Unfair dismissal, valid reason and out of hours conduct

This extract from an appeal decision of the Fair Work Commission deals with an important legal issue in unfair dismissal cases, namely  the relevance of out of hours conduct to the termination of an employee’s employment.

“The approach to determining whether there is valid reason for dismissal

[114] The principles relevant to consideration under s.387(a) of whether there is a valid reason for dismissal, are well established. Relevantly, a valid reason is one that is sound, defensible and well founded, and not capricious, fanciful, spiteful or prejudiced. When the reason for dismissal is based on the misconduct of the employee, the Commission must, if it is in issue in the proceedings, determine whether the conduct incurred and what it involved. The conduct must be such that dismissal is a sound, defensible and well-founded reaction. In undertaking this consideration, the Commission is required to determine whether the employer had a valid reason to dismiss an employee based on the evidence before it and is not restricted to the reasons relied on by the employer at the time of the dismissal.

[115] As the conduct which resulted in the Respondent’s dismissal occurred outside the workplace and out of hours, it was necessary for the Deputy President to apply the principles for assessing whether such conduct was a valid reason for dismissal. To properly consider whether the Respondent’s out of hours conduct was a valid reason for dismissal, the Deputy President was required to make findings about the nature of the conduct and its relationship to the inherent requirements of the Respondent’s role as a Category 1 Safety Critical Worker pursuant to the National Standard for Rail Safety Workers.

Out of hours conduct – Rose v Telstra

[116] The approach to considering whether out of hours conduct is a valid reason for dismissal was set out in the decision of Vice President Ross (as his Honour then was) in Rose v Telstra. 69 That decision has been extensively applied in decisions of the Commission dealing with dismissal on the basis of out of hours conduct, and was recently restated in the decision of a Full Bench in Newton v Toll Transport Pty Ltd.70 In Rose v Telstra, the authorities in relation to dismissal of an employee based on out of hours conduct were extensively considered. The facts in Rose v Telstra were that Mr Rose (an employee of Telstra) was dismissed because of his conduct in relation to an altercation with a work colleague, which occurred outside working hours, in hotel accommodation, in circumstances where both employees were working away from their homes and were being paid an accommodation allowance by their employer, Telstra. At the time of the incident, neither employee was wearing a Telstra uniform and they were not “on-call”. Telstra argued that the consequences of the altercation included damage to public property in circumstances where the hotel owner knew that the two persons involved were Telstra employees, which tarnished the reputation of the Company and brought it discredit within the small country town where the altercation occurred.

[117] After traversing the origins of the Anglo – Australian contract of employment, his Honour observed that: “The modern law of employment has its basis on contract not status. An employee’s behaviour outside working hours, will only have an impact on their employment to the extent that it can be said to breach an express or implied term of his or her contract of employment.” His Honour then referred to several cases to illustrate this point. It is instructive to consider those cases in some detail in the order they are dealt with in Rose v Telstra.

[118] The first was the decision of the High Court in Commissioner for Railways (NSW) v O’Donnelly. 71 In that case an employee who had been charged with manslaughter (unconnected with his employment) and subsequently acquitted, was suspended from duty without pay, while the charge was pending. The issue for determination was whether the employee had been duly suspended under s. 82 of the Government Railways Act, which allowed inter alia for dismissal or suspension of employees guilty of misconduct or breaking of any rule, by-law or regulation of the railway service, and whether that employee was entitled to his wages for the period. The Court held that the employee was not duly suspended in accordance with the relevant provision and was entitled to payment. The plurality (Rich, Dixon and McTiernan JJ) held that to suffer an arrest on a criminal charge does not, per se, fall within the category of “misconduct or breaking any rule, by-law or regulation of the railway service” so that the suspension was not pursuant to the relevant provision.72 Latham CJ observed that unless misconduct was found, no action under the provision could be taken against the employee.73 Dixon J said that to be the subject of a criminal charge is not misconduct, and that: “properly understood, the provision had no application where it is desired to remove the officer from duty pending the hearing of the criminal charge of which the head of the branch is not prepared to say the officer is guilty”. In that case, the relevant connection required to be established (and which was not established) was that the out of hours conduct met the definition of misconduct in the relevant statute.

[119] The next decision referred to in Rose v Telstra is that of Lawrence DP in HEF of Australia v Western Hospital, who made the following observation:

“The conviction of an individual for a criminal offence does not necessarily have any effect upon that person’s employment. The question of the relevance of a conviction or an employee’s alleged misbehaviour to the employee’s work should be considered in terms of whether or not the employee has breached an express or implied term of his or her contract of employment. Whether events occurring outside the actual performance of work will be relevant to the employment relationship will vary from case to case. For example, an accountant who has committed an act of dishonesty (for which he may have been charged and convicted) in the course of some activity outside his employment might be said to have breached a term of his contract of employment.” 74

[120] Reference was then made to the case of F.C. Shepherd & Co Ltd v Jerrom, 75 where it was held that if attendance at work for a significant period is precluded because an employee has been convicted of a serious offence and imprisoned, then the contract of employment may be brought to an end by the operation of law due to frustration. The decision of Staindl J in Hussein76 was also cited in Rose v Telstra. Hussein involved an employee of Westpac who was convicted of credit card fraud relating to another bank and therefore outside his work. It was observed in Rose v Telstra that depending on the circumstances, a conviction for a criminal offence arising from or out of work activities may lead to termination. In this respect, the following view of Staindl JR was cited:

“… a conviction on a drink-driving charge which occurred outside work hours would not be relevant to the employment of many people. However, it would be of critical relevance to a truck driver or taxi driver. It seems to me that an appropriate test is whether or not the conduct has a relevant connection to the employment.” 77

