Unfair dismissal cases; the basic legal principles

These passages from a recent appeal decision of a Full Bench of the Fair Work Commission  set out some of the fundamental and orthodox legal principles which the Commission is expected to apply when determining an unfair dismissal case.

“Consideration

[70] It is convenient to consider the grounds of appeal in the order advanced by the Appellant in its written submissions and at the hearing of the appeal. In relation to ground 1, it is well established that in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account each of the matters set out in paragraph (a) – (h) of the section. 50 As a Full Bench of the Commission observed in Sydney Trains v Hilder51 the requirement can only be read as applicable to each element of the trilogy – that is, a finding that a dismissal is or is not harsh, or is or is not unjust, or is or is not unreasonable, must in each case be founded on a consideration of all the matters set out in s. 387(a) – (h).52

[71] A failure to comply with this requirement is a serious error of law. 53 It is also well established that the Commission must consider and weigh up all the factors and that no one factor alone will necessarily be determinative.54 While in some cases, not all the matters in s. 387 will be relevant, it is nonetheless necessary to make a finding in relation to each of them, even if only to set out the basis for the finding of irrelevance.

[72] Ground 1 asserts that the Commissioner reached her conclusion that the dismissal was harsh, on the basis of the considerations in s. 387(a) and (h) and without considering matters in s. 387(b) – (h). This is said to be evident from the part of the Commissioner’s decision dealing with valid reason, which also included a finding that the dismissal was disproportionate. It was contended that such a finding was not a matter that went to whether the Appellant had a valid reason under s. 387(a) of the Act.

[73] We accept that the way the Commissioner dealt with the matters in s. 387(a) and (h) is unorthodox. Generally, the matters in s. 387 should be considered in the order in which they appear in the Act, and findings should be made as to each of the matters before weighing them. However, it should be noted that it is actual failure to weigh each of those matters which constitutes jurisdictional error rather than the order in which they are considered. It is also the case that the exercise of weighing each matter to determine whether a dismissal is or is not harsh, or is or is not unjust, or is or is not reasonable, may result in some matters being considered of little or no relevance depending on which limb of the harsh, unjust or unreasonable trilogy is being addressed.

[74] In Byrne v Australian Airlines 55 the High Court considered the meaning of an award provisions that termination of employment would not be “harsh, unjust or unreasonable”. In their joint judgment McHugh and Gummow JJ said:

“It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted. …

Procedures adopted in carrying out the termination might properly be taken into account in determining whether the termination thus produced was harsh, unjust or unreasonable.” 56

[75] A dismissal may be:

“Harsh – because of its consequences for the personal and economic situation of the employee, or because it is disproportionate to the gravity of the misconduct;

Unjust – because the employee was not guilty of the misconduct on which the employer acted; and/or

Unreasonable – because it was decided on inferences that could not reasonably have been drawn from the material before the employer.” 57

[76] When this framework is considered, it may be that matters relevant to s. 387(h) are determinative of whether a dismissal is harsh, matters relevant to s. 387(a) are determinative of whether a dismissal is unjust and matters relevant to s. 387 (b) – (g) are determinative of whether a dismissal is unreasonable, or a combination of these matters is relevant to each the three limbs of the harsh, unjust or unreasonable trilogy. The decision-making process involved in weighing the matters in s. 387 may also involve returning to a particular matter and adjusting the weight given to it, to make a finding in relation to unfairness.

[77] Notwithstanding that in the decision under appeal the consideration of s. 387(a) and s. 387(h) was set out sequentially and under a combined heading, the Commissioner has considered all the matters in both sections and has reached conclusions in relation to them. The Commissioner has also considered all other matters in s. 387(b) – (g).

[78] In Sydney Trains v Hilder 58 the Full Bench referred to paragraph [118] of the decision at first instance in finding that the Deputy President did not arrive at his finding that dismissal was unreasonable having considered all the matters set out in s. 387 (a)-(h). In particular, the Full Bench found that the Deputy President found that the dismissal was unreasonable based only on his conclusion under s. 387(a) that there was no valid reason before he gave any consideration to paragraphs (b)-(h) and that this constituted a significant error of law that is jurisdictional in nature.59

[79] However in that matter, the Appellant did not press this ground of appeal and the Full Bench went on to note that had the issue been raised, it might have been said that the error was not of a material nature because once the Deputy President found, pursuant to s. 387(a) that there was no valid reason for the dismissal, there was nothing in the findings directed to s. 387(b) – (h) which could have avoided a conclusion that the dismissal was unreasonable. 60 Despite finding that the Deputy President’s conclusion that there was no valid reason was made in error, the Full Bench affirmed the Deputy President’s conclusion that Mr Hilder’s dismissal was harsh and ultimately found that there was no reason to disturb the orders made by the Deputy President.

