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Misconduct but still unfairly dismissed

To start off 2016, we thought it might be prudent to revisit one of the more significant decisions handed down in 2015 in which a termination for serious misconduct was determined to be unfair, despite there being a valid reason for dismissal.  In this case, it was the Commission’s comments about compensation that should be particularly interesting for employers.

Background

In this case, the employee was employed by a HR consultancy business.

The dismissal occurred following the employee leaving work with a migraine in December 2014.  The employee, after treating the migraine, intended to return to work but instead was directed to return home.  Once she returned home, the employee was spoken to by a manager and was asked whether she had downloaded company data to a personal hard drive.  The employee admitted that she had and said she had done so in order to be able to work from home.  The manager advised her that there was absolutely no need for her to copy the entire drive that she had and that she did not have permission to do so.  The employee was then advised that the employer would be terminating her employment immediately.

The employee demanded to speak with the owner of the Company, and they then spoke later that day.  During that discussion, the employee attempted to defend her conduct.  The owner of the employer emphasised the volume of data that was downloaded and eventually confirmed the termination.  

The downloading of the data was admitted by the employee.   However, she argued that she downloaded the data for the purposes of completing work related tasks from home.  She denied that the material was taken for her own business’ purposes, nor was she ever told that she could not do so, or that there was a policy that said as much.  The employee did admit that it was a ‘silly thing to do’.

She then contended that the employer ‘…did not carry out a reasonable investigation and summarily dismissed her without giving her any opportunity to provide her version of events’.  That essentially formed the basis of her unfair dismissal application. 

Decision

In his decision, Commissioner Hampton considered all the evidence.  It was particularly noted that the employee had set up her own training business and, following the termination, had in fact begun running that business.  Numerous steps towards initiating that business were taken before the circumstances surrounding the dismissal took place.  The employer was unaware of this fact at the time of termination, but relied on this evidence as proof that the employee intended on using the confidential information and intellectual property that she downloaded in her own business.

In determining whether there had been a valid reason for the dismissal, Commissioner Hampton noted these particular circumstances and stated:

“The combination of events and circumstances was grounds for suspicion and I have found that some of the explanations provided by [the employee] were unconvincing. However, based upon the evidence before the Commission, I am not persuaded that [the employee’s] conduct constituted theft or misappropriation of the IP as I cannot be satisfied to the requisite degree that such was intended or actually occurred….”

Commissioner Hampton acknowledged that some of the employee’s conduct was not consistent with the employer’s policies.  He also noted that trust and confidence was an important element in the employment relationship, particular in a small workplace such as the employer’s.

For these reasons, he determined that there was a valid reason for the dismissal.

Commissioner Hampton did go on to find that there was procedural unfairness in effecting the termination and, in particular, noted that not all of the reasons for the dismissal were put to the employee during the termination process.  Consequently, the employee had not been given an opportunity to respond to all those issues.

Significantly, whilst the Commissioner was satisfied that there was a valid reason for the dismissal, he did state the following:

“In this case there was misconduct but not serious misconduct that warranted immediate dismissal. In that context, the absence of notice or pay in lieu of notice is a factor to be weighed into the overall consideration.”

On that basis, given the misconduct fell short of serious misconduct and the finding that there was some procedural unfairness in the termination process, the Commissioner determined that the dismissal was indeed harsh and unjust.

Remedy

Commissioner Hampton then went on to consider an appropriate remedy.  His Honour determined that even if a proper investigation and termination process had been followed, the employee would still have only remained in employment for a short period.

On that basis, he determined that this was a case where the employee’s compensation could only be limited to the relevant notice period that she would have received had she been terminated for misconduct as opposed to serious misconduct.

His commentary on this point is important for all employers to consider.  He stated:

“[194] There is demonstrated misconduct that may be taken into account as provided by s.392(3) of the Act. That is, there is misconduct that contributed to the decision and in other circumstances it would be appropriate to make a deduction on the amount of compensation otherwise due. In this case, the level of compensation is only equivalent to the level of notice due under the Act and I do not consider that an order of the Commission in this context should be less than the statutory minimum notice period given the circumstances.”

Lessons for Employers

As we have discussed in previous updates, the recent case law coming out of the Fair Work Commission points to the threshold for serious misconduct becoming increasingly difficult to meet.  For that reason, we recommend that employer’s exercise caution before terminating an employee for serious misconduct and wherever possible, appropriate legal advice should be sought before doing so.

This case is significant as it shows that whilst the employer made the wrong decision in escalating to a summary dismissal as the conduct was not so serious as to constitute serious misconduct, the Fair Work Commission will not seek to ‘reward’ employees who have engaged in misconduct.  In these cases, where there is a valid reason for dismissal, but the conduct does not constitute serious misconduct, then the Fair Work Commission are more likely to only award compensation equivalent to the relevant notice period.

Mark Bunch, Partner

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