Unfair dismissal cases; the discretionary possibilities

The termination of the employment of an employee may be with or without a valid reason and it may be harsh, unjust and unreasonable, or depending upon the circumstances there may be a valid reason for it and it may not be harsh, unjust and unreasonable or it may be with a valid reason without being unreasonable and harsh, but may be an unfair dismissal because it is unjust. Still with me? Well here is an example.

“Other relevant matters

[97] Section 387(h) of the Act provides the Commission with a broad scope to consider any

other matters it considers relevant.

[98] The basis upon which a dismissal may be found to be harsh, unjust or unreasonable,

notwithstanding a finding that there was a valid reason for dismissal based upon conduct in

breach of employer policy was explained by the Full Bench majority in B, C and D v Australian

Postal Corporation T/A Australia Post in the following terms:37

“[41] Nevertheless, it remains a bedrock principle in unfair dismissal jurisprudence of

the Commission that a dismissal may be “harsh, unjust or unreasonable”

notwithstanding the existence of a “valid reason” for the dismissal”: Australian Meat

Holdings Pty Ltd v McLauchlan (1998) 84 IR 1; J Boag & Son Brewing Pty Ltd v John

Button [2010] FWAFB 4022; Windsor Smith v Liu [1998] Print Q3462; Caspanello v

Telstra Corporation Limited [2002] AIRC 1171; King v Freshmore (Vic) Pty Ltd [2000]

Print S4213; Dahlstrom v Wagstaff Cranbourne Pty Ltd [2000] Print T1001; Erskine v

Chalmers Industries Pty Ltd [2001] PR902746 citing Allied Express Transport Pty Ltd

(1998) 81 IR 410 at 413; Qantas Airways Limited v Cornwall (1998) 82 IR 102 at 109;

ALH Group Pty Ltd T/A the Royal Exchange Hotel v Mulhall [2002] PR919205. That

principle reflects the approach of the High Court in Victoria v Commonwealth and is a

consequence of the reality that in any given case there may be “relevant matters” that

do not bear upon whether there was a “valid reason” for the dismissal but do bear upon

whether the dismissal was “harsh, unjust or unreasonable”.

[42] Broadly speaking, circumstances bearing upon whether a dismissal for misconduct

is harsh, unjust or unreasonable fall into three broad categories:

(1) The acts or omissions that constitute the alleged misconduct on which the

employer relied (together with the employee’s disciplinary history and any

warnings, if relied upon by the employer at the time of dismissal) but

otherwise considered in isolation from the broader context in which those

acts or omissions occurred.

(2) The broader context in the workplace in which those acts or omissions

occurred. [This may include such matters as a history of toleration or

condonation of the misconduct by the employer or inconsistent treatment of

other employees guilty of the same misconduct.]

(3) The personal or private circumstances of the employee that bear upon the

substantive fairness of the dismissal. [This includes, matters such as length

of service, the absence of any disciplinary history and the harshness of the

consequences of dismissal for the employee and his or her dependents.]

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[43] The determination of whether there was a “valid reason” proceeds by reference to

the matters in category (1) and occurs before there is a consideration of what Northrop

J described as “substantive fairness” from the perspective of the employee. Matters in

categories (2) and (3) are then properly brought to account in the overall consideration

of the whether the dismissal was “harsh, unjust or unreasonable” notwithstanding the

existence of a “valid reason”.

[47] In Bostik (Australia) Pty Ltd v Gorgevski (No 1) (1992) 41 IR 452 Sheppard and

Heerey JJ observed (at p 460):

“Employers can promulgate polices and give directions to employees as they see

fit, but they cannot exclude the possibility that instant dismissal of an individual

employee for non-compliance may, in the particular circumstances of an

individual case, be harsh, unjust and unreasonable.”

[48] Thus, a finding that an employee has failed to comply with policies and procedures

does not mean that a dismissal is not harsh, unjust or unreasonable. The Commission

has consistently applied the proposition that instant dismissal of an employee for noncompliance with his or her employer’s policies may, in the particular circumstances of

an individual case, be harsh, unjust and unreasonable: Kangan Batman TAFE v Hart

[2005] PR958003, Ross VP, Kaufman SDP and Foggo C at para [51]; Fearnley v Tenix

Defence Systems Pty Ltd [2000] Print S6238, Ross VP, Polites SDP and Smith C

(Fearnley) at [61]); Atfield v Jupiters Ltd (2003) 124 IR 217 (Jupiters) at [12]-[13].”

[99] There are four other relevant matters to consider.

