Australia: Serious misconduct and dishonesty in employment

Last Updated: 14 October 2012
Article by Elise Croft


The Fair Work Act 2009 ("FWA") and the Fair Work Regulations ("FWR") provide the framework within which employees may allege that, amongst other things, their employer has taken adverse action against them or dismissed them unfairly.

One of the most common situations in which such claims are made is when an employee has been "summarily dismissed" (dismissed without notice) on the basis of serious misconduct. In such circumstances the employee often claims that:

  • there was some other (unjustifiable) reason why they were dismissed, or
  • there was no serious misconduct and therefore, as a result of the decision to summarily dismiss, the employer is in breach of the employment contract.

The employer must then defend the claim on the basis that there was serious misconduct warranting the summary dismissal.

Understandably, there is no clear definition of the degree of misconduct which would justify summary dismissal. It is entirely dependent upon the circumstances of the particular case. The FWA and FWR simply say that serious misconduct has its 'ordinary meaning' and will include:

  • Wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;
  • Conduct that causes serious or imminent risk to the health and safety of a person or the reputation, viability or profitability of the employer's business;
  • The employee, in the course of employment, engaging in theft, fraud or assault;
  • The employee being intoxicated at work; or
  • The employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee's contract of employment.

As to the first point above: if the employee deliberately disregards the essential conditions of their contract of employment, it is likely that there will have been serious misconduct. However, much will depend upon what the employee was employed to do and which obligations were considered vital to the contract. Conduct which (a) impedes the faithful performance of those vital obligations, or (b) destroys the necessary mutual trust and confidence between employer and employee, can justify summary dismissal.

Hill v Compass Ten Pty Ltd (No. 2)[2012] FCA 815

Hill was employed by Compass Ten as its Facilities/Operational Manager at the Sunshine Lodge residential care facility in NSW. He was dismissed in October 2011 for unsatisfactory performance and subsequently claimed that his dismissal was in breach of the FWA and the terms of his contract of employment.

First Aid Certificate

Subsequently, Compass Ten sought support for the dismissal by referring to the first aid certificate which Hill had submitted when he applied for the job which in fact belonged to his son. Hill said he attached it by mistake but it was clear from the evidence that he had never obtained a first aid certificate. The Court found that he had changed the name on his job application to more closely resemble his son's name on the first aid certificate. Compass Ten submitted that this was a serious breach of the contract.

The contract itself provided for termination 'immediately and without notice' in the event of serious misconduct or a serious breach of the contract. Serious misconduct was defined as:

Without limitation... dishonesty, fraud, assault...or failing to comply with any of [Compass Ten's] policies or procedures from time to time...

The issue of the first aid certificate did not arise until after the dismissal but the Court said this did not matter - the employer was entitled to raise the misconduct in support of its decision to dismiss.

One of Sunshine Lodge's licensing conditions required at least one member of staff on duty to hold a first aid qualification. Mr Hill's role as a manager required him to deal with residents suffering from disabilities and requiring regular medical treatment. The statutory licensing requirements concerning first aid trained staff were therefore critical and his deception, if known at the time, would have justified summary dismissal.

Medical Records

Compass Ten had a system for keeping medical records which required Hill to manually record the administration of medication and medical appointments in the appropriate diary and folder. It was clear that he was expected to follow the system.

Instead, Hill attempted to implement an electronic system without consulting the Director and without permission. As a result, important medical documentation was missing or incomplete. His unilateral decision to change the system amounted to wilful disobedience.


Hill had also been instructed by the Director to attend a training course designed to assist him in handling difficult patients. In clear breach of that instruction, he did not do so, arguing that the second day of training would have been irrelevant. The Court found that he had wilfully disobeyed the Director's instruction.

Financial Records

Sunshine Lodge also had a system for recording and distributing 'comfort money' to residents which required the relevant staff member to ensure that sufficient funds were held to the resident's credit. The register needed to be signed to acknowledge that the money had been provided to the resident. Under Hill's management, the register had not been properly kept and he appeared to lack an appreciation of the need to allocate money according to existing credit balances. Hill had been told by his superior what was required and he refused to follow the required practice.

Further Records

Another of Hill's duties was to record the provision of tobacco to residents. A form was kept for this purpose which was required to be completed weekly. After 29 August 2011, no record of tobacco usage was included in the record sheets.

The Court's Conclusion

The Court said that it was possible that some of Hill's conduct, particularly with regard to his failure to follow instructions from the Director, may not in isolation have reasonably formed a basis for his dismissal. However, the totality of his conduct demonstrated a persistent unwillingness to follow the instructions and procedures sufficient to justify summarily dismissal.

The Court also found that Hill knew, before he issued his proceedings, that he had committed an act which was grounds for summary dismissal and which would inevitably provide Compass Ten with a complete defence to his claim for breach of contract as soon as they became aware of it. Accordingly, he was ordered to pay Compass Ten's costs of the proceedings.


The employer's success was clearly assisted by the existence of written policies setting out Hill's obligations. Without them, it would have been more difficult to establish the allegations of unsatisfactory performance.

It is also clear that if an employee is dismissed for misconduct on specific grounds and further misconduct is subsequently discovered, the employer may raise such misconduct in support of the dismissal despite being unaware of it at the time.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Elise Croft
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