Dismissal From Employment Based on Suspicion

In Australia, an employer can dismiss an employee without notice for “serious misconduct”. However, an employer can only take disciplinary action against an employee when they have conclusive proof of the employee’s misconduct. Suspicion alone is an insufficient basis to justify dismissal. An employer should fully investigate an allegation of serious misconduct before terminating an employee. This article looks at why suspicion of serious misconduct is insufficient cause for dismissal in Australia with reference to recent case law.

Dismissal For Serious Misconduct

The Fair Work Commission’s Unfair Dismissal Benchbook defines serious misconduct as wilful or deliberate actions that are inconsistent with the employment contract. It is also any conduct that presents a serious and imminent risk to the health and safety of a worker, the business’s reputation, or profitability. Examples of serious employee misconduct include fraud, theft, assault, intoxication at work, or a refusal to follow lawful and reasonable instructions from the employer.

An employer may only dismiss an employee for serious misconduct when they have sound, defensible, and well-founded cause. An employer should not dismiss an employee without notice, even for serious misconduct, unless the conduct amounts to a repudiation of the employment contract. When an employer terminates a worker’s employment on mere suspicion rather than evidence, the employee has grounds for an unfair dismissal claim. However, an employee on a probationary period can be dismissed and cannot make an unfair dismissal claim to the Fair Work Commission.

Investigations

Investigations are an essential element of any workplace allegation of wrongdoing.

The first step is for an employer to review the organisation’s policies on grievance management, workplace investigations, discrimination and harassment. An employer may be obligated to conduct their investigation according to employment contract or award standards.

The High Court of Australia established the standard of proof for unfair dismissal cases in Briginshaw v Briginshaw (1930). This case affirmed that for allegations of serious misconduct, stronger evidence is required to establish a fact on the balance of probabilities. This is not achieved through indefinite testimony, inexact proofs, or indirect inference. Therefore, the investigation should focus on uncovering the best possible evidence. It may be necessary to seek specialist assistance to conduct the investigation or review the resulting evidence.

The seriousness of the allegation and the potential consequences will inform the formality of the investigation. In Farmer v KDR Victoria Pty Ltd T/A Yarra Trams [2014], an employee was accused of using a mobile phone while operating a tram. Because of the potentially serious consequences, the FWC stated that the employer should have conducted a formal and objective investigation with close questioning of witnesses. In other instances, there is no need to independently establish the facts of the case. For instance, in Bluescope Steel (AIS) Pty Ltd v Agas [2014] the FWC found that for a straightforward safety breach, it was sufficient for management to conduct an informal investigation and rely on an internal incident report.

While suspicion is insufficient for dismissal, an employer should suspend an employee during the investigation if there is a significant loss of confidence and trust in the employment relationship. In Camilleri v IBM Australia Limited [2014], an employee charged inaccurate expenses for three years before IBM commenced investigations. IBM did not suspend the employee for nine months while the investigation was ongoing. Even after the investigators tendered the final report, IBM waited another month to suspend Mr Camilleri. While the investigation uncovered proof of serious misconduct, the FWC found it difficult to reconcile the employer’s assertion of lost trust and confidence with the fact that they required Mr Camilleri to keep working even after the investigation concluded. The employee was reinstated to his position.

Case Study

The Fair Work Commission recently found that an employer’s suspicion of employee misconduct was insufficient for dismissal. In Gates v Blugibbon Pty Ltd [2021], an employee of a medical recruitment agency was provided with a work laptop and access to a shared storage drive containing confidential documents and client files. In April 2021, Mr Gates took sick leave after receiving conduct and performance warnings. During this leave, the employer determined that the employee was planning to leave his position and take the company’s confidential information. The employer took steps to protect this information, removing access to work email and retrieving the work mobile.

During the employee’s personal leave, there were abnormal download activities on the employee’s laptop. The employer suspected that the employee was copying confidential information. The employee denied accessing the laptop at all during his leave period. However, a preliminary search of the laptop confirmed that someone had logged on to the laptop several times and deleted a virtual disc application. The employer immediately dismissed the employee for serious misconduct on the grounds of unauthorised use of confidential company information and dishonesty.

The employee made an unfair dismissal claim before the Fair Work Commission. He claimed that he only used the laptop while on leave to access personal files and HR policies relevant to his employment. The FWC acknowledged that some businesses have such sensitive cyber security that unauthorised access could constitute a legitimate ground for dismissal. However, the FWC did not find that this level of cyber security was warranted in the employer’s business. The FWC refused to allow the findings of a cyber security report as it was compiled after the dismissal and did not weigh on the employer’s decision. The FWC also noted that the employee did not transfer the company files to himself before deleting them. Therefore, there was no proof that the employee intended to use the files unlawfully.

The FWC found there was no valid reason for the employee’s dismissal, and that he was afforded no procedural fairness. The employer did not properly investigate the employee’s alleged conduct, notify the employee of the reason for his dismissal, or give him a chance to respond to the allegations. It would have been appropriate for the employer to suspend the employee and conduct a full investigation into the allegation instead of acting on their suspicion. The FWC found that the employee was unfairly dismissed and ordered that the employer pay six weeks wages in compensation.

As this case demonstrates, suspicion alone is an insufficient reason for dismissal. An employer must have substantive evidence of wrongdoing. Please contact the commercial law team at Armstrong Legal on 1300 038 223 for any advice on unfair dismissal, workplace investigations and employment law.