Can poor performance constitute serious misconduct, warranting a summary dismissal?

If not, what are the possible consequences if a dismissal occurs on this basis?

The former issue was explored recently in a decision of the Fair Work Commission in Valenzuela.

The Facts

The Worker brought an application against the Employer for an unfair dismissal remedy in the Commission.

At the time of her dismissal, the Worker was the Employer’s Finance Manager. Her duties included the preparation of financial reports.

The Worker was provided with a letter by the Employer setting out a number of allegations. The Employee was asked to respond to the letter, and that this would be considered before a final decision was made in relation to what disciplinary action, if any, would be taken. It was noted that any such action could include the Worker’s dismissal. The allegations set out in the letter included reference to accounting errors and the lateness of the filing of various returns on behalf of the Employer.

The Worker met with the Employer to respond to the letter around two weeks after being presented with it. It was alleged that during this meeting, the Worker blamed other employees for the issues raised arising from the allegations. The Worker’s employment was subsequently terminated immediately on the basis that the Employer had found her guilty of serious misconduct.

The Findings

It was found by Senior Deputy President Hamberger of the Commission that the Worker had been untruthful in relation to some of the information she had provided to the Employer in her CV, such as the fact that she had an MBA and was an associate member of the CPA. This came to the fore during cross examination.

The Commission found that the Employer had a valid reason for terminating the Worker’s employment, particularly associated with the allegations raised above, which it was found “… caused serious damage to the (Employer’s) business“.

However, the reasons for the Worker’s dismissal were more properly categorised as “poor performance” as opposed to “serious misconduct”, as was contended by the Employer.

The Commission found that there was no satisfactory evidence of the Worker having received any warnings about poor performance prior to the time of the issue of the letter. However, it also concluded that the weight to be attached to this finding was diminished because of the Worker’s unwillingness to accept responsibility for her mistakes – meaning that any attempt at having her improve her performance would probably have been unsuccessful.

Ultimately, the Commission found that the Worker’s dismissal was not unfair, except in one limited respect – that being that the Worker was guilty of poor performance, rather than serious misconduct. On this basis, the Commission concluded that notice should have been given to the Worker of her dismissal.

Despite this finding, the Commission did not award compensation in this instance, finding also that reinstatement was inappropriate. This was because of the finding of the Worker’s dishonesty in relation to her qualifications, the Commission finding that had the Worker been honest with the Employer about these that she might never have been appointed to her position in the first place.

Conclusion

While the Employer was ultimately successful in its defence of the Worker’s claim, this may not have been the case in other circumstances. The Commission found that the grounds relied upon by the Employer to justify its dismissal of the Worker were associated with poor performance, which in this this case was not serious misconduct.

Any potential dismissal by an employer based on serious misconduct needs to be considered very carefully.

While by no means an exhaustive list, the Fair Work Act defines serious misconduct as including:

  • willful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;
  • conduct that causes serious and imminent risk to:
    • the health or safety of a person; or
    • the reputation, viability or profitability of the employer’s business; or
  • the employee, in the course of the employee’s employment, engaging in:
    • theft; or
    • fraud; or
    • assault;
  • the employee being intoxicated at work;
  • the employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment.

Again, while not exhaustive, this definition does not readily suggest that poor performance by an employee on its own (i.e. not willful or deliberate behaviour), will equate to serious misconduct.

If the grounds for dismissal are not serious enough to warrant a finding of serious misconduct, and a Worker is dismissed without being provided with appropriate notice (or potentially a payment in lieu), serious consequences could follow. These could include civil actions for breach of contract (i.e. likely a claim for damages equating to what the employee would have been paid in any notice period, or what they would have received in lieu), as well as orders for civil penalties for breaches of the Fair Work Act. Such orders can be made against an employer and those individuals “involved” in the decision to dismiss, such as managers.

It is recommended that employers seek legal advice if circumstances arise where they are considering dismissal for serious misconduct.

This information is intended to provide a general summary only and should not be relied on as a substitute for legal advice.

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