FWC warns employers to be careful when putting "criminal" allegations to employees16 November 2023
The Fair Work Commission (FWC) has published a decision in which it urges employers to exercise “great caution” when making allegations of “fraud”, “theft” or other criminal behaviour, which if not justified in the circumstances, may be a factor indicating harshness in a dismissal.
In the matter of Ms Deanna Gilbin v Coogee Legion Ex-Service Club Pty Ltd  FWC 2785, the FWC held that dismissal of an employee, for accepting a drink without payment, was unfair based on a number of considerations, including that:
- using the words “fraud” and “theft” in an allegations letter was intimidatory
- criminal behaviour was implied without any basis upon which to conclude there was intent behind the conduct, and
- to categorise the behaviour as “receiving stolen goods” was unprofessional and without basis.
The decision is consistent with the sentiment expressed in other FWC decisions, for example in Jimenez v Accent Group T/A Platypus Shoes (Australia) Pty Ltd  FWC 5141, in which it was determined that, where the employer had characterised the employee’s conduct as theft from the outset, any responses provided by the employee were “contaminated by the predisposed view that it held” such that no meaningful opportunity to respond was offered (and therefore there was a denial of procedural fairness).
Ms Gilbin was employed by the Coogee Legion Ex-Service Club Ltd (the Club) as Duty Manager. Following a stock audit revealing that the Club was missing a significant amount of stock, it held a staff meeting at which it reminded staff (including Ms Gilbin) of the requirements when handling stock and processing transactions. The Club also reminded its staff of the various policies in place under which it was clear that any supply or acceptance of food or drinks without payment would be considered to be theft and may result in dismissal.
Following the meeting, Ms Gilbin remained at the Club and was drinking socially with her colleagues. The Club checked CCTV footage from the evening, which showed Ms Gilbin purchasing two drinks throughout the evening, and then ordering a third without making payment. A number of other employees were also observed to be ordering drinks without payment (with some of them taking up to five drinks, pretending to process the transaction, and also pretending to hold their phones up to pay).
The Club invited the employees to a meeting at which it handed them allegations letters. The allegations against Ms Gilbin included that she had “engaged in theft and fraud” by (1) attending the meeting and not providing any reasons for the stock discrepancies, and (2) ordered, received and failed to pay for drinks immediately following the meeting. Ms Gilbin in her response, apologised and stated she did not intentionally not pay for the drink. After five minutes of deliberation by the Club, and at the meeting, Ms Gilbin was informed she could resign or be dismissed as the Club did not believe Ms Gilbin’s response. Ms Gilbin was then permitted to view the CCTV footage. She took several days and ultimately decided not to resign.
The Club then called the colleague who gave Ms Gilbin the drink, who corroborated Ms Gilbin’s response. The Club did not inform Ms Gilbin of this and proceeded to terminate her employment. The termination letter provided to Ms Gilbin stated “all of the allegations of theft” were substantiated and that she was being dismissed for theft and dishonesty.
Deputy President Wright (DP Wright) held there was no valid reason for the dismissal, there were significant procedural deficiencies, and there were a number of other factors to indicate the dismissal was harsh, unjust and unreasonable.
DP Wright agreed Ms Giblin had received a drink without payment, against Club policies, which she had signed and agreed to comply with. However, DP Wright did not agree that the evidence indicated her non-compliance was intentional. In coming to this conclusion, DP Wright highlighted that the Club did not, during the meeting, inform Ms Gilbert of its conclusions of her dishonesty based on the CCTV footage, show her the CCTV footage during the meeting, or have any discussion about the potential that the receipt of the drink was unintentional. He highlighted that the Club made these enquiries only after it decided to dismiss Ms Gilbin. DP Wright concluded that there was no deliberate act of taking a free drink, and therefore no misconduct.
DP Wright also identified the following procedural deficiencies:
- The allegations letter:
- alleged “fraud” but contained no particulars of the allegation
- alleged she had not provided any reasons for discrepancies discovered in the audit; however, she was never asked to do this, and
- stated Ms Gilbin had been seen failing to pay for “drinks”, when it was only one drink – falsely implying there were multiple acts of wrongdoing.
- The termination letter also referred to “allegations of theft” being substantiated, again falsely implying there were multiple acts of wrongdoing.
- The Club made adverse findings about Ms Gilbin’s dishonesty based on CCTV footage that it did not show her, or advise her of, prior to deciding to terminate her employment.
- The Club made further enquiries after it had already decided to terminate Ms Gilbin’s employment and failed to inform Ms Gilbin of these enquiries thereby withholding information from Ms Gilbin, which potentially supported her response.
- The Club unfairly treated Ms Gilbin in the same manner as the other employees (who had been seen to be taking up to five drinks without payment and engaging in deceitful conduct of pretending to pay and “ring” the drinks through the system).
Some of the other factors that DP Wright considered weighed in favour of a finding that the dismissal was unfair (in particular, that it was harsh) were:
- the Club’s use of the words “fraud” and "theft” were intimidatory, especially when directed at an employee in the early stages of her career
- the Club’s use of the above words suggested criminal behaviour where there was no basis upon which to find the conduct was intentional (and where intent is required to be proven to the criminal standard), and
- the Club’s categorisation of Ms Giblin’s acceptance of a free drink as “receiving stolen goods” was unprofessional and without basis.
Lessons for employers
The key takeaways of this decision for employers include:
- When putting allegations of misconduct to employees, to be mindful of classifying conduct as criminal (either directly, or indirectly), and before doing so consider the following:
- Does the conduct, if substantiated, truly have the potential of being classed as ‘criminal’ or and meet the elements of the described offence (for example, as ‘fraud’ or ‘theft’)?
- What is the level of seriousness of the conduct, and on what scale is it being alleged – does that level or scale justify criminal implications?
- What is the purpose of adding criminality to the allegations - might it be considered intimidatory to class the conduct in this manner (taking into account the person’s personal circumstances and other surrounding circumstances)?
- Intent may need to be established “beyond reasonable doubt”.
- When putting allegations and gaining responses, an employer should ensure they have adhered to the following:
- informed the employee what is being alleged in sufficient detail to enable them to respond, including where appropriate providing supporting evidence
- not overstated the allegations, and
- considered each allegation on its own merit.
- Conclude the investigation prior to deciding the outcome.