Unfair Dismissal Update
LegalTalk - June 2009
Three recent unfair dismissal cases before the Australian Industrial Relations Commission (AIRC) provide useful lessons for employers on managing the dismissal process to reduce litigation risks.Verbal representations not a binding contract
In the first case the AIRC considered whether verbal representations made by an employer about the nature of the job offer amounted to a legally binding contract.Facts
The employee was initially employed in a HR role on a three month fixed term contract. At the interview for the role the employee told the employer's HR Manager that she was only interested in the role if it would become permanent at the end of the fixed term contract. The employee claims the HR Manager told her this was the case.Prior to the expiration of the fixed term contract the employee was offered and accepted a second three month fixed term contract. Before accepting the second contract she again asked the HR Manager about the role becoming permanent and claims she was told this would occur.
The employee also claimed that during her time at the employer she was given numerous verbal reassurances by the HR Manager about the future permanency of the role.
On 30 October 2008, one week before the second fixed term contract was due to expire, the HR Manager told the employee that the role would not be made permanent and her employment would terminate when the contract expired. The HR Manager also told the employee that she was not required to attend work for the last week of the contract but would be paid for this time.
The employee subsequently applied to the AIRC alleging unfair dismissal.
The employer sought to have the employee's application dismissed, on the grounds that the AIRC lacked jurisdiction to deal with the case because the employee's employment was not terminated at the employer's initiative, and if it was, the employer terminated the employee for genuine operational reasons.
Findings
Commissioner Thatcher found that the AIRC had jurisdiction, because the employer had effectively dismissed the employee one week before her contract expired and this dismissal was not for genuine operational reasons. The Commissioner relisted the case for conciliation.In determining the jurisdictional issue, Commissioner Thatcher considered whether the verbal representations made to the employee about the future permanency of the role constituted a legally binding contract.
Commissioner Thatcher noted that whether verbal representations constitute a valid contract depends firstly on the intention of the parties. The Commissioner found that the employer never intended the verbal representations made to the employee to be legally binding, because the employer's HR policy required all decisions on the length of an employee's employment to be in writing and the fixed term contracts contained a provision that the contract constituted the entire agreement between the parties.
Commissioner Thatcher consequently held that the HR Manager's verbal statements did not create any legally binding obligation on the employer to provide the employee with permanent employment.
Lessons for employers
Employers should be wary of making unintended representations to employees or potential employees about the nature of their employment.To reduce the risk that verbal representations made during the recruitment process or course of employment are legally binding, employers may consider instituting a policy requiring all terms of employment to be committed to writing. For this reason, employers should also consider inserting a provision in all employment contracts to the effect that the contract constitutes the entire agreement between the parties.
(U2008/7124) [2009] AIRC 171 (25 February 2009)
Positive obligation on employer to prevent employee misconduct
The second case involved an employer disclosing serious allegations about an employee to other employees at the workplace and taking insufficient steps to remedy the situation before dismissing the employee for his consequent misconduct.Facts
A factory security supervisor emailed the factory HR Manager, detailing his concerns that the previous day an employee working as a forklift driver at the factory had come to work intoxicated.The HR Manager received the email on her laptop computer just prior to making a power point presentation to a number of employees at the factory. Upon connecting her laptop to the presentation screen she inadvertently displayed the email containing the allegations to all employees attending the presentation.
Following the presentation some of these employees approached the employee named in the email about the allegations. This employee subsequently complained to the HR Manager who apologised for publicising the email, but failed to take any further action to prevent the employee retaliating against the security supervisor. This was despite the employee's history of getting angry, upset and swearing at work.
On 15 October 2008, the employee confronted the security supervisor about the allegations and verbally abused him. The employer consequently dismissed the employee on that day.
The employee made an application to the AIRC alleging unfair dismissal.
Findings
Commissioner Blair's view was that that the employee's dismissal was unreasonable because the employer could have prevented the misconduct which led to the dismissal. The Commissioner noted that if the HR Manger had been more proactive and responsible in the way she handled the inadvertent disclosure of the email, the employee's verbal abuse of the security supervisor would likely not have occurred.Commissioner Blair ordered the employer to pay the dismissed employee four months' pay as compensation but did not order reinstatement of the employee, due to concerns that his conduct at work could adversely affect the safety and welfare of other employees.
Lessons for employers
Employers who experience problems with employee misconduct should take proactive steps to prevent further unsatisfactory conduct where such conduct might reasonably be anticipated.Employers who fail to take such steps and subsequently dismiss employees on grounds of misconduct may be found to have acted unfairly and be subject to compensation orders.
(U2008/6975) [2009] AIRC 285 (19 March 2009)
Employer may rely on evidence obtained after dismissal to justify summary dismissal
In the third case the AIRC considered whether an employer could use information gained after it summarily dismissed an employee to justify its actions.Facts
An employee working as an IT officer used his system administrator privileges to gain access to emails and documents on other employees' computers. This employee subsequently transferred these private, commercially sensitive and highly confidential emails and documents to the hard drive of his own computer.On 20 June 2008, executives at the employer discovered some of these emails on the employee's computer, confronted him and finding his explanation insufficient, summarily dismissed him.
The employer's further investigation of the employee's computer revealed other emails and documents which the employee had wrongly accessed and transferred to his own computer. The employee applied to the AIRC alleging unfair dismissal.
Findings
At first instance Commissioner Foggo found that the employee's dismissal was harsh, because at the time of dismissal the employer had insufficient information on hand to justify summarily dismissing him. The Commissioner held that at the time of dismissal the employer had only enough information regarding the employee's misconduct to justify dismissing him with notice.The Commissioner ordered the employer to pay the employee four weeks' pay in lieu of notice as compensation but did not order the employer to reinstate the employee, because information obtained by the employer after the employee's dismissal had revealed the employee engaged in serious misconduct.
On appeal the full bench of the AIRC overturned this decision. The full bench held that even though the employer lacked sufficient evidence at the time of the employee's dismissal to justify summarily dismissing him, the employer could rely on the findings of its further investigation to retrospectively justify its actions.
Lessons for employers
Where a dismissal is challenged, an employer may be able to rely on evidence obtained after the dismissal to justify its actions in dismissing the employee.However, this may not always be the case. For example, if the evidence could have been discovered by reasonable enquiries made before the dismissal and the employer failed to make such enquiries, the employer may not be able to rely on evidence obtained after the dismissal.
Consequently, in most if not all circumstances, employers should fully investigate an employee's alleged misconduct prior to summarily dismissing them.
(C2008/3385) [2009] AIRCFB 374 (21 April 2009)
Of further interest