Valid reason for dismissal in fair work law

What is a valid reason for the dismissal of an employee? Here is the answer.

“Was there a valid reason for the dismissal related to the Applicant’s capacity or conduct (s.387(a))?

[83] To be a valid reason, the reason for the dismissal should be sound, defensible or well founded and should not be capricious, fanciful, spiteful or prejudiced. However, in assessing the validity of the reason (s) for dismissal the Commission will not stand in the shoes of the employer and determine what the Commission would do in the same position.

[84] In Sydney Trains v Gary Hilder [2020] FWCFB 1373 at [26] (“Hilder”) the Full Bench summarised the well-established principles for determining such matters:

“The principles applicable to the consideration required under s 387(a) are well established, but they require reiteration here:

(1) A valid reason is one which is sound, defensible and well-founded, and not capricious, fanciful, spiteful or prejudiced.

(2) When the reason for termination is based on the misconduct of the employee the Commission must, if it is in issue in the proceedings, determine whether the conduct occurred and what it involved.

(3) A reason would be valid because the conduct occurred and it justified termination. There would not be a valid reason for termination because the conduct did not occur or it did occur but did not justify termination (because, for example, it involved a trivial misdemeanour).

(4) For the purposes of s 387(a) it is not necessary to demonstrate misconduct sufficiently serious to justify summary dismissal on the part of the employee in order to demonstrate that there was a valid reason for the employee’s dismissal (although established misconduct of this nature would undoubtedly be sufficient to constitute a valid reason).

(5) Whether an employee’s conduct amounted to misconduct serious enough to give rise to the right to summary dismissal under the terms of the employee’s contract of employment is not relevant to the determination of whether there was a valid reason for dismissal pursuant to s 387(a).

(6) The existence of a valid reason to dismiss is not assessed by reference to a legal right to terminate a contract of employment.

(7) The criterion for a valid reason is not whether serious misconduct as defined in reg 1.07 has occurred, since reg 1.07 has no application to s 387(a).

(8) An assessment of the degree of seriousness of misconduct which is found to constitute a valid reason for dismissal for the purposes of s 387(a) will be a relevant matter under s 387(h). In that context the issue is whether dismissal was a proportionate response to the conduct in question.

(9) Matters raised in mitigation of misconduct which has been found to have occurred are not to be brought into account in relation to the specific consideration of valid reason under s 387(a) but rather under s 387(h) as part of the overall consideration of whether the dismissal is harsh, unjust or unreasonable.”

[85] In Hilder the Full Bench also found at [29]:

“However, the Deputy President’s consideration of whether there was a valid reason was affected by error of a more consequential nature, in that he did not address the material issues identified in the principles identified above but rather determined the issue by reference to a number of irrelevant matters. As the Deputy President recognised, there was no dispute as to the occurrence of the conduct which was the reason for Sydney Trains’ dismissal of Mr Hilder. Nor was it in dispute that this conduct constituted a breach of the Policy. Mr Hilder conceded that he was aware of the Policy and its significance. The only question to be resolved therefore was whether the breach of the Policy was a matter of sufficient gravity to constitute a sound, defensible, well-founded and therefore valid reason for dismissal. This required an assessment of the importance of the Policy in the context of Sydney Trains’ operations and Mr Hilder’s work duties.”

Elali v Transport for NSW – Sydney Trains (2022) FWC 2757 delivered 14 October 2022 per Easton DP