[80] We do not accept that in the present case, the way in which the Commissioner ordered her reasons indicates that she reached a conclusion in relation to the harshness of the dismissal before she had considered the other matters. While the Commissioner’s consideration of “harshness” at [50] appears under her consideration of s. 387(h) before dealing with the matters in s. 387(b) to (g), considerations (b) to (g) turn to considerations regarding and relevant to process. It is apparent that the Commissioner had acquainted herself with the process adopted by the Respondent prior to making her findings in relation to s. 387(h) of the Act. So much is evident from her references to the process followed by the Respondent in her findings in relation to the background facts, including paragraphs [20]-[24] of her decision. \.

[81] In the circumstances, that the Commissioner set out her conclusion in relation to harshness, at an earlier point in the decision than the conclusions about other s. 387 matters, does not of itself, constitute failure to weigh all those matters. The nature of the exercise involved in weighing the s. 387 matters does not require that they be considered in a particular order, only that all matters are considered, their relevance assessed and that they are weighed in determining whether a dismissal is or is not harsh, or is or is not unjust, or is or is not unreasonable.

[82] Nor do we accept that the conclusion reached by the Commissioner in relation to valid reason, is compromised by her consideration under the same heading, of matters relevant to s. 387(h). In contrast to the first instance decision considered by the Full Bench in Sydney Trains v Hilder, in the present case the Commissioner concluded that there was a valid reason for the Respondent’s dismissal – that he knowingly breached the PED Protocol, by using his mobile telephone while driving a forklift, after being trained in, and adequately informed about, the protocol.

[83] The significant error of law in the first instance decision considered by the Full Bench in Sydney Trains v Hilder, was that the finding there was no valid reason for the dismissal was made without taking into account the materially relevant considerations. In that case, the error was obvious – there was a conclusive finding made in relation to valid reason as provided in s. 387(a) without reference to the relevant principles and based almost entirely on considerations that were properly matters relevant to s. 387(h).

[84] In the present case, there is no such apparent error. The Commissioner applied the relevant principles and made a finding that there was a valid reason for dismissal, which is not challenged in the appeal. The finding in relation to valid reason had regard to the fact that the Respondent breached a safety procedure, the purpose of the procedure and the consequences of the breach. It was only after reaching her conclusion in relation to s. 387(a) that the Commissioner went on to separately consider matters relevant to s. 387(h). While s. 387(h) was considered immediately after s. 387(a), and the consideration is followed by a finding at [56] that the dismissal was harsh, that finding is not linked to consideration of whether there was a valid reason..

[85] Further, we find that whilst the Commissioner considered s.387(h) prior to considering other key factors that led to the Commissioner’s finding of harshness, this does not establish that the other factors were not considered at all before arriving at her finding that the dismissal was harsh and her ultimate finding that the dismissal was unfair.

[86] The Commissioner’s finding that the dismissal was unfair because it was harsh, is made at [69], at which point the Commissioner had set out her consideration of the matters in s. 387(b) – (g).

[87] As we have noted above, the matters in s. 387(b) to (g) turn to various considerations regarding and relevant to process. It is worth noting that it is open to the Commission to find no deficiencies in the process followed in effecting the dismissal and in the lead up to it but that the dismissal was nevertheless harsh. We find there was nothing in the findings the Commissioner made in relation to s. 387(h) that could have been undermined by her findings with respect to s. 387(b) – (g). . In this regard, the matters in s. 387(b) to (g) were not seriously contested in the proceedings before the Commissioner, and neither are her findings in relation to these matters contested in the appeal.

[88] In those circumstances, the Appellant’s submission that the Commissioner fundamentally misunderstood the statutory task required to be undertaken and the error resulted in the Commission’s discretion miscarrying, such that on this error alone permission to appeal should be granted and the decision quashed, cannot be sustained. There is no basis to go behind the Commissioner’s decision on the basis of what is essentially a formatting issue, where there is no error in the decision that goes to jurisdiction. In the circumstances of this case, to accept ground 1 would elevate form over substance. Appeal ground 1 is rejected.

[89] Appeal ground 2 asserts that the Commissioner’s error in ground 1 was compounded in the manner she dealt with s. 387(h) of the FW Act and that the Commissioner limited her consideration under that section to matters raised by the Respondent and did not consider (or have proper regard to) matters relied on by the Appellant. These matters are said to be the Appellant’s obligation to uphold safety standards in the workplace; the nature and extent of the Respondent’s breach of the applicable safety procedures; and that the Respondent’s length of service and seniority meant that he should have known better than not to comply with the Appellant’s safety procedures.

