By Simon Abraham

12 January 2015

In March 2014, the Harvard Business Review published an article entitled "Hire Slow, Fire Fast".

The essence of the article is that successful businesses should be ‘absurdly selective’ in who they hire. When an employee is not working out, successful businesses don’t allow the problem to fester but also manage to treat the employee with dignity.

Sadly, too often in Australia it is the other way around. Unsuitable employees are often engaged hastily due to time pressures whilst employees that are not performing are left in place where they consume a disproportionate amount of management time and morale is inevitably damaged. The usual reason given by employers for such inaction is fear of being involved in unfair dismissal proceedings.

It isn’t only small businesses that fall into this trap. In mid-2014, Myer hired Andrew Flanagan as group general manager for strategic and business development which came with a $ 400,000 salary. Mr Flanagan’s CV stated that he had worked for a Spanish fashion company, Inditex Group, that owns the global ‘fast fashion’ chain Zara. His CV and references were falsified. He had previously used a false CV to work at other businesses. Myer fired him on his first day in the job after his fraud was belatedly uncovered.

Employers should learn from Myer’s mistakes and take the following steps where possible:

  • Always carry out a police check of prospective employees who are to be engaged in a position of trust. We can refer you to external companies that carry out such searches for a modest sum. We can also put an employment contract in place that gives employers the right to carry out such searches as a pre-condition of employment.
  • Reference checks should be carefully carried out. Don’t rely upon a recruitment company alone. They may well be getting scammed as well. We recommend undertaking your own separate reference checks.
  • Carry out a Google search of the prospective employee. In Mr Flanagan’s case, he had no LinkedIn account or any other internet record of his alleged ‘employment’ history.
  • For the most senior roles, we can carry out a search of the National Personal Insolvency Index (bankruptcy) and a number of Courts also have online search facilities.

When firing an employee it is important that steps are taken to minimise an unfair dismissal claim and to protect the intellectual property and goodwill of the business. In most cases, it is appropriate to have the employee leave immediately and pay them their notice in lieu. However, you must ensure that the employment agreement and the Fair Work Act are complied with in all respects.

 

For more information please contact Simon Abraham or a member of our Employment Law Team.

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