concerns on board.

There are very few instances of misconduct that warrant immediate dismissal: theft, fraud, violence or serious breaches of workplace health and safety laws.

How insurance can help with unfair dismissal claims

Many food service business owners and senior managers are unaware that unfair dismissal claims can be covered by insurance.

Management liability insurance covers the costs related to investigations, legal fees and settlement that can come out of an unfair dismissal claim, as well as fines and penalties.

For example, a small cafe terminated one of its employees who then lodged an unfair dismissal claim with the Fair Work Commission alleging bullying. The employer and employee could not come to an agreement so the Fair Work Commission instigated an investigation.

The employer notified us and we worked with their insurer to appoint a lawyer. The matter was settled during the conciliation process and the settlement amount was covered under the employer’s management liability policy, as were the legal costs.

What does management liability insurance cover?

The scope of management liability insurance includes employment practices liability which protects employers, directors and managers financially if the following claims are brought against the business:

• unfair dismissal
• emotional distress
• bullying and harassment
• discrimination
• deprivation of career opportunities.

Management liability insurance also bundles together several other standalone insurance covers into one policy to safeguard against a variety of risks that restaurant and catering businesses might encounter. 

Get help from Gallagher

As long-standing partners of Restaurant and Catering Australia, we know that the owners and managers of restaurants, cafes or catering businesses are extremely busy with the day-to-day running of their operation. 

Let our industry specialists organise the insurance cover you need to protect your business from unfair dismissal claims.

We help you face tomorrow with confidence. The Gallagher Way. Since 1927.