[90] We do not accept that the Commissioner failed to consider these matters or to have proper regard to them. We accept the Respondent’s submissions that on a fair reading of the Commissioner’s decision, these matters are considered. The Commissioner set out the contents of the PED Policy and the evidence in relation to its introduction and dissemination in the workplace. The Commissioner also noted that the Applicant knew about the Policy or that he should have known how to access it given the length of his service with the Appellant. Further, the Commissioner set out the facts surrounding the Respondent’s breach of the PED Policy in the decision.

[91] In relation to the Respondent’s length of service, it was open to the Commissioner to conclude that the lapse of judgement on his part that led to the breach was genuine and momentary. As the Appellant correctly points out, in Singh v Sydney Trains the Commission found that an employee’s length of service and the expectation that they be familiar with an employer’s safety policies is a matter that might tell against a finding of harshness. However, in that case, it was telling that the dismissed employee had not expressed any remorse or contrition for his actions. Further, it was noted in that case that the employee had engaged in a “belligerent denial of wrongdoing”.

[92] In the present case, the Commissioner acknowledged the length of the Respondent’s service and that given his employment history the Respondent would have known how to access the Policy, which he knew about. The Commissioner also considered that the PED Policy and the terms in which it was explained were clear and well-defined and set out the Appellant’s expectations in a manner such that employees could not be mistaken about where and when they could use a PED.

[93] The Commissioner balanced these matters against considerations that the Respondent had no disciplinary issues and clean record and was a dedicated and loyal employee. Further balancing considerations were that the Respondent had not attempted to hide his breach, apologised for his actions, was clearly and genuinely remorseful and had provided reasons for his momentary lapse of judgement. We do not accept that in noting that no injury or harm was caused by the incident, the Commissioner had regard to an irrelevant consideration. The Commissioner found a valid reason for dismissal and considered this matter under s. 387(h). Implicitly the Commissioner acknowledged the significance of the Respondent’s breach and the importance of the PED Protocol.

[94] The Commissioner dealt with these matters in her consideration under s. 387(h) and for reasons we have set out in relation to ground 1, the fact that the Commissioner dealt with the s. 387(h) considerations immediately after those relating to s. 387(a) and under a combined heading, does not constitute a failure to weigh them in the overall consideration of whether the Respondent’s dismissal was unfair. Appeal ground 2 is rejected.

[95] In appeal ground 3, the Appellant contends that the Commissioner erred in finding that Ms Addison took a zero-tolerance approach to the breach and did not genuinely consider the matters raised by the Respondent. In its submissions in relation to this ground the Appellant focused on an assertion that because certain aspects of Ms Addison’s evidence were unchallenged, it should have been accepted by the Commissioner in the following respects.

[96] Firstly, Ms Addison’s evidence was that she weighed up the decision to dismiss the Respondent and considered his long period of some 23 years’ service, the explanation for the breach, his regret and the fact he had a clean disciplinary history. Secondly, Ms Addison’s evidence was that on balance, she decided termination of employment was appropriate given the seriousness of the breach, the Respondent’s knowledge of the Policy and that breach may lead to dismissal. Thirdly, Ms Addison said that the Respondent does not have a zero-tolerance policy but treats each breach based on all the circumstances including seriousness, whether the employee is aware of the requirements of the policy breached, the employee’s disciplinary history and any other relevant matters. The failure of the Commissioner to accept that evidence was said to have led to significant errors on the part of the Commissioner which were foundational to her findings of harshness.

[97] While we accept that Ms Addison’s evidence on the three matters identified in the appeal was not considered in detail by the Commissioner in her reasons, the decision records that Ms Addison stated she did consider the matters raised in mitigation by the Respondent at [54] and observed (as recorded at [61] and [62]) that the Respondent was provided with an opportunity to provide reasons why his employment should not be terminated and that the response was considered prior to the decision to terminate the Respondent’s employment being made. The Commissioner also noted Ms Addison’s evidence that the Appellant does not have a zero-tolerance approach to breach of the PED Policy in a “High Risk Area” and does not make termination of employment an automatic outcome for such a breach.

[98] We do not consider that it was necessary for the Commissioner to make a finding as to whether Ms Addison’s evidence on these points should be accepted or not. Such a finding was not foundational to the conclusion in relation to harshness and the overall finding that the dismissal was unfair. Consistent with the provisions of s. 387 of the FW Act, the Commissioner undertook the required exercise of weighing the matters in s. 387 and determined that the mitigating factors raised by the Respondent outweighed the matters raised by the Appellant. This exercise can be, and is, frequently undertaken, on the basis that evidence about motivation or belief of a decision maker is weighed in the overall exercise of assessing whether a dismissal is unfair, without a finding being made as to the truthfulness of the evidence. The finding in the present case was that regardless of whether Ms Addison did or did not have regard to the matters identified in her evidence, those matters considered objectively, did not outweigh the matters raised by the Respondent in mitigation and that for this reason the dismissal was unfair, because it was harsh.

