There have been numerous cases in the past few weeks (and plenty more prior), where the FWC has found that the applicant has been terminated for a “valid” reason; but the termination failed because it was found that it was “unfair”. This was due to losing one’s job not being proportionate to the misconduct. In other words “the punishment did not fit the crime”.
In this edition I examine, the law, relevant precedents and recent case history.
The FWA provides the “checkpoints” that the FWC must consider when determining such matters:
- Whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and
- Whether the person was notified of that reason; and
- Whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
- Any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and
- If the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and
- The degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
- the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
- Any other matters that the FWC considers relevant.
REMEMBER: In the FWC “procedural fairness” is king.
The “gold standard” (ie precedents) – as handed down by courts in relation to thjis subject are:
- Crozier v Palazzo Corporation Pty Ltd, a Full Bench of the Australian Industrial Relations Commission dealing with similar a provision of the Workplace Relations Act 1996 (Cth) stated the following:
“As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified…[it] would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. Much like shutting the stable door after the horse has bolted.”
- The ambit of the conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd  HCA 24; (1995) 185 CLR 410 at 465 by McHugh and Gummow JJ as follows:
‘….It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.’
- A valid reason for dismissal is one that is “sound, defensible or well founded and not capricious, fanciful or spiteful”. The authority for this approach is found in the often cited case of Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 at page 373 which reads as follows:
“In its context in s.170DE(1), the adjective “valid” should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s.170DE(1). At the same time the reasons must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must ‘be applied in a practical, common sense way to ensure that the employer and employee are treated fairly’.”
A valid reason for dismissal attempts to balance, in a practical way, the needs of employees and employers.
When the reason for the dismissal relates to the employee’s conduct, it is necessary for the Commission to determine, on the balance of probabilities, whether the alleged conduct occurred, and if so, whether it was a sufficient reason for termination.
- There is a distinction between capacity and conduct. In this matter, it was the conduct of the employee that formed the basis of her termination. In King v Freshmore (Vic) Pty Ltd, a Full Bench held:
“When a reason for a termination is based on the conduct of the employee, the Commission must, if it is an issue in the proceedings challenging the termination, determine whether the conduct occurred. The obligation to make such a determination flows from s.170CG(3)(a). The Commission must determine whether the alleged conduct took place and what it involved.
The question of whether the alleged conduct took place and what it involved is to be determined by the Commission on the basis of the evidence in the proceedings before it. The test is not whether the employer believed, on reasonable grounds after sufficient enquiry, that the employee was guilty of the conduct which resulted in termination [See 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].”
It is not the role of the Commission 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 court.” However, the Commission must consider the entire factual matrix in determining whether an employee’s termination is for a valid reason.
Greg Reiffel Industrial Relations & Human Resources Consulting has been providing the following services to businesses for over 30 years:
- General HR and IR advisory service.
- Fair Work Commission representation (eg unfair dismissals, adverse actions, etc.).
- Workplace investigations and mediations.
- Policies and procedures.
- Discipline & Termination.
- People Audits (are you at risk of prosecution?).
- Enterprise Agreements, Contracts of Employment, Individual Flexibility Agreements.
- On-site HR services.
Contact Greg on 0438 906 050 or mailto: email@example.com.