What is a valid reason to dismiss an employee?

One of the most important legal issues in an unfair dismissal case brought under the Fair Work Act is whether the employer had a valid reason for the dismissal. This requires the Fair Work Commission to assess whether the reason of the employer was “sound, defensible and well founded”.

“Valid reason for the dismissal

[41] When deciding whether a dismissal was unfair, the Commission is obliged to take into account whether there was a valid reason for dismissal relating to the employee’s capacity or conduct. 43

[42] The reasons considered are the employer’s ‘reason(s)’. 44 The Full Bench in B, C, and D v Australia Postal Corporation t/as Australia Post (Australian Postal Corporation) stated:

[34]… In a misconduct case, the Commission is concerned with whether the misconduct in fact occurred, not with whether the employer has reasonable grounds to believe that it occurred (e.g. Yew v ACI Glass Packaging Pty Ltd (1996) 71 IR 201, Sherman v Peabody Coal Ltd (1998) 88 IR 408; Australian Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1).

[35] Subject to that, as indicated by Northrop J in Selvachandran, “valid reason” is assessed from the perspective of the employer and by reference to the acts or omissions that constitute the alleged misconduct on which the employer relied, considered in isolation from the broader context in which they occurred. It is the reason of the employer, assessed from the perspective of the employer, that must be a “valid reason” where “valid” has its ordinary meaning of “sound, defensible or well founded”. As Northrop J noted, the requirement for a valid reason “should not impose a severe barrier to the right of an employer to dismiss an employee”.

[36] A failure to comply with a lawful and reasonable policy is a breach of the fundamental term of the contract of employment that obliges employees to comply with the lawful and reasonable directions of the employer. In this way, a substantial and wilful breach of a policy will often, if not usually, constitute a “valid reason” for dismissal. 45

[43] In summary, where the reason for termination of employment relates to an employee’s capacity or conduct, it is not the Commission’s function to stand in the shoes of the employer and determine whether or not the decision made by the employer was a decision that would be made by the Commission. It is rather, for the Commission to assess whether the employer had a valid reason connected with the employee’s capacity or conduct. 46

Bell v Meedac Incorporated (2022) FWC 905 delivered 20 April 2022 per Beaumont DP