Procedural Flaws and HR Software Dependency Lead to Unfair Dismissal

Key Takeaways

1. Clear and Transparent Communication: Businesses must maintain open and explicit communication with employees, particularly when addressing performance issues and potential dismissals, avoiding vague or unclear warnings.
2. Use HR Software to Complement, not Substitute: HR software can be a valuable tool for documentation and compliance but should be used alongside internal expertise or external advice to address the unique needs of each situation.
3. Legal Compliance Awareness: Employers should stay well-versed in labour laws or well- connected to their legal advisors and ensure strict adherence, even when using HR software with compliance features, to prevent procedural deficiencies and potential legal issues.
4. Prompt Payment of Entitlements: Timely payment of entitlements upon termination is crucial to avoid financial hardship for employees and ensure compliance with legal requirements, emphasising the importance of efficient HR processes.

In a recent case that underscores the challenges of overreliance on subscription-based HR software, an occupational therapy business, Sense Rugby Pty Ltd, has faced criticism for its handling of a senior administration worker’s dismissal. The worker’s termination was ostensibly due to repeated failures to follow instructions and an alleged overstepping of her role. However, procedural deficiencies in the dismissal process, stemming from an over-dependence on HR software, have cast a shadow over the fairness of the termination.

The Case Overview

Sense Rugby Pty Ltd, a small business in the occupational therapy sector, faces a dispute over dismissing a senior administration worker. The primary grounds for dismissal were the worker’s consistent failure to adhere to instructions and perceived breaches of her role’s boundaries. Notably, the company had issued warnings about her conduct, albeit without explicitly conveying the potential for dismissal. The company’s communication extended only as far as mentioning “performance management” with “serious consequences” in vague terms.

A Heavily Relied-upon HR Software: “Happy HR”

Throughout the dismissal process, Sense Rugby heavily relied on a subscription-based HR software program named “Happy HR.” While Happy HR does provide valuable technical support, it notably lacks the provision of personalised human resources advice or support, thereby constraining its efficacy as a comprehensive HR tool.

The company owner utilised Happy HR to deliver warning letters and prepare the employee’s termination letter. However, the company deviated from the software’s template policy for performance and behavioural improvement plans regarding the dismissal.

Challenges Posed by HR Software Overreliance

1. Lack of Tailored Guidance: A notable shortcoming of HR software, such as Happy HR, lies in its inability to offer personalised advice. A one-size-fits-all approach often falls short in intricate employment matters, particularly those involving potential dismissals. The absence of tailored guidance can result in procedural lapses, as evidenced in this case.
2. Communication Gaps: The failure to explicitly communicate the possibility of dismissal to the employee is a significant procedural deficit. While HR software can facilitate documentation, it should never replace clear, transparent communication between employers and employees, especially in situations involving employment termination.
3. Compliance Complexity: HR software often includes features designed to ensure compliance with labour laws. However, the effectiveness of these features heavily depends on the user’s understanding and adherence to legal requirements. In this case, the company’s failure to comply with the Fair Work Act, particularly regarding the payment of entitlements on termination, underscores the limitations of relying solely on HR software.

The Verdict and Ramifications

After thoroughly examining the case, Commissioner Sarah McKinnon determined that the worker’s dismissal was inconsistent with the small business fair dismissal code. This inconsistency primarily stemmed from the company’s inadequate communication of the possibility of dismissal based on the employee’s behaviour. Additionally, the company’s delay in providing the worker’s entitlements resulted in adverse financial consequences for the employee, further contributing to the unfairness of the dismissal.

In conclusion, Commissioner McKinnon ruled that the worker had been unfairly dismissed, and discussions on compensation are pending. This case serves as an important lesson for businesses that rely heavily on HR software. While these tools can provide valuable assistance in record-keeping and compliance, they should complement, not replace, essential elements of hiring an employment law professional. Ensuring clear communication and unwavering adherence to legal requirements, ensuring employees are treated fairly and equitably.