[99] The Appellant also submits in relation to this ground, that the finding that the Appellant complied with s. 387(b) and (c) is inconsistent with later findings to the effect that Ms Addison did not genuinely consider matters raised in mitigation by the Respondent. We do not accept that there is an inconsistency in the findings. As we have already noted, the finding in relation to harshness was not based on the genuineness or otherwise of Ms Addison’s consideration of the mitigating factors raised by the Respondent, but rather, by weighing all the considerations and concluding that the Respondent’s dismissal was, on balance, unfair because it was harsh. The Commissioner’s findings in relation to Ms Addison were that her approach to the dismissal of the Applicant was inconsistent with the Appellant’s approach to breaches generally. This finding was open to the Commissioner on the evidence. Ground three is rejected.

[100] Ground 4 relates to ground 3 and asserts that the Commissioner erred by standing in the shoes of the employer and substituting her own view about what the employer should done the harshness of the dismissal. The Appellant refers in support of this ground to the judgement of Moore J in Walton v Mermaid Dry Cleaners. 61 The relevant passage is as follows:

“In my opinion the evidence does not establish that the employer had a valid reason for terminating the employment of Mr Walton. 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 that it did.” 62

[101] Firstly, the observation of Moore J is made in relation to whether there was a valid reason for dismissal. It does not establish as a general principle, that the Commission will not over-rule an employer’s decision to dismiss an employee simply on the basis that the employer contends that there was a valid reason for dismissal. It is well established that a valid reason for dismissal is one that is sound, defensible and well founded. 63 Where a dismissal is based on conduct, as it was in the present case, the consideration of whether there was a valid reason for dismissal requires an objective assessment of whether the conduct was of sufficient gravity or seriousness to justify dismissal as a sound, defensible or well-founded response.64 Further, the question of whether a dismissal is unfair, is answered by reference to all matters in s. 387 of the FW Act, which includes at s. 387(h) any other matter that the Commission considers relevant.

[102] Reaching a contrary view to that of the employer about the unfairness of a dismissal, after properly considering all relevant matters, does not amount to standing in the shoes of the employer. We do not accept that the Commissioner did this and ground 4 is rejected.

[103] Ground 5 asserts that the Commissioner erred in determining that reinstatement was an appropriate remedy on the basis of: the factual errors asserted in ground 3; having regard to a statement of Mr Renfrey (who did not give evidence and whose statement was not relied on by the Respondent) and by misunderstanding the Appellant’s evidence about why it had lost trust and confidence in the Respondent. As the Appellant points out, the Commissioner’s decision on remedy involved the exercise of discretion, and it must demonstrate error of the type that permits an appellate court to interfere with discretionary decisions of that nature.

[104] In our view there is no such error in the present case. For the reasons given in relation to ground 3 of the appeal, we do not accept that the Commissioner made factual errors, much less significant errors. We accept that Mr Renfrey’s evidence should not have been considered given that the Respondent did not rely on it. However, we do not accept that the evidence was critical to the decision to reinstate the Respondent. Mr Renfrey was a co-worker. Similar evidence was also given by a Supervisor employed by the Appellant. Further, there was no dispute that in the Respondent’s 23 years of service, he had an impeccable safety record. Accordingly, to the extent that the Commissioner was in error to consider the evidence of Mr Renfrey, we do not consider that the error was significant so that it caused the discretion to decide to reinstate the Respondent to miscarry.

[105] Finally, we do not accept that the Commissioner misunderstood the Appellant’s case that it had lost trust and confidence in the Respondent. The Commissioner had regard to the Appellant’s evidence, but as the Respondent’s submissions point out, was not limited to that evidence in determining whether reinstatement was inappropriate. The Commissioner had also made findings about the Respondent’s work record, his honesty during the investigation and his remorse for the incident. The Commissioner was not in error to have regard to those matters and to decide that reinstatement was appropriate in all the circumstances.

Conclusion

[106] We are satisfied that the grant of permission to appeal would be in the public interest. For reasons which we articulate in this decision we consider that the appeal raises issues of general application in respect to the approach to addressing the matters in s. 387 of the FW Act. However, we dismiss the appeal because we are satisfied that there was no appealable error in the Commissioner’s decision. We order as follows:

  1. Permission to appeal is granted.
  2. The appeal is dismissed.

Metcash Trading Limited T/A Metcash Trading v Hudson (2022) FWCFB 2 delivered 20 January 2022 per Catanzariti VP, Asbury DP and Matheson C