12 May 2015
Sina Mostafavi, Senior Associate
One of the most frequent issues we are asked as workplace lawyers to advise our clients on is that of termination of employment. The concerns around termination generally arise from the relative ease with which unfair dismissal applications can be brought and the consequences of having to compensate or reinstate an employee where the dismissal is found to be harsh unjust or unreasonable.
The case law in the Federal Fair Work Commission (“FWC”) reveals that the unfairness in any given termination can arise in a number of ways and so risks can be minimised by understanding the deficiencies and avoiding these same mistakes. Recent cases from 2014 illustrate that a dismissal can be unfair as a result of poor management, for example where:
- an employer fails to have a substantively fair basis (reason) to terminate employment;
- an employee is not provided with procedural fairness in relation to the dismissal; and/or
- the dismissal is unduly harsh in relation to the effect it has on the employee.
Unfortunately it would appear all too common that employers focus on the reason for the dismissal rather than the other issues which are also relevant in terms of fairness, such as whether it is harsh to dismiss an employee in particular circumstances.
For example, in the case of Harbour City Ferries Pty Ltd v Christopher Toms  FWCFB 6249 (“Toms”), the employee was operating a ferry that crashed into a wharf at Sydney Harbour. The employee was drug tested which proved positive for marijuana. The employee confessed that 16 hours earlier, he had smoked a marijuana cigarette at home to relieve shoulder pain. Despite there being a clear breach of the company’s drug and alcohol policy, which stated that employees must be free from the presence of drugs while working, the FWC found that the employee’s dismissal was harsh due to the employee’s unblemished record with the company for 17 years and that rendered the dismissal unfair. The employee was reinstated, given that the company had not raised any issues about the employee’s record or capacity to carry out his duties in future. However, an award for lost wages was not awarded as a penalty for the policy breach.
The decision was subsequently overturned on appeal by the FWC Full Bench, who found that the employee’s serious misconduct, being “deliberate disobedience, as a senior employee, of a significant policy” was not adequately mitigated by the matters dealt with in the first instance decision, reversed the reinstatement and dismissed the employee’s application.
Similar to the first instance decision in Toms, in Anderson v Thiess Pty Ltd  FWC 6568, the dismissal of an employee who sent offensive emails in clear breach of a company’s policy, which also had the potential to cause significant reputational damage was found to be harsh and unreasonable, when taking in factors such as his age and difficulty in obtaining other employment. FWC found that while there was a valid reason for dismissal, the termination was harsh and unreasonable given his age being 65 years and likelihood he would not find another job. The FWC denied reinstatement but compensation was reduced by a further 50% due to the misconduct of the employee.
These cases clearly demonstrate that while there may be a valid reason to dismiss, this will not always justify a termination, and that other factors must be considered. This said, as was found in the Toms appeal, a sufficiently serious breach of a policy, where not adequately mitigated by other relevant considerations, may defeat an unfair dismissal application.
In the case of Chris Conlon v Asciano Services Pty Ltd T/A Pacific National Pty Ltd  FWC 2127, the FWC found that it was not unfair to dismiss a 63 year old train driver who failed to see and respond to two train signals and was 120 seconds away from colliding with another train. Looking out for signals and adjusting the speed of the train were fundamental aspects of his duties and he clearly breached company policy and safety procedures by failing to do so (all of which meant that there was a valid reason for dismissal and the facts were proven in terms of the acts alleged against him). Given the opportunity to respond in writing, the driver stated that there had been no information given to him to indicate other trains might be crossing at that particular intersection the day of the near collision.
He admitted he was disappointed in himself and asked Pacific National to take into account his long and loyal service of 20 years. The FWC heard that Pacific National considered placing the driver in a suitable non-driving position, however, no such roles were available.
The FWC took into account the driver’s age and experience when determining the matter, however, it could not find the dismissal unfair.
