Unfair dismissal and valid reason for termination of job

The following extracts from a recent unfair dismissal case determined by the Fair Work Commission contain several passages which deal with the issues of valid reason for dismissal and lawful and reasonable instructions by an employer.

“3.2 Valid reason for the dismissal

When determining if a dismissal is unfair, the Commission takes into account whether there was a valid reason for dismissal relating to the employee’s capacity or conduct. 30 I have concluded that there was a valid reason for dismissal for the reasons that follow.

The reasons considered are the employer’s ‘reason(s)’. 31 The Full Bench in B, C, and D v Australia Postal Corporation t/as Australia Post (Australian Postal Corporation) stated:

[34].In a misconduct case, the Commission is concerned with whether the misconduct in fact occurred, not with whether the employer has reasonable grounds to believe that it occurred (e.g. Yew v ACI Glass Packaging Pty Ltd (1996) 71 IR 201, Sherman v Peabody Coal Ltd (1998) 88 IR 408; Australian Meat Holdings Pty Ltd v MacLauchlan (1998) 84 IR 1).

[35] Subject to that, as indicated by Northrop J in Selvachandran, “valid reason” is assessed from the perspective of the employer and by reference to the acts or omissions that constitute the alleged misconduct on which the employer relied, considered in isolation from the broader context in which they occurred. It is the reason of the employer, assessed from the perspective of the employer, that must be a “valid reason” where “valid” has its ordinary meaning of “sound, defensible or well founded”. As Northrop J noted, the requirement for a valid reason “should not impose a severe barrier to the right of an employer to dismiss an employee”.

[36] A failure to comply with a lawful and reasonable policy is a breach of the fundamental term of the contract of employment that obliges employees to comply with the lawful and reasonable directions of the employer. In this way, a substantial and wilful breach of a policy will often, if not usually, constitute a “valid reason” for dismissal. 32

In summary, where the reason for termination of employment relates to an employee’s capacity or conduct, it is not the Commission’s function to stand in the shoes of the employer and determine whether the employer’s decision was a decision that the Commission would have made. Instead, the Commission is to assess whether the employer had a valid reason connected with the employee’s capacity or conduct. 33…………………………..

 

………………………An employer clearly has the authority to give directions and expect them to be obeyed, subject to such directions being lawful and reasonable. 34 In R v Darling Island Stevedoring and Lighterage Co Ltd; Ex part Halliday,35 (Darling Island Stevedoring) it was held:

If a command relates to the subject matter of the employment and involves no illegality, the obligation of the servant to obey it depends at common law upon its being reasonable. In other words the lawful commands of an employer which an employee must obey are those which fall within the scope of the contract of services and are reasonable.

The Full Bench in Briggs v AWH 36 stated that the determination of whether an employer’s direction was a reasonable one did not involve an abstract or unconfined assessment as to the justice or merit of the direction. The employer, therefore, is not required to demonstrate that the ‘direction issued was the preferable or most appropriate course of action, or in accordance with “best practice”, or in the best interests of the parties’.37 Adopting the approach identified in Darling Island Stevedoring, the Full Bench cited Dixon J, quoting:

But what is reasonable is not to be determined, so to speak, in vacuo. The nature of the employment, the established usages affecting it, the common practices which exist and the general provisions of the instrument, in this case an award, governing the relationship, supply considerations by which the determination of what is reasonable must be controlled. 38

…………………………………………………………

3.7 Any other matters considered relevant

Section 387(h) imports a broad discretion upon the Commission to consider any other relevant matters, including the circumstances of the Applicant’s employment and its cessation.

Whether the Applicant’s conduct justified summary dismissal for serious misconduct is a factor relevant for consideration under s 387(h) of the Act. 45 However, the expression ‘summary dismissal’ has a reasonably well understood meaning at law. It refers to a dismissal without notice arising from a breach of an essential term of the employment contract, a serious breach of a non-essential term of the contract, or conduct manifesting an intention not to be bound by the contract in the future on the part of the employee.46

As was observed in Ryman v Thrash Pty Ltd t/a Wisharts Automotive Service (Ryman), 47 the payment of a sum in lieu of notice is not consistent with a summary dismissal, understood in the way explained above. The Full Bench in Ryman said:

such a payment is best characterised as compensation for the remuneration that an employee would have received if the employee had been afforded the period of notice to which he or she was entitled. If the employer has a right to summarily dismiss, there cannot be any entitlement to notice, and no basis therefore for a payment in lieu of notice. 48

The term ‘serious misconduct’ does not operate as a fixed standard for the determination of the type of conduct by the employee which may warrant summary dismissal. 49 In Sharp v BCS Infrastructure Support Pty Limited,50 the Full Bench referred to the decision in Rankin v Marine Power International Pty Ltd in which Gillard J stated that ‘[T]here is no rule of law that defines the degree of misconduct which would justify dismissal without notice’,51 and identified the touchstone as being whether the conduct was of such a grave nature as to be repugnant to the employment relationship.52

Wilful or deliberate behaviour amounting to serious misconduct is conduct which strikes at the heart of the employment relationship. In North v Television Corporation Ltd, 53 it was stated:

It is clear that a single act of disobedience may be sufficient to justify dismissal on the ground of misconduct but it was held in Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285, that to justify summary dismissal a single act must be such as to show that the employee was repudiating the contract of service or one of its essential conditions.

The decision of Laws v London Chronicle (Indicator Newspapers) Ltd, 54 referred to above, makes it plain that an act of disobedience or misconduct (justifying summary dismissal) requires that the disobedience must be also be ‘wilful’, as observed:

… I do, however, think (following the passages which I have already cited) that one act of disobedience or misconduct can justify dismissal only if it is of a nature which goes to show (in effect) that the servant is repudiating the contract, or one of its essential conditions; and for that reason, therefore, I think that one finds in the passages which I have read that the disobedience must at least have the quality that it is “wilful”: it does (in other words) connote a deliberate flouting of the essential contractual conditions.

Clearly, the Respondent bears the onus of establishing the serious misconduct. The applicable standard of proof is on the balance of probabilities, but the more serious the allegation, the higher the burden on the employer to prove the allegation. 55………………………………..

The ordinary relationship between employer and employee at common law is one importing the implied duty of mutual trust. The Respondent clearly trusted the Applicant to uphold its values and comply with its instructions when providing its services. 56

It is, therefore, my conclusion that the ‘trust’ and ‘confidence’ essential to the relationship of employer and employee had been destroyed. There was, in my view, a valid reason for terminating the employment of the Applicant based on her serious misconduct.

In Parmalat Food Products Pty Ltd v Wililo, 57 the Full Bench held:

The existence of a valid reason is a very important consideration in any unfair dismissal case. The absence of a valid reason will almost invariably render the termination unfair. The finding of a valid reason is a very important consideration in establishing the fairness of the termination. Having found a valid reason for termination amounting to serious misconduct and compliance with the statutory requirements for procedural fairness it would only be if significant mitigating factors are present that a conclusion of harshness is open. 58”

Passages from  Wilson v Workpower Incorporated (2021) FWC 3141 delivered  18 June 2021 per Beaumont DP