A recent Fair Work Commission ("FWC") decision has found that despite an employee making covert recordings of disciplinary conversations with management, this would not result in a compensation reduction for misconduct, because the employer was not aware of the covert recordings at the time of the dismissal.


The Applicant was a casual sales assistant at Bed Bath n Table ("BBT") who had been employed with the company for just over eight months. Her employment had been terminated because of misconduct arising out of three allegations of non-compliance with a company policy and alleged behaviour towards her regional manager.

Following the dismissal, BBT discovered through evidence submitted by the Applicant that she had made secret recordings of conversations between the Applicant and company management. In BBT's submissions to the FWC it sought to rely on the covert recordings for a compensation reduction for misconduct. The decision follows on from several previous appeals by the Applicant, including one that found that secret recordings would be a valid reason for termination of employment.

Order for compensation

The FWC rejected BBT's submissions regarding the compensation reduction for misconduct, holding that the reasoning was invalid due to the sequence of events. The FWC determined that the award of compensation was "appropriate in the circumstances".

The FWC applied the "Sprigg Formula" when deciding upon the appropriate amount of compensation. The Sprigg Formula estimates the amount of compensation that the employee is entitled to in consideration of the continuation of the employment. Under the Sprigg Formula, compensation will be reduced due to misconduct if it contributed to the decision of the employer to dismiss the employee at the time that decision is made.

The FWC found that if the misconduct of the employee contributed to the decision of BBT to dismiss the employee, the FWC would be bound to make a compensation reduction for misconduct. However, since BBT did not know of the recordings at the time of the dismissal it could not be found that the misconduct contributed to the decision to dismiss. In these circumstances, the FWC held that it was not an appropriate cause to deduct an amount for misconduct from the compensation awarded.

Key takeaways

  • Covert recordings can in certain circumstances amount to valid grounds for dismissal.
  • Employers must have a clear and valid reason for dismissal.
  • Compensation for dismissal can be reduced by the FWC for misconduct if it contributed to the decision to terminate the employment.