Unfair dismissal and misconduct

What follows is an extract from an important Fair Work Commission which sets out, in classic form, the elements of an unfair dismissal case which was centered around allegations of misconduct.

“We accept that in conduct cases the assessment of whether there was a valid reason for the dismissal is to be considered in isolation from the broader context in which the alleged misconduct occurred. That is, the impact of dismissal upon the employee is taken into account under s.387(h) and is not brought to account in assessing whether there was a valid reason for dismissal. But in our view, the proposition that ‘valid reason’ is assessed from ‘the perspective of the employer’ is unhelpful and obfuscates the task required by s.387(a).

The proposition put is suggestive of a subjective test: ‘from the perspective of the employer’. Such an approach is erroneous. Where the reason for termination is based on alleged misconduct the Commission must determine whether the alleged misconduct took place and what it involved, 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. 100 As Moore J observed in Walton v Mermaid Dry Cleaners Pty101, a case decided under a legislative antecedent to s.387:

‘I should, however, make plain – and this has been made plain in many cases decided by this court – that it is not the court’s function to stand in the shoes of the employer and determine whether or not the decision made by the employer was a decision that would be made by the court but rather it is for the court to assess whether the employer had a valid reason connected with the employee’s capacity or conduct, and in these proceedings I have concluded it did.’ 102 (emphasis added)

…………………………………………… Ground 8 contends that the Deputy President erred in concluding that the single act of misconduct he found that Mr Gelagotis had committed constituted serious misconduct.

The Appellant submits that the Deputy President’s conclusion that Mr Gelagotis’ misconduct was repudiatory 104 focused too narrowly on Mr Gelagotis’ compliance with Esso’s policy. It is submitted that the correct focus was to consider the impact of the single act of misconduct on the employment relationship as a whole, including by reference to Mr Gelagotis’ length of service, demonstrated ability and standards of prior conduct, and to do so from the standpoint that a single act of misconduct does not usually justify dismissal on the ground of serious misconduct. It is also submitted that the abnormal work environment was also a matter of significance, as was Esso’s own policy on summary dismissal, which imposed a threshold of exceptional circumstances.

[116] As the Deputy President correctly observed (at [239]), for the purpose of establishing a valid reason in the context of s.387(a) it is not necessary to demonstrate misconduct sufficiently serious to justify summary dismissal. 105 The Deputy President deals with the proportionality issue at [277] to [283] of the Decision:

‘[277] The proportionality of the dismissal to the conduct that is the subject of a valid reason is a matter to be considered in connection with s.387(h). Clearly a dismissal may be harsh because it is disproportionate to the gravity of the misconduct on which the employer acted.

[278] As was noted by the Full Bench in Sharp v BCS Infrastructure Support Pty Limited, an assessment of the degree of seriousness of misconduct which has been found to constitute a valid reason for dismissal for the purposes of s.387(a) is a relevant matter to be taken into account under s.387(h), and it may also be appropriate to conclude that the misconduct was of such a nature as to have justified summary dismissal. This does not mean that it is necessary to consider that an employee’s conduct meets any particular postulated standard of serious misconduct.

[279] The applicants contended that for conduct to constitute serious misconduct and justify instant dismissal it must be serious, a ‘radical breach’ of the employment relationship that is inconsistent with its continuation. In this regard they referred to the decision of the Full Federal Court in Melbourne Stadiums Ltd v Sautner.  However, the Full Court in that case cites a passage from Rankin noting that ‘there are offences which justify dismissal but which would not, in themselves, show that the employee was intending not to perform contractual obligations in the future’. The Full Court in Melbourne Stadiums also noted that the applicant’s conduct in that case did not necessarily have to amount to a repudiation of his contract of employment to justify his summary dismissal.