[121] In Hussein Staindl JR set out the passage from the decision of Lawrence DP in HEF of Australia v Western Hospital (above) together with the following additional passages from that decision:

“The contractual right of an employer to dismiss an employee summarily on the ground of serious and wilful misconduct is a right which is limited to cases where the misconduct has a relevant connection with the performance of his or her work as an employee. The position has been summarised by E I Sykes and H J Glasbeek, Labour Law in Australia, (1972), p 71 in the following terms:

‘In relation to criminal or quasi-criminal offences, it appears that commission of one or these at the place of work is enough. Where, however, the criminal conviction is in respect of an act which is committed away from the place of work and not in the hours of duty, it appears that the crucial test is whether the criminal conduct touches the course of duties of the workman or his abilities in relation to such duties.’

In dealing with such issues in unfair dismissal claims, two questions will need to be asked. First, did the employee do the things which are alleged against him? Second, did the action have any relevant connection to the performance of his duties as an employee? These two questions have relevance to the present case because it will be necessary to determine if the employees misbehaved themselves, as alleged by the hospital, and whether any misbehaviour had a relevant connection with the performance of their duties as employees.”

The test proposed by McCallum, Pittard and Smith in Labour Law: Cases and Materials (2nd Ed, 1990), is to a similar effect: they see the crucial issue as being whether the criminal conduct ‘touches the employment’. (at p 140).” 78

[122] Staindl JR held in Hussein that there was a sufficient connection between the employee’s work with Westpac and his conviction for credit card fraud on another bank, in circumstances where the employee was a migrant liaison officer with Westpac, in a position of responsibility, honesty and trust, in particular giving advice to members of the Turkish community.

[123] Also cited in Rose v Telstra is the decision of the High Court in Blyth Chemicals v Bushnell, 79 in relation to the duty of fidelity and good faith owed by an employee to an employer. That case involved a person employed as a company manager who, during his employment, without knowledge or consent of the employer, became chairman of directors for life and or principal shareholder with a controlling interest, of a company which was a potential rival to his employer. Notably in that case, their Honours Justices Dixon and McTiernan said that conduct including that which is destructive of the necessary confidence between employer and employee is a ground of dismissal and went on to observe:

“But the conduct of the employee must itself involve the incompatibility, conflict or impediment, or be destructive of confidence. An actual repugnance between his acts and his relationship must be found. It is not enough that ground for uneasiness as to its future conduct arises.” 80

[124] Their Honours Justices Starke and Evatt also said in that case that:

“The mere apprehension that an employee will act in a manner incompatible with the duty of fidelity does not afford a ground for dismissal; he must be guilty of some conduct in itself, incompatible with his duty and the confidential relation between him and the employer.” 81

[125] Reference was also made in Rose v Telstra to the decision of Spender AJ in Cementaid (NSW) Pty Ltd v Chambers,  82 in which it was held that to establish a breach by an employee of the duty of fidelity “an actual repugnance between the employee’s acts and his relationship with his employer must be found.”83 Other cases cited in Rose v Telstra were the decisions in McManus v Scott-Charlton84 and R v Railways Board; Ex parte Haran.85 The former case involved an employee privately engaging in sexual harassment of a co-worker and the latter case, an assault on railway premises committed by one employee against other employees when the perpetrator was off duty. In both cases the employees had: engaged in the behaviour; been directed not to do so again; and breached the direction. In McManus Finn J held that the direction in relation to out of hours conduct was lawful because the harassment was a consequence of the employment relationship between the victim and the perpetrator and the harassment had, and continued to have, adverse effects on the employer’s business. In Haran, the conduct was found to have affected the management and conduct of the railways. It was also noted that in both cases, the employees’ out of hours conduct damaged the interests of their employers.

[126] Similarly, in Wall v Westcott, 86 an employee having an affair with his employer’s wife, as revenge or an affront to the employer, in a small community, constituted misconduct justifying dismissal. Various cases involving sexual or other privately engaged-in misconduct by persons holding special positions – police officer, university academic, solicitor and public servant – were also referenced in Rose v Telstra. The common theme was that there may be a link between out of hours conduct engaged in by employees holding special positions, and their employment, by virtue of those employees engaging in out of hours conduct which is inconsistent with the inherent requirements of their positions or their ability to perform their duties.87 It was observed in Rose v Telstra, that in each of these cases there was a clear connection between the out of hours conduct engaged in by the employee and the employment, by virtue of the conduct being incompatible with the employee’s duty as an employee (which may extend beyond a duty to the employer because of the special nature of the position) or likely to cause serious damage to the employment relationship.

[127] Cases involving fighting were also considered in Rose v Telstra. The facts in Re Dispute – Transfield Pty Ltd Re: Dismissal of Union Delegate 88 were that a union delegate sought out and accosted a foreman in a hotel, in non-working time, about a dispute on a worksite. Justice Sheehy concluded that there was a connection between the assault and the employment of the union delegate, on the basis that the attack would tend to undermine the authority of management because it foremen would fear that there could be further assaults against them.

[128] In AWU-FIME Amalgamated Union v Queensland Alumina Limited, 89 two employees dismissed for fighting in a crib room, in breach of company policy, were dismissed for a valid reason notwithstanding that the crib room was a “sanctuary from work.” Justice Moore concluded that the purpose of the employer’s policy was two-fold: to avoid situations where employees may injure themselves in a dangerous working environment and to ensure that employees exercised a measure of discipline when responding to tensions that might arise with other members of the workforce. In Australian Workers Union (WA Branch) v Goldsworthy Mining Ltd,90 Commissioner Martin refused to reinstate an employee dismissed for creating a disturbance in the mess, by behaving in an aggressive manner, being abusive to mess workers and taking “physical action” against a cook. While unclear in the report of the decision, this conduct probably occurred on the employer’s premises or in premises provided by the employer.

