Unfair dismissal for employer policy breaches

Although the law and the Fair Work Commission will respect employer policies when they are lawful and reasonable, and a serious breach of a legitimate policy by an employer may constitute a valid reason for dismissal,  the Commission in unfair dismissal cases by and large takes a pragmatic approach to the issue and not every breach of every employer policy will be a valid reason for dismissal, as is clear in the following extract from a Commission unfair dismissal decision.

“Her submissions also make reference to the decisions in Hemmingson v Note Printing Australia Limited    [2017] FWC 3063 and O’Brian v MSS Security Pty Ltd [2016] FWC 105. It is submitted that they stand for the proposition that a one-off error of judgement, or an act of carelessness, is not sufficient to constitute a valid reason for dismissal, even in circumstances involving zero tolerance……………………….71] This matter involves what can be described as an unfortunate set of circumstances. On the one hand it appears that Ms Snell was primarily motivated by a desire to avoid any unnecessary inconvenience for the customer involved. There is nothing to suggest that she was in any way motivated by personal gain or intended to act to the detriment of the Bank. However, it is put in response that she has acted in breach of policy and procedure in circumstances where the Bank has emphasised the importance of adhering to these requirements, regardless of any inconvenience to the customer.

[72] However, I now turn to consider whether Ms Snell can be said to have been unfairly dismissed in the sense that her dismissal was “harsh, unjust or unreasonable” having particular regard to each of the matters in s.387 that I am required to take into account.

[73] It is noted at the outset that the circumstances in which an employee’s dismissal can be considered to be “harsh, unjust or unreasonable” have been considered in a number of previous decisions. The decision in Byrne v Australian Airlines Ltd 15 is often cited in this context. The joint judgement of McHugh and Gummow JJ concluded:

“…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.” 16

[74] The decision of the Full Bench of Fair Work Australia in L. Sayer v Melsteel Pty Ltd 17 also provides guidance about the Commission’s role in regard to each of the matters in s.387 that must be taken into account in determining whether an employee’s dismissal was “harsh unjust or unreasonable.” The Full Bench concluded:

“Where the applicant does present a case, in the ordinary course each of the criteria in s.387 which is capable of being relevant on the facts emerging at the hearing must be taken into account.” 18

[75] I turn now to deal with each of the considerations in s.387, and those authorities to the determination of this matter.

(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)

[76] Before coming to the particular circumstances involved in this matter it is noted again that previous decisions have had regard to what is required in order to conclude that there was “a valid reason for the dismissal related to the person’s capacity or conduct.” The judgement of Northrop J in Selvachandran v Peteron Plastics Pty Ltd 19 is often referred to in this context. His Honour came to the following conclusions:

“The reasons of an employer for terminating the employment of an employee are solely within the knowledge of the employer. The employer may state a reason but that reason need not be the actual reason nor need it be the only reason. This is the rationale for the onus of proof provisions contained in s 170EDA.

Section 170DE(1) refers to ‘‘a valid reason, or valid reasons’’, but the Act does not give a meaning to those phrases or the adjective ‘‘valid’’. A reference to dictionaries shows that the word ‘‘valid’’ has a number of different meanings depending on the context in which it is used. In the Shorter Oxford Dictionary, the relevant meaning given is: ‘‘2. Of an argument, assertion, objection, etc; well founded and applicable, sound, defensible: Effective, having some force, pertinency, or value.’’ In the Macquarie Dictionary the relevant meaning is ‘‘sound, just, or well founded; a valid reason’’

In its context in s 170DE(1), the adjective ‘valid’ should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s 170DE(1). At the same time the reason must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must ‘be applied in a practical, commonsense way to ensure that’ the employer and employee are each treated fairly…” 20

[77] In Parmalat Food Products Pty Ltd v Wililo 21 the Full Bench also concluded that:

“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 a 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.” 22

[78] The Full Bench majority in B, C and D v Australian Postal Corporation T/A Australia Post 23 (“Australian Postal Corporation”) also provides a useful summary of the approach to be taken by the Commission in weighing the factors to be considered:

“Reaching an overall determination of whether a given dismissal was “harsh, unjust or unreasonable” notwithstanding the existence of a “valid reason” involves a weighing process. The Commission is required to consider all of the circumstances of the case, having particular regard to the matters specified in s.387, and then weigh:

(i) the gravity of the misconduct and other circumstances weighing in favour of the dismissal not being harsh, unjust or unreasonable;

against

(ii) the mitigating circumstances and other relevant matters that may properly be brought to account as weighing against a finding that dismissal was a fair and proportionate response to the particular misconduct.” 24

[79] It is also clear that the reason must be valid when viewed objectively. It is not sufficient that the Employer believed it had a valid reason for termination. This was made clear in the Full Bench decision in Rode v Burwood Mitsubishi 25 when it stated:

“…the reason for termination must be defensible or justifiable on an objective analysis of the relevant facts. It is not sufficient for an employer to simply show that he or she acted in the belief that the termination was for a valid reason.” 26

[80] These authorities make clear that the existence of a “valid reason” is often the most important consideration of the matters in s.387 that the Commission must have regard to. It is also clear that a “valid reason” must be one that is “sound defensible and well founded” as opposed to one that is capricious, spiteful or prejudiced. It must also be valid in the context of both the employee’s capacity or conduct, and the operational requirements of the business. The test must also be applied in a practical, common sense way to ensure the parties are treated fairly in circumstances where each has rights and privileges, but duties and obligations as well. I have sought to adopt the approach of these authorities in coming to a decision in this matter.

[81] The submissions and evidence relied upon by each party in this context have been set out in detail already and are not restated now. In summary, Ms Snell submits that there was no valid reason for her dismissal in the sense that the grounds relied on can be said to be sound, defensible or well-founded based on an objective analysis of the relevant facts. There had been no previous issues concerning her capacity or conduct during the time that she was employed by the Bank, and she was not aware that her conduct could result in disciplinary action, including her employment being terminated. She was also acting in accordance with what she had been told by a member of the iSupport team, and she was entitled to act in accordance with that advice and direction. In addition, if the Financial Crimes team was genuinely concerned about what had occurred it would not have waited for more than a month to raise the matter with her after being first informed about it.

[82] The Bank submits in response that Ms Snell’s actions in copying and altering and then submitting an Account Opening form that had been previously signed by a customer constituted “internal fraud” in terms of its Financial Crimes Policy, and justified her dismissal. It emphasises the importance of the account opening application, signed by the customer, to the Bank’s relationship with the customer. It also expects high standards of honesty and integrity from its employees, particularly at a time when the financial services industry is under enhanced scrutiny as a consequence of the recent Royal Commission.

[83] It also submits that Ms Snell must have been aware that she was acting in breach of the relevant policy and procedure, given the promulgation of those policies and procedures through various training and other online tools. It also submits that her actions demonstrated that she was aware she was acting in breach of policy and procedure. In this context it rejects the submission that her actions can be justified because she was acting on the basis of a direction from the iSupport team member.

[84] I now turn to consider whether the Bank can be said to have had a valid reason to dismiss Ms Snell having regard to the relevant evidence and submissions. The first thing that can be said is that the circumstances that unfolded originated from a mistake made by Ms Snell. When she initially met with the customer, she was told that she wanted to open two new accounts. However, the account opening form that was signed by the customer, and then submitted by Ms Snell, only contained details of one account. Ms Snell was subsequently made aware of this mistake when the customer contacted her sometime later to ask why she could not access the second account.

[85] Ms Snell was unable to find anything in iContact that provided any guidance about what to do in this situation and decided to contact the Bank’s iSupport team. She was in regular contact with the team members when she needed advice and assistance, and they were acknowledged to be a “higher authority” that staff in the Bank could seek advice from, when necessary. The content of this conversation is important and the transcript has been set out in full at an earlier point in this decision. Ms Snell submits that she acted in accordance with the advice received from the iSupport team member in that conversation, and her dismissal in these circumstances represents a form of entrapment. The Bank has a very different view. It submits that Ms Snell sought to use iSupport to legitimise a course of action that she knew to be in breach of policy. It also submits that the content of the conversation makes clear that she was not directed to act in a certain way, but instead badgered the iSupport team member in an attempt to gain endorsement for what she was proposing.

[86] The transcript of the conversation indicates that Ms Snell explained at the outset what had occurred, and the mistake she was looking to rectify. The iSupport team member initially responds by indicating that she will need to submit another application form because a second account could not be added to the original form without the customer again signing the application form. Ms Snell then asks the team member whether she could contact the Accounts Opening team to ask whether she could do what she proposed, particularly as the initial account had only been only opened relatively recently. Ms Snell is then put on hold while the iSupport team member apparently makes contact with the Accounts Opening team.