[280] Summary dismissal embraces termination of employment arising from breach of an essential term of the employment contract, a serious breach of a non-essential term, or conduct manifesting an intention not to be bound by the contract in the future. In my view Mr Hatwell’s treatment of Mr Flens on 31 July 2017, and Mr Gelagotis’ actions in seeking to exclude Mr S.P. from the lunchroom because he had accepted employment with UGL, were serious matters, and of sufficient gravity to constitute serious misconduct…

[282] Mr Gelagotis took deliberate steps to exclude Mr S.P. from the lunchroom because he had accepted employment with UGL. The conduct was proscribed by a policy with which he was required to comply. He was a health and safety representative. Mr Kostelnik’s reminder to employees of the importance of the policy on 22 June 2017 came after Mr Gelagotis’ actions on 15 June 2017; nevertheless, Mr Gelagotis acknowledged that he was aware of the policy, and that breach of the policy could result in dismissal.  He had undertaken online refresher training on 29 September 2016. Mr Gelagotis accepted employment with Esso understanding that the policy applied to his employment. The policy prohibited conduct which has the purpose or effect of creating an intimidating, hostile or offensive work environment. Excluding Mr S.P. from the lunchroom because he had accepted employment with UGL contravened the policy, and breached his contract of employment. It contravened an essential term of the contract that governed standards of behaviour in the workplace. Even if this term were considered a non-essential term, the contravention of it was a serious breach. The gravity of the conduct is such as to amount to serious misconduct.

[283] For the purposes of my consideration of s.387, I consider that Esso’s summary dismissal of the applicants for these reasons was not disproportionate to their conduct in question.’ (footnotes omitted)

[117] In considering the Appellant’s submissions it is important to appreciate that we are here concerned with a statutory scheme where the central question is whether a person has been ‘unfairly dismissed’. 106 In the present case this question is resolved by determining whether the dismissal was ‘harsh, unjust or unreasonable’ taking into account the matters specified in s.387(a) to (h).107 A number of general propositions may be made about s.387:

  1. When the reason for termination is based on the misconduct of the employee the Commission must, if it is in issue in the proceedings, determine whether the conduct occurred and what it involved. 108
  2. There would be a valid reason for termination if the conduct occurred and it justified termination. There would not be a valid reason if the conduct did not occur or it did occur but did not justify termination. For example, an employee may concede that the conduct took place but contend that it involved a trivial misdemeanour. 109
  3. For the purposes of s.387(a) it is not necessary to demonstrate misconduct sufficiently serious to justify summary dismissal on the part of the employee in order to demonstrate that there was a valid reason for the employee’s dismissal (although established misconduct of this nature would undoubtedly be sufficient to constitute a valid reason). 110
  4. The existence of a valid reason for a dismissal is not assessed by reference to the existence of a legal right to terminate a contract of employment. As Gray J observed in Miller v University of New South Wales:

‘What is sought is not the existence of a legal entitlement to terminate the employment, but the existence of a reason for the exercise of that right that is related to the factual situation. The validity is not to be judged by reference to legal entitlements, but to the Commission’s assessment of the factual circumstances as to what the employee is capable of doing, or has done, or as to what the employer requires in order to continue its activities.’ 111

  1. Whether an employee’s conduct amounted to misconduct serious enough to give rise to the right to summary dismissal under the terms of the employee’s contract of employment is not relevant to the determination of whether there was a valid reason for dismissal pursuant to s.387(a).
  2. An assessment of the degree of seriousness of misconduct which is found to constitute a valid reason for dismissal for the purposes of s.387(a) is a relevant matter under s.387(h). In that context the issue is whether dismissal (or in the present case, summary dismissal) was a proportionate response to the conduct in question. 112

[118] The Deputy President correctly noted that no explicit finding of the Appellants’ common law position was necessary in order to resolve the questions posed by section 387 ([278]). The Deputy President’s reasons are to be understood as determining whether Mr Gelagotis’ dismissal was disproportionate to the gravity of the misconduct. In order to do this, he considered whether the conduct, as found, constituted one of the three categories entitling an employer to summarily dismiss ([280], [283]) and concluded that Mr Gelagotis’ conduct constituted a breach of an essential term; a contractual requirement that each Appellant comply with Esso’s policy ([140], [226], [281] – [282]). Indeed, on the evidence, we would have reached the same conclusion, taking into account:

  • the conduct was proscribed by a policy with which he was required to comply;
  • the policy prohibited conduct which has the purpose or effect of creating an intimidating, hostile or offensive work environment;
  • Mr Gelagotis was a health and safety representative;
  • the conduct was intentional. Mr Gelagotis took deliberate steps to exclude Mr S.P from the lunch room because he had accepted employment with Mr S.P;
  • Mr Gelagotis was aware of the policy and that breach could result in dismissal, having undertaken some on line refresher training on 29 September 216.

