The issue whether there is a valid reason for the dismissal of an employee whose employment is covered by the Fair Work Act is one of the most important tests which the Fair Work Commission uses in an unfair dismissal case. It is not the only issue, because a dismissal may still be found to be relevantly unfair even though there was a valid reason but it is vitally important.
Here is the test.
“Was there a valid reason for the dismissal related to the Applicant’s capacity or conduct?
In order to be a valid reason, the reason for the dismissal should be “sound, defensible or well founded” 76 and should not be “capricious, fanciful, spiteful or prejudiced.”77 However, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer.78
Where a dismissal relates to an employee’s conduct, the Commission must be satisfied that the conduct occurred and justified termination. 79 The question of whether the alleged conduct took place and what it involved is to be determined by the Commission on the basis of the evidence in the proceedings before it. The test is not whether the employer believed, on reasonable grounds after sufficient enquiry, that the employee was guilty of the conduct which resulted in termination.80”
Harley v Salena Estate Pty Ltd –  FWC 7842 – 19 November 2019 – Platt C