Valid Reasons for Dismissal
In Australia, an employer must have a valid reason to terminate the employment of a permanent employee. Under the Fair Work Act 2009, the employer’s reasons must be ‘sound, defensible or well founded’, and cannot be spiteful, prejudiced, capricious, or fanciful. This article looks at the valid reasons for dismissal in the Australian workplace.
Most employment relationships come to an end due to resignation of an employee, or through retrenchment due to the redundancy of the position. A small proportion of permanent employees are terminated due to poor performance, and a similarly small proportion are terminated as the result of serious misconduct.
The Fair Work Regulations 2009 defines serious misconduct as acts that are fundamentally inconsistent with the continuation of the employment relationship. For example, it is serious misconduct if the employee:
- causes imminent and serious risk to the health and safety of others
- causes damage to the profitability or reputation of the employer
- is intoxicated while at work
- steals from the employer or while in the performance of work
- defrauds the employer
- assaults someone in the workplace
- commits sexual harassment in the workplace, or
- refuses to carry out lawful or reasonable instructions from their employer.
Workplace investigations
In most circumstances, employers cannot summarily dismiss an employee for serious misconduct. It is insufficient for an employer to act on a mere belief that there is a valid basis for termination. An employer must only act on a justifiable or defensible position based on an objective analysis of relevant facts. As such, an employer must conduct a reasonable investigation into the allegations of misconduct and give the employee a fair opportunity to answer the charges. Employees are entitled to procedural fairness in any dismissal process, which can be achieved if the investigation and process of dismissal are fair. Otherwise, a dismissal would be seen as harsh, unjust and unreasonable, and therefore grounds for a claim of unfair dismissal.
The findings of an internal workplace investigation will be influential in any Fair Work Commission inquiry into unfair dismissal. It is important to remember that the question before the Commission in an unfair dismissal case is less about the employee than it is about the employer. While the Commission may reach a conclusion about whether or not the worker committed the conduct leading to the dismissal, the focus of the enquiry is actually on whether the employer acted reasonably in establishing the facts and provided the employee with natural justice as part of the process of reaching this conclusion.
Case study
The Fair Work Commission recently considered the issue of valid reasons for dismissal in Bunce v Pmfresh Pty Ltd [2024]. The applicant was employed as a forklift operator for the employer, before being summarily dismissed following a workplace incident. The employee was using a forklift to move pallets when he drove the machine into a stack of filled pallets on the floor. Upon questioning, the employee admitted to smoking marijuana the previous evening, and conceded that a drug test would reveal recent drug use. After conducting a workplace investigation, the employer terminated the worker for serious misconduct.
The employee made an unfair dismissal claim on the grounds that there was no valid reason for the dismissal. He claimed that there was no objective evidence that he was impaired by drug use at the time of the incident. Additionally, the employee submitted that as a long-term recreational drug user, he had a higher tolerance for substances that would not affect his work performance.
The employer claimed that the employee was in breach of their drug and alcohol policy and therefore engaged in serious misconduct. In this case, the FWC held that the employee’s drug use and lack of regard for safety were valid reasons for dismissal, especially in workplaces where machinery is operated. The FWC determined that though the employer did not administer a drug test to the employee as required under their own policy, the employer was entitled to decide that the employee was impaired based on the following facts:
- the employee admitted to recent and recurring drug use
- the employee conceded that a drug test would show a positive result, and
- the employee’s concentration was demonstrably impaired as he forgot where he placed a pallet after only 30 seconds.
The FWC was also critical of the employee’s actions in driving when his view was obstructed. Moreover, the employee demonstrated an unsatisfactory understanding of workplace safety. The FWC determined that the employee’s conduct, including his unsafe operation of the forklift was serious misconduct and a valid reason for dismissal. This serious misconduct outweighed the employer’s procedural failure to notify the employee of the investigation findings before terminating the employee.
The employment law team at Go To Court can provide advice to both employers and employees on valid reasons for dismissal. Please get in touch or telephone our offices on 1300 636 846 for any legal assistance.