[119] It was reasonably open to the Deputy President to additionally conclude that the conduct was serious misconduct, repudiatory, and that Mr Gelagotis’ dismissal was a proportionate response to that conduct. As Gillard J observed in Rankin v Marine Power International Pty Ltd: ‘There is no rule of law that defines the degree of misconduct which would justify dismissal without notice’ 113. Further, it was not necessary for his Honour to consider intent when considering whether there was repudiation at common law. The test for repudiation is whether the conduct of the employee is such as to convey to a reasonable person, in the position of the employer, renunciation either of the contract as a whole or of a fundamental obligation under it. The issue turns upon objective acts and omissions and not on uncommunicated intention.114 In any event, the conduct was wilful…………………….Ground 9 of the original grounds of appeal was deleted in the Amended grounds of appeal.

[121] Grounds 10 to 12 are related. Ground 10 contends that the Deputy President erred “in the fact that he failed to take into account and/or failed to give equal significance to relevant s.387(h) matters in determining whether the dismissal was harsh, unjust or unreasonable, namely:

(a) the singularity of the act of misconduct as found;

(b) the Deputy President’s findings in paragraph 134, 256 and 259 of the Reasons pertaining to the prevailing, pre-existing, industrial circumstances;

(c) the Deputy President’s finding in paragraph 273 of the Reasons that Mr Gelagotis had an unblemished record of service with the Respondent and his finding concerning the personal effects of the dismissal on Mr Gelagotis, including that he was now doing unskilled work for his father;

(d) the fact that the other reasons relied upon by the Respondent to justify Mr Gelagotis’ dismissal were dismissed;

(e) that Mr Gelagotis believed that his actions were supported by and accorded with the Maintenance Lunchroom Rule;

(f) the Deputy President’s finding in paragraph 259 of the Reasons that the misconduct as found occurred in abnormal working circumstances; and

(g) the proportionality of dismissal having regard to the aforementioned matters.

[122] At Ground 11 it is contended that the aforementioned considerations are relevant because:

(a) The “valid reason” criterion in s. 387(a) of the Fair Work Act 2009 entails an objective assessment of the conduct, as found, viewed from the employer’s perspective, including by deciding whether that conduct justified termination of employment.

(b) Section 387(h) of the Fair Work Act 2009 required the Deputy President to take into account these matters in deciding whether he was satisfied the dismissal was harsh, unjust or unreasonable.

[123] Ground 12 contends that the Deputy President erred “by giving excessive weight to his reasons for concluding there was a valid reason for Mr Hatwell’s dismissal and gave inadequate weight to the matters referred to in paragraph 10 herein”.

[124] The Appellant contends that the issue of disproportionate weight goes to the question of rationale decision making. In support of this contention the Appellant relies on the joint judgment (per Hayne, Kiefel and Bell JJ) in Minister for Immigration v Li. 115 In Li, the joint judgment starts with the proposition that in the exercise of a statutory discretionary power (as in the matter before us): ‘The legislature is taken to intend that that a discretionary power, statutorily conferred, will be exercised reasonably.’116 The joint judgment later expands on the context of the standard of reasonableness (at [72]):

‘… in Minister for Aboriginal Affairs v Peko-Wallsend Ltd, Mason J considered that the preferred ground for setting aside an administrative decision which has failed to give adequate weight to a relevant factor of great importance, or has given excessive weight to an irrelevant factor of no importance, is that the decision is “manifestly unreasonable”. Whether a decision-maker be regarded, by reference to the scope and purpose of the statute, as having committed a particular error in reasoning, given disproportionate weight to some factor or reasoned illogically or irrationally, the final conclusion will in each case be that the decision-maker has been unreasonable in a legal sense.’ (footnotes omitted)

