Australia: Caught red handed? Why employers should be careful about instant dismissal

What you need to know

• The Fair Work Commission recently considered a case in which an employee had been instantly dismissed for serious misconduct, with the employer relying on CCTV footage to support its decision.
• However, based on the CCTV footage and other evidence, the employer was found to have had no valid reason to dismiss the employee and was ordered to pay compensation.
• The decision is a salient reminder to employers that even in the face of what they consider to be compelling evidence of wrongdoing, they must be prepared to demonstrate that a dismissal is not unfair.

Many employers have been in the position of catching an employee 'red handed' for some type of wrongdoing, and confidently proceeding towards immediate dismissal.

On its face, the evidence can seem overwhelming. The employer might see no compelling reason to delay the matter of an instant dismissal any further in order to discuss it with the employee. What's more, they might feel there is nothing to be gained from conducting a further investigation or following a disciplinary process in circumstances where the alleged wrongdoing seems so clear and intolerable.

However, while there may well be a valid reason for termination, an employer must be prepared for the possibility that the employee may bring a claim for unfair dismissal. It is therefore important for the employer to be in a position to demonstrate that his or her immediate dismissal of the employee was not unfair.

What is an unfair dismissal?

In short, a dismissal will be unfair if the Fair Work Commission considers that it is harsh, unjust or unreasonable, as provided by section 385 of the Fair Work Act 2009 (Cth).

In order for an employer to show that an employee's dismissal is not harsh, unjust or unreasonable, a proper investigation should be undertaken to establish the substantive grounds for termination and procedural fairness must be afforded to the employee.

A recent case involving the Salvation Army

Earlier this year, the Fair Work Commission considered a case in which an assistant store manager who worked for the Salvation Army Property Trust (SAPT) for 11 years had her employment terminated for serious misconduct.¹ The reason for her instant dismissal? She was alleged to have taken $200 from a customer that she did not put through the cash register.

SAPT submitted inferences should be drawn based on CCTV footage showing the assistant with cash in her hands after she had been in the production room with a customer. It further claimed the assistant's credibility was undermined when she changed her story (to admit that she had real money as opposed to an 'Australian banknote notepad') after being shown the CCTV footage at the hearing.²

The matter was heard by the Fair Work Commission's Senior Deputy President who found that, at its worst, the CCTV evidence showed the assistant folding a single $50 note (as opposed to four $50 notes as alleged by SAPT) in a white piece of paper and putting it in her apron. There was nothing to suggest the $50 note came from the customer, and the assistant had a plausible alternative explanation about where the money had come from.³

The Senior Deputy President went on to observe that he was being asked by SAPT to rely on 'indirect inferences' (such as the fact that the applicant had money in her hands at some point around the time she served the customer, and that she apparently said during her interview that the cash registers were busy) whereas the assistant had consistently denied ever receiving any money from the customer, both during the investigation and in her evidence before the Fair Work Commission. The assistant had given plausible explanations for her behaviour, and the Senior Deputy President was ultimately satisfied that she had not received money from the customer.⁴

The outcome: valid ground for dismissal?

The Senior Deputy President held that:

• there was no valid reason for the assistant's dismissal
• as a large employer, SAPT was expected to adopt rigorous procedures and the Senior Deputy President was not satisfied it did so, stating:

On this basis, the assistant was awarded $22,404.50 representing the maximum compensation cap based on her annual salary divided by two.

Key takeaways

This case represents a salient reminder to employers of the dangers of instant dismissal and the consequences of failing to conduct thorough investigations and follow rigorous procedures, even in the face of what they may consider to be compelling evidence of wrongdoing.

In some cases, deciding whether or not to proceed with an instant dismissal may require a delicate balance of the risks involved in allowing an employee to continue in their work, particularly when those risks might affect third parties such children or other vulnerable people in an employee's care.

When in doubt about the dismissal of an employee, whether immediate or otherwise, it is prudent for employers to seek appropriate advice based on the specific circumstances.

Footnotes

¹ Jennifer Walker v Salvation Army (NSW) Property Trust t/as The Salvation Army – Salvos Stores [2017] FWC 32.

² At [42].

³ At [43].

⁴ At [44] – [45].

⁵ At [49].

This article is intended to provide commentary and general information. It 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 article. Authors listed may not be admitted in all states and territories