[87] When the conversation resumes Ms Snell is again told she will need to send in a new application, however, her immediate reaction is again to question this advice, given that the first account was only opened in the previous week. She also asks whether the customer will need to sign the new application form and is told, “Well technically yes but you could try and see how you go with the existing one.”  27 The iSupport team member then indicates that she can’t really say anything further and that the lodging of “…a whole new application is what I need to say28.” However, she continues to add, “Send through another request to have another account opened and then it’s up to you which application you send through whether that be a brand new one as it should be because the customer is signing for it or whether you want to amend the current one29.” Ms Snell then responds by saying that this is what she will do, and that she will also attach a note indicating that she forgot to include the second account. The iSupport team member then concludes by saying, “Yeah, yep – see how you go that way,” and the conversation ends.

[88] A number of things can be said about this conversation. Firstly, it appears that Ms Snell is attempting to get approval for a course of action that would involve the least inconvenience to the customer, as she would not have to come back into the Branch to sign a new application form. It also appears that it might have enabled the account to be opened more quickly, again providing a benefit to the customer. As indicated, she appears to have been motivated by a desire to avoid any additional inconvenience to the customer, and there is no suggestion that she was in any way motivated by personal gain, or by any other ulterior motive. However, that of itself does not necessarily absolve her from responsibility for what occurred.

[89] Secondly, in attempting to avoid any further inconvenience for the customer it is also clear that Ms Snell was endeavouring to push the boundaries in terms of what was required. This is evidenced by the fact that after outlining what the problem was she is immediately told by the iSupport team member that she will need to submit another application, and that it was not appropriate to add further details to the original application form. However, Ms Snell is not prepared to immediately accept this advice and asks the team member to query it with the Accounts Opening team, and presses on more than one occasion for this to be done. The team member finally agrees to do this and there is then a break in the conversation while she apparently makes this enquiry. When the conversation resumes Ms Snell is again told she will need to submit another application, but again questions whether the customer will need to sign this application form when she asks, “Does she have to sign?”

[90] While it is not suggested that Ms Snell was directed by the iSupport team member to take a particular course of action I am satisfied that she can be said to have been aided and abetted from this point by the responses provided by the team member. This is evidenced by the team member’s response to the question “Does she have to sign,” when she replies, “Well technically yes but you could try and see how you go with the existing one.” A short time later the team member states, “Yeah so basically a whole new application is what I need to say,” but she then adds, “Send through another request to have another account opened then its [sic] up to you which application you send through whether that be a brand new one as it should be because the customer is signing for it or whether you want to amend the current one.” Ms Snell then responds by stating, “Oh, OK and I’ll just leave a note there so um yeah that the ledger was forgotten.” The team member then replies, “Yeah, yep – see how you go that way,” before the conversation ends with Ms Snell concluding, “I shall do that.”

[91] As indicated already it is evident that Ms Snell is pushing the team member during the course of this conversation to try and get a particular outcome. However, it is also clear that the iSupport team member had various options to her in response to these entreaties. For example, she could have simply held the line and maintained, as she should have done, that Ms Snell was required to have the customer come into the Branch and sign another application form. However, as the conversation progresses, she is clearly giving tacit support to other suggested possibilities before she concludes, “Yeah, yep – see how you go that way.” It is apparent that both parties are carefully avoiding making any direct statements but saying just enough of what the other wants to hear.

[92] The following conclusions can be drawn from these exchanges. Firstly, I am satisfied that Ms Snell’s intention in making the call to iSupport was to try and obtain endorsement for something she knew was pushing the boundaries in terms of what was acceptable. Secondly, she did press the iSupport team member to support this outcome, despite being told on more than one occasion what she needed to do. However, the iSupport team member was at fault in eventually giving ground and responding in the way she did. Finally, while I am satisfied that Ms Snell was not directed by the iSupport team member, various suggestions were flagged with her during the course of their conversation, and Ms Snell was finally given what might be described as tacit support and encouragement for what she was proposing, when she is told “Yeah, yep – see how you go that way.”