[125] In essence, an obviously disproportionate response to weight attributed to a relevant consideration is one path to a conclusion that the decision fell outside the bounds of legal reasonableness. But, there are limits to such an approach to the review of a discretionary decision, as the joint judgement notes at [66]:

‘This approach does not deny that there is an area within which a decision-maker has a genuinely free discretion. That area resides within the bounds of legal reasonableness. The courts are conscious of not exceeding their supervisory role by undertaking a review of the merits of an exercise of discretionary power. Properly applied, a standard of legal reasonableness does not involve substituting a court’s view as to how a discretion should be exercised for that of a decision-maker. Accepting that the standard of reasonableness is not applied in this way does not, however, explain how it is to be applied and how it is to be tested.’ (footnotes omitted)

[126] In considering grounds 10 to 12 we note at the outset that contrary to the Appellant’s submission s.387 does not prescribe the weight to be given to each of the matters in s.387(a) to (h); nor does it require that ‘equal significance’ be given to each of these matters. Subject to the decision maker operating within the bounds of legal reasonableness the weight afforded to each of the considerations relevant to the exercise of the discretion is a matter for the decision-maker.

[127] At [252] to [295] of the Decision the Deputy President gave consideration to each of the matters said to give rise to harshness; noting at the outset that ‘a dismissal may be harsh, unjust or unreasonable despite the existence of a valid reason for the dismissal’ (at [253]). In the course of his consideration the Deputy President had regard to:

➣ the broader industrial context (at [256] to [259]), noting that the submissions as to mitigation by reference to industrial context might have been more compelling ‘if the conduct had been admitted and regretted, but explained in some particular way by reason of the context’ (at [258]);

➣ the fact that the valid reason concerns what might be described as single act, or events, rather than a course of conduct (at [262] to [265]);

➣ the personal circumstances of the applicants (at [273] to [276]) noting that dismissal has had very significant effects on Mr Gelagotis and Mr Hatwell; and

➣ the proportionality of the dismissal to the conduct that is the subject of a valid reason (at [277] to [283]).

[128] The Deputy President plainly considered, but was ultimately unmoved by, the various mitigatory factors put to him. The Decision discloses that the Deputy President identified, considered and evaluated all of the matters put to him. In our view the exercise of the Deputy President’s discretion, and his weighing of the relevant considerations, plainly falls within the bounds of legal reasonableness as articulated in Li.

[129] Grounds 13 and 14 are related and contend that clause 22 of the Esso Gippsland (Longford and Long Island Point) Enterprise Agreement 2017 precluded Mr Gelagotis’ dismissal. These grounds are predicated on the footing that the Deputy President was wrong to hold that Mr Gelagotis committed serious misconduct. It is accepted that if the Deputy President’s finding as to serious misconduct is correct then clause 22 would have no operation. 117

[130] We have earlier concluded that it was reasonably open to the Deputy President to conclude that Mr Gelagotis’ conduct was serious misconduct, repudiatory, and that his dismissal was a proportionate response to that conduct (see [117] above). It follows that we need not deal with grounds 13 and 14.

……………………………It was a term of Mr Hatwell’s contract of employment that he comply with the policy. 131 He was reminded, in the warning letter he received on 30 June 2017 in relation to his unauthorised absence from the site, that it remained a condition of his employment that he comply with company policy.132 He was also reminded of the harassment policy on 22 June 2017, the day the protest line commenced, when Mr Kostelnik sent an email to all employees and contractors, including Mr Hatwell, reiterating that they were to comply with the Harassment Policy.133 Mr Hatwell had himself invoked the harassment policy on two occasions.134

[141] The obligations set by the harassment policy were in my view reasonable. Mr Hatwell contravened the policy by engaging in inappropriate conduct that had ‘the purpose or effect of … creating an intimidating, hostile or offensive work environment’, namely by uttering the abusive words to Mr Flens on 31 July 2017.

