In a recent case, company system errors within an employer’s electronic payroll and timekeeping system produced incorrect records concerning their employees’ absences. This misinformation directly led to the employer dismissing over 125 construction employees in response to the supposed “emergency situation [concerning] widespread theft, fraud and destruction by the workforce”.  

Subsequently, over 40 employees claimed unfair dismissal through the Fair Work Commission (the “FWC”). Within these claims, a key issue the FWC considered was whether a system error was a defence for employers who had dismissed employees. Including this present case, only several of the claims ultimately proceeded to hearing. 

Background 

The employee had been employed as an electrician for over 2 years and had recently begun a flexible working arrangement due to family commitments. He was working on a refurbishment project at a resort which was due to be completed March 2024 and was employed to do maintenance jobs around the resort and several others connected to it. The employee had a positive working relationship the employer and there was a possibility of continued employment after the project was concluded. 

The employer alleged that the employee had 78 unexplained absences shown in its system and that he was entering an extra 30-minute break on Monday to Thursday, which led to an overpayment of $30,000. In response, the employee claimed that he regularly encountered issues using the employer’s timesheet App and some of these errors involved delays, glitches and poor connectivity. The employee also claimed that there were contextual reasons as to why his timesheets may not have been accurate (for example, when the employees worked offsite, they sent their timesheets to management because they did not have access to the timesheet App). 

The employee was subsequently terminated on 8 August 2023 without being provided a fair opportunity to respond to the allegations. 

What makes this case unjust, harsh and “unconventional”? 

The FWC noted that this dismissal was unjust because the employee was not guilty of the misconduct that formed the basis of the employer’s reason for termination, and the employer had not followed a proper show cause and termination process. The FWC noted that had the employer conducted a proper investigation into the company system errors and timesheet issues, the technical difficulties would have been identified.  

The dismissal was found to be harsh because of the personal and economic consequences on the employee, as the employee had a flexible working arrangement with the employer to accommodate for custody of his two children, meant that securing permanent employment as an electrician was extremely difficult. The employee was only able to secure casual employment approximately six weeks after the termination. The lack of job security, no paid leave and lower hourly pay in the new role proved personally and financially harsh on the employee.  

Further, while the initial mass dismissal was driven by a system error, the employer’s “scatter-gun” handling of the matter with the employee was observed by the FWC to be, if nothing else, an “unconventional” approach to industrial relations. In making this observation, the FWC noted the employer had offered to rehire the employee some 20 minutes following the termination. 

What can employers take away from this case? 

It’s not uncommon for employers to be faced with apparent evidence of employee misconduct.  Irrespective of the apparent strength of that information, employers must consider carefully how they respond to allegations of misconduct, make all reasonable inquiries and ensure any disciplinary process is fair. All of the relevant circumstances must be considered, including the circumstances specific to an employee such as their length of service, employment record, financial circumstances, and any mitigating factors.

Vanessa Yol, Associate and Daniel Prodigalidad, Paralegal