Australia: Unfair dismissal case shows importance of applying disciplinary procedures correctly and consistently

Last Updated: 10 August 2015
Article by Candice Van Tonder

In brief - Fair Work Commission finds employee's dismissal harsh, unjust and unreasonable

Despite the Fair Work Commission finding that bullying behaviour was a valid reason for his dismissal, an employee was found to have been unfairly dismissed due to an inconsistent application of, and failure in, the employer's disciplinary process.

The decision in the Fair Work Commission in Keenan v Leighton Boral Amey Joint Venture [2015] FWC 3156 illustrates the importance of an employer consistently following a comprehensive disciplinary and dismissal procedure, and ensuring that work events at which alcohol will be supplied to employees are managed in a way that ensures responsible service of alcohol.

Responsible service of alcohol not adhered to by employer

Mr Stephen Keenan became an employee of Leighton Boral Amey NSW Pty Ltd on 1 April 2013 to work on the Leighton Boral Amey Joint Venture (LBAJV). Mr Keenan was appointed team leader in October 2014.

Upon commencing employment with LBAJV, Mr Keenan agreed to comply with all company policies and procedures and attended an induction session where he was provided with training on LBAJV's values. This included PowerPoint presentations on "safety and respect", "how the workplace is free from harassment and discrimination" and policies prohibiting bullying, harassment and discrimination.

On 12 December 2014, LBAJV organised a Christmas party for its employees, who were advised that morning that they should enjoy the party responsibly. The party took place at a hotel and the arrangement was that the hotel would serve alcohol and food between the hours of 6 and 10pm. At the time it was the hotel's policy not to serve guests who appeared to be in a state of intoxication.

Mr Keenan arrived at the party around 7pm, having already consumed two stubbies of beer and proceeded to drink a further 10 beers and one vodka and coke during the course of the evening. He was never refused service of alcohol or asked to leave the party and attendees could serve themselves by pouring beers from "esky type containers".

Verbal abuse and bullying at work Christmas party

During the course of the evening, Mr Keenan told a director of LBAJV: "F--- off mate" and stated to another employee: "All those board members and managers are f---ed, they can all get f---ed. Kevin Badger is a c---" and "I think I just told him to f--- off."

When another employee, Ms Stokes, disagreed, Mr Keenan asked her: "No seriously, who the f--- are you? What do you even do here?"

Later on that evening Mr Keenan told Tara Kennedy, a communication and stakeholder manager for LBAJV: "I hate working for LBAJV. It's a shit place to work. In fact I just told the head of Leightons to f---- off."

Mr Keenan proceeded to ask Ms Kennedy what she considered personal questions and stated: "I want to ask for your number, but I don't want to be rejected."

Sexual harassment allegations at after party

The service of alcohol at the hotel ended at 10pm and Mr Keenan went upstairs to the hotel's public bar area, along with other LBAJV employees, who were all paying for their own drinks at the bar. Mr Keenan walked outside where Ms Stokes was sitting and made a number of attempts to touch a dimple on her chin, making contact with her face a number of times despite her pulling away.

A little while later during a discussion with Ms Cosser, a fellow employee, Mr Keenan stated: "I used to think you were a stuck up bitch, but Ryan says you are alright. If Ryan likes you then you must be ok."

A little while later Mr Keenan proceeded to hold a colleague's face and kiss her on the mouth without warning. The colleague, Ms O'Reilly, left and went to the bathroom and when she later walked past him, Mr Keenan said to her: "I'm going to go home and dream about you tonight."

At around 11pm a number of employees were moving on to another venue and Mr Keenan formed part of this group. Mr Keenan commented to fellow employee Ms Kearns: "My mission tonight is to find out what colour your knickers you have on" [sic]. Upon arriving at the next venue, Mr Keenan was refused entry.

Correct disciplinary procedures not followed by employer

Following complaints from employees about Mr Keenan's behaviour, LBAJV management met with Mr Keenan for an informal meeting on 16 December 2014. At the informal meeting, Mr Keenan did not have a support person or a representative present.

Findings of the investigation into the allegations were prepared by 17 December 2014 and eight allegations of misconduct on the part of Mr Keenan were outlined, including inappropriate behaviour and language, sexual harassment and bullying.

A second, more formal meeting took place on 18 December 2014 to allow Mr Keenan and his representative an opportunity to respond to the allegations. However, the meeting failed to identify the factual content of most of the allegations in a way which would permit Mr Keenan to provide an informed response.

During the second meeting, Mr Keenan and his representative submitted potential outcomes as an alternative to dismissal, including a written warning, an apology, counselling, a demotion, a ban from events and monitoring of progress.

LBAJV management subsequently made the decision to dismiss Mr Keenan and this was communicated to him by letter on 20 January 2015. The letter confirmed that the dismissal was based on the sexual harassment of Ms Kennedy and Ms O'Reilly.

Despite Mr Keenan and his representative requesting that the dismissal decision be reviewed, Mr Keenan was contacted less than 24 hours later and advised that the decision would stand.

Disciplinary procedures not implemented consistently

In contrast to the disciplinary action taken against Mr Keenan, in November 2014 Mr Denmeade, a manager for LBAJV, changed the work roster for electricians and electrical supervisors, resulting in each having one day off per month rather than two.

