Unfair dismissal and lawful but unreasonable directions

As a general rule of common law an employee must comply with an employer’s lawful and reasonable instructions or directions. However where a direction is lawful but unreasonable an employee’s refusal to comply will ordinarily not be regarded as a valid reason for dismissal.

“Was there a valid reason for the dismissal related to the Apicant’s capacity or conduct?

[116] In order to be a valid reason, the reason for the dismissal should be “sound, defensible or well founded” 90 and should not be “capricious, fanciful, spiteful or prejudiced.”91 However, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer.92

[117] Where a dismissal relates to an employee’s conduct, the Commission must be satisfied that the conduct occurred and justified termination.93 “The question of whether the alleged conduct took place and what it involved is to be determined by the Commission on the basis of the evidence in the proceedings before it. The test is not whether the employer believed, on reasonable grounds after sufficient enquiry, that the employee was guilty of the conduct which resulted in termination.” 94

[118] As set out above, the letter of termination states that the Applicant was dismissed for failing to follow a lawful and reasonable direction to move to a different hotel in Los Angeles, and failing to comply with the requirement for flight and duty rest and attending for a flight potentially fatigued.

[119] The Respondent submitted that each of those matters was a lawful and reasonable direction and each independently constitutes a valid reason for the Applicant’s dismissal.

[120] In Construction, Forestry, Maritime, Mining and Energy Union v Mt Arthur Coal Pty Ltd T/A Mt Arthur Coal 95 (Mt Arthur Coal) a Full Bench of the Commission considered the duty to obey lawful and reasonable directions. A helpful summary of this analysis was set out by Deputy President Saunders in Gregory John Casper v New Horizons96, as follows:

[28] In the absence of a contrary intention, there is a term implied into all contracts of employment to the effect that employees must follow the lawful and reasonable directions of their employer.

[29] A lawful direction is one which falls within the scope of the employee’s employment. An employee is not obliged to obey a direction which goes beyond the nature of the work the employee has contracted to perform, although an employee is expected to obey instructions which are incidental to that work.

[30] A direction which endangers an employee’s life or health, or which the employee reasonably believes endangers his or her life, will not be a lawful order, unless the nature of the work is itself inherently dangerous, in which case the employee has contracted to undertake the risk. Further, the direction must be lawful in the sense that it must not direct the employee to do something that would be unlawful, such as driving an unregistered or unroadworthy vehicle.

[31] The reasonableness of a direction given to an employee is a question of fact and must be judged objectively having regard to all the circumstances, including the nature of the particular employment, the established usages affecting the employment, the common practices that exist, the general provisions of any instrument governing the relationship, and whether the employer has complied with any relevant consultation obligations. It is not necessary to show that the direction in question is the preferable or most appropriate course of action or in accordance with ‘best practice’ or in the best interests of the parties. There may be a range of options open to an employer within the bounds of reasonableness.

[32] A direction lacking an evident or intelligible justification will not be reasonable, but that is not the only basis on which unreasonableness can be established. All the circumstances must be considered. 97

(footnotes omitted)

[121] There was no exclusion of this common law term in the Applicant’s contract of employment. However, as stated earlier, there was an express term requiring her to follow reasonable and lawful instructions. A ‘reasonable instruction’ is defined in the contract as “one that you are physically able to do, will not threaten your health or safety and is reasonable in the circumstances.” 98

Direction to move hotels

[122] There is nothing illegal or unlawful regarding directing employees to stay at particular accommodation and I am satisfied that the direction to move hotels fell within the scope of the Applicant’s employment and was therefore lawful. 99

[123] Turning to the question of reasonableness, I am not satisfied that the direction was reasonable having regard to the matters set out at [58] to [65] and the following circumstances:

  • Ms Cohrs would have been aware of the volume and type of supplies and items (including perishable items) that the Applicant was required to coordinate for the return flight. Indeed, Ms Cohrs queried whether two hours would be enough time for the Applicant to pack up her room;
  • Assuming it would take two hours (although it is unknown whether it would have taken a longer or shorter period), to pack up her room, the Applicant would have been moving hotels at approximately 8:00pm and would still be required to set-up the new room at the Dream Hotel before purchasing supermarket supplies very late into evening or on the day of departure, when she would otherwise rest;
  • Irrespective of whether the Applicant had changed hotel rooms or not earlier in the day, in refusing to follow the direction, the Applicant advised Ms Cohrs that she wanted to maximise her sleep that evening at the Thompson Hotel. In this respect, the rationale for Applicant’s refusal was consistent with the Respondent’s Fatigue Management Plan principles which directs personnel to maximise the use of sleep opportunities. 100

[124] In my view, and having regard to all of the evidence before me, the Applicant refused to change hotels because to do so would have compromised her sleep the night before departure

[125] Accordingly, I find the direction to the Applicant to move from the Thompson Hotel to the Dream Hotel on 1 November 2021, while lawful, was not reasonable.

