When is a termination of employment an unfair dismissal?

There are two main steps in assessing whether a termination of employment is an unfair dismissal. The first issue is whether there is a valid reason for the dismissal. For example, was there a problem with the employee’s performance or conduct?

And the second is whether the dismissal was nevertheless harsh, unjust or unreasonable, which generally depends upon the personal circumstances of the employee and the process followed by the employer.

Here is an extract from a recent decision of the Fair Work Commission which is an analysis of the first of those issues.

“Valid reason

A valid reason is one that is sound, defensible and well founded. It should not be capricious, fanciful, spiteful or prejudiced. 44

It is relevant to note that in respect of conduct matters (other than in small businesses) the Commission’s role is not to consider whether an employer had reasonable grounds for concluding that a dismissed employee had committed acts of misconduct. It is the Commission’s role to consider whether the conduct itself occurred, and whether it constituted a breach of duty and a valid reason for dismissal 45. The Commission is tasked to consider whether, to a reasonable degree of satisfaction on the evidence before it, misconduct occurred on the balance of probabilities. The more serious the alleged misconduct, the more stringent the civil burden of proof46.

Mr McCouaig was dismissed on notice. His letter of dismissal 47 does not condense the reason into a single proposition. Colliers refers to “unacceptable workplace behaviour”. Its response to the unfair dismissal application48 invokes similar language.

I am satisfied that the reason for dismissal was an alleged failure of duty involving two alleged conduct breaches in the context of a performance management process that was well advanced and which had included two warnings. The conduct breaches were firstly, an alleged failure to inform his managers of a fire incident at Wyatt House on Sunday evening 5 August; and secondly, an alleged failure to attend a meeting on 9 August which had been called to discuss the matter. The performance failures were summarised in the termination letter as alleged failures to follow “due process, communication, attitude and dismissive behaviour”.


It is necessary to consider whether either or both of the alleged conduct breaches were a valid reason for dismissal, and whether the alleged performance failures were valid reasons for dismissal. It is also necessary to consider whether individually or in combination these provided a valid reason for dismissal.

Conclusion on valid reason

Colliers did not submit at the hearing that (absent the conduct matters) Mr McCouaig’s dismissal was warranted on performance grounds alone. I agree. There were some performance deficiencies warranting counselling and warning but no valid reason on 9 August to dismiss on performance grounds.

Having regard to my findings about the alleged conduct breaches and the alleged performance deficiencies I conclude that there was no valid reason for dismissal individually or in combination.

Mr McCouaig did not fail to escalate-up a fire incident on Sunday 5 August 2018 because he was not informed about the incident at that time. There was no misconduct in this respect.

Mr McCouaig had reasonable grounds for not attending the meeting on 9 August. He failed to follow an instruction to do so but in all the circumstances it was an unreasonable instruction. There was no misconduct in this respect.

There were some performance deficiencies warranting counselling and warning but others were overstated and lacked objectivity. Mr McCouaig’s fluctuation in attitude and performance was in part a consequence of a flawed performance management system that sent mixed messages about his overall performance against KPIs. It was also infected by the mutual dislike between he and Ms Gray especially in the wake of his bullying complaint and its follow-up. The second warning of 31 July was based in part on unfair criticism. It was not reasonable to conclude on 9 August that Mr McCouaig was failing to perform the duties of a facilities manager. Dismissal on performance grounds was not warranted.”

McCouaig v Colliers International (SA) Pty Ltd (2019) FWC 1517delivered 8 March 2019 per Anderson DP