Employers beware; if you forgive you must forget Part 2

The Court was referred by the applicant to Carter v The Dennis Family Corporation [2010] VSC 406 at 121 – 125 (“Carter”) in support of the proposition that where an employer terminates on notice in circumstances where it is aware of conduct which may justify summary termination, the employer cannot then rely on that conduct to defeat a claim for notice. At [122] of Carter, Habersberger J stated:
• 122. In Phillips v Foxall, Blackburn J stated:
o Now the law gives the master the right to terminate the employment of a service on his discovering that the servant is guilty of fraud. He is not bound to dismiss him, and if he elects, after knowledge of the fraud, to continue him in service, he cannot at any subsequent time dismiss him on account of that which he has waived or condoned. This right the master may use for his own protection.
• 123. A more recent statement of the principle is to be found in the judgment of Gillard J in Rankin (Rankin v Marine Power International Pty Ltd [2001] VSC 150; (2001) 107 IR 117). His Honour stated:
o An employer who has full knowledge of the misconduct of an employee, and who makes a decision to continue to employ the employee, cannot at a later date, unless of course other facts come to his knowledge, dismiss him summarily on the basis of the employee’s known conduct. It is said that the employer has waived his right to dismiss the employee summarily, and thereby condones the misconduct.
• However, in the same case, his Honour said:
o It is clear that no such waiver, condonation or election can take place until the employer has full knowledge of the misconduct. (Footnotes omitted)

The respondent does not plead reliance on any matters which it has discovered subsequent to the termination of employment in order to justify summary dismissal.[21] The respondent was aware of all the matters it pleads as a ground for summary termination at the time of dismissal. Because the respondent elected to pay notice it cannot now raise those matters to claim a right to summarily terminate the applicant’s employment. The respondent cannot terminate the contract twice.

McGowan v Direct Mail And Marketing Pty Ltd [2016] FCCA 2227 (30 August 2016) per McNab J