The Fair Work Commission (FWC) has ruled on procedurally unfair terminations resulting from the misuse of HR software platforms. This comes following a growing reliance on subscription-based platforms in businesses without in-house HR expertise. While the technology is giving hours back to these businesses by streamlining and enhancing their HR practices, employers are reminded that the technology does not negate the obligation for procedural fairness at the termination of employment.

The recent decision of Rebecca Whiffen v Sense Rugby Pty Ltd [2023] FWC 2516 provides a case in point. This case involved an unfair dismissal application made by an employee of a small business, Sense Rugby Pty Ltd (Employer). At the conclusion of the case, Commissioner McKinnon ruled that the dismissal didn’t comply with the Small Business Fair Dismissal Code (the Code) and was therefore unfair. Given that the employer had utilised their respective cloud-based HR software to facilitate the performance warning and subsequent termination, it begs the question, what went wrong?

So, where did this small business get it wrong?

The facts of this matter are that the Employer, an occupational therapy business, terminated a Senior Administration worker (Employee), for repeated failure to adhere to management instructions and exceeding the ambit of her role. The Employer addressed these concerns as performance issues and disseminated a performance warning in the ordinary course through the Employer’s HR software.

Notably, the Employer did not explain in the warning letter that the Employee’s actions could lead to termination of her employment – a critical failure.

Commissioner McKinnon noted that the closest the Employer came to conveying the severity of the situation to the Employee was where it explained in the warning letter that the Employee’s failure to follow instructions could have “serious consequences”. This fundamentally failed to satisfy the requirement of the Code to raise the prospect of dismissal directly.

The Employer sought to defend the unfair dismissal application by arguing that it relied upon it’s HR subscription service with Happy HR to document and undertake the Employee’s performance management process. Commissioner McKinnon highlighted, however, that the subscription provided technical support without tailored human resources advice or support. This meant that the effectiveness of the cloud-based tool was limited to the knowledge of the user.

In other words, it was unacceptable for the Employer to argue that its obligations to the Employee were spoken for simply because it engaged a cloud-based platform provider to house its HR records.

Furthermore, the Employer was found to have breached the National Employment Standards (NES) through its late payment of the Employee’s final pay, including two weeks’ wages in lieu of notice and outstanding wages. In the circumstances, this caused adverse financial consequences for the employee.

In the end, the Commissioner recognised the valid reason for dismissal but deemed the dismissal itself unreasonable. This resulted from the clear procedural deficiencies and a failure to comply with the Fair Work Act in respect of final pay upon termination.

What should businesses take away from this case?

There are several key takeaways from Rebecca Whiffen v Sense Rugby Pty Ltd. Principally, a procedurally fair termination is essential for safeguarding the rights of employees and ensuring compliance with employment laws. This requires that Employers engage critically with any disciplinary procedure and consider which of the following may apply:

• providing reasonable notice or payment in lieu of notice to the employee;
• stating valid reasons for the termination related to performance, misconduct, redundancy, or other legitimate factors;
• offering the employee an opportunity to respond to any allegations;
• conducting a fair investigation, where necessary;
• allowing the employee the opportunity to have a support person;
• maintaining records throughout the process;
• ensuring compliance with applicable policies, procedures and the employment contract or any other agreement;
• providing an avenue for employees to challenge the decision; and
• ensuring the termination is not based on discrimination.

A fair termination process not only protects the legal interests of the employer but also upholds principles of justice and fairness in the workplace, reducing the risk of dispute and legal action.

The further takeaway from this case is that the engagement of cloud-based software does not negate employer obligations, the moral of the story being that if you’re going to get cloud-based HR support, get the support you deserve and make sure your cloud-based software comes with tailored HR support.