Not providing an employee procedural fairness is another example which may taint an otherwise “fair” dismissal as it may be considered unjust or unreasonable to terminate where this occurs. This quite commonly happens during the investigation process. For example, although there may be a valid reason for termination, a mishandled investigation may deem a dismissal unfair, as seen in the case of Cowan v Sargeant Transport Pty Ltd  FWC 5330. The FWC found that the lack of systematic approach to investigating the driver’s actions of urinating outside the entrance to a Woolworths warehouse meant that it failed to make the employee aware of the allegations and evidence against himself or provide him with sufficient opportunity to respond or have a support person present. The company’s failure to meet the driver in person denied the employee an opportunity to ensure that the HR manager and others were aware of his medical condition and the urinary urgency which he sometimes suffered as a result.
Similarly in Farmer v KDR Victoria Pty Ltd T/A Yarra Trams  FWC 6539 a tram driver was found to be wrongly accused of using his mobile phone while operating a tram after a flawed investigation into the incident, therefore there was no substantive and valid reason for dismissal. In contrast, providing warnings before dismissal can protect an employer from reinstatement of a dismissed employee as seen in the case of Scott Wilson v Leighton Contractors Pty Ltd  FWC 5503.
Procedural fairness may also be breached where there has been significant delay in dealing with the inappropriate conduct of employees. In Camilleri v IBM Australia Limited  FWC 5894, the application of a “zero tolerance” policy in relation to business conduct was overridden by the FWC and the dismissal found to be unfair due to significant delays of almost three years between the first instance of inappropriate behaviour and the termination of the employment, as well as a substantial delay in notifying the employee of the termination after the decision to terminate was made. A similar situation occurred in Cannan and Fuller v Nyrstar Hobart Pty Ltd  FWC 5072, whereby the failure of Nyrstar to deal with the bullying behaviour of two workers contemporaneously and the delay in putting specific allegations to them led to a finding that the dismissals were unfair.
In the case of Sheldrick v Hazeldene’s Chicken Farm Pty Ltd  FWC 5820, the FWC found that a requirement that an employee work additional unpaid hours and enter an on-call roster (after an employee refused to accept phone calls during his annual leave period and to sign a contract requiring him to do so which led to his dismissal) was unfair and unreasonable. The FWC stated that the company had no legal right to compel the employee to accept significantly changed terms of employment and the denial of procedural fairness were factors which led the FWC to award nearly $8,000 in compensation for lost remuneration.
In Kirsch v ThyssenKrupp Polysius Australia Pty Ltd  FWC 8640, deliberate and manipulative actions by an employee in discussing her impending redundancy were factors that the FWC found were relevant in deciding not to grant an extension of time for filing her unfair dismissal claim (claims must be filed within 21 days of the termination taking effect). The employee was informed of her impending redundancy and was asked to attend a meeting to discuss redeployment options. On the day of the planned meeting, the employee sent a text message saying she would not be at work and sent a further email attaching a medical certificate indicating that she would not return to work for another seven days after which she was on approved annual leave. The company advised the employee that they would make their final decision about her employment on the day before her annual leave and that dismissal was the likely result. The company sent her an email and also a letter advising her of her redundancy the day before her annual leave; however the employee had left the country and did not read these emails until her return. The FWC found that the evidence established that the employee was aware that it was highly likely she was to be retrenched and did not inform the company of her travel plans. In doing so, the FWC found that the approach of the employee was wilful blindness to try and establish a right to lodge an unfair dismissal application that did not exist, and her dismissal came after the company had made every feasible effort to engage her in discussions about her redundancy to mitigate its effects.
It is evident from these cases that a termination may be unfair for a number of reasons, even if the reason to terminate is valid. Given this, employers need to carefully assess not just the reason for dismissal but whether it will be harsh, unjust or unreasonable. This includes an obligation on employers to ensure that they provide procedural fairness to an employee during any investigation into the conduct of the employee and throughout the termination process. This will minimise the chance that a dismissal that is valid is not deemed by the FWC to be unfair due to procedural or other defects.