Most Read Contributor in Australia, September 2016
If you are a small business employer (ie you and related
entities employ fewer than 15 employees, including casuals and
part-timers), you will be able to successfully defend an unfair
dismissal claim if the dismissal is consistent with the Small
Business Fair Dismissal Code. A recent decision of the Full Bench
of the Fair Work Commission (Commission) has
highlighted what you need to do to comply with the Code when you
want to summarily dismiss (without notice) an employee for serious
A previous full bench of (then) Fair Work Australia held that to
summarily dismiss an employee consistent with the Code, a small
business employer must hold a belief that the employee's
conduct was sufficiently serious to justify immediate dismissal. It
must also have reasonable grounds on which to base the belief. This
requires the employer to carry out a reasonable investigation into
the matter, even if the employer is not actually correct in its
In Steri-Flow Filtration Systems (Aust) Pty Ltd v Craig
Erskine  FWCFB 1943
(Steri-Flow), the employee, Mr Erskine,
was also sole owner and director of another company. The
employee's company used valuable property of his employer for
his own company's benefit and to his employer's detriment,
without authorisation. The employer investigated the matter,
including seeking explanations and relevant documents from the
employee and others, and reviewing the relevant law. The employee
was dishonest about the matter when confronted by his employer.
As a result of its investigation, the employer formed a belief
that the employee's conduct was sufficiently serious to justify
immediate dismissal, and summarily dismissed the employee. The
termination letter clearly set out the employer's belief about
the conduct of the employee and its conclusion that the conduct
amounted to serious misconduct. The termination letter also
explained how the employer had formed the belief.
The Full Bench of the Commission found that the letter was
useful evidence about the state of mind of the employer at the time
of the dismissal. The employer successfully relied on the
termination letter to establish that it had reasonable grounds for
holding its belief about the employee's conduct. The Full Bench
of the Commission found that the grounds were reasonable because
the investigation conducted by the employer was reasonable. It also
highlighted that such conflicts of interest and dishonesty
generally justify summary dismissal.
Lessons for employers
Small business employers should make sure that when they intend
to dismiss an employee for serious misconduct, they:
conduct a reasonable investigation, including gathering
evidence, putting allegations to an employee and taking their
response into account;
form a belief as to whether or not the employee's conduct
is sufficiently serious to justify immediate dismissal, preferably
based on relevant legal principles; and
after giving the employee an opportunity to respond to the
allegations of serious misconduct and taking into account any
response, record all of these considerations in writing, preferably
in the termination letter.
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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Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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