Employment Law Termination NSW

As an employer you are entitled to exercise your right to dismiss an employee for misconduct. However, you should be aware of the consequences of doing so, and not doing so, so you can properly weigh up the risks to your business.

The risk of termination is generally a payment of compensation if you get it wrong legally.

The risk of not doing so is generally the cultivation of a poor workplace culture and the compromising of your leadership within the business.

If it is most important to you to maintain the culture of your workplace and move the employee on quickly to avoid any disruptions, then you have the right to do this but you need to be aware that there is a risk that you may have to pay some compensation to the dismissed employee if they bring a claim for unfair dismissal.

On the other hand, if it is most important to you to avoid a potential unfair dismissal claim and the possibility of having to pay some compensation, then you need to ensure that the processes you use when warning and dismissing employees are fair.

The bottom line is that dismissing an employee will either cost you time or money. Generally, the more time you’re prepared to spend on being fair, the less money you will have to pay in compensation. A recent case of Melanie Davidson v Visa Global Logistics Pty Ltd T/A Visa Australia Pty Ltd highlights the need for fairness in your discipline processes generally.

The Case

Davidson brought a claim for relief from unfair dismissal against her employer and claimed that ‘ she had been given an unjust “first warning” followed by a “show cause” letter which led to her dismissal’.

The employee had been involved in two alleged incidents of misconduct; firstly, she was alleged to have raised her voice and sworn at another staff member, and; secondly, she was alleged to have suggested that another staff member should punch a colleague in the face.

The employer issued a warning letter following the first incident and a show cause letter following the second incident.

In the show case letter the employer made it clear that termination was an option if the misconduct continued or if the employee did not satisfactorily show cause as to why her employment should not be terminated.

The employer did not accept the employee’s response and decided to dismiss her.

The Outcome

In a misconduct case the FWC must determine whether the misconduct actually occurred, and whether it amounted to a valid reason for dismissal.

The facts of this case were not disputed and there was no doubt that the misconduct had occurred. The FWC therefore had to determine if Davidson’s misconduct constituted a valid reason for Global Logistics to dismiss her.

The FWC decided that her misconduct was not a valid reason for dismissal.

In coming to this decision, the FWC made a number of conclusions:

  1. that the misconduct did not constitute a threat of violence or act of intimidation and was meant as a joke; and
  2. that the real reason for the dismissal was the breakdown in the relationship between the employer and employee.

In coming to the conclusion at point two (2) above, the FWC looked at the procedures used by the employer in disciplining and warning Davidson and found that they were not fair.

The FWC rejected the employer’s argument that Davidson was dismissed solely because of the second incident of misconduct, and instead found that the first warning was a factor in the employer’s decision to dismiss Davidson because it led to the relationship breakdown.

The FWC found that the first warning was unfair and was not justified. It relied on the fact that the employer had singled out Davidson, as she was the only employee to receive a warning, even though other employee’s had also been involved in the first incident.

The FWC concluded that Davidson was singled out and treated differently to the other employees because of the relationship breakdown, and that it was the relationship breakdown which actually led to her dismissal and not her misconduct.

Therefore, the warning given to Davidson was found to be unjustified and the dismissal was deemed to be ‘harsh, unjust and unreasonable’ in the circumstances and an order for compensation was made.

The Lessons for Business Owners

There are a few lessons to be gleaned from this case, but the most important one is that…

business owners need to ensure that their workplace procedures are fair at all times if they want to avoid the risk of an unfair dismissal claim being successfully brought against them.

In that regard, fairness clearly requires a lack of bias and there should be evidence to support the allegations the subject of any disciplinary action (e.g warning, dismissal).


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