[129] In North Australian Workers’ Union v Newcastle Protective Coating Pty Ltd, 91 employees were dismissed for conduct engaged in at accommodation provided by the operator of a mine at which they were working. Commissioner Portus observed that:

“Misconduct in the normal course concerns conduct on the job and not conduct of the employee away from the job, but this is not the case where the employee’s conduct occurs in accommodation quarters provided by the employer as part of the contract of employment. Similarly in this case misconduct can extend to conduct in accommodation provided not by the employer but by a third party under arrangement with the employer. In this case it was made clear to the employees in their contract of employment that their duties extended to proper use of the accommodation facilities.

… I find that the five employees were properly dismissed from their employment. Their actions were directly related to a term of their contract of employment. Furthermore, it was a reasonable term to include in the contract particularly when one bears in mind that Groote Eylandt is an aboriginal reserve.”

[130] In Rose v Telstra, his Honour determined that there was no reasonable basis for concluding that Mr Rose’s conduct had damaged his employer’s interests and nor was his conduct, viewed objectively, likely to cause serious damage to his relationship with his employer. Accordingly, there was no valid reason to terminate Mr Rose’s employment. His Honour concluded with the following observation:

“I do not doubt that the applicant’s behaviour on 14 November 1997 was foolish and an error of judgment. He made a mistake. But employers do not have an unfettered right to sit in judgment on the out of work behaviour of their employees. An employee is entitled to a private life. The circumstances in which an employee may be validly terminated because of their conduct outside work are limited. The facts of this case do not fall within those limited circumstances.”

[131] More recently, in Newton v Toll Transport Pty Ltd (Newton), 92 cited by the Respondent in its submissions in the present appeal, a Full Bench of the Commission considered an appeal by an employee dismissed for engaging in a physical altercation with a co-worker, out of working hours. The facts of the case (extracted by the Full Bench from the decision at first instance) were that the employee, Mr Newton, a truck driver employed by Toll Transport, was on leave and attending meetings organised by the Transport Workers’ Union, in his capacity as a Union Delegate. Toll paid for and/or organised the airfares, transportation, accommodation, and meals for its employees who attended the conference, in accordance with an arrangement the Company had with the Union. Mr Newton engaged in the fight with another employee (Mr Chambers) who was also attending the conference. Both Mr Newton and Mr Chambers were dismissed and applied for remedies for unfair dismissal. Both applications were dealt with by Deputy President Boyce who in separate decisions, dismissed Mr Newton’s application finding that he was not unfairly dismissed and upheld Mr Chambers’ application and ordered that Mr Chambers be reinstated.93 Mr Newton appealed the decision dismissing his application.

[132] In the first instance decision in Newton, 94 the Deputy President found that Mr Newton was not at work at the time he engaged in the fight and his involvement was not, of itself, of such gravity or importance as to indicate a rejection or repudiation of his contract of employment with Toll. It was also noted that there was no evidence that Toll’s reputation or interests were damaged including because of the awareness on the part of other employees, of the fight. Members of the public did not witness the fight and the employees concerned were not wearing any clothing that would associate them with Toll. The Deputy President also found that Mr Newton’s belief that he was bound by Toll’s policies and procedures during his free time, was not relevant.

[133] The Deputy President concluded that involvement of Mr Newton in the fight and a verbal altercation that he also engaged in, were not valid reasons for his dismissal, either individually or combined, because these incidents did not have a sufficient connection to his employment. However, the Deputy President went on to conclude that Mr Newton was dishonest both to Toll and in his evidence to the Commission and that this constituted a valid reason for his dismissal, weighing in favour of a finding that the dismissal was not harsh, unjust or unreasonable and that overall, the dismissal was not unfair. The Deputy President found in relation to this matter that:

“It follows from the foregoing that whilst an employee may engage in conduct or behaviour that does not occur at work, or does not have a requisite connection with work, if such matters are investigated by their employer, such an investigation will occur at work. It equally follows that any answers provided by an employee to questions put to him or her by their employer during such an investigation fall within the scope of the employment relationship. And in so falling within the scope of the employment relationship in this case, Mr Newton had a duty to answer questions and/or give his version of events honestly.”

[134] The Deputy President’s finding was based on his view that the duty to answer questions was an incident of the duty of fidelity owed to his employer and the requirement that an employee not act in a manner destructive of the necessary confidence between employer and employee, as set out in the judgements in Blyth Chemicals v Bushnell. 95

[135] Relevantly, one of the grounds in Mr Newton’s appeal against the decision, was that the Deputy President erred in concluding that Mr Newton was required to be honest and candid with Toll, in its investigation of a fight which was out of hours conduct, not connected with his employment. In its decision in the appeal, the Full Bench agreed with the Deputy President’s conclusion that the fight did not have a relevant connection with Mr Newton’s employment with Toll and that his involvement in the fight did not constitute a valid reason for his dismissal. However, in relation to the Deputy President’s conclusion that Mr Newton had a duty to answer questions about the fight posed by his employer at work, the Full Bench said:

[145] The concept of a duty of fidelity and good faith is used as a matter of convenience to subsume a range of obligations which are intended to ensure that the employee renders honest and faithful service to the employer. They include:

  • an obligation not to damage the employer’s interests by disclosing or using confidential information obtained in the course of employment
  • an obligation to act honestly in handling the employer’s property
  • an obligation not to earn any secret profits, and
  • an obligation not to engage in employment outside of the hours devoted to their main job where the spare time work is for a competitor of the main employer and may damage the employer’s business.

