Maximum compensation payout for a valid dismissal

Whilst a valid reason may exist for dismissing an employee, the dismissal can still be ‘unfair’ and result in an order for maximum compensation.

In the recent case of Kane and McMillan v Goodyear and Dunlop Tyres (Australia) Pty Ltd, two tyre fitters were summarily dismissed because they each made a mistake in fitting the wrong tyre to a trailer. The employees had been working together, the first employee retrieved the wrong tyre and the second employee fitted the tyre to the trailer without checking it was the correct model. The error caused the tyre to explode upon inflation.

The employer argued that the employees had an unsatisfactory attitude to safety meetings during their employment. Senior Deputy President Drake found that the employees attended staff safety meetings and even had the initiative to develop a tool storage device to reduce the risk of injury. SDP Drake labelled the employers expectation of enthusiasm at safety meetings as unrealistic and criticised the employer for not having discussions with the employees prior to the dismissals concerning their performance, efficiency and attitude.

In addition, the employees were not provided with an opportunity to respond or explain why their employment shouldn’t be terminated. Importantly, it was noted that the conduct of the employees wasn’t wilful or inadvertent but an ‘accident.’ SDP Drake made a point of distinguishing between conduct which constituted a single error; a number of single errors; a series of careless acts and a course of conduct demonstrating reckless indifference to safety. It was acknowledged that whilst the error made by the employees provided a valid reason for dismissal, the nature of the incident being a single mistake/accident, rendered the dismissal harsh.

One employee was awarded maximum compensation of 6 months’ wages and consideration is being given to reinstating the other employee.

KEY POINT: Employers must ensure that prior to the dismissal full consideration is given to whether there’s a valid reason. It’s then vital that a fair and reasonable procedure is applied. A failure to do so may result in an order for 6 months wages as compensation or the employee being reinstated.