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Employment Update – October 2017 – Employee lies about qualifications: Unfair dismissal but no compensation

The Fair Work Commission has recently delivered another instructive decision for employers.  The decision again brings into the spotlight the threshold for establishing serious misconduct, but also provides a significant deterrent to employees who lie about their qualifications.

In this case the Applicant was employed as Finance Manager for a not for profit group of companies (‘Employer’).  In 2014, the Applicant applied for the position of Accountant with the Employer and indicated that she had a Masters in Business Administration and was an ‘ASA – CPA Australia’.    Essentially, the ASA – CPA qualification certifies that the holder is an associate member of the CPA, and the holder then has a period of time to complete the CPA program to obtain CPA status.

The Applicant was employed on the basis of her stated qualifications, and at the time of her dismissal, she was employed as the Finance Manager.  In that role she was responsible for the preparation of financial reports, including tax return documents, for all the entities within the Employer’s Group, and the Group itself.

During the hearing, Senior Deputy President Hamberger heard that the 2015-16 accounts, which were prepared by the Applicant, presented a $600,000 loss by the Employer.  Despite this apparently being a significant loss, the Applicant did not report that loss to the Employer’s Managing Director, who was only eventually alerted to the loss by another manager.

Not only was the alleged loss significant, and not reported to the Managing Director, it was later found that the reported figures were actually incorrect, with the Employer in fact making a profit of $322,908.

Most seriously, evidence was presented that the Applicant had failed to comply with her essential duty to send the Employer’s returns to the Australian Charities and Not-for-profits Commission (‘ACNC’).  Whilst the Managing Director had earlier negotiated an extension of time for the Employer to lodge the returns, the Applicant still lodged the returns two days late.  The Applicant neither advised the Managing Director nor the ACNC that the returns would be lodged late   The failure to comply with the lodgment obligations caused significant damage to the Employer’s business, with the ACNC advising that the Employer had lost its Public Benevolent Institution Status as a result.  This also allegedly cost the Employer significant accounting and legal costs to rectify.

The Employer also raised with the Applicant that at a subsequent Board meeting, the Applicant proceeded to provide incorrect and confidential financial information about the Employer’s Group to the Director’s, including that their cash flow would be negative for a number of weeks (which was incorrect).  As a consequence of the Applicant’s reporting at this meeting, one Director resigned from their position, and another Director threatened to resign.

In late November 2016, the Employer provided the Applicant with a letter detailing its concerns with her conduct.  Some 2 weeks later, in a lengthy meeting with the Applicant and her husband, the Applicant proceeded to blame the Managing Director and other people in the organisation for the allegations that had been levelled at her (and as detailed above).  At that meeting, the Managing Director determined to terminate the Applicant immediately.

It should be noted that it was not until after the termination, that the Employer became aware of the Applicant’s misrepresentation of her qualifications.

The passages of the decision relevant to the issue of the Applicant misrepresenting her qualifications make for very interesting reading:

“[6] During her cross-examination the applicant agreed that she had provided the respondent with a professional profile when applying in 2014 for the position of accountant that indicated that her qualifications included ‘ASA – CPA Australia’ and ‘Master in Business Administration – Ateneo Graduate School of Business’.  She also agreed that in including this in her resume she wanted people to believe that she had a master’s degree in business administration.

[7] The applicant agreed that she did not have a master’s degree.

[8] The applicant was asked whether she was a ‘CPA ASA’. She did not respond to this question directly, instead (after being pressed) saying:

‘Okay. CPA ASA is like when you are going to enter to the CPA program you will be – you will have to submit qualifications like your tertiary education and your experience. They will assess whether you are qualified to undergo this – you are qualified to undertake all the subjects leading to the CPA. And so I was assessed and I got that’.

[9] The applicant agreed that she had six years to move from ASA status (i.e. associate status) to pass the relevant subjects to achieve CPA status, and that she first ‘got her ASA’ in 2008. When asked whether she had undertaken the program to achieve CPA status she obfuscated:

‘Did you do the course? —Yes. I did one and then I did stuff – I also had an ICAA and I did not continue. So is the same (sic)’.