[146] The obligations imposed by the common law duty of fidelity and good faith operate to prohibit acts outside of the employment which are inconsistent with the continuation of the employment relationship. But as Spender AJ observed in Cementaid (NSW) Pty Ltd v Chambers, ‘an actual repugnance between the employee’s acts and his relationship with his employer must be found’.”

[136] After setting out and endorsing the principles (described by the Full Bench as the ratio) in Rose v Telstra the Full Bench in Newton said:

[151] In essence, the Deputy President reasons that investigations by employers about matters that do not occur at work and which do not have any requisite connection with work are investigations which ‘occur at work’. It is said to follow from this that: ‘any answers provided by an employee to questions put to him or her by their employer during an investigation fall within the scope of the employment relationship’. In short, because questions (presumably about anything) are asked ‘at work’ the employee has a duty to answer honestly. With respect, we disagree.

[152] Contrary to the proposition advanced by the Deputy President, an employee does not become obliged to answer questions from their employer about matters occurring outside work in their private lives merely because those questions are asked whilst the employee is at work. The mere fact that the employee is asked questions ‘at work’ is insufficient.

[137] After setting out cases relevant to the right to silence and the duty of an employee to give information to an employer 96 the Full Bench in Newton cited with approval the following observation of Finn J in McManus v Scott-Charlton:

“I am mindful of the caution that should be exercised when any extension is made to the supervision allowed an employer over the private activities of an employee. It needs to be carefully contained and fully justified.” 97

[138] The Full Bench also observed that it was necessary to consider the entire factual matrix in determining whether an employee’s lie or dishonesty is a valid reason for dismissal and noting that the fact that the question relates to conduct which lacks a requisite connection to employment is a relevant contextual matter, as is the fact that the employee is under no obligation to answer questions about such conduct. The Full Bench went to note its acceptance that in some circumstances a dishonest answer to a question about out of work conduct may provide a valid reason for dismissal – for example, if an employee damages their employer’s interests by dishonestly and intentionally impugning the character of another employee. The Full Bench in Newton also cited the decision of an earlier Full Bench in Streeter v Telstra Corporation Limited. 98 That case involved an employee who had attended a social function organised by her employer, and had sexual intercourse in a hotel room booked by co-workers to stay in after the event, within view and/or earshot of three other employees, and who when interviewed about the conduct by her employer, denied the conduct and then refused to answer questions.

[139] The Full Bench in Newton observed that the majority of a Full Bench in Streeter, considered that the Member at first instance had erred in concluding that the employee’s dishonesty could not ground a valid reason for dismissal and decided that there was a valid reason for the employee’s dismissal, due to her dishonesty in interviews with Telstra management. The Full Bench in Newton also observed that the majority decision in Streeter was predicated on the earlier finding that there was a sufficient connection between the out of work conduct and employment, and that this was a finding in respect of which reasonable minds may differ. The Full Bench in Newton further observed that Ms Streeter would not have been bound to be honest in her interview with the employer in circumstances where the conduct did not have a requisite connection to employment, because (for example) other employees did not observe it.

Principles in relation to out of hours conduct as a valid reason for dismissal

[140] The principles in relation to when out of work conduct may constitute a valid reason for dismissal, which can be distilled from Rose v Telstra and Newton and the cases considered in those decisions, are as follows. As stated in Rose v Telstra and endorsed by the Full Bench in Newton:

“…in certain circumstances an employee’s employment may be validly terminated because of out of hours conduct. But such circumstances are limited:

  • the conduct must be such that, viewed objectively, it is likely to cause serious damage to the relationship between the employer and employee; or
  • the conduct damages the employer’s interests; or
  • the conduct is incompatible with the employee’s duty as an employee.

In essence the conduct complained of must be of such gravity or importance as to indicate a rejection or repudiation of the employment contract by the employee.”

[141] There is no indication in Rose v Telstra that the out of hours conduct said to constitute a valid reason for dismissal must be conduct that is a repudiation of the employment contract. Rather, it is sufficient that the conduct is indicative of repudiation or rejection of an employee’s contract of employment. It is axiomatic that for conduct to indicate a rejection or repudiation of the employment contract, the out of hours conduct must be sufficiently connected to the employee’s employment. Not every connection between out of hours conduct and employment, will constitute a valid reason for dismissal.

[142] To constitute a valid reason for dismissal, the conduct must touch the employment. 99 As E I Sykes and H J Glasbeek (quoted in Hussein), posed the test – the out of hours conduct must touch the duties or the abilities of the employee in relation to the duties.100 Creighton and Stewart in Labour Law 5th Edition also refer to conduct in the employee’s private life which may constitute a breach of duty. What is clear is that to determine whether conduct engaged in privately, out of hours or outside work has a relevant connection with employment to constitute a valid reason for dismissal, it is necessary to consider the entire factual matrix. This will include matters such as: the nature of the out of hours conduct and what it involved; where the out of hours conduct occurred; the circumstances in which the out of hours conduct occurred; the nature of the employment; the role and duties of the employee concerned; the principal purpose of the employee’s employment; the nature of the employer’s business; express and implied terms of the contract of employment; the effect of the conduct on the employer’s business; and the effect of the conduct on other employees of the employer.