Failing to comply with Flight Operations Manual re: flight, duty and rest policies

[126] I accept the Respondent’s submissions that the Applicant was trained in, and had access to the Flight Operations Manual, and that the matters set out in the Flight Operations Manual, including the flight, duty, and rest time policies are generally lawful and reasonable directions, relevant to the persons (or positions) to whom they are directed.

[127] Indeed, policies and procedures that go to safety and fatigue management in the aviation industry (whether commercial or private aviation) are critically important and serious matters.

[128] However, in the matter before me, the issue is whether the Applicant failed to comply with the Respondent’s Flight Operations Manual to have a minimum (and uninterrupted) rest period of 12-hours between 5:00am and 5:00pm on 2 November 2021 in Los Angeles.

[129] The Respondent contends that the Flight Operations Manual requires the Applicant to do so and her actions in leaving the Thompson Hotel to go to the Tartine Bakery, Bristol Farms and Il Pastaio during the middle of the day, and when she departed the Thompson Hotel prior to 5:00pm to collect catering from Spagos, were actions in breach of a lawful and reasonable direction to comply with the requirement in the Flight Operations Manual.

[130] For the reasons that follow, the Respondent’s contention cannot be accepted.

[131] First, the 12-hour minimum rest period does not apply to a flight attendant. The tables set out in sections 3.8.4.2 and 3.8.4.3 of the Flight Operations Manual designate which members of the “flightcrew” the minimum rest periods apply to. The term “flightcrew” is defined as Pilot crewmembers, and the table places the requirement on “two pilots”.

[132] Second, during the proceedings, when asked by the Commission whether the 12-hour minimum rest period applied to a flight attendant, Mr Mudaliar responded “Commissioner, I can’t definitively answer that question, sorry.” 101

[133] Third, at paragraph [11] of his witness statement, Mr Mudaliar stated that when he received the Hazard Incident Report filed by Ms Cohrs on 8 November 2021, he formed the view that the Applicant’s reported actions suggested a serious breach of safety protocols. During the proceedings, Mr Mudaliar was asked by the Commission to identify the safety protocols he was referring to. In response to confirmed the safety protocols he was referring to was the direction of the chief pilot and not a provision of the Flight Operations Manual. 102

[134] Fourth, the Respondent has not otherwise established through direct evidence that the Applicant was required to comply with the 12-hour minimum rest period, or that it was implied or inferred by custom and practice. While it is apparent that the Applicant did attempt to get maximum rest on the day of departure, the Respondent has not identified the specific direction that applies to the Applicant.

[135] Furthermore, even if I had found that a 12-hour minimum rest period applied to the Applicant, I would not have found the direction was reasonable where the Applicant’s conduct in departing the Thompson Hotel was to collect restaurant meals specifically requested by Mrs Lederer, and fresh food items such as fruit juices, pastries, and deli cuts. These items must be picked up on the day of departure by the flight attendant if they cannot be delivered.

[136] Accordingly, I find that the Applicant’s actions were consistent with her duties and were ‘common practice’ 103 and any suggestion that the Applicant was not acting in accordance with her duties is straining credulity beyond breaking point.

Conclusion – Valid Reason

[137] For the reasons set out above, I find that there was no valid reason for the Applicant’s dismissal.

Was the Applicant notified of the valid reason?

[138] Proper consideration of s.387(b) requires a finding to be made as to whether the applicant “was notified of that reason”. Contextually, the reference to “that reason” is the valid reason found to exist under s.387(a). 104

[139] As I am not satisfied that there was a valid reason related to dismissal, this factor is not relevant to the present circumstances. 105

Was the Applicant given an opportunity to respond to any valid reason related to their capacity or conduct?

[140] As I am not satisfied that there was a valid reason related to dismissal, this factor is not relevant to the present circumstances. 106

Did the Respondent unreasonably refuse to allow the Applicant to have a support person present to assist at discussions relating to the dismissal?

[141] In all the circumstances, I find there was not any unreasonable refusal by the Respondent to allow the Applicant to have a support person present to assist in discussions relating to her dismissal. I regard this factor as a neutral consideration.

Was the Applicant warned about unsatisfactory performance before the dismissal?

[142] As the dismissal did not relate to unsatisfactory performance, this factor is not relevant to the present circumstances.

To what degree would the size of the Respondent’s enterprise be likely to impact on the procedures followed in effecting the dismissal?

[143] Neither party submitted that the size of the Respondent’s enterprise was likely to impact on the procedures followed in effecting the dismissal and I find that the size of the Respondent’s enterprise had no such impact. This factor weights neutrally in my consideration.

To what degree would the absence of dedicated human resource management specialists or expertise in the Respondent’s enterprise be likely to impact on the procedures followed in effecting the dismissal?

[144] It is not in dispute, and I find that the Respondent’s enterprise did not lack dedicated human resource management specialists and expertise. This factor weights neutrally in my consideration.

What other matters are relevant?

[145] Section 387(h) requires the Commission to take into account any other matters that the Commission considers relevant.

[146] Neither party made any submissions in relation to this factor, and I have not taken any other matter into consideration.

Is the Commission satisfied that the dismissal of the Applicant was harsh, unjust or unreasonable?

