Unfair dismissal cases and discretionary issues

These extracts from a recent unfair dismissal decision of the Fair Work Commission are a very good example of the difficult balancing act which is often in involved in determining whether the termination of the employment of an employee was relevantly unfair. In this case the record of the employee who was dismissed for misconduct was excellent, the misconduct found to have been committed was reasonably innocuous and the investigation by the employer was technically flawed but still , in the end, the employee lost the claim in a case decided by a very experienced, compassionate and highly and well respected member of the Commission.

“Background

[5] The applicant worked for the employer for a period of about 4 years and 3 months. The applicant performed work as a qualified air-conditioning and refrigeration technician.

[6] The employer operates a multi-service contractor business in the Shoalhaven, Illawarra, Eurobodalla, and the Southern Highlands areas of New South Wales. The business operations provided by the employer include air conditioning, electrical, solar and batteries, data and communications, security installations, and hot water services. The employer has approximately 71 employees.

[7] The applicant had an unblemished employment record, and he was considered by the employer to be their most senior air-conditioning tradesman. On Friday 6 May 2022, the applicant and an apprentice who was under his tutelage, were working on a large residential job site which involved inter alia, the supply of refrigerant gas into air conditioning systems. The applicant realised that they had insufficient refrigerant gas to complete the work, and he arranged to have another cylinder of gas delivered to the job site.

[8] While the applicant and his apprentice were waiting for the refrigerant gas to be delivered, they noticed a portable basketball hoop with backboard in a paddock alongside of the work site. The applicant and the apprentice started to throw clumps of dirt aimed at the basketball hoop in the fashion of “shooting goals”. As part of this “shooting goals” activity the applicant picked up a small rock and threw it at the basketball hoop and it shattered the tempered glass backboard.

[9] The applicant reported that he had damaged the basketball backboard. The applicant told the site supervisor and his manager about the damage. The applicant also contacted the client who was the owner of the basketball hoop/backboard, and he apologised for what had happened, and he offered to pay for any repair or replacement. The client apparently told the applicant that he was disappointed but appreciated the contact from the applicant and the offer to pay for any rectification of the damage.

[10] On Sunday, 8 May 2022, the applicant received a text message from the employer which advised that he was required to attend a meeting the following day to discuss the damaged basketball backboard incident (the basketball backboard incident) and he could bring a support person to the meeting if he wished.

[11] On Monday, 9 May 2022, the applicant attended a meeting with the employer, and he was asked to explain what had occurred regarding the basketball backboard incident. The employer held a separate meeting with the apprentice who was also questioned about the basketball backboard incident. At the conclusion of the meeting the applicant was told that he was suspended from employment with pay, and that he would receive advice of the punishment that the employer would determine in respect of the basketball backboard incident.

[12] Later on Monday, 9 May 2022, the applicant checked his email inbox and he discovered that at 12:53 pm that day, he had been sent a termination of employment letter. The termination of employment letter referred to the basketball backboard incident, the discussion that had occurred on the previous Friday and the meeting held earlier that day. The employer advised that it considered that the wilful and deliberate behaviour of the applicant was in breach of, and inconsistent with, the continuation of the contract of employment. The letter stated that the applicant’s actions had seriously damaged the employer’s reputation and could have resulted in injury to the applicant or others. The letter communicated that the employer treated the applicant’s conduct as serious misconduct and advised that the applicant was summarily dismissed.

[13] Immediately following his dismissal, the applicant did not seek other employment because he was considering starting his own business. However, he discovered that he had to be employed and working with a licensed electrician in order to complete further trade qualifications. Following this discovery, the applicant decided to accept an offer of alternative employment which commenced on 4 July 2022.

[14] The applicant sought monetary compensation as remedy for his alleged unfair dismissal. The application document stated that the applicant sought monetary compensation for the mental and financial stress caused by the immediate dismissal and for the inconvenience of transferring an apprenticeship and possible extension of time onto that apprenticeship.