[100] First, Sydney Tools should never have alleged, let alone stated in Mr Davidson’s

termination letter, that he engaged in theft. Theft is a very serious allegation. It should not be

made lightly or without a proper investigation. Dismissing an employee for theft can have a

significant impact on the employee and their ability to obtain alternative employment. In the

present case, Mr Davidson borrowed the ladder from his workplace on 19 March 2023 with the

full knowledge of at least Mr Gillespie and Mr Worthy. They knew that he intended to return

the ladder to the Gosford store the next morning. Further, the Store Manager, Mr Lloyd, also

knew on 19 March 2023 that Mr Davidson had borrowed the ladder because Mr Worthy told

him so.38 True to his word, Mr Davidson returned the ladder to the Gosford store before it

opened on the morning of 20 March 2023. Despite those known facts, at about 4pm on 20

March 2023 Sydney Tools dismissed Mr Davidson for theft.39 At no stage did Mr Davidson

have, or display, an intention to permanently deprive Sydney Tools of their ownership of the

ladder. It is not, and never was, even arguable that Mr Davidson stole the ladder from Sydney

Tools. This conduct on the part of Sydney Tools adds weight to Mr Davidson’s contention that

his dismissal was unfair.

[101] Secondly, the gravity of the misconduct in which Mr Davidson engaged when he

borrowed the ladder was disproportionate to his dismissal, even when regard is had to the

previous warning Mr Davidson received on 2 August 2022. The evidence before the

Commission established a practice whereby employees of Sydney Tools do not comply with

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the requirement in the internal theft part of the Security Policy to “send an email to

security@sydneytools.com, controlroom@sydneytools.com.au, cc your manager” before

helping a customer to carry stock to their car. However, I consider this to be quite different

from the obligation in the same part of the policy to ensure that stock does not leave the store

unless it is accompanied by appropriate paperwork. In the case of the sales employee assisting

a customer to take a purchased item to their car, the customer has paperwork in the form of a

receipt for their purchase. In contrast, Mr Davidson did not have any paperwork when he

borrowed the ladder from the store. Accordingly, I do not consider this to be a mitigating factor

when considering the seriousness of Mr Davidson’s conduct.

[102] Although Mr Davidson breached policy and procedure on 19 March 2023, it is clear

from the statements made to Mr Davidson by both Mr Elvis Bey and Mr Titta that he would

have been given permission to borrow the ladder if he had made the request to management on

19 March 2023.40 Mr Davidson made an error of judgment in the heat of the moment because

he wanted to help his daughter who had locked her keys in her apartment on a Sunday afternoon.

He should have paused and considered which managers he could call to obtain permission to

borrow the ladder, rather than asking a junior sales employee if he could borrow the ladder after

he was told that Mr Titta was sick and not at work. But Mr Davidson was not dishonest. Nor

did he do anything to cause financial or other damage to Sydney Tools. His conduct warranted

a warning but dismissal was a disproportionate response. This adds significant weight to Mr

Davidson’s argument that his dismissal was harsh.

[103] Thirdly, it is relevant that I have regard to the fact that Mr Davidson was summarily

dismissed as part of my overall assessment concerning the harshness of his dismissal. The

proportionality of the summary nature of Mr Davidson’s dismissal must be weighed against the

gravity of his misconduct.

41

[104] In Sharp v BCS Infrastructure Support Pty Ltd,

42 a Full Bench of the Commission

discussed the question of whether particular conduct by an employee warranted their summary

dismissal as an “other relevant matter” within the meaning of s 387(h) of the Act (references

omitted):

“[33] The relevance of the definition of “serious misconduct” in reg.1.07 to the matter

is also, with respect, obscure. Section 12 of the Act contains a definition of “serious

misconduct” for the purposes of the Act which simply cross-refers to reg.1.07. Apart

from s.12 itself, the expression “serious misconduct” is used in only three places in the

Act. In s.123(1)(b), a dismissal for serious misconduct is a circumstance in which the

notice and redundancy entitlement provisions of Pt 2-2 Div 11 are not applicable; in

s.534(1)(b) a dismissal for serious misconduct is one to which the requirements for

notification and consultation in Pt 3-6 Div 2 do not apply; and in s.789(1)(b) a

dismissal for serious misconduct is one in relation to which the requirements

established by Pt 6-4 Div 3 for notification and consultation do not apply. The

expression “serious misconduct” is not used anywhere in Pt 3-2, Unfair Dismissal, of

the Act. Section 392(3) requires the Commission, in relation to the award of

compensation for an unfair dismissal, to reduce the amount that it would otherwise order

by an appropriate amount where it is “satisfied that the misconduct of a person

contributed to the employer’s decision to dismiss the person”. However, it is clear that

conduct may constitute “misconduct” for the purpose of s.392(3) without necessarily

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being “serious misconduct”. The expression is used in the Small Business Fair

Dismissal Code, but that had no application in this case (and it is at least highly doubtful

in any event whether the reg.1.07 definition applies to the Small Business Fair Dismissal

Code). Reg.1.07 therefore had no work to do in the application of the provisions of Pt

3-2 to the circumstances of this case.

[34] It may be accepted that 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). In that context, a

conclusion that the misconduct was of such a nature as to have justified summary

dismissal may also be relevant. Even so, it is unclear that this requires a consideration

of whether an employee’s conduct met a postulated standard of “serious misconduct”.