[147] I have made findings in relation to each matter specified in s.387 as relevant. I must consider and give due weight to each as a fundamental element in determining whether the termination was harsh, unjust or unreasonable. 107

[148] Having considered each of the matters specified in section 387 of the FW Act, I am satisfied that the dismissal of the Applicant was harsh, unjust and unreasonable.

[149] In coming to this decision, I have taken into account all of the evidence and submissions of the parties. The fact that an issue is not mentioned in this decision does not mean that it has not been taken into account. I have also had regard to the object stated at s.381(2) of the FW Act to ensure that a “fair go all round” is accorded.

Conclusion

[150] I am therefore satisfied that the Applicant was unfairly dismissed within the meaning of s.385 of the FW Act.

Remedy

[151] Being satisfied that the Applicant was unfairly dismissed within the meaning of s.385 of the FW Act, I may, subject to the FW Act, order the Applicant’s reinstatement, or the payment of compensation to the Applicant.

[152] Under s.390(3) of the FW Act, I must not order the payment of compensation to the Applicant unless:

(a) I am satisfied that reinstatement of the Applicant is inappropriate; and

(b) I consider an order for payment of compensation is appropriate in all the circumstances of the case.

Is reinstatement of the Applicant inappropriate?

[153] The Applicant seeks the remedy of reinstatement to her former position or another position within the Lederer Group, such as working on Crystal Lady.

[154] The Respondent opposes reinstatement on the basis that Ms Cohrs could not have confidence that the Applicant will follow directions in future.

[155] In Nguyen v Vietnamese Community in Australia 108, a Full Bench of the Commission stated the following in relation to reinstatement:

[9] The question whether to order a remedy in a case where a dismissal has been found to be unfair remains a discretionary one. No party in the proceedings at first instance suggested that his Honour exercise his discretion not to order a remedy at all. Indeed the Respondent was not opposed to an appropriate amount of compensation being awarded. It is implicit from his Honour’s decision that he concluded that a remedy was appropriate in the circumstances, the issue became the form of the remedy.

[10] Subsection 390(3) underscores the primacy of reinstatement as a remedy for an unfair dismissal as the discretion to order a remedy of compensation may only be exercised if the Commission is satisfied that reinstatement is ‘inappropriate’. Further, one of the objects of Part 3-2 of Chapter 3, in which the unfair dismissal provisions appear, is “to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement”. We would observe that to describe reinstatement as the ‘primary remedy’, is to simply recognise that reinstatement is the first, perhaps even the foremost, remedy under the Act. The relevant question in determining whether to grant the remedy of reinstatement of an employee in relation to a dismissal that is found to have been ‘unfair’ is whether reinstatement is appropriate in the particular case.

[15] In Australia Meat Holdings Pty Ltd v McLauchlan a Full Bench of the AIRC gave consideration to the differences in the provisions of the IR Act and the WR Act and concluded that “a consideration of appropriateness of reinstatement involves the assessment of a broader range of factors than practicability . . . [I]n considering whether to order the reinstatement the Commission is not confined to an assessment of the practicability of such an order are that must decide whether such an order is appropriate”. We agree with this observation.

[16] We now turn to the relevant question concerning the appropriateness of reinstatement.

[17] Reinstatement might be inappropriate in a whole range of circumstances, for example if such an order would be futile such as where reinstatement of an employee would almost certainly lead to a further termination of the employee’s employment because the employer has since discovered that the employee engaged in an act of serious misconduct which was only discovered after the employee’s termination or if the employer no longer conducts a business into which the employee may be reappointed. The fact that the employer has filled the position previously occupied by the dismissed employee would rarely, of itself, justify a conclusion that reinstatement was not appropriate. As a Full Bench of the AIRC observed in Smith v Moore Paragon Australia Ltd,:

“It will often, if not typically, be the case that the position occupied by an applicant for relief under s.170CE of the Act will, at the time the application is arbitrated, either no longer exist or no longer be vacant. In our view that bare fact would rarely, on its own, justify a conclusion that an order for reinstatement was not ‘appropriate’. To adopt such an approach would tend to defeat the remedial purpose of the legislation.”

[156] While I have given careful consideration to the issue of reinstatement, throughout the proceedings, it was clear to me that the relationship between the Applicant and Ms Cohrs and Mr Mudaliar has irretrievably broken down. Accordingly, I have decided that reinstatement is inappropriate.

Is an order for payment of compensation appropriate in all the circumstances of the case?

[157] Where reinstatement is found to be inappropriate, it does not automatically follow that a payment for compensation is appropriate. As noted by the Full Bench, “[t]he question whether to order a remedy in a case where a dismissal has been found to be unfair remains a discretionary one…” 109

[158] Having regard to all the circumstances of the case, I consider that an order for payment of compensation to the Applicant is appropriate. However, there is insufficient material before me addressing the matters relevant to the calculation of compensation. 110

[159] Accordingly, the matter will be listed for mention and directions in relation to the issue of compensation.”

Davoren v Pejr Business Aviation Pty Ltd (2023) FWC 239 25 January 2023 per Ryan C