[143] The cases establish that out of hours conduct may be relevantly connected to employment so that it is a valid reason for dismissal because the conduct occurs in a facility (such as a crib room) or accommodation provided by the employer or by a third party under an arrangement with the employer. 101 However, more may be required to establish the relevant connection than the geographical location at which the conduct occurs. Thus cases where an employee engages in conduct out of working hours, in a mess or camp style accommodation where rules of occupation are promulgated to all employees may be distinguishable from purely private conduct engaged in by an employee travelling on the employer’s business where that conduct is not observed by other employees.

[144] The requisite connection between out of hours conduct and employment may be because the results of the conduct directly impact the employee’s ability to perform work, in a practical sense. For example, as a result of criminal conduct engaged in out of working hours the employee may be unable to perform the duties he or she was employed to perform because the employee is imprisoned for an extensive period, so that the contract of employment is frustrated. Similarly, a connection may be established where a sanction imposed on the employee because of out of hours conduct prevents the employee from carrying out duties which are the principal purpose for which he or she was employed – for example, an employee employed as a chauffeur who loses his or her drivers’ licence and is legally unable to drive a motor vehicle and who cannot reasonably be employed on alternative duties.

[145] The connection between the out of hours conduct and the employment may be because the role the employee is employed to perform, has inherent requirements, duties or obligations, with which the out of hours conduct is directly inconsistent. This may be because the employee holds a special position such as police officer, university academic, solicitor or public servant, and engages in conduct out of work which is directly inconsistent with the inherent requirements of his or her position. In such cases, the expectations that the employer may reasonably have about perceptions of the employee on the part of persons external to the employer, such as customers or members of the community, may be sufficient to establish the connection.

[146] There may be a connection between the employment of a person convicted of a crime outside work where that person is employed in a role which requires them to perform the same duties, or duties in the same context, in which the crime was committed. An example of such a connection is found in Hussein. There, an employee of a bank, who engaged in credit card fraud on another bank, outside work, was validly dismissed for such conduct. The relevant connection was that the employee was required to assist persons whose first language was not English with a range of financial transactions, including, on occasions, handling cash. The employee held a position of responsibility and trust, and the employer was therefore entitled to expect that he was trustworthy and that his honesty in the carrying out of his duties. could be relied on. That the employee engaged in criminal conduct involving fraud against a bank, was sufficient connection to justify dismissal on the basis that the employer no longer trusted the employee and could not rely on his honesty, in respect of his dealings with its customers and/or the bank.

[147] However, if the employee had been employed in an administrative role in which he was not dealing with customers of the bank, or a role which did not involve financial transactions, the requisite connection may not have been found. While employers generally expect their employees to be trustworthy, this expectation, is not of itself, sufficient to establish a relevant connection with employment so that conduct outside work, where an employee’s honesty and integrity is brought into question, is a valid reason for dismissal. The critical distinction between cases where a relevant connection is established is that something beyond mere expectation is required. The connection must relate to an inherent requirement of the employee’s position or an attribute which the employee must have in order to undertake the required duties of his or her position.

[148] A relevant connection between conduct outside working hours and employment may also be found where the employee concerned engages in conduct out of hours which materially damages the employer’s interests in respect of its relationships with its clients and staff. In Wakim v Bluestar Global Logistics, the relevant relationship between the out of hours conduct and employment was found where an employee who was convicted of a child sexual offence was a public figure whose conduct attracted widespread media attention and was also the primary point of contact for current and potential clients of the employer and a senior manager and regarded as a leader in the business. Accordingly, the out of work conduct was found to be a valid reason for dismissal.

[149] There are also cases where the relevant connection between out of hours conduct and employment is found based on the effect of the conduct on other employees or the efficient operation of the business. Thus, in McManus v Scott-Charlton, conduct engaged in by an employee which involved the harassment of a co-worker outside working hours, was a valid reason for dismissal because of the effect on the victim of the harassment at work. Similarly, a deliberate assault on a foreman outside work, was found to be grounds for dismissal because it would likely impact on the relationship between managers and those they were supervising. 102

[150] The line that can be traced through the cases is that all the circumstances of the employment must be examined and that the express or implied terms of a contract of employment are relevant, but not determinative, to the connection between out of hours conduct and employment, where the conduct is relied on as a reason for dismissal. Absent a connection with employment of the requisite kind, out of hours conduct will not constitute a valid reason for dismissal. We turn now to consider the appeal grounds.

Appeal grounds

Ground 1

[151] In relation to ground 1, it is apparent that the Deputy President erred in finding that the Appellant did not have a valid reason to dismiss the Respondent. The error was two-fold. First, the Deputy President did not properly apply the test when considering whether there was a relevant connection between the Respondent’s criminal conduct out of work and his employment, in accordance with the principles in Rose v Telstra endorsed by a Full Bench of the Commission in Newton. This was an error of principle, of the kind identified in House v The King. Secondly, the Deputy President did not consider the entire factual matrix disclosed by the evidence, for the purposes of determining whether there was a valid reason for the Respondent’s dismissal. In this regard, the Deputy President’s analysis of the evidence involved significant errors of fact which satisfy the test in s.400(2) of the Act.

[152] We commence by considering the uncontested evidence before the Deputy President. The evidence established that at around 8:20am on 16 August 2020, the Respondent was stopped by Police while driving a vehicle, when he had a blood alcohol concentration of over four times the legal limit. The Respondent conceded under cross-examination at the hearing before the Deputy President that when he drove a vehicle on that date and in those circumstances, he exhibited a significant lack of judgement, was not thinking clearly and knew that his conduct was reckless. The Respondent agreed that he knew that by driving while intoxicated, he could injure himself or someone else. The Respondent also agreed that he knew that when driving a train, he should not have alcohol in his system because it could affect his ability to drive safely and that he was required to be self-aware in relation to his ability to drive a train safely, because he is not supervised while driving and can be rostered to drive a train with less than 24 hours’ notice. Further, the Respondent agreed that Train Drivers are required to self-report if they feel they cannot drive safely, and that the Appellant needed to have trust and confidence that the Respondent would comply with this requirement.

