Australia: Harsh, unjust or unreasonable: is the unfair dismissal regime broken?

We are familiar with the long standing approach of industrial tribunals in determining whether an employee's dismissal was unfair. You examine if there was a valid reason for dismissal, whether a fair process had been followed and look at the personal circumstances of the employee to form an impression if, overall, the dismissal was unfair.

As was stressed by the Fair Work Commission in B, C and D v Australian Postal Corporation t/a Australia Post [2013] FWCFB 6191, a case involving the access, storage and sending of pornography, there are no hard and fast rules:

... it remains a bedrock principle in unfair dismissal jurisprudence of the Commission that a dismissal may be "harsh, unjust or unreasonable" notwithstanding the existence of a "valid reason" for the dismissal.

The biggest problem with this scheme is the uncertainty it brings for business, and the "message" it can send to misbehaving employees. So much is obvious from the recent Full Bench decision in Mt Arthur Coal Pty Ltd t/a Mt Arthur Coal v Goodall [2016] FWCFB 5492. In this case, the employee made deplorable comments about colleagues in breach of policy but was reinstated.

This decision adds weight to an argument that the unfair dismissal scheme is broken in that the framework for assessing whether a dismissal was unfair does not gel with what is expected of a prudent employer. The scheme needs refinement to deal robustly with inappropriate behaviours that threaten the cohesion and wellbeing of workplaces.

The facts

Mr Goodall had five years unblemished service. He was trained in the Code of Conduct that prohibited behaving in a way that was "offensive, insulting, intimidating, malicious or humiliating" and making "jokes or comments about a person's race, gender, ethnicity, religion, sexual preference, age ...". Despite such training, Mr Goodall made derogatory remarks about a colleague's sexuality and offensive remarks about Muslims.

Mr Goodall said he was just "mucking around" and it was "just blokes having a laugh". As to his offensive remarks about Muslims, he showed little remorse. Mr Goodall said he did not consider the matter serious and the investigation was "BHP's way of pissing people off and stripping morale off us". Mr Goodall was dismissed.

Mr Goodall was reinstated to his job. Despite a valid reason for dismissal, the dismissal was harsh, including because his comments were "towards the lower end of the scale", as Commissioner Saunders said. BHP appealed, urging the Full Bench:

[Mr Goodall's] bigoted conduct was, and is, reprehensible in the workplace. Whatever his personal opinions, his bigoted incitement of derogatory views of Muslims in the workplace calls for a proper expression of opprobrium by the institution that is the peak industrial tribunal in Australia.

BHP argued comments which vilify persons of different religions or sexuality should not be assessed on a scale of seriousness.

The Full Bench was divided

The majority of the Full Bench said the discretion to find a dismissal unfair is broad and some latitude must be given to the Commissioner. It said, "[t]he conclusion that Mr Goodall's dismissal was harsh does not on its face appear to be surprising, outlandish or counter-intuitive". It was acceptable to assess the seriousness of the conduct, the Full Bench concluded. BHP's appeal was dismissed.

The dissenting decision of Commissioner Johns speaks volumes:

[91] This is not a case of a difference of degree, impression or empirical judgment. There is extensive literature about the effects of discrimination, including in the workplace. Making jokes or comments that are inherently Islamophobic and homophobic is likely to negatively affect the mental health of people in the workplace ranging from anxiety to depression...
[92] It is for this very reason that Mt Arthur has a Code of ... Conduct that expressly prohibits behaving in a way that is "offensive, insulting, intimidating, malicious or humiliating"... In implementing the policy ... and conducting training ... Mt Arthur was fulfilling its obligations as an employer under ... legislation to ensure that its workplaces are free of discrimination and harassment.
[93] In the face of a substantial and willful breach of that policy, Mt Arthur took the matter seriously, and ultimately concluded that it was a valid reason for termination ... Requiring Mt Arthur to reinstate Mr Goodall in this context is plainly unjust. Mt Arthur took decisive action to eliminate Islamophobia and homophobia in its workplace. It should have been commended for its action, not punished by being required to take Mr Goodall back.
[94] In my opinion the comments categorised as crude, lewd and sexist comments were downplayed in their characterisation... The Commissioner failed to properly characterise the (so called) crude, lewd and sexist comments as homophobic.
[95] Further, the Commissioner failed to attach an appropriate level of seriousness to these homophobic comments in circumstances where Mr Goodall directed them at a particular individual ... In this context, a finding that the "conduct was towards the lower end of the scale of seriousness" cannot, with respect, be taken seriously.
...
[98] When the crude, lewd and sexist comments are properly characterised any suggestion that they are at the "lower end of the scale of seriousness" is, with respect, irrational.
[99] Turning then to the Islamophobic comments the Commissioner could have taken "judicial notice" of the psychological damage caused by the same....
[100] When Mr Goodall's deeply offensive and Islamophobic comments are properly considered, ... [t]he subsequent down-grading of the gravity ... beggars belief. The fact that Mr Goodall was motivated by prejudice should have been an aggravating factor.

What does it all mean?

The comments were deliberate and offensive for which Mr Goodall showed limited remorse. Mr Goodall was trained to not engage in such behaviour. Other than supporting the employer's decision, any other outcome creates uncertainty for business and sends the wrong message to employees, including the victims of such conduct.

Such an outcome, as in this case, lends support to an argument that the unfair dismissal system is broken. The community would expect a prudent employer to deal with such inappropriate behaviour. Should the test simply be: what is the correct and preferable decision? No need for the uncertainty generated by concepts of fairness and harshness.

For supporters of the regime, it would be hard to resist the call to refine the system to require the Commission to have explicit regard to the legal obligation of employers to regulate inappropriate behaviours and supporting employers in the enforcement of appropriate standards of conduct. Such considerations, made mandatory, may achieve a fairer go all round.

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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