Ten key lessons from this year’s most important unfair dismissal cases

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Ever held on to a bad employee just because you were afraid of an unfair dismissal claim?

Without human resources teams behind them, small business owners are often unsure how to terminate or mange a troublesome employee without ending up before the Fair Work Commission.

The good news is, if you have a valid reason for dismissal and run a fair process in dealing with your staff’s conduct and performance, at the end of the day you will either make a fair dismissal or find the right solution to deal with the employee.

SmartCompany takes a look at the most important unfair dismissal judgments from the last 12 months to bring you ten important lessons on how and when its OK or not OK to sack a staff member.

1. Have policies and make them clear through training

Having clear staff policies in place, such as social media or company credit card expenditure guidelines, is the very first line of defence an employer has to deal with staff who do the wrong thing.

But it’s not only important to show the Fair Work Commission you have these policies, it’s also imperative to show you’ve properly communicated those guidelines to staff.

An Adelaide plumbing manager recently lost an unfair dismissal case after he was sacked for buying two slabs of beer for a company Christmas party with the business’ credit card.

James Farrelly was provided with a company credit card by his employer and given specific training on how the card should be used and its strict limitations, including that any questionable expenditures should be checked with his manger.

After Farrelly asked his boss if he could have a separate Christmas function for the plumbing department and was turned down, he purchased two cartons of beer, costing $114.98, with his company credit card anyway. He was terminated for unauthorised and inappropriate expenditures on the card.

The commission upheld the dismissal, finding Farrelly had clearly been instructed not to have a second Christmas party and had been given comprehensive and relatively recent induction briefing on how to use the credit card.

Employment lawyer Peter Vitale told SmartCompany once an employer has made clear what the permissible use of a company credit is, a breach of that use will usually justify termination.

In general, Vitale recommends employers set clear policies and demonstrate they have clearly communicated the policies to employees to cover themselves from unfair dismissal claims.

2. Provide procedural fairness

Procedural fairness is critical to how the Fair Work Australia decides an unfair dismissal case. If you fail to show you have applied procedural fairness before you dismiss an employee, it will usually result in a finding that the dismissal was unfair.

A recent case that involved an employee who was sacked for allegedly turning up drunk to work and “smothering” 50 chickens with heavy machinery shows that even if you think you have a valid reason for dismissal, you must provide the employee with procedural fairness.

Heidi Cannon was dismissed from Mornington Peninsula-based Poultry Harvesting last year after she was found asleep on the job the morning after the Melbourne Cup.

She was sacked for being intoxicated at work, but the Commissioner found Poultry Harvesting did not have sufficient evidence to prove she was drunk and did not provide her with an opportunity to respond to the allegation. Cannon subsequently won the case and was awarded close to $7000 in compensation.

Employment lawyer and M+K Lawyers partner Andrew Douglas told SmartCompany while being intoxicated at work represented serious misconduct under Fair Work regulations, the onus falls upon the employer to prove the allegation and provide procedural fairness in the investigation.

“Even if there is a valid reason for termination, a breach of procedural fairness will fundamentally undermine the fairness of the determination,” says Douglas.

Procedural fairness includes:

  • Having a valid reason to dismiss someone;
  • Providing the allegation to someone in writing;
  • Providing them with the opportunity to reply;
  • Allowing them to have a support person present;
  • Asking the employee if there was any relevant circumstance that should inform the decision; and
  • If the dismissal relates to poor performance, giving someone appropriate warnings.

3. Casual workers can be covered by unfair dismissal laws 

You may be under the impression your casual staff are not covered by unfair dismissal laws simply because they are not full or part time employees – but you might be wrong to make such an assumption.

The Fair Work Act does provide unfair dismissal protection for long-term casual workers who have a expectation of continued employment.

A recent case involving a casual bottle shop worker who was unfairly dismissed for not cleaning up a broken sign showed a casual worker can be covered by unfair dismissal protection if they can show they work regular shifts.