[153] Notwithstanding the Respondent’s concessions, it was not in dispute that the Respondent attended work to commence his rostered shift, at 5.15 am on 17 August 2020 – less than 24 hours after he had been charged with a high range drink driving offence. By reason of being charged with that offence, the Respondent knew, or should have known, that less than 24 hours earlier – at 8.20 am on 16 August 2020 – his blood alcohol concentration was over four times the legal limit. The Respondent drove a train on 17 August 2021, presumably at, or close to, the commencing time of his shift. The Respondent did not take any steps to determine whether there was residual alcohol in his system and simply relied on his own judgement. The Respondent did this in circumstances where he knew that on two previous occasions his judgement in relation to having alcohol in his system had failed and the fact that he had attended for work with alcohol in his system, was only discovered because he had been randomly tested.

[154] Under cross-examination, the Respondent conceded that he did not recall what time he had stopped drinking or whether he had slept, before reporting to work on 17 August and driving a train. The Respondent also conceded that he did not know how many drinks he had consumed before being pulled over by the Police on the morning of 16 August, and that it must have been a large number for the Respondent to be four times over the legal limit.  103

[155] In relation to the two previous incidents where the Respondent had alcohol in his system at work, the Respondent accepted in cross examination that both events had occurred early in the morning, he erroneously believed that he could drive a train and was not above the proscribed limit for alcohol despite drinking the previous day, and that his conduct in this regard raised a safety concern for him and the Appellant. In short, the evidence establishes that despite being twice sanctioned for his significant lack of judgement in reporting for work after he had been drinking the day before, the Respondent engaged in the same conduct on 17 August 2020.

[156] In our view, the Deputy President’s analysis failed to engage with this evidence and was unduly focused on peripheral matters such as the fact that the Respondent’s conduct occurred outside working hours on a day when the Respondent was not rostered to work, and that the Respondent did not need a driver’s licence to perform the duties of a train driver. While these matters were relevant to the entire factual matrix, they were not determinative.

[157] In this regard, the Deputy President also focused his attention on the proposition that there was no evidence that the Respondent had alcohol in his system when he attended work on 17 August. With respect, the Full Bench is of the view that this was not the point in the circumstances of this case as disclosed by the evidence. Rather, the Respondent did not know whether he still had alcohol in his system and chose to attend work regardless and not to self-report immediately, despite knowing that he had been charged with a high range drink-driving offence less than 24 hours previously. Contrary to the Respondent’s submissions, it is also not to the point that the Appellant does not have facilities for employees to self-test if they are concerned about whether they are fit to drive a train. The Respondent was required to self-report any concern about his fitness and if he did not wish to do so, the Respondent could simply have stayed away from work. We also note that the Respondent conceded in cross-examination that there is an “Are you ok policy” and that he was required to self-report if he felt that he could not drive a train and that the Appellant is required to have trust and confidence that he will self-report if he considers he is unable to drive a train safely. Further, the Respondent accepted that when he is working early in the morning, he needs to have an understanding about whether he has alcohol in his system. 104

[158] In light of the evidence about the Respondent’s conduct on 16 August 2020, the Respondent should have held real concerns about his fitness to work on 17 August and understood that it was the same conduct for which he had previously been sanctioned and was inconsistent with the inherent requirements of his job as a Train Driver, that he be fit to safely drive a train. The Deputy President did not consider these matters and his failure to do so, is a significant error of fact that satisfies the test in s.400(2) of the Act.

[159] This is relevant to the next matter we consider – the inherent requirements of the Respondent’s position as a Train Driver and whether his criminal conduct was relevantly connected to that position. The Respondent was employed as a Category 1 Safety Critical Worker under the National Standard for Health Assessment for Rail Safety Workers and the Appellant as a rail safety operator was required to ensure that he was not impaired by alcohol or drugs when undertaking his work. As such, the Respondent was employed in a special position with duties and obligations to the effect that he was able exercise good judgment, including by ensuring that he did not have alcohol in his system and that he was able to assess his own ability to drive a train safely.

[160] In essence, the Deputy President considered the Respondent’s conduct based on example posited by Staindl JR in Hussein, that a conviction on a drink-driving charges would not be relevant to the employment of many people but would be of critical relevance to a truck or taxi driver. The Deputy President should have considered the Respondent’s conduct on the broader basis also discussed in Hussein having regard to the inherent requirements of his role as a train driver and the attributes an employee in that role is required to demonstrate. These matters were relevant to consideration of whether the Respondent’s criminal conduct had a relevant connection to the Respondent’s employment.

[161] Instead, the Deputy President focused on matters that were at best, peripheral to this question, by observing that a driver’s licence is not an inherent requirement of the Respondent’s role as a Train Driver and that unlike the taxi driver referred to in Hussein, the Respondent does not require a valid driver’s licence to perform the duties of a Train Driver. For the reasons we have set out above, this constituted a failure by the Deputy President to apply the proper test in accordance with the principles in Rose v Telstra and significant error of fact in relation to the way the Deputy President dealt with the evidence that was before him about the imperatives associated with safety, the Respondent’s critical role in ensuring that he did not jeopardise his own safety or that of co-workers, passengers and the rail network and the interests of his employer.

