Most employers know serious misconduct as conduct that justifies dismissing an employee without either notice or payment in lieu of notice (sometimes called summary dismissal). But what exactly falls into the definition of serious misconduct?

Fair Work Regulation 1.07 defines serious misconduct by reference to its ordinary meaning, one that has often been considered by case law, but more by way of examples of what is or is not considered to be serious misconduct, rather than by any clear definition.

Under the regulations, misconduct is conduct that is wilful or deliberate and that is inconsistent with the continuation of the employment contract. It is also conduct that causes serious and imminent risk to the health and safety of a person or to the reputation, viability or profitability of the employer’s business.

Serious misconduct includes theft, fraud, assault, sexual harassment, intoxication at work and the refusal to carry out lawful and reasonable instructions consistent with the employment contract.

A worker is taken to be intoxicated if the worker’s faculties are, by reason of the worker being under the influence of intoxicating liquor or a drug (except a drug administered by, or taken in accordance with the directions of, a person lawfully authorised to administer the drug), so impaired that the worker is unfit to be entrusted with the worker’s duties, or with any duty that the worker may be called upon to perform.

Where serious misconduct is alleged, the test for a valid reason for dismissal does not change. The test remains whether the reason was sound, defensible or well founded. Where an employee has been dismissed without notice for serious misconduct, the Fair Work Commission may find that, although there was a valid reason for the dismissal, the dismissal was harsh because summary dismissal was a disproportionate response.

Where the conduct involves serious misconduct, the principle established in Briginshaw v Briginshaw (1938) 60 CLR 336 is also relevant. The Briginshaw principle does not raise the standard of proof beyond the balance of probabilities. However, the strength of the evidence needed to establish a fact on the balance of probabilities may vary according to the nature of what it is sought to prove. More serious allegations usually require stronger evidence.

Out-of-hours conduct

It is only in exceptional circumstances that an employer has a right to extend any supervision over the private activities of employees. The out-of-hours conduct must have a relevant connection to the employment relationship.

The case of Rose v Telstra Corporation Limited (1988) AIRC 1592 looked at relevant decisions on out-of-hours conduct and provides the following summary:

• the conduct must be such that, viewed objectively, it is likely to cause serious damage to the relationship between the employee and employer;
• the conduct damages the employer’s interests; or
• the conduct is incompatible with the employee’s duty as an employee.

In cases involving out of hours conduct, it is not sufficient for the employer to simply assert that the conduct will in some way affect the employer’s reputation or compromises the employee’s capacity to perform his or her duties. Rather, there needs to be evidentiary material upon which a firm finding may be made.

Conduct outside of work involving criminal offences does not, alone, warrant dismissal. There still must be a relevant connection between the criminal activity and the employee’s employment. However, if the employee is unable to attend work for a significant period because they are convicted of a serious offence and imprisoned, then the contract of employment may be brought to an end by the operation of law due to frustration.

Case examples

O’Keefe v Williams Muir’s Pty Ltd T/A Troy Williams The Good Guys [2011] FWA 5311

The employee made negative and threatening comments about a colleague on Facebook. The Fair Work Commission held that threatening another work employee is a serious issue and one which would not be tolerated in any workplace. The manner in which the threat was made and the words used provided sufficient reason for the employer’s dismissal of the applicant on the grounds of serious misconduct.

DP World Sydney Ltd v Lambley (2012) 222 IR 277

The employee was dismissed for serious misconduct for assaulting another employee. The Fair Work Commission held fighting in the workplace usually amounts to a valid reason for dismissal, as an employer has every right to establish policies against fighting and to ensure compliance with those policies by dismissing employees who are found to have engaged in fighting unless there are extenuating circumstances.

An appeal to the Federal Court was dismissed in [2013] FCA 4.

Mr Leith Graham v Walker Australia Pty Ltd T/A Tenneco [2017] FWC 5136

This unfair dismissal case involved a paint gun operator who was dismissed for serious misconduct. However, he contended that it was simply an accident. The employee was responsible for spraying paint on the exhaust systems of cars. When the incident occurred, he had entered the spray paint booth and then tested the paint gun. This resulted in spraying paint into the factory, which hit a co-worker on the back and neck.

The employer conducted an investigation into the incident after the co-worker lodged a complaint. The investigation determined that the employee had been taking part in horse-play and that he had therefore deliberately sprayed his co-worker. He was subsequently dismissed for serious misconduct and thereafter made an unfair dismissal claim.

Despite claiming it was simply an accident, the Fair Work Commission did not agree with the employee. It found that his behaviour amounted to serious misconduct and that a summary dismissal was justified. The Fair Work Commission came to this decision based on several key pieces of evidence, including that when the paint hit the co-worker, the employee was seen quickly trying to recalibrate the settings on the paint gun. This was deemed as behaviour that a reasonable person would not partake in following an accident.

The Fair Work Commission also heard that the employee had failed to consider safer options for testing the paint gun, such as pointing it in a different direction, away from the co-worker. The employee had argued that his dismissal for serious misconduct had been particularly harsh as he had been working for his employer for over 18 years. However, this fact worked against him at his hearing. The Fair Work Commission took into account his long service and the fact that he had been using a paint gun for eight years. As such, it was found that the employee should have simply known better than to spray a colleague.

The Fair Work Commission noted that determining the intentions of the employee was not necessary, because simply spraying his colleague caused significant risk to his health and workplace safety. It was sufficient that the employee had been “reckless and indifferent” to the safety of his colleagues.

Conclusion

Summary dismissal or termination without notice is not an option that an employer should undertake lightly. However, if it clearly falls within one of the examples given in Fair Work Regulation 1.07, and there is sufficient evidence to establish the serious misconduct on the balance of probabilities and taking into account the seriousness of the allegations, then summary dismissal should be considered as an option.

This article was written by Chris Morey, Special Counsel, and reviewed by Clare Raimondo, Partner.