[142] In closing oral submissions, counsel for Mr Hatwell noted that, in her evidence, Ms Butler had said that she would not dismiss an employee for the single use of the word ‘scab’. 135 The context of this evidence makes clear that she is not referring to the single use of the word ‘scab’ by Mr Hatwell in the circumstances of the present case. She was answering a question of an un-contextualised nature. As I discuss further below in the context of Mr Gelagotis’ alleged conduct, an abusive word can be used in a range of possible contexts (including, significantly, in private). Ms Butler was not in my view suggesting that, had the only allegation against Mr Hatwell concerned his use of the word scab in the context of what he said to Mr Flens, she would not have dismissed him.

[143] In any event, regardless of what may be Ms Butler’s view of the matter, I consider that to call a person a ‘fucking scab’ in the circumstances of my findings above is a very serious matter. It constitutes a valid reason for dismissal. I consider further below whether the conduct amounts to serious misconduct, and the significance of clause 22 of the Onshore Agreement.’

[151] We discern no error in the Deputy President’s conclusion that Mr Hatwell’s conduct, in calling Mr Flens a ‘fucking scab’ constitutes a valid reason for dismissal. As mentioned earlier, in conduct cases the assessment of whether there was a valid reason for the dismissal is to be considered in isolation from the broader context in which the alleged misconduct occurred.

[152] Ground 8 contends that the Deputy President erred in [67] of the Decision by misconstruing the valid reason criterion in s.387(a) to mean that he was required to determine whether there was a good and a substantiated reason for dismissal, or that the valid reason criterion was confined to that inquiry. For the reasons set out at [102] to [110] we are not persuaded that the Deputy President misdirected himself in his consideration of whether there was a ‘valid reason’ for Mr Hatwell’s dismissal, within the meaning of s.387(a).

[153] Ground 9 contends that the Deputy President erred by failing to make an express finding about the evidence given by Mr Hatwell concerning the conversation with Mr Flens and to give reasons for that finding resulting in the Deputy President failing to determine whether the alleged conduct occurred in circumstances where the Deputy President was required to be satisfied that the alleged conduct did occur. We are not persuaded that there is any substance to this ground.

[154] It is clear that the Deputy President preferred the evidence of Mr Flens over Mr Hatwell and he provided fulsome reasons for so doing ([121] – [137]). The fact that the Deputy President did not make negative credibility findings in relation to Mr Hatwell does not mean that he was obliged to globally accept his evidence.136

[155] For reasons which will become apparent it is not necessary for us to deal with grounds 10 and 11.

[156] Grounds 13 to 15 are related. Ground 13 contends that the Deputy President erred in the fact that he failed to take into account and/or failed to give equal significance to relevant s.387(h) matters in determining whether the dismissal was harsh, unjust or unreasonable, namely:

(i) the singularity of the act of misconduct as found;

(ii) evidence that the Respondent would not have dismissed an employee for the single use of the word “scab” and had warned but not dismissed two other employees, Mr Osborn and Mr Burton, for using that word at the workplace;

(iii) the Deputy President’s findings in paragraph 134, 256 and 259 of the Decision pertaining to the prevailing, pre-existing, industrial circumstances;

(iv) the Deputy President’s finding in paragraph 273 of the Decision that Mr Hatwell had had 10 years of unblemished service with the Respondent and his finding concerning the personal effects of the dismissal on Mr Hatwell;

(v) the fact that the other reasons relied upon by the Respondent to justify Mr Hatwell dismissal were dismissed;

(vi) the Deputy President’s finding in paragraph 120 of the Decision that there was no evidence that Mr Hatwell had done anything like what had been attributed to him to anyone else;

(vii) the Deputy President’s finding in paragraph 259 of the Decision that the misconduct as found occurred in abnormal working circumstances; and

(viii) the proportionality of dismissal having regard to the aforementioned matters.

[157] At Ground 14 it is contended that the aforementioned considerations are relevant because:

(i) The “valid reason” criterion in s. 387(a) of the Fair Work Act 2009 entails an objective assessment of the conduct, as found, viewed from the employer’s perspective, including by deciding whether that conduct justified termination of employment.

(ii) Section 387(h) of the Fair Work Act 2009 required the Deputy President to take into account these matters in deciding whether he was satisfied the dismissal was harsh, unjust or unreasonable.