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Consideration

[26] The unfair dismissal provisions of the Act relevantly include s. 385 which stipulates that the Commission must be satisfied that four cumulative elements are met in order to establish an unfair dismissal. Section 385 is in the following terms:

“385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.”

[27] In this case, there was no dispute that the matter was confined to a determination of that element contained in subsection 385 (b) of the Act, specifically whether the dismissal of the applicant was harsh, unjust or unreasonable.

[28] Section 387 of the Act contains criteria that the Commission must take into account in any determination of whether a dismissal is harsh, unjust or unreasonable. Section 387 is in the following terms:

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.”

  1. 387 (a) – Valid reason for the dismissal related to capacity or conduct

[29] In this instance, the applicant was dismissed because the employer concluded that his conduct in respect to the basketball backboard incident represented serious misconduct. The employer established serious misconduct because it formed the view that the conduct represented (a) deliberate actions which seriously damaged the reputation of the employer’s business, and (b) it involved deliberate breaches of workplace health and safety standards and was therefore conduct that was inconsistent with the continuation of the contract of employment.

[30] Upon careful consideration of all of the evidence, particularly that provided by the witnesses during the Hearing, there is sound basis upon which the Commission has been amply satisfied that the applicant’s conduct during the basketball backboard incident was indeed misconduct as was found by the employer, and which has provided valid reason for his dismissal. In this instance it was regrettable to observe that the applicant seemed to have been unable to comprehend that what he did during the basketball backboard incident was not merely a trivial mistake but instead action that was likely to cause significant damage to the employer’s interests.

[31] It was unfortunate for the applicant to have been dismissed in circumstances where a single instance of foolish and seemingly uncharacteristic misbehaviour caused damage to the property of a client of the employer. However, the employer was entitled to treat the isolated incident as a matter that caused irreversible and fatal damage to the employment relationship. Although the level of any threat to the health and safety caused by the actual incident may have been questionable, the significant concern regarding the actual and potential reputational damage to the employer’s business interests was undeniable. Unfortunately, the applicant failed to appreciate the reputational damage that the employer would be likely to suffer if it was seen to have condoned the applicant’s reckless behaviour.

[32] The employer was presented with a difficult decision. The employer’s most senior and highly regarded air-conditioning technician had made a single but very serious mistake. The employer would have contemplated that if the applicant was capable of such serious misjudgement albeit on a single occasion, could such an error of judgement be a reflection of more general application. Importantly, the employer considered that the potential for reputational damage if it permitted the applicant to continue in employment, would result in costs to its business interests that it was not prepared to risk.

[33] Following a careful, thorough, and balanced evaluation of all the evidence involving the basketball backboard incident, the Commission has been comfortably satisfied that the applicant engaged in serious misconduct. The conduct of the applicant caused serious and imminent risk to the reputation, viability, or profitability of the employer’s business in satisfaction of the meaning of serious misconduct found in Regulation 1.07 of the Fair Work Regulations 2009. The health and safety risks associated with the conduct of the applicant during the basketball backboard incident included some level of threat to the health and safety of persons in the workplace but which, in fairness to the applicant, did not satisfy the notion of causing serious and imminent risk as contemplated by Regulation 1.07 of the Fair Work Regulations 2009.

[34] In summary therefore, the conduct of the applicant during the basketball backboard incident whereby he threw objects including a stone in the direction of the basketball hoop and which caused the backboard to shatter, was serious misconduct which provided valid reason for his dismissal from employment.

  1. 387 (b) – Notification of reason for dismissal

[35] The employer provided notification of the reason for the applicant’s dismissal in the termination of employment letter dated 9 May 2022.

[36] Regrettably, the termination of employment letter was provided to the applicant by way of an email communication that was sent several hours after the applicant had been placed on paid suspension from employment. Although the employer had met with the applicant earlier in the day to discuss the circumstances surrounding the basketball backboard incident, the advice of the decision to terminate the employment should have been conveyed face-to-face with the applicant being recalled to the workplace.