[10] The applicant finally conceded that she did not finish the course and was not an associate member of the CPA.

[11] In fact it is clear that the applicant’s associate membership of the CPA lapsed in 2010 – that is, she was not an ‘ASA – CPA’ at the time she applied to work for the respondent, despite her representation to the contrary.

[12] It is also noteworthy that when asked earlier this year, during the Commission hearing into the respondent’s jurisdictional objection, whether she was a CPA accountant the applicant replied:

‘I’m a CPA back in the Philippines. I’m an ASA in Australia’.

[13] I find that the applicant deliberately deceived the respondent about her qualifications when she originally applied to work for them. Moreover, she gave what can charitably be described as misleading evidence to the Commission about this matter in the proceedings concerning the respondent’s jurisdictional objection. This casts serious doubt on the applicant’s credibility.

[14] I consider it appropriate to treat all the evidence of the applicant with considerable scepticism. I found the respondent’s sole witness, [the Managing Director], by contrast to be a plausible witness. While some of her answers were rambling, I have no reason to doubt her general truthfulness. Accordingly where there is a conflict in the evidence of the applicant and [the Managing Director], I prefer that of [the Managing Director].”

In turning then to consider whether the Employer had a valid reason for the dismissal, SDP Hamberger was satisfied that there was a valid reason for the dismissal, and confirmed that the Applicant’s “failure to lodge the ACNC report on time or to prepare satisfactory financial reports for 2015 caused some serious damage to the respondent’s business.  Aggravating these concerns was the applicant’s failure to accept any responsibility or even acknowledge her errors.”

However, SDP Hamberger did find that the reasons for the dismissal did not meet the required threshold for serious misconduct, and instead categorized those reasons as poor performance.  SDP Hamberger relevantly commented:

“[30] On balance, despite the lack of prior warnings, I am not satisfied that the applicant’s dismissal was unfair, except in one limited respect. Her poor performance caused serious damage to the respondent’s business. This was compounded by her unwillingness to accept any responsibility for her mistakes. The exception is that the applicant was dismissed summarily and was neither given notice nor paid in lieu of notice. The applicant was guilty of poor performance rather than serious misconduct. This would normally justify notice of termination. I find that the dismissal was unfair – but only to the extent that the applicant should have been afforded notice of her dismissal.”

Despite ultimately finding that the dismissal was unfair, because in the circumstances of being terminated for poor performance the Applicant should have received notice of termination, SDP Hamberger declined to award the Applicant any compensation at all.  SDP Hamberger justified this decision on the basis that the Applicant had been dishonest in relation to her qualifications, and found:

“It would be reasonable to infer that at least part of the applicant’s poor performance was due to the fact that she was ‘out of her depth’ in performing the Finance Manager’s role. If she had been honest with the respondent about her qualifications she might never have been appointed to the position.”

Lessons for employers

This case provides a few clear lessons for employers, namely:

  1. Make sure you fact check a prospective employee’s qualifications – this case is evidence of the fact that an applicant may lie or mislead about qualifications, and as one would expect in order to make their job application seem more attractive to a prospective employer;
  2. The threshold for serious misconduct remains very high – even in this case where the impacts for the Employer were severe, because the cause was related to the Applicant’s performance of her role, more so than her conduct, serious misconduct could not be established to the Commission’s satisfaction. With this in mind, Aitken Legal always recommends that its clients seek advice before proceeding with a serious misconduct termination.  Note that significant planning, including investigation steps, can assist with assessment as to the level of conduct and whether it meets the serious misconduct level;

The Fair Work Commission will not reward an employee’s poor conduct with gratuitous awards of compensation and Aitken Legal note that there have been recent decisions where an employee’s misconduct has resulted in no compensation being awarded.  Of course, the question of what compensation will be awarded is always in the discretion of the Commission member.