Procedurally flawed misconduct investigation results in reinstatement

In a recent unfair dismissal decision where legal representation was refused, the Fair Work Commission (FWC) reinstated a Litchfield Council employee after finding there was no valid reason for her dismissal and that the disciplinary process was initiated improperly and was procedurally unfair.

The decision in Ms Susan Edwards v Litchfield Council [2019] FWC 6660 is a useful reminder to employers to implement and follow appropriate policies and procedures when considering disciplinary action in order to mitigate the risk of any post termination of employment proceedings.

Background

The Applicant was employed as a gate keeper at the Council’s Waste Transfer Stations for seven years before it was alleged that she had defrauded the Council by engaging in improper and illegal transactions.

After receiving an initial complaint from an employee alleging that the Applicant had not appropriately directed or charged a customer, her manager viewed CCTV footage of the day to ascertain whether the complaint could be substantiated. Her manager then viewed footage from other days to look for potential misconduct by the Applicant and identified further instances in which the Applicant had failed to properly assess vehicle loads, collect required fees and record transactions. She had also invited third parties into the gatehouse for extended periods and made personal transactions during her shifts.

Shortly before the complaint was received, the Applicant had contacted the Mayor to discuss the Council’s response to her enquiries about the calculation of her cashed out annual leave payment. At the Mayor’s request, a meeting was organised to discuss the Applicant’s concerns about her annual leave payment. The Applicant was also told about the allegations during that meeting, even though she did not have a support person with her.  

Another meeting was arranged to discuss the allegations, during which the Applicant was supported by an Industrial Relations consultant. The Applicant was shown CCTV footage, but was not provided with the accompanying printout of the log of transactions. The Applicant denied all of the allegations.

However, her denials were not accepted and she was found to have engaged in misconduct in relation to five of the seven allegations put to her. She was given a “first and final warning”, placed on a six-month assessment period and warned that any further instances of unacceptable behaviour may lead to the termination of her employment.

Shortly after the first and final warning, the Applicant took extended personal leave. Less than a week after her return to work, the Applicant was asked to respond to allegations that she had made inappropriate comments about another employee in the gatehouse logbook, was discourteous to a customer and had charged incorrectly for loads of waste.

The Applicant requested a copy of the gatekeeper’s logbook to assess the nature of the communications, but the Council denied the request. The Applicant responded in writing denying the allegations.

A further allegation was made that the Applicant had engaged in a personal transaction during working hours and failed to charge correctly for vehicles to dump commercial waste. The Applicant was subsequently suspended from her employment. She was then showed CCTV footage of the transaction and accepted that she had failed to charge the appropriate fee.

After considering the Applicant’s response and the prior first and final warning, the Council’s loss of trust and confidence in the Applicant’s ability to apply the Council’s policies and procedures in her role led to it terminating the Applicant’s employment for:

• inappropriate behaviour towards a colleague and failure to follow Council procedure to raise a grievance
• failure to follow Council procedure in relation to dumping waste
• depriving Council of funds, and
• failing to record all transactions.

Decision

The Respondent submitted the findings of misconduct resulted in lost trust and confidence in the Applicant’s ability to properly perform her role and provided a valid reason for dismissal. However, the Commissioner accepted that the Applicant’s denial that she deliberately undercharged or failed to charge customers was “straightforward and credible”. This included because the Applicant had not been trained in the Council’s guidelines for how fees should be charged and when discretion on fees could be exercised.

The Applicant submitted that the investigations that resulted in the first and final warning and the dismissal were procedurally unfair because the specific incidents and allegations resulting in the final warning were put to her at short notice, and without the ability to fully understand the matters, and allow time to properly respond. The Commission agreed.

In assessing the mandatory considerations as to whether a dismissal is harsh, unjust or unreasonable, the Commission also accepted:

• There was inconsistent treatment of the Applicant on a range of issues, such as having people in the gatehouse and potentially missing payment for loads, resulting in an unjustified level of scrutiny that was not directed at other gatekeepers.
• The Applicant was denied the opportunity to bring a support person to the initial meeting where the allegations were initially raised with her.
• The Council’s procedure of moving to the first and final level of discipline was a “disproportionate response”, particularly considering the Applicant’s length of service and that she had never been subject to documented disciplinary action before the final warning.
• The Council was not a small employer. It had a specialist human resource management officers as well as access to external expertise in employment law.

Remedy

The Commission found the dismissal was harsh, unjust and unreasonable, concluding there was no valid reason for the Applicant’s dismissal, that the disciplinary process was initiated improperly and was unfair, and that the termination was a disproportionate response by the Council.

The Applicant sought reinstatement, which was opposed by the Council on the basis of loss of trust and confidence in the Applicant. The Commission accepted there had been a loss of trust and confidence but considered the appropriateness of reinstatement involves an assessment of a “broad range of factors” on the facts of the particular case. As compensation can only be awarded if the Commission considers the primary remedy of reinstatement is inappropriate and the Commission’s view that there were no practicalities impeding reinstatement, the Commission ordered that the Applicant be reinstated with back pay.

What employers need to know

Not all procedural failings will render a dismissal unfair. However, this decision serves as a timely reminder to employers of the importance of:

• Giving prior notice of the intent to discuss disciplinary matters to allow the employee to be equipped with the ability to respond and make an informed choice about a support person, particularly if the allegations involve serious or criminal allegations.
• Providing the employee with sufficient materials and time to enable them to properly respond to any allegations.
• Considering the plausibility of the employee’s responses and, where they are not accepted, clearly outlining the basis upon which they are not considered to be reasonable, including allowing some room to give the employee the benefit of any doubt.
• Affording due weight to mitigating circumstances, including training afforded, length of service, personal circumstances and proportional treatment.

Although it did not arise in the Commission’s decision, employers should also be mindful that some states may have workplace surveillance laws that would need to be reviewed and considered before undertaking an investigation that seeks to consider or rely upon CCTV or other surveillance tracking devices.