[162] These errors are repeated in the Deputy President’s consideration of the risk to the Appellant’s interests that was posed by the Respondent’s conduct. After setting out a passage from Wakim v Bluestar Global Logistics in relation to out of hours conduct by an employee being connected to employment by its effect on the employer’s reputation, the Deputy President failed to consider the risk to safety posed by the Respondent’s inability, on three occasions, to properly self-assess and know when he can and cannot drive, because of being affected by alcohol. That safety risk was material and not hypothetical as found by the Deputy President. When the passage of transcript referred to by the Deputy President as the basis for his finding that the Appellant conceded that the risk was hypothetical is considered, it is apparent that no such concession was made. The reference is to a submission by Counsel for the Appellant in relation to future risks of a Train Driver being found to be operating a train while under the influence of alcohol. In circumstances where the Respondent had twice reported for work with alcohol in his system and on a third occasion reported for work less than 24 hours after being found to have a blood alcohol content of over four times the legal limit, there was nothing hypothetical about the risk that the Respondent could fail to self-assess and drive a train when it was not safe for him to do so. The implications of this risk are heightened by the Appellant’s statutory safety obligations.

[163] For these reasons, appeal grounds 1 and 4(a) are upheld.

Ground 2

[164] Grounds 1 and 2 overlap to the extent that in ground 2 it is asserted that in addition to the Deputy President’s erroneous finding in relation to whether there was a valid reason for the Respondent’s dismissal, the Deputy President should have found, on the basis of the evidence, that the Respondent’s dismissal was not harsh, unjust or unreasonable. There was also overlap in the Appellant’s submissions in relation to grounds 1 and 2. The Appellant reiterated in ground 2, the Deputy President’s findings in relation to the Respondent’s conduct on 16 August 2020 and on the previous occasions he had tested positive for alcohol in random tests before he started work, and his previous attempts at rehabilitation. The Appellant contended that considering these findings the Deputy President erred by concluding that the Respondent’s lack of judgment was unlikely to be repeated and that his dismissal was inexplicable and/or that the Deputy President failed to give any proper consideration to the fact that the Respondent’s criminal conduct occurred despite previous rehabilitation attempts.

[165] We agree that the finding that the Respondent’s dismissal was harsh, unjust and unreasonable was contrary to the evidence upon which it was based and that this constitutes significant error of fact to which s.400(2) applies. As we have noted above, the Respondent had on two previous occasions, reported for work and upon being subject to a random test, returned a positive result for alcohol. On both occasions the Respondent had conducted a self-assessment and concluded that he was able to drive. The evidence before the Deputy President included concessions by the Respondent that on both occasions, he was found to have alcohol in his system at work and stated to persons investigating the incidents that he had been drinking the previous day. The evidence also establishes that the Respondent told investigators on the first occasion that he could not remember the time at which he stopped drinking and on the second occasion that he stopped drinking at 7:00pm on the night before he attended for work, and on that occasion, was found to have a positive reading for alcohol when first tested, before returning a zero result in a later test. The Respondent also accepted under cross-examination that on both occasions he had tested positive for alcohol before commencing work, he believed that he was fit for work. 105

[166] These matters were also highlighted in the Appellant’s written and oral submissions at first instance. We also note that the transcript of the Respondent’s evidence under cross-examination in the proceedings before the Deputy President indicates he attempted to explain the second incident by asserting that a colleague had used a liberal amount of hand sanitiser in the area where the Respondent was working. While the Deputy President was in a better position to observe the Respondent while giving his evidence, and to make assessments as to credit, the Respondent’s evidence on this point appears incongruous, particularly given it was not raised in the Respondent’s evidence in chief. We also note that this failure was taken up with the Respondent in cross-examination in the hearing at first instance. 106

[167] In light of the weight of this evidence, the failure of the Deputy President to conclude that the conduct on 16 August 2020 was the same conduct as the Respondent had engaged in on two previous occasions, was a significant error of fact. We are also of the view that the Deputy President was in error with respect to his consideration of the evidence relating to the
Respondent’s efforts at rehabilitation. That evidence clearly established that the Respondent had participated in rehabilitation in 2009 because this was required of him by the Appellant. The evidence also established that in 2011, the Respondent had been required to attend a medical session prior to recommencing duties as a train driver and had told the doctor that he intended to remain abstinent from alcohol in the long term. Further, the Respondent accepted that he had engaged in rehabilitation and counselling after his criminal charges and that he was compelled to do this given the circumstances of his criminal offence. 107 The Appellant also submitted at first instance, and in the appeal, the most recent rehabilitation efforts had been engaged in for a period of only three months and the evidence of this was the same evidence the Respondent provided to the Magistrate who dealt with his criminal charges.

[168] While the Deputy President set out extracts from Ms Bunting’s evidence and the Appellant’s submissions, he did not assess this material in reaching his findings at [84] that the evidence did not support a conclusion that the Respondent’s lack of judgment was likely to be repeated and that he had undertaken “significant rehabilitation”. Those findings were against the weight of the evidence. As a result, the Deputy President’s finding that the Appellant’s decision to dismiss the Respondent was “inexplicable” also constitutes a significant error of fact that satisfies the test in s.400(2).

[169] Finally, in relation to ground 3 of the appeal, we accept that the Deputy President did not have sufficient regard to the Respondent’s admissions in cross-examination, that the Appellant must have trust and confidence that the Respondent would not have alcohol in his system when he attends for work as a Train Driver and that it could not have that confidence given his past behaviour. We also note that the Respondent accepted in cross-examination that his statement to the Commission at first instance, that he had always followed the policies of the Appellant, was not accurate. 108 For reasons we articulate in relation to appeal ground 1, the finding that there was no valid reason for the Respondent’s dismissal was erroneous because it was based on a misapplication of the principles in relation to the connection between out of hours conduct and employment and significant errors of fact.