James McKinnon was awarded $7000 in compensation from The Crest Hotel in Sylvania, after the Fair Work Commission ruled he was covered by unfair dismissal laws because he worked on a regular and systematic basis and could reasonably expect to work the same shifts each week.

“Some employers who have casuals who work regular part-time or full-time hours and have done so for a long time, need to be aware, whether designated as casual or not, they may have rights for unfair dismissal claims or even long service leave,” says Vitale.

4. The definition of workplace is expanding

It’s no longer as simple as to say, ‘the office is a workplace, but after work drinks at a bar are not’. Several cases in the last 12 months have shown courts and the Fair Work Commission are increasingly willing to accept an expanded definition of what constitutes a place of work.

In February, the definition was put to the test when an employee who was sacked for groping a bartender while staying at a hotel paid for by his employer lodged an unfair dismissal claim.

The employee was put up in a hotel the company regularly used to accommodate its employees as part of their employment. While he was there, he squeezed the bottom of a female waitress and was subsequently terminated for bringing the company into disrepute.

The worker attempted to argue his dismissal was unfair because his actions had occurred outside of the workplace. But the commission found it was reasonable to make a connection between his actions and his place of work, given the existing relationship between the employer and the hotel.

Douglas says the case is representative of a larger change happening in employment law where it takes into account how an employee’s actions impact the employer’s reputation.

“There is a brand and reputational relationship between a business and the person,” he says.

“If you do something that damages the brand and reputation that has some natural connection to the business, you can be reprimanded.”

5. Be careful when sacking on the spot

One of the most important lessons an employer can learn is to give staff ample warning when if they are going to dismiss them – sacking someone on the spot can lead to trouble.

According to the Small Business Fair Dismissal Code, it is only fair for an employer to dismiss an employee without notice or warning when the employer reasonably believes the employee’s conduct was “sufficiently serious” to justify a dismissal.

In March, a Melbourne woman was awarded more than $4000 compensation by the Fair Work Commission after being unfairly dismissed on the spot by a company that specialises in renting out adult entertainment buses.

Diana Menabue, an administration assistant at V Bus in Altona, was sacked after she warned a schoolteacher the buses the school was booking for students had stripper poles inside them. V Bus sacked Menabue for attempting to sabotage the business by cancelling bookings.

But the commission found although the company directors believed her conduct was sufficiently serious to justify immediate dismissal, the belief was not based on reasonable grounds, gathered through a reasonable investigation into the matter.

Vitale says the case highlighted the need for business owners to follow due processes and conduct a proper investigation if they suspect misconduct has occurred.

“In cases where an employee is dismissed for serious conduct the employer has to have a reasonably based belief that the conduct occurred,” Vitale says.

“That puts an onus on the employer to conduct some reasonable investigation.”

6. Don’t treat employees differently

It’s important to show the commission you stick to your policies by treating each employee the same.

In May last year, a public servant successfully argued he was unfairly dismissed for groping the breasts of five women at the work Christmas party.

The NSW Industrial Relations Commission found Andrew McCaskill, a project officer with the Department of Justice, was treated more harshly than a senior manager who was only demoted for groping another women’s breasts at the party.

Commissioner Tabbaa dismissed the argument that McCaskill’s conduct should be distinguished from that of the senior manager because it involved more women and found the penalty of dismissal was harsh when assessed against the penalty meted out to his colleague.

Vitale says businesses need to demonstrate they are serious about implementation of policies such as equal opportunity policies and sexual harassment policies.

“One of the ways you do that is by applying them equally to different employees,” he says.

7. If you encourage something, you can’t sack someone for it

A recent case, which that saw an insurance broker awarded $300,000 after he was sacked for passing out drunk in a hotel corridor, shows employers can’t sack someone for behaviour they are seen to encourage or endorse.

Donald Mitchell-Innes worked for risk and insurance company Willis when he was sacked for falling asleep outside of his hotel room and attending a work conference hung over.