[158] Ground 15 contends that the Deputy President erred by giving excessive weight to his reasons for concluding there was a valid reason for Mr Hatwell’s dismissal and gave inadequate weight to the matters referred to in paragraph 13 herein”.

[159] Paragraph [60] of the Appellant’s written submission succinctly advances the essence of the argument put in respect of these grounds.

‘The Deputy President’s reasons considered as a whole exposes a focus on his assessment of Mr Hatwell’s disrespectful and abusive language toward Mr Flens in breach of Esso’s policy (which founded a valid reason), at the expense of a distinct assessment of matters reflective of the employee perspective in determining whether dismissal was harsh, unjust or unreasonable. The inadequate weight given to these matters exposes discretionary error in the discharge of the function conferred by s. 387 of the FW Act. Further, the inadequate weight the Deputy President gave to these matters exposes the exercise of discretion as disproportionate from which it should be inferred that the discretion was exercised unreasonably.’ 137

[160] The Appellant cites the judgment of the majority of the High Court in Li in support of the above proposition and the contention that an obviously disproportionate response to weight attributed to a relevant consideration is one path to the conclusion that the decision fell outside the bounds of ‘legal reasonableness’, as articulated in Li. We have earlier set out the relevant passages from Li (see [125] to [126]).

[161] At [241] of the Decision the Deputy President notes, correctly, that for a dismissal to be unfair, the Commission must be satisfied that it was harsh, unjust or unreasonable (s.385(b)). Further, in considering whether it is so satisfied, the Commission must take into account the matters specified in s.387. Having considered the question of whether there were valid reasons for dismissal, the Deputy President then turns to address each of the remaining matters in turn and finds that:

➣ Mr Hatwell was notified of the reason for his dismissal and given an opportunity to respond (s.387(b) and (c)) (see [242] to [246]);

➣ it was not contended that Esso had refused to allow Mr Hatwell to have a support person present (s.387(d)) (see [248]);

➣ the dismissal did not relate to unsatisfactory preference and hence there was no need to warn Mr Hatwell prior to his dismissal (s.387(e)) (see [249]); and

➣ No submissions were made as to the relevance of the considerations in s.387(f) and (g) in the present matter. Esso is an organisation with considerable resources, including dedicated human resources specialists, some of whom gave evidence at the hearing. The size of the employer’s enterprise would have no adverse impact on the procedures followed in effecting dismissal. One would expect that allegations of misconduct would be extensively investigated, as was the case here. There was no ‘absence of dedicated human resources person’ and accordingly the consideration in s.387(g) has no application (see [251]).

[162] The Deputy President then turns to consider any other relevant matters (s.387(h)), in particular:

➣ The industrial context ([256] to [259]): the Deputy president accepted that the circumstances surrounding UGL’s employment arrangements have resulted in significant tension in the workplace and was a ‘material change in the applicants’ normal working environment. But, because they denied the conduct, the applicants did not explain how their actions were affected by the circumstances and why this is a mitigating factor. On this basis the Deputy President concluded that this factor did not weigh in favour of a conclusion that (relevantly) Mr Hatwell’s dismissal was harsh unjust or unreasonable.

➣ Esso’s policy is not a source of any obligation on the part of Esso employees to be friends with each other or with employees of contractors. Esso employees are ‘fully entitled to hold and express opinions on subjects of industrial concern and to disagree with the industrial actions of others and that this may affect personal relations between those individuals’. But found that ‘the conduct of Mr Hatwell … was not confined to expressing opinions’ (at [260] to [261]).

➣ That the valid reason in relation to Mr Hatwell related to a single act or event (at [262] to [264]).

➣ That Mr Hatwell’s conduct had an adverse impact on Mr Flens. The Deputy President observed at [265]:

‘In my view, the conduct that I have found occurred, and that constituted a valid reason for dismissal of each of the two applicants in these matters, had an adverse impact on Mr Flens and Mr S.P. The evidence did not establish exactly what this effect was. However, as noted above, in the course of Mr Flens’ evidence, he turned to me and said ‘I was told I was a fucking scab’ 138 It was plain to me from Mr Flens’ tone of voice and demeanour that he found this very upsetting.’