[93] Ms Snell clearly felt at this point that she had received endorsement for what she proposed from someone she clearly viewed as a more senior authority within the Bank and was reassured as a consequence in terms of what she proposed. When the actions of Ms Snell and the iSupport team member are examined and reviewed they can both be said to have been motivated by similar considerations. Ms Snell, on the one hand, was trying to do the best for one of the Bank’s external customers by putting her to as little inconvenience as possible, while the iSupport team member was endeavouring to accommodate one of the Bank’s internal customers in the way that customer wanted.

[94] It also follows from the conclusion I have come to about the involvement of the iSupport team member that she should also bear a degree of responsibility for what occurred. Two things follow from this. Firstly, the two employees were treated in dramatically different ways, given that Ms Snell was summarily dismissed but the iSupport team member was simply given a verbal warning. While it is accepted that Ms Snell initiated the enquiry, I am not necessarily satisfied that this absolves the team member from responsibility. Secondly, the person that finally made the decision to terminate Ms Snell’s employment was not aware of the precise nature of the involvement of the iSupport team member at the time she made the decision to dismiss Ms Snell. Ms Cakebread only reviewed the transcript of the conversation sometime after Ms Snell was dismissed. Ms Cakebread indicated in her evidence that her decision would not have been any different if she had been aware of the conversation at the time, but without being critical of her it is difficult to understand what else she could say at that point. She also justified the differential treatment of the two employees on the basis that the iSupport team member had been frank and open in her responses about what had occurred and had apologised. However, Ms Snell’s responses were arguably of a similar nature.

[95] The next issue that needs to be considered in terms of “valid reason” is whether Ms Snell was aware, or should have been aware, that what she did was in breach of the Bank’s policy and procedure. The Bank’s submits that she should have been aware, given the training and other information and advice provided to all of its employees. It also emphasises that this was not a minor matter, and the account opening application form signed by the customer underpins the nature of the contract entered into by the Bank and its customer. It also refers, in particular, to the fraud awareness training provided to Ms Snell in a module delivered in November 2018, and to the content of an email circulated to all staff in late 2017, which specifically made reference to the requirement to follow policy and procedure, regardless of whether that resulted in any inconvenience to the customer. It submits that the fact that Ms Snell was motivated by a desire to try and avoid any inconvenience to the customer was irrelevant. The policy was instead clear, and she deliberately embarked on a course of action that was in breach of that policy when she decided to falsify and submit an altered document.

[96] It also refers to the telephone conversation with the iSupport team member and submits that in endeavouring to gain approval for what she was proposing Ms Snell was acknowledging that she was intending to act in breach of the Bank’s policy.

[97] Ms Snell submits in response that she had participated in around ninety-nine training programs during the time she was employed and could not be expected to recall or be across the detail of all that was involved. As indicated already she also rejects the Bank’s submission about why she contacted iSupport and submits that she only did so after she was unable to determine how to proceed after consulting iContact. She submits that she was simply following the appropriate procedure by seeking advice from a higher authority.

[98] The Bank finally relies on Ms Snell’s responses during the interview on 11 April in support of it having a valid reason to terminate her employment. It acknowledges that she was emotional and upset during the course of the interview. However, it also submits that she was evasive at times and less than candid in some of her responses. Ms Snell rejects these submissions and submits instead that she was so upset at the time that she did not have a proper understanding of what was being put to her, and this impacted on the way in which she responded. This was exacerbated by the fact she had not been informed about the precise details of what was to be discussed prior to the interview taking place.

[99] The transcript of the interview makes clear that Ms Snell was given no indication at the outset about the precise nature of the circumstances involved. It begins instead with what might be described as some disarming small talk presumably designed to make her feel more relaxed and at ease. She is then asked to confirm that she has participated in various training modules. At this point she is still not aware about the precise nature of the particular circumstances involved. This line of questioning appears instead to be intended to obtain admissions, and to build the case against her, prior to her being aware of the precise nature of the allegations. She is then finally told about the identity of the particular customer involved. While she is able to recall the customer, and the fact that she omitted to include the details about the second account on the original application form, she is less sure about some of the other detail concerning what then occurred. However, the transcript indicates that she endeavours to recall as much as she can, and appears to answer the questions asked of her in an open and candid way. She also explains why she contacted iSupport, despite acknowledging that she was aware of the relevant policy and procedure. She also indicates on more than one occasion that she was having difficulty recalling some of the detail involved, given the passage of time, and the number of different matters staff in the Branch are required to deal with. It is also clear that she was very upset and emotional during the course of the interview and this undoubtedly contributed to her difficulties in responding.