But the NSW District Court found alcohol consumption, in a work context, was not uncommon amongst employees at Willis. Staff were regularly expected to socialise and consume alcohol with clients and Willis routinely reimbursed alcohol expenses resulting from employee gatherings or entertaining clients.

The court subsequently found the dismissal was a harsh reaction, given there was a common manifestation of low-level intoxication, without other consequences of behaviour of significance in the workplace.

TressCox partner Rachel Drew told SmartCompany employers need to ensure if they are concerned about the workers drinking they have a policy in place that makes it clear it is unacceptable and connect intoxication with performance of work.

Drew says if employers have a policy on alcohol consumption it is important for them to comply with that policy as well.

“If the employer is going to conduct a training conference that includes alcohol at dinner and paying for alcohol at a venue afterwards the employer needs to accept some degree of responsibility,” Drew says.

8. Put the allegations to the employee in writing

Even if you are found to have had a valid reason to dismiss an employee, it is still important you conduct an appropriate investigation and disciplinary procedure.

In July last year, the Fair Work Commission found a Bunnings employee was unfairly dismissed following a brawl with his co-worker because the company had failed to follow correct procedure.

The fight started when Michael Fitzpatrick told a colleague to “go and get f—ed” and ended in a physical altercation between the two. The incident was partly overheard by other Bunnings employees and the pair were suspended on the day.  But in the investigation following the fight the Commissioner was not satisfied all the allegations were properly put to Fitzpatrick and in particular he made the observation that the allegation should have been put in writing.

Vitale says the case shows even where employers think they have a clear cut case for termination, the commission will still look at the process that is followed prior to termination.

“The employer, particularly a large employer with a dedicated human resources department, needs to ensure its process is spot on,” he says.

Even if you are a small employer, it is well worth your while to show you’ve followed a fair process.

 9. Keep up to date with WHS laws

Under state and territory Workplace Health and Safety laws, employers have a legal obligation to provide a safe workplace.

If you provide an employee with a lawful and reasonable direction to adhere to WHS laws and they breach them, it may be reasonable to terminate them – by following the correct procedures.

A recent case involving a BHP Billiton worker who was sacked for not shaving his beard acts a ‘how to’ for fairly dismissing an employee who flouts workplace safety.

James Felton was sacked after repeated directions and warnings from the mining giant to shave his beard because it inferred with the proper use of his face mask respirator.

BHP had been advised particles in the air of the underground mine where Felton worked were carcinogen, and directed all employees to present to work clean shaven to wear the masks, but Felton refused, asserting his goatee beard and moustache were a “personal attribute”.

But the commissioner found the dismissal was not unfair in light of Felton’s refusal to comply with the WHS policy.

“It was his right to maintain his appearance however this was in conflict with a reasonable and lawful direction and for reasons outlined above, made future employment for him at BHP Billiton at Olympic Dam untenable,” said Commissioner Peter Hampton in his judgment.

Douglas says the direction to shave was both lawful and reasonable because a company has an obligation to provide a safe place of work and Felton’s failure to comply represented a breach of WHS laws and a serious breach of the company’s policy.

10. Changing a job description can be seen as a termination

In December, a Sydney retail manager won an unfair dismissal case after she refused to accept a $26,000 pay cut.

Angela Johnson was dismissed from fashion retailer URBRANDS in April after she refused to accept a cut in remuneration from a base salary of $80,000 plus a car, to a base salary of $54,000 and no car.

The commission found Johnson’s refusal to accept the proposed reduction in remuneration did not provide a valid reason for termination.

Douglas says a business employs a worker as a job, not a person. As such, any change to the job can be seen as a termination.

“It usually isn’t a problem because it usually happens as a promotion,” says Douglas. “But when you demote someone, they cease to have the same job and that is termination.”

While Douglas says there are clauses that allow employers to alter job descriptions, it is never something that can be put in a contract, and an employer must seek to fairly renegotiate a contract with an employee.


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