➣ Rejected the applicants’ contention of inconsistent treatment (at [269] to [270])

➣ Mr Hatwell’s personal circumstances (at [273] to [276])

[163] The Deputy President then turned to consider the issue of proportionality (at [277] to [281]). In concluding (at [283]) that Esso’s summary dismissal of Mr Hatwell was not disproportionate to his conduct the Deputy President said:

‘The proportionality of the dismissal to the conduct that is the subject of a valid reason is a matter to be considered in connection with s.387(h). Clearly a dismissal may be harsh because it is disproportionate to the gravity of the misconduct on which the employer acted. …

Summary dismissal embraces termination of employment arising from breach of an essential term of the employment contract, a serious breach of a non-essential term, or conduct manifesting an intention not to be bound by the contract in the future. In my view Mr Hatwell’s treatment of Mr Flens on 31 July 2017, and Mr Gelagotis’ actions in seeking to exclude Mr S.P. from the lunchroom because he had accepted employment with UGL, were serious matters, and of sufficient gravity to constitute serious misconduct.

Mr Hatwell used very intimidating and abusive language towards Mr Flens. The conduct clearly contravened a policy that applied to Mr Hatwell’s employment and with which he was required to comply. He was aware of the policy, had been reminded of it by management, and had himself invoked the policy on two occasions. In my view Mr Hatwell’s mistreatment of Mr Flens repudiated his contract of employment with Esso. Even if there had not been such a policy, use of such language is manifestly unacceptable in the workplace and amounts to serious misconduct.’ 139 (footnotes omitted)

[164] Finally, the Deputy President considered the contention that Esso had failed to comply with the clause 22 of the Onshore Agreement (at [284] to [295]).

[165] The Deputy President’s conclusion is set out at [296] to [299]:

‘The circumstances from which these applications have arisen are lamentable. Mr Flens and Mr S.P. have been subjected to mistreatment. Mr Hatwell and Mr Gelagotis have lost their jobs. Other Esso employees have been dismissed and disciplined. The workplace has been divided.

Many individuals and their unions hold strong views about the employment arrangements at UGL. That is their right. Some former UGLK employees have chosen to accept, or perhaps have had little financial choice but to accept, employment with UGL on lesser conditions than those that they previously enjoyed. This is their right.

The industrial circumstances at Longford have been the subject of much evidence and argument in these matters. However, the focus of my consideration of these two applications has been the conduct of the applicants.

Taking into account all of the evidence and the considerations in s.387 of the Act, and based on my factual findings, I consider that the dismissal of Mr Hatwell was not harsh, unjust or unreasonable, and that his dismissal was therefore not unfair.’

[166] There is a degree of overlap between a decision which falls outside the bounds of legal reasonableness, as articulated in Li, and a decision which is ‘unreasonable or plainly unjust’, such as to fall within the final category of review in House v The King 140, that is:

‘It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.’ 141

[167] For the reasons which follow we are satisfied that this is such a case. In our view, the proper exercise of discretion at first instance was, on the evidence before the Deputy President, so clearly in favour of a finding that the dismissal was harsh that the decision to dismiss Mr Hatwell’s application for an unfair dismissal remedy was manifestly unjust.

[168] At the outset it needs to be born in mind that the ‘valid reason’ for Mr Hatwell’s dismissal was a single contravention of Esso’s harassment policy constituted by Mr Hatwells conduct in calling Mr Flens a ‘fucking scab’. This conduct occurred in the context of a protracted industrial dispute which had resulted in ‘significant tension’ in the workplace and constituted a ‘material change’ in the normal working environment. 142 Further, the relevant decision maker at Esso – Ms Butler – made it clear that she would not dismiss an employee for a single use of the word ‘scab’. The relevant extract from Ms Butler’s evidence is as follows:

‘You would accept, would you not, that it couldn’t in the circumstances I have described to you justify in itself termination of his employment?—And that one particular behaviour in and of itself is not the only behaviour that I have had to consider when I’ve weighed up that decision.

Ms Butler, that wasn’t my question.  Will you answer my question?—Would you like to restate it again.

