What is a valid reason for dismissal

Two of the most important considerations when determining whether the termination of an employee’s employment is unfair is firstly whether there was a valid reason for the dismissal and secondly whether the penalty of dismissal was harsh, unjust and unreasonable in all the circumstances. When determining the first question, the factors which are addressed in a recent unfair dismissal decision of the Fair Work Commission were as follows;

“Valid reason – s 387(a)

[50] The essence of a valid reason is that the reason is a sound, defensible or a well-founded reason – one that is not capricious, fanciful, spiteful or prejudiced.62 The issue is whether there was such a valid reason related to the Applicant’s capacity or conduct. Whether conduct which founds a valid reason occurred is to be determined based on the evidence in the proceedings assessed on the balance of probabilities taking into account the gravity or seriousness of the allegations.63 The test is not whether the employer, after a sufficient investigation, had a reasonably held belief that the conduct occurred.64 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.65 It is not necessary to show the misconduct as 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).66 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.67

[51] As noted earlier, the Respondent’s reason for dismissal was given as “contract repudiation – inability to render substantial performance”.

[52] The failure to comply with the directions given by the Respondent to the Applicant at various points throughout 2020 to return to work and/or to provide a date on which he intends to return to work are not matters on which the Respondent can now rely to as founding a valid reason. This is because it failed to act until more than 13 months after the last of those events and because it changed its position by first denying then approving the Applicant’s retrospective leave requests. Thus, the Applicant was on approved leave during periods when he had been directed to attend for work. In my view, the Respondent has waived its right to terminate the Respondent’s employment on those grounds. But even if it has not, the passage of time between the known (mis)conduct means that the act of dismissal would not be for a reason that is sound, defensible, or well-founded.

[53] That said, these circumstances are relevant in assessing whether at the time of the Applicant’s dismissal there was a valid reason for the dismissal. Ultimately, the Respondent required the Applicant to return to work. He was absent from work without approval for any leave (paid or unpaid) for a significant period. Attempts to get clarity about his intended return date were met with obfuscation and distraction. He was not likely to return to Australia soon if at all. He is yet to return. He provided no evidence to the Respondent of any attempts to return to Australia or attempts to make such arrangements. Because of his location in Hyderabad he was not able to attend for work and perform his duties. It seems plain enough from the various exchanges discussed above, the Applicant was also not ready, nor willing (or at least excessively reluctant) to return to work to perform the job into which he had been employed. The situation had to be brought to a head. Whether by design or inadvertence, the Respondent had for some time tolerated the position of the Applicant’s absence and his repeated failure, despite directions, to return to work. That the Applicant might have had some difficulty in returning to Australia is a matter almost entirely of his own making. He had the opportunity to return to Australia in early March 2020, before international travel was restricted. His alleged financial position at the time (a matter about which I have no probative evidence) was likely brought about by his failure to apply for leave immediately after 7 November 2019 and his attitude of keeping quiet about the leave situation.

[54] On the evidence, at the time of his dismissal the Applicant was not ready, willing or able to attend for work, that position had pertained for quite some time, the prospect of him returning to work in the near future was vague and this provided a valid reason for his dismissal. The fundamental employment obligation that, as a full-time employee, the Applicant attend for work and perform work for the Respondent, was not being, and could not be met. I am therefore satisfied there was a valid reason for his dismissal. The valid reason related to both his conduct and his capacity.

[55] That there was a valid reason for the Applicant’s dismissal weighs against a conclusion that his dismissal was unfair. And in the circumstances discussed above, it does so significantly.”

Mangamuri v Linfox Armaguard (2022) FWC 763 delivered 2 May 2022 per Gostencnik DP