Getting serious about misconduct

In the wake of the latest Fair Work Commission (FWC) annual report, applications for unfair dismissal have taken the cake as the most commonly lodged type of application. Unfair dismissals can be a minefield for employers to navigate, in particular the process of summary dismissal.

Under the National Employment Standards (NES), most workers (exceptions apply) are provided with a right to a minimum notice period of one week per year of service.

If a worker is summarily dismissed, this refers to the immediate (on-the-spot) termination of employment, where the worker is not provided with any notice, nor are they paid in lieu of their notice period.  Generally, once a worker is eligible to be protected by a minimum notice period under the NES, their employment can only be summarily dismissed if they are found to have engaged in serious misconduct.

However, the mischaracterisation of a worker’s behaviour as serious misconduct can find an employer staring down the barrel of an unfair dismissal claim in the FWC. This is not surprising, noting that the element of “serious misconduct” is riddled with complexities and uncertainty.

What is serious misconduct?

Serious misconduct is defined and regulated under the rule 1.07 of the Fair Work Regulations 2009 (Cth), providing for conduct which satisfies:

“(a) wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;

(b) conduct that causes serious and imminent risk to:

(i) the health or safety of a person; or

(ii) the reputation, viability or profitability of the employer’s business.”

In practice, wilful or deliberate behaviour amounting to serious misconduct has been characterised in a range of ways, thereby cultivating a basis for an unfair dismissal application.  What is considered as serious misconduct isn’t black and white; it could be a single act of disobedience in some cases and, in others, it may be a series of conduct amounting to something serious. For employers, it can be incredibly tricky to know when an employer’s conduct is so serious that it warrants immediate dismissal.

However, we can look to common law interpretations for guidance. In Concut Pty Ltd v. Worrell (2000) 103 IR 160, Justice Kirby clarified that serious misconduct involves conduct regarding serious matters which:

• Are incompatible with the fulfilment of an employees’ duty
• involves an opposition
• conflicts between the employees’ interest and employees’ duty to the employer
• impedes the faithful performance of the employees’ obligations
• is destructive of the necessary confidence between the employer and employee.

Where an employee’s conduct satisfies one of the above, this may be considered as grounds for summary dismissal.

Single acts 

With respect to “single acts” the decision of Laws v. London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285, established that single acts of misconduct must not be “trivial breaches” of the express or implied terms of the employment contract.

For an employee’s single act to satisfy the requirements, it must breach the terms of the contract that are relevant to the employee’s duties. If the single act is a breach of express/implied terms that are irrelevant to an employee’s particular duties, this is unlikely to satisfy as wilful and deliberate behaviour warranting serious misconduct.

Further, if the conduct has occurred and has been waived in the past, even when known to the employer, this may not satisfy as serious misconduct as it can then be argued that it does not satisfy the element of wilful and deliberate.

Serious misconduct in practice

So, what does this look like in the real world? Below we explore some key cases where an employee’s actions were considered as a valid reason for summary dismissal.

• Safety breaches – Singh v. Fenner (Australia) Pty Ltd [2015] FWC 5583
  • The colleagues of a mill operator witnessed the employee intentionally placing his hand over a machine that was rotating at high speed and posing a risk of serious injury.
  • The FWC considered this was a valid ground for serious misconduct and dismissal due to the potential damage and ramifications which may have occurred due to the employees’ reckless actions.
  • The term “potential damage” included both the serious injury but also the significant cost caused by the disruption to the production process.

• Dishonest conduct – Mohapatra v. Acciona Energy Australia GlobalPty Ltd t/ as Acciona [2015] FWC 5976
  • An employee claimed personal expenses as a business expense and also made unauthorised personal purchases on the company credit card.
  • The FWC determined that the dismissal was valid and satisfied as serious misconduct due to the employees’ education, responsibility, and seniority. Due to the latter, even if the employee was motivated by lack of judgement and understanding, this is regarded as serious misconduct.

• Dishonest Conduct – BCG (Australia) Pty Ltd v. Phippard (2002) 115 IR 430
  • A General Manager misused the expense system and while the breaches were relatively minor or trivial, his senior position required that he set an impeccable example in respect of expense claims.
  • The FWC established this was wilful and deliberate in light of his senior position and thereby a valid reason for dismissal.

• Spreading malicious rumours – Reedy v. Global Cranes Pty Ltd [2011] FWA 3037
  • An employee engaged in spreading malicious rumours about her Managing Director, both verbally and via text messages. This also included text messages to her Managing Director’s fiancée.
  • The FWC determined this as serious misconduct as the employee deliberately attempted to taint the Managing Directors’ relationship with their fiancée and other employees. As such, the employee was acting in a manner which was inconsistent to the ongoing working relationship.

Dealing with employee misconduct is often a legal minefield. As such, seeking legal advice can be crucial to protecting your business. If an employer summarily dismisses an employee for serious misconduct where serious misconduct did not in fact occur, they can be liable for damages for unfair dismissal.