A heated exchange ensued at a meeting, during which Mr Denmeade stated to one of the employees: "Do you want us to get our c--ks out and measure them too?" Mr Denmeade apologised to the employee after the meeting and reported the incident. No disciplinary action was taken.

Employee argues that after party conduct falls outside scope of employment

The Fair Work Act 2009 requires various factors to be taken into account when deciding whether a dismissal is harsh, unjust or unreasonable, so as to amount to unfair dismissal. One of the main factors in making this determination is whether "a valid reason" for the dismissal exists.

Under section 394 of the Fair Work Act, where an employee has been dismissed, an application can be made for an unfair dismissal remedy in relation to the termination. In his application to the Commission under this section, Mr Keenan submitted that the conduct that occurred at the public hotel bar was outside of the scope of his employment and therefore could not constitute a valid reason for dismissal.

As held in Rose v Telstra Corporation Limited [1998] AIRC 1592, LBAJV argued that out of hours conduct may constitute a valid reason for dismissal where the conduct is such that it is likely to cause serious damage to the relationship between the employer and employee, damage the employer's interests, or is incompatible with the employee's duties as an employee.

LBAJV further argued that Mr Keenan's sexual harassment may render LBAJV vicariously liable under section 28B(2) of the Sexual Discrimination Act 1984, which states that "it is unlawful for an employee to sexually harass a fellow employee" and this could cause damage to the employer's interests.

Sexual harassment not sufficiently connected with employment

Vice President Hatcher found that although the act of kissing Ms O'Reilly was unwelcome conduct of a sexual nature, the harassment occurred outside of working hours and outside the workplace.

There was no evidence that LBAJV had induced or encouraged Mr Keenan to attend the hotel bar after the Christmas party, and the connection between the circumstances of the harassment and the fact that there existed a common employer, was not sufficient to render the conduct unlawful under section 28B(2). (See Leslie v Graham [2002] FCA 32.)

As the conduct was therefore found to be not unlawful under this section, LBAJV was not to be held vicariously liable and had therefore not established a valid reason to terminate Mr Keenan's employment.

Despite LBAJV's argument that the "but for" test should be used (that is, but for the fact that there was a work Christmas party, Mr Keenan would not have been at the bar), the Commission confirmed that the use of the "but for" test in this context was incorrect and in effect cast the net too widely over conduct occurring in private settings.

It was found that the actions towards Ms Kennedy and Ms Cosser were unpleasant, but did not amount to sexual harassment.

Bullying valid grounds for dismissal, but employer fails to follow disciplinary procedures

The Commission considered the conduct towards Ms Stokes at the Christmas party to be the only allegation which constituted a valid ground for dismissal, confirming that the words and manner in which the words were said constituted bullying.

Despite having found that Mr Keenan had engaged in bullying behaviour, Vice President Hatcher found that the allegations were not communicated to Mr Keenan clearly, that he was not given a proper opportunity to respond, and that he was denied the presence of a support person at the first meeting. This amounted to procedural failure, made worse by the fact that LBAJV is a sizeable company and has a dedicated human resources team.

Irresponsible service of alcohol contributed to employee's behaviour

In determining whether the dismissal was harsh, unjust or unreasonable, the Commission found it relevant to consider Mr Keenan's prior work record and the isolated nature of the conduct, as well as the role that alcohol played in his conduct and the service of alcohol at the function.

The Commission noted in particular that it is contradictory for an employer to insist on usual standards of behaviour at a work function, whilst at the same time allowing unlimited service of free alcohol.

The Commission identified that LBAJV had not taken sufficient steps to satisfy itself that the hotel would serve alcohol responsibly, nor was there any person from LBAJV with managerial authority in charge of conduct at the function.

The Commission found that the role of alcohol at the Christmas party weighed in favour of the conclusion that Mr Keenan's dismissal was harsh.

Differential disciplinary treatment may be grounds for finding dismissal unfair

With specific reference to the lack of disciplinary action taken against Mr Denmeade, the Commission noted that it is well established that differential treatment of similar misconduct by an employer may be a legitimate basis upon which to find that a dismissal is unfair. (See Darvell v Australian Postal Corporation [2010] FWAFB 4082 at [21]-[24].)

As such, the Commission considered that differential treatment by LBAJV of the conduct by Mr Denmeade and Mr Keenan was sufficient to add weight to the conclusion that Mr Keenan's dismissal was harsh and unjust.

Despite the finding that there was a valid reason for his dismissal, the Commission ultimately found that Mr Keenan's dismissal was unfair as it was harsh, unjust and unreasonable.

Employers must take steps to minimise the likelihood of a dismissal being unfair

This case highlights the importance of employers following a comprehensive and consistent disciplinary policy and procedure. Employers should ensure that:

  • disciplinary policies are up to date and reference statutory obligations
  • staff training is conducted on what is acceptable behaviour
  • disciplinary procedures are followed consistently in all cases
  • alternatives to dismissal are considered in circumstances where they are appropriate

For further information, please contact:

Kristen Lopes
Workplace relations
Colin Biggers & Paisley

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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Candice Van Tonder
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