[170] The Full Bench agrees with the Appellant’s submission that the errors in relation to valid reason, also contributed to failure on the part of the Deputy President to consider the material admissions by the Respondent relevant to appeal ground 2, and the Appellant’s submissions in relation to them. Instead, the Deputy President placed decisive weight on the Respondent’s short rehabilitation following his criminal charges without reference to the previous misconduct and attempts at rehabilitation, in reaching his conclusion that the Respondent’s dismissal was harsh, unjust and unreasonable. This constitutes a significant error of fact that meets the test in s.400(2) of the Act.

[171] We therefore uphold appeal ground 2.

Ground 3 and 4(b)

[172] Grounds 3 and 4(b) of the appeal centre on the Deputy President’s conclusion that the Respondent’s dismissal was harsh. We consider that these appeal grounds should also be upheld on the basis that the conclusion is founded on errors of fact in relation to the evidence. The conclusion in relation to harshness, is based on findings that the Respondent’s age and relatively significant length of service and difficulty that the Deputy President accepted the Respondent would have gaining employment because he required a driver’s licence to work for the only other employer of Train Drivers – the rail freight industry.

[173] As the Appellant correctly points out in its submissions in the appeal, the Respondent was under 50 at the time the application was heard. Further, the Deputy President does not refer to the Respondent’s evidence under cross-examination that he is a qualified electrical fitter (albeit his certificate is over 20 years old) and that he has an advanced certificate in electrical engineering. 109 Further, as Counsel for the Appellant’s noted in her submissions to the Deputy President at first instance, the Respondent put on no evidence about his financial circumstances or any difficulty obtaining other employment or in relation to difficulties in the rail network of obtaining employment without a driver’s licence. While it is true that the Commission can accept assertions made from the bar table by a party in proceedings, which are not challenged by the other party, in the present case, the Respondent’s submissions were challenged and the lack of evidence was highlighted. Contrary to the Respondent’s assertion in the appeal, the Appellant was not obligated to call evidence to rebut a proposition that was not established by evidence from the Respondent. Accordingly, the Deputy President should not have accepted those submissions, or at very least, should have provided a further opportunity for evidence about this to be led and responded to. As a result, there was insufficient evidence to support the findings of harshness.

[174] This is a significant error of fact that meets the test in s.400(2) of the Act. We therefore uphold grounds 3 and 4(b) of the appeal.

Ground 5

[175] Ground 5 of the appeal is that reinstatement was not appropriate. The Full Bench agrees with this submission. It is axiomatic that to grant a remedy for unfair dismissal, the Deputy President was required to first conclude that the dismissal was unfair, because it was harsh, unjust or unreasonable. It is well established that 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 which would not reasonably have been drawn from the material before the employer.

[176] The Deputy President concluded at [78] that the Respondent’s dismissal was “harsh, unjust and unreasonable”. The Deputy President went on to find that the dismissal related to conduct that could only be considered out of work conduct which could never constitute a valid reason for termination and that the dismissal was harsh in its effects upon the Respondent. We assume that the conclusion that the dismissal was unjust and unreasonable was based on the finding that there was not a valid reason for the Respondent’s dismissal. For the reasons we have set out above in relation to appeal grounds 1, 4(b) and 3, the Deputy President’s finding in relation to valid reason was attended by error. For reasons we have also set out above, the Deputy President’s finding that the dismissal was harsh, was also erroneous. Accordingly, the Deputy President’s overall finding of unfairness was based on the incorrect application of the principles in Rose v Telstra, in relation to the relevant connection between out of hours conduct and employment, and significant errors of fact which affected his findings in relation to valid reason.

[177] The Full Bench is also of the view that even if not having a driver’s licence would impact the Respondent’s ability to obtain employment in the rail freight industry, this matter would not outweigh the valid reason for his dismissal so as to render the dismissal unfair.

[178] Accordingly, there was no basis for granting the Respondent a remedy for unfair dismissal. It is also apparent that apart from setting out the Appellant’s submissions in relation to reinstatement, the Deputy President did not fully consider those submissions or the evidence that was before him, in reaching his conclusion in relation to remedy.

[179] Therefore, we uphold appeal ground 5. Given our conclusions in relation to the appeal grounds, it is not necessary that we consider appeal ground 6 as most of the points encompassed in ground 6 have been dealt with in our consideration of the other grounds of appeal.

Conclusion and disposition of the appeal

[180] For the reasons given, we grant permission to appeal, uphold the appeal and quash the decision. Given our conclusions in relation to the grounds of appeal it is not necessary to remit the application for rehearing. We also do not consider that it is appropriate to receive further evidence in relation to harshness on the basis that even if the Deputy President’s conclusions in this regard were correct, this would not result in a finding that the dismissal was unfair as harshness would not outweigh other relevant considerations in relation to the validity of the reason for dismissal and the fact that the Respondent was afforded procedural fairness. We are also of the view that the Respondent should not be permitted to lead further evidence in relation to harshness in the appeal in circumstances where no evidence in relation to this matter was led in the proceedings at first instance and where the Respondent conducted its case in the appeal on the basis that there was no error in the decision at first instance.

[181] The Orders of the Commission are:

  1. Permission to appeal is granted.
  2. The Appeal is upheld.
  3. The Decision in [2021] FWC 3792 is quashed.”

Sydney Trains v Bobrenitsky (2022) FWCFB delivered 16 March 2022 per Catanzariti VP, Asbury DP, Simpson C and Ryan C