In the circumstances I just put to you in the question I asked about what you knew from Mr [SP’s] evidence you said the word “scab” in and of itself could not justify termination of his employment, could it?—If the only thing that I was faced with considering was an isolated example of an employee using the word “scab” once I would not terminate somebody’s employment, no.’ 143

[169] The fact that the employer (for present purposes Ms Butler as Esso’s representative) was of the view that conduct of the type engaged in by Mr Hatwell did not warrant dismissal is plainly relevant. 144 Ms Butler was the person at Esso who was responsible for considering the outcomes of an investigation into conduct directed at Mr Flens and Mr SP by various Esso employees; and for deciding whether there should be any disciplinary action.145 It is pertinent to note in this regard that Ms Butler decided to issue ‘first and final’ warnings to Mr Osborn and Mr Burton for the use of language like ‘scab’ and ‘grub’,146 rather than dismissing them.

[170] Mr Hatwells’ circumstances are also relevant. He had been employed by Esso for over 10 years and expected to continue his career at Esso. Apart from the warning he received from participating in the ‘walk off’ on 20 June 2017 (along with the other participating Esso employees, see [12] above) Mr Hatwell has had an unblemished disciplinary history. There is no evidence of any previous behaviour of the kind the Deputy President found constituted a valid reason for his dismissal.

[171] The dismissal has had ‘very significant effects’ on Mr Hatwell and on his family. 147 He was suspended on full pay on 9 August 2017 for nearly three months while Esso conducted an investigation and, as found by the Deputy President:

‘it must have been difficult for [him] not to be able to go to work as usual and lead [his] normal [life], with the shadow of investigation hanging over [him].’ 148

[172] Further, as noted by the Deputy President (at [275]) several of the allegations against Mr Hatwell were unsubstantiated and this was a factor that may be taken into account:

‘In the case of Mr Hatwell, I have found his conduct in relation to Mr Flens was a valid reason for dismissal, but have not found substantiated the allegations about his conduct in relation to Mr S.P. Mr Hatwell’s suspension was not confined to the issues relating to Mr S.P; the suspension letter refers to allegations about ‘harassment of a UGL contractor or contractors’, which includes Mr Flens. However, it was the allegations concerning the treatment of Mr S.P. that led to the protracted investigation and lengthy suspension. In my view there is an element of unfairness associated with the fact that Mr Hatwell was suspended for a long period (rather than a shorter period, as would have seemed likely had the investigation been confined to his treatment of Mr Flens) in connection with allegations that I have found to be unsubstantiated.’ 149

[173] In accordance with s.400(1), we consider that it is in the public interest to grant permission to appeal and we do so on the basis that the Decision manifests an injustice. Public confidence in the administration of justice is undermined by decisions that are manifestly unjust. This is a matter that enlivens the public interest and warrants the grant of permission to appeal. 150

[174] We have concluded that the Deputy President’s decision was manifestly unjust and plainly falls outside the bounds of legal reasonableness as articulated in Li. For that reason we have decided to uphold the appeal and quash the Deputy President’s decision to dismiss Mr Hatwell’s application for relief.

[175] In rehearing the matter we adopt the Deputy President’s finding that there was a valid reason for dismissal and his findings as to the considerations in paragraphs 387(b) to (g), as summarised at [161] above. In relation to s.387(h) we have taken into account the matters set out at [168] to [172] above.

[176] We have taken into account the matters set out at s.387(a) to (h), insofar as they are relevant and have concluded that Mr Hatwell’s dismissal was harsh. It follows that Mr Hatwell was unfairly dismissed (see s.385). In our view Mr Hatwell’s conduct warranted a disciplinary response which fell short of dismissal.

[177] The jurisdictional prerequisites for an order for a remedy have been met. We are satisfied that Mr Hatwell is a person protected from unfair dismissal at the time of being dismissed (s.390(1)(a)) and he has been unfairly dismissed (s.390(1)(b)).

[178] Given the passage of time and the limited submissions and evidence relevant to remedy in the proceedings at first instance we have decided to remit the question of whether a remedy should be granted and, if so, the nature of that remedy, to Deputy President Colman for determination.”

Hatwell v Esso Australia P/L/ (2018) FWCFB 6092