Unfair dismissal, small business and serious misconduct

The following extract from a recent Fair Work Commission decision is a good analysis of the relationship between termination of employment by small businesses and serious misconduct.

“In this case the applicant was dismissed for reason of alleged serious misconduct and that part of the SBFD Code relating to summary dismissal has required examination and application to the particular circumstances surrounding the dismissal of the applicant. The first sentence of the SBFD Code is particularly relevant and is repeated: “It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal.”

In this instance, upon termination of employment, the employer paid the applicant an amount equivalent to two weeks’ notice. However, apart from this payment, the dismissal contained all of the elements usually associated with a summary dismissal. In particular, the reasons for the dismissal involved serious misconduct and the implementation of the dismissal was summary in nature. That is, the applicant was advised of his dismissal without there being any contemplation of further explanation or defence by way of a show cause process.

The applicant’s solicitor argued that because there had been payment of a period of notice, the dismissal was not a summary dismissal and should not be assessed against those terms of the SBFD Code that are relevant to summary dismissal. In my view this proposition would impose an unrealistic and unintended rigidity on any application of the SBFD Code.

A dismissal which is for reason of serious misconduct and which might appropriately justify termination without notice or warning, should still be properly assessed as a summary dismissal notwithstanding that an employer, for whatever reason, decided to make payment of an amount in respect to a putative period of notice. Broadly speaking, the SBFD Code establishes requirements for dismissal without notice or warning which represent a less stringent evidentiary basis upon which any serious misconduct is established when compared to the evidentiary basis that applies for a medium/large business. Similarly, the SBFD Code sets out less stringent requirements for other dismissals than those which apply to a medium/large business.

That part of the SBFD Code which deals with summary dismissal is concerned with the evidentiary basis upon which a small business employer establishes serious misconduct. While the other dismissals part of the SBFD Code introduces a less stringent set of procedural requirements than applies to a medium/large business. The requirements that are mentioned in the SBFD Code as being relevant to cases of other than summary dismissal will invariably have little or no relevance to circumstances where a dismissal is made without notice or warning and is based upon serious misconduct. It would be contrary to the spirit and intent of the SBFD Code if, when a small business employer decided to pay an amount in lieu of notice in respect to a dismissal for serious misconduct, it was required to satisfy the procedural requirements of the other dismissals part of the SBFD Code.

Therefore, although the dismissal of the applicant was not, in a strict legal sense, a summary dismissal because an amount was paid in lieu of notice, in all other respects the dismissal was manifestly in the character of a summary dismissal. In particular the dismissal was, in the employer’s view, for reasons of serious misconduct justifying the immediate termination of employment invoked at the earliest opportunity. Consequently, it is appropriate to apply that part of the SBFD Code which relates to summary dismissal to the circumstances of the dismissal of the applicant.

There are three primary operative components contained in the first sentence of the summary dismissal part of the SBFD Code, which, if in combination are satisfied, have the effect of rendering any summary dismissal to be fair. The first component involves the existence of a belief on the part of the employer. The second component requires that the belief of the employer was made on reasonable grounds. The third component requires that the employer’s belief be that the conduct was sufficiently serious to justify immediate dismissal.”

Zotti v Hall Industries Australia Pty Ltd (2018) FWC 5620 delivered 11 September 2018 per Cambridge C