Employers should be careful when using the terms "negligence", "gross negligence" and "serious misconduct" to label employees' conduct.
A recent Fair Work Commission decision has put a spotlight on the relationship between "negligence", "gross negligence" and "serious misconduct" (John v The Star Pty Limited  FWC 543).
One goes through to the keeper
Matthew John had been employed by Star Pty Limited as a security officer at its casino in Pyrmont for more than five years.
Mr John was part of the safety team which responded to incidents as and when they arose, but he sometimes had to work in the welcome team and check patrons seeking entry were over 18 and not intoxicated.
One night while on the welcome team Mr John asked Ms L for her proof of identification. The 17 year old proffered her friend's Learner Drivers Licence. Mr John looked at it but not back up at her face; he then allowed her in. This was caught by the casino's CCTV.
Mr John was called to a meeting to explain his conduct. He accepted fault and that that he should not have let Ms L through, but said there were mitigating circumstances: there wasn't enough support at the entrance point, too many people were trying to go in, the team leader was absent, and the help he'd asked for had not been given.
After a 35 minute break, the meeting resumed and Mr John was told that his employment was being summarily terminated for failing to conduct a proper identification check. He was told of the reasons for termination by letter 22 days later. The letter referred to Star's obligations under the Casino Control Act 1992 (NSW) to prevent entry to minors, and stated that his conduct amounted to a "serious breach" of his duties.
Mr John made an application for unfair dismissal remedy under Part 3-2 of the Fair Work Act 2009 (Cth), saying the dismissal was harsh, unjust or unreasonable.
Negligent, but not grossly negligent
Mr John's conduct, argued Star, amounted to gross negligence. He did not look at Ms L's face when viewing her identification and spent a total of four seconds conducting the check. The CCTV footage also showed other occasions where he had conducted only the most cursory of identification checks.
Commissioner Cambridge disagreed.
While Mr John's conduct was deficient, it "did not involve the grave, serious or significant departure from the standard of care which should have been exercised and which caused substantial loss or damage to the employer, such as would be necessary to provide valid reason for his summary dismissal."
His dismissal was harsh, unjust and unreasonable, given that
- his employer had contributed to the situation by adopting unreasonable standards and expectations, and not fixing systemic deficiencies in the way in which security was organised, including failing to specify a procedure for conducting ID checks; and
- deficiencies in the process: the letter of dismissal was sent very late, some asserted facts were shown to be inaccurate, and there was no fair and balanced apportioning of fault.
Mr John admitted fault on his part for what was a serious error, which justified appropriate warning and coaching rather than dismissal.
Star was ordered to reinstate John to his position and to make up his lost pay.
"Gross negligence" vs "serious misconduct"
Although not strictly necessary to his decision, Commissioner Cambridge delivered some interesting remarks upon the concept of serious misconduct.
Commissioner Cambridge ruled that "serious misconduct" did not extend to mere negligence – even if the negligence is at a level qualifying it to be "gross negligence" – and suggested it is unfair to terminate an employee without notice where all that the employee has done amounts to "gross negligence".
He noted that misconduct entails an element of wilfulness. Negligence, on the other hand, is characterised by lack of care. He then went on to say:
"Courts and Tribunals appear to be gradually casting off the proposition that negligence would justify summary dismissal, as it represents an outdated concept which was established upon the principles which applied during the era of the master and servant relationship."
The trend in case law is arguably not clear cut. Some cases do reflect an evolutionary casting-off of gross negligence but others do not.
On the one hand, in Ramsey v AVA Systems Pty Ltd  FWA 1998, the applicant's conduct was alleged to constitute "gross negligence" and therefore, it was argued, justified summary termination. However, in Commissioner Robert's view, "gross negligence" fell outside the term "misconduct" as "Mr Ramsay was summarily dismissed for alleged 'gross incompetence'. Mr Ramsay was not accused of misconduct."
On the other hand, in Pillai v Messiter (No. 2) (1989) 16 NSWLR 197, the NSW Court of Appeal said (albeit in the arguably distinguishable circumstances of negligence in the context of the performance of professional duties by a medical practitioner) that "gross negligence might amount to relevant misconduct, particularly if accompanied by indifference to, or lack of concern for, the welfare of the patient".
The interaction between "serious misconduct" and "gross negligence" is complex and nuanced. The relationship between the two concepts is likely to vex lawyers, judges, legal academics, and human resources professionals for some time.
Certainly, the era of "master and servant" has long passed, and employers are expected to provide training, resources and other assistance to employees if they engage in careless conduct. However, have we come far enough that "gross negligence" is no longer a manifestation of "serious misconduct"? It seems we will have to wait a bit longer for that question to be definitively answered.
What is clear, however, is that there is still a distinction between conduct that warrants summary dismissal, and conduct that doesn't.
For employers dealing with employee misconduct, the first step should be getting the investigation process right so the process is thorough and fair.
Once the facts are uncovered you have to shape the response to the conduct. As we've seen in this and other cases, the use of labels such as "gross negligence" or "serious misconduct" won't be enough to justify summary dismissal if the conduct itself doesn't justify it.
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.