In Rankin v Marine Power International Pty Ltd Gillard J stated that “There is no rule

of law that defines the degree of misconduct which would justify dismissal without

notice” and identified the touchstone as being whether the conduct was of such a grave

nature as to be repugnant to the employment relationship. “Serious misconduct” is

sometimes used as a rubric for conduct of this nature, but to adopt it as a fixed standard

for the consideration of misconduct for the purpose of s.387(h) may be confusing or

misleading because the expression, and other expressions of a similar nature, have been

considered and applied in a variety of contexts in ways which are influenced by those

contexts. In McDonald v Parnell Laboratories (Aust) Pty Ltd Buchanan J said:

“[48] The terms ‘misconduct’, ‘serious misconduct’ and ‘serious and wilful

misconduct’ are often the subject of judicial and administrative attention as

applied to the facts of particular cases but there is relatively little judicial

discussion about their content and meaning. Naturally enough, when the term

‘serious misconduct’ is under consideration an evaluation of what conduct

represents ‘serious’ misconduct is influenced by the (usually statutory) setting

in which the phrase must be given meaning and applied. Frequently, for

example, the question at issue is whether an employee is disentitled by reason

of his or her conduct to a statutory entitlement (eg. in New South Wales, where

Ms McDonald was employed, see Long Service Leave Act 1955(NSW) s

4(2)(a)(iii); Workers Compensation Act 1987(NSW) s 14(2).”

[35] In the Decision, the Vice President, correctly, did not attempt to address the parties’

submission concerning “serious misconduct” in the context of his consideration of

whether there was a valid reason for the dismissal, but only as a relevant matter under

s.387(h). His findings at paragraph [55] and [56] that Mr Sharp’s conduct was “serious

misconduct” was, we consider, responsive to the submission of BCS noted in the first

sentence of paragraph [52] that “the Applicant’s conduct constituted serious misconduct

justifying immediate dismissal”. That is, “serious misconduct” was used as a shorthand

expression to describe misconduct of a nature that justified summary dismissal. A

finding of that nature was a matter which was open to be taken into account as relevant

under s.387(h) because it involved an assessment of the seriousness of the conduct in

question.”

[105] Mr Davidson’s conduct did not warrant his dismissal, let alone summary dismissal. His

conduct on 19 and 20 March 2023 was not of such a grave nature as to be repugnant to the

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employment relationship. Nor was his conduct incompatible with the employment in which he

had been engaged by Sydney Tools. He made a one-off error of judgment by failing to follow

policy and procedure. He did not engage in theft or any act of dishonesty. He was aware of

other employees borrowing stocked items from the Gosford store. For example, Mr Davidson

was aware that the previous Gosford Store Manager had borrowed a chainsaw from the Gosford

store while he went camping for the weekend. Mr Davidson’s error was not to call another

manager for permission once he became aware that Mr Titta was not at work on the afternoon

of Sunday, 19 March 2023. The evidence before the Commission demonstrates that the ladder

was voluntarily returned to the Gosford store by Mr Davidson on the morning of 20 March

2023 and the ladder was not damaged or discounted on account of the fact that it had been

briefly used (extended against a wall) by Mr Davidson.

[106] Fourthly, the process followed by Sydney Tools prior to dismissing Mr Davidson was

procedurally unfair because it did not involve any proper or fair investigation into the serious

allegation of theft before the decision was made to summarily terminate Mr Davidson’s

employment. A fair investigation would have involved giving Mr Davidson a reasonable

opportunity to explain in detail what had happened and why he had acted in the way that he did

when he borrowed the ladder from work. If Mr Davidson had been provided with such an

opportunity, there is no doubt that he would have explained in detail the difficult situation his

daughter faced on the previous afternoon, provided details of his discussions with both Mr

Gillespie and Mr Worthy on the previous day and his request to speak to Mr Titta, suggested

that Sydney Tools view the available CCTV footage to check his account of what happened on

the previous day when he attended the store to borrow the ladder, and explained what happened

when he took the ladder to his daughter’s apartment. If Sydney Tools had investigated those

matters in a fair and balanced manner, it would not, acting reasonably, have concluded that Mr

Davidson engaged in theft or that his conduct warranted more than a warning to follow the

correct policy and procedure.

Conclusion on whether a harsh, unjust or unreasonable dismissal

[107] After considering each of the matters specified in section 387 of the Act, my evaluative

assessment is that Sydney Tools’ dismissal of Mr Davidson was not unjust, but it was harsh and

unreasonable.

[108] Sydney Tools had a valid reason for Mr Davidson’s dismissal, notified him of the reason

for his dismissal, and gave him a very brief opportunity to respond to the reason. For those

reasons, I have concluded that the dismissal was not unjust.

[109] However, the dismissal, let alone summary dismissal, was disproportionate to the

conduct in which Mr Davidson engaged, Sydney Tools did not conduct a proper or fair

investigation before deciding to dismiss Mr Davidson, and it should never have dismissed him

for theft. It follows, in my assessment, that Mr Davidson’s dismissal was harsh and

unreasonable.”

 

Davidson v Sydney Tools [2023] FWC 1980 delivered 8 August 2023 per Saunders DP