[100] One matter, in particular, highlights the extent of Ms Snell’s confusion and general state of mind at this time. Her recall of the conversation with the iSupport team member was that she had been told that she would be required to have a new form signed by the customer. However, she omitted to make mention of the discussion about the other possibilities that were canvassed as their conversation progressed. It is not clear why she failed to make mention of this in the interview, because it provided an explanation about why she took the action that she did, but it was presumably because of how upset and confused she was at the time.

[101] I am satisfied that the failure of the Bank to be aware of the precise nature of the conversation with the iSupport team member before taking the action to dismiss Ms Snell is of particular significance in considering whether it had a valid reason to dismiss her, because it explains, in large part, why she took the action that she did. A lack of awareness about the fact that calls to iSupport were recorded was put forward by the Bank as the reason why the transcript of the conversation was not reviewed. However, this explanation significantly undermines the claim that a thorough investigation took place before the decision was made to dismiss Ms Snell. It also suggests the application of a double standard when compared to the strict approach taken towards her conduct, and a sense that the Bank’s shortcomings can be overlooked but those of its employees cannot.

[102] In coming to a decision about whether the Bank had a valid reason to terminate Ms Snell’s employment the authorities make clear that the Commission does not stand in the shoes of the employer. It is instead required to determine whether, on the basis of the available evidence, the circumstances justified the decision to dismiss the employee. I am not satisfied, in conclusion, that those circumstances existed in this case. I have had particular regard to the following matters in coming to this conclusion. Firstly, the dramatically different treatment by the Bank of Ms Snell and the iSupport team member, despite both being responsible for what occurred. Secondly, the nature of the manner in which the interview on 11 April was carried out. Thirdly, the Bank’s failure to be aware of all of the relevant circumstances including, in particular, the precise nature of the telephone conversation between Ms Snell and the iSupport team member on 4 March 2019.

[103] The Bank’s reliance on Ms Snell having been trained in regard to the relevant policies is also noted. As indicated, it is accepted that any organisation needs to ensure that its employees are aware of what is expected of them so that the organisation and its customers are protected, as far as possible, from any potential exposure. This is obviously of particular importance in an organisation operating in the financial services industry. However, while the Bank obviously wants to be seen to be doing everything possible to protect itself, and its customers, it is difficult to comprehend how any of its employees can be expected to absorb and retain the content of the apparently ninety-nine different forms of training that Ms Snell was required to participate in during the period of three and a half years that she was employed. In summary, I am not satisfied that the fact that this training was provided necessarily means that the Bank is absolved from all responsibility when mistakes occur, and that its employees instead bear that responsibility.

[104] Finally, it is difficult to conclude in all the circumstances that the termination of Ms Snell’s employment was a proportionate response. For example, if submitting the application form in the way that she did was considered to be such a significant matter then it is unclear why it took more than a month for this matter to be brought to her attention, despite the immediate alert provided by the Accounts Opening team. By then the processes in place had worked to ensure that a fresh application form, signed by the customer, had been submitted as required and the second account was now operational. All of this had been done by Ms Snell in accordance with the various advice she received at different times.

[105] As indicated, the Bank has sought to portray what occurred as a serious breach of policy that justified Ms Snell’s instant dismissal, despite the fact she had been employed for more than three and a half years and had been promoted during this time. However, I am satisfied that it is also possible to view what occurred in a very different light. Ms Snell clearly made an initial mistake in not including the details of the second account that the customer wanted to have opened on the original application form. She then sought advice through the Bank’s internal support system about what to do, and a suggested approach was developed. However, this was subsequently rejected by the specialised Account Opening team, and so Ms Snell arranged for the customer to come into the Branch again to sign another application form. This occurred, and the application form was again submitted and the account opened. It is difficult to conclude in these circumstances that the Bank had a valid reason to terminate Ms Snell’s employment………….Conclusion

 

[115] I am satisfied, in conclusion, that Ms Snell was unfairly dismissed by the Bank in the sense that her dismissal was harsh, unjust or unreasonable. In coming to this decision I have had particular regard to the conclusions reached in regard to s.387(a) and (c). I now turn to consider what is appropriate by way of remedy.”

Snell v Bendigo and Adelaide Bank Limited (2019) FWC 8050 delivered 18 December 2019 per- Gregory C