Employee Misconduct and Disciplinary Actions

Australian employment law (primarily the Fair Work Act 2009), establishes clear guidelines to address employee misconduct, ensuring that disciplinary actions are justified, proportionate and procedurally fair. Employee misconduct ranges from minor infractions to severe breaches of conduct, requiring tailored responses that balance the interests of both employer and employees. This article defines employee misconduct and examines the types of disciplinary actions that are sanctioned under Australian workplace law.

What is employee misconduct?

Employee misconduct is behaviour that is wilful and unsatisfactory that falls outside the organisation’s expectations and standards. Minor misconduct is distinct from serious misconduct, based on the severity of the infraction and the impact that the employee’s behaviour has or could have on the organisation and its employees.

The Fair Work Regulations 2009 describes serious misconduct as:

• wilful or intentional behaviour that is incompatible with the continuation of the employment contract; or
• employee conduct that presents a serious and immediate risk to health and safety, or that could damage the profitability, viability or reputation of the company.

The Regulations give examples of serious misconduct that are incompatible with continued employment, such as sexual or physical assault at work, theft, fraud, intoxication while at work, or refusing a lawful and reasonable direction.

If an employee’s misconduct is serious enough (even for a first offence), the employer can dismiss the employee without notice. This is known as summary dismissal.

Out-of-hours misconduct

While an employee’s serious misconduct at work is grounds for summary dismissal, the same behaviour out-of-hours is not grounds for disciplinary action unless there is a connection to their employment. As the Australian Industrial Relations Commission has pointed out, an employer can only extend supervision to the private activities of employees under exceptional circumstances. It would be difficult for an employer to discipline the employee for out-of-work conduct unless there is a relevant connection to the employment relationship. In fact, even criminal conduct out-of-hours does not warrant dismissal, unless there is a clear connection between the employee’s criminal act and their employment. Of course, if an employee is absent from work because of a conviction or imprisonment for a serious offence, the employment contract would terminate because of frustration.

On occasion, employers will set standards for out-of-hours behaviour in employment contracts. For instance, the employer may direct employees to avoid making offensive statements on social media if their association with the employer is identifiable. If an employee agrees to these conditions, they become contractually binding. Such contracts typically indicate the consequences for the employee if they breach their contractual obligations, up to and including immediate termination.

It is also not unusual for employers to prohibit employees from wearing company logos or work clothes outside of work, to ensure that their behaviour does not reflect negatively on the organisation. If an employee fails to heed this prohibition and causes damage to the reputation of the business due to their conduct, this may be sufficient reason to justify termination.

Rose v Telstra (1998) provided further clarification about out-of-hours conduct. In that case, it was found that out-of-hours conduct can justify dismissal if it is incompatible with the employee’s duty, could seriously damage the relationship between employer and employee, or could harm the employer’s interests. However, the case established that it is insufficient for the employer to simply assert that the conduct would impair the employee’s ability to perform their duties or damage the employer’s reputation; more substantial evidence is required.

Disciplinary action

As noted above, when an employee engages in serious misconduct, the employer may have reasonable grounds to dismiss the worker without notice, as long as they undertake an appropriate process. When taking disciplinary action, the employer should take the following steps:

• undertake a workplace investigation to establish the facts, and perhaps suspend the employee on full pay if the allegation relates to serious misconduct or there is a discernible threat to other people or property;
• give the employee written notification of the allegation, the possible implications if the investigation proves the misconduct, the date and time of any disciplinary meeting, and their right to bring a support person;
• provide the employee with a reasonable opportunity to prepare for the meeting (usually 24-48 hours’ notice);
• allow the employee to explain their behaviour at the meeting and then investigate further based on their response before deciding if, on the balance of probabilities, the allegations have been substantiated; and
• consider the appropriate outcome, whether that is a warning, reprimand, or termination.

Unfair dismissal

An employer who fails to adhere to statutory guidelines risks a finding of unfair dismissal under the Fair Work Act. An employee with at least 12 months of employment can argue that a dismissal was harsh, unjust or unreasonable and make a complaint to the Fair Work Commission (FWC). The FWC will consider whether the employer had a valid reason to dismiss the employee based on their misconduct, and whether the employer afforded the employee procedural fairness when deciding to terminate.

The employment law team at Go To Court can offer advice on the legal options to address employee misconduct, or help an employee with an unfair dismissal claim. Contact GTC Legal on 1300 636 846 today for any legal assistance.