Can HR dismiss an employee for looking for another job?

A recent FWC case has drawn attention to the legal complications that can arise when an employer discovers one of their workers is looking for another job. 

Finding out an employee is shopping around for new opportunities can put HR and managers in a tricky position. 

Juggling the company’s interests and operational needs while ensuring employees are treated fairly in these circumstances is often a delicate tightrope walk with potential legal and ethical pitfalls on both sides.

This is especially true if the employee’s decision to change jobs is not set in stone.

The case in question

A recent case heard by the Fair Work Commission (FWC) has underscored the need for careful and transparent management following the discovery that a worker is looking for a new job. 

The case involved a worker employed by a disaster recovery organisation, who filed for unfair dismissal in July this year on the grounds that he had been dismissed for seeking other work. The employer objected to the application, claiming the employee had resigned from his role.

The employee’s situation began when he started a job search due to anticipated financial strains from his partner’s upcoming parental leave. This led to prospective employers contacting his workplace, which raised concerns within the company.

In response, his manager initiated a conversation with him about his job search and recent sporadic absence from work. During this conversation, he was offered a two-week notice period to find alternative employment.

However, what was allegedly intended as an optional offer was construed by the employee as a termination of employment. 

In its ruling, the FWC noted that this exchange did not make it clear that the employee had a choice in the matter, and the employer did not correct the misunderstanding. 

Therefore, it ultimately found the termination of employment occurred at the employer’s initiative, meaning the employee is free to proceed with an unfair dismissal claim if he chooses to. 

Can job-hunting be valid grounds for dismissal?

According to ​​Michael Byrnes, Employment Partner at law firm Swaab, the simple answer is that an employer cannot dismiss an employee simply because they are looking for another job. 

With that said, it’s possible that the way the employee chooses to go about their job search is in violation of their employment agreement, and is therefore grounds for termination.

“They need to conduct the search in a manner that is consistent with their obligations to the employer,” he says. “[For example], any interviews or applications should be done outside of work hours. 

“An employee should also be careful not to engage in active disparagement of their current employer. They might say, ‘I’m unhappy,’ ‘I don’t feel fulfilled,’ or ‘I feel that my remuneration doesn’t reflect what I bring to the table.’ Those are observations related to your own feelings and views. But to say, ‘The management is inept,’ or ‘The company’s in trouble’ – those types of comments are inconsistent with your obligations as an employee.”

When a prospective new employer contacts the organisation for a reference, HR and managers who are nominated as referees can be put in a difficult position in terms of providing a reference while also meeting their own obligations to their employer, he says.

“[Employees] need to conduct the search in a manner that is consistent with their obligations to the employer.” – Michael Byrnes, Employment Partner at law firm Swaab

“Particularly if you’re a referee and you’re talking to a competitor of the company for which you presently work, and then you give them all that information as part of the reference, in a way you are helping to facilitate a process which is to the potential advantage of this competitor.

“Perhaps [they are] even poaching or soliciting an employee of the business, and you end up effectively helping or taking part in that process.”

This is one reason why it’s so important for employees to be transparent when they nominate a manager or HR practitioner as a referee, as that person may well need to reflect on their position and whether they can provide a reference without compromising the needs of the organisation.

How to respond to an employee looking for another job

The FWC case is a good reminder to HR of the importance of clarity, tact and sensitivity when it’s discovered that an employee is looking for another job.

As a first step, it’s a good idea to try and understand the employee’s reasons for wanting to leave and how serious they are about it, which can help you tailor your response.

While a manager or HR person’s first instinct may be to keep these exchanges confidential, Byrnes warns that there are some circumstances in which you may have a responsibility to notify others.

“Depending on the nature of your role with the organisation, it may well enliven an obligation for you to make [management] aware of that in some way so they can take steps to counteract the solicitation – whether that be offering more money, improving their working conditions or whatever it might be to help secure that employee,” he says.

Circumstances like this are rarely black and white, and there are all sorts of factors that can change what constitutes an appropriate response. It will depend on the nature of the employment relationship and whether there is joint consensus that the employee would be better off in a different role. 

In rare cases, an employee on a fixed-term contract looking for other work might be considered in violation of their employment agreement, even if they conduct their job search in a compliant way, says Byrnes.

“The extent to which an employee can actively look for work while they’re still in employment is an interesting issue, because that’s what most people endeavour to do,” says Byrnes.

“It’s often said, and I think rightly so, that it’s easier and you’re in a stronger position if you’re looking for a new job while you’re still in employment, rather than once employment comes to an end. And you can do that, but it can be a tricky and delicate balancing act. 

“The most important thing is that [the employee] doesn’t become disengaged from their current employer, and doesn’t do anything which is inconsistent with their obligations to that employer, while looking for other work.”

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