  1. 387 (c) – Opportunity to respond to any reason related to capacity or conduct

[37] The applicant was provided with an opportunity to respond to the issues surrounding the basketball backboard incident, during the meeting that was held on the morning of 9 May 2022. During that meeting, the applicant confirmed the details of the activities associated with the basketball backboard incident. The applicant was then placed on paid suspension from duty.

[38] The employer subsequently considered the totality of the circumstances surrounding the basketball backboard incident and it decided to terminate the employment of the applicant and the apprentice. At this point, the employer should have provided the applicant with advice that it had reached the position that it would terminate the applicant’s employment because of his misconduct during the basketball backboard incident, but before implementing any dismissal, it should have given the applicant an opportunity to plead his case and show cause why his employment should not be terminated. The failure to provide the applicant with this further step to enable him to show cause why his employment should not be terminated, has represented a clear procedural defect in respect to the process that was adopted by the employer. This procedural defect must be balanced against all of the other factors which are relevant to consideration of the applicant’s unfair dismissal claim.

  1. 387 (d) – Unreasonable refusal to allow a support person to assist

[39] The employer did not unreasonably refuse to allow the applicant to have a support person present at the meeting held on 9 May 2022.

  1. 387 (e) – Warning about unsatisfactory performance

[40] This factor is not relevant to the circumstances in this instance as the applicant was not dismissed for unsatisfactory performance but instead, for misconduct.

  1. 387 (f) – Size of enterprise likely to impact on procedures

[41] The employer is not a small size business operation and therefore the procedures that it has adopted have been subject to the requisite level of scrutiny.

  1. 387 (g) – Absence of management specialists or expertise likely to impact on procedures

[42] There was evidence that the employer had only a part-time human resource manager. The processes that were adopted by the employer broadly provided the applicant with procedural fairness, except for the procedural deficiency whereby there was no opportunity for the applicant to show cause as to why his employment should not be terminated.

  1. 387 (h) – Other relevant matters

[43] The Commission has had regard for the evidence of the personal circumstances of the applicant, including the financial and other impacts of the termination of employment. These matters have been evaluated and balanced against the various other factors under consideration.

Conclusion

[44] In this case the applicant was dismissed when the employer formed the view that he had engaged in serious misconduct that was inconsistent with any continuation of the employment relationship. The misconduct arose from findings that the employer made following its investigation into, and consideration of, an event which has been described as the basketball backboard incident. Upon careful analysis, the employer’s primary findings in respect to the applicant’s serious misconduct during the basketball backboard incident have been confirmed.

[45] The evidence has established that, in particular, the potential reputational damage arising from the serious misconduct of the applicant caused irreversible and fatal damage to the employment relationship. Consequently, the conduct of the applicant during the basketball backboard incident was serious misconduct that has provided valid reason for his dismissal.

[46] An examination of the other relevant factors has established that there were certain procedural errors or defects with the process that the employer adopted in respect to the final determination of the dismissal of the applicant. The identified procedural deficiencies have required careful evaluation and balance against the established valid reason for dismissal.

[47] In conclusion, the applicant was dismissed for valid reason involving his established misconduct during the basketball backboard incident. Although certain procedural deficiencies have been identified in respect to the employer’s final determination of dismissal, these procedural deficiencies, have not, when balanced against the nature of the valid reason for dismissal, operated to render the dismissal of the applicant to be either harsh, or unjust, or unreasonable.

[48] Therefore, as the dismissal of the applicant was not harsh, or unjust, or unreasonable, it cannot be found to be unfair. The application for unfair dismissal is dismissed accordingly. An Order dismissing the application shall be issued in conjunction with this Decision.”

Lander v North Nowra Investments Pty Ltd T/A Simmark (2022) FWC 2753 delivered 14 October 2022 per Cambridge C