Termination of employment contract for serious misconduct

Table of contents

What is serious misconduct?

You may be dismissed if you have engaged in serious misconduct.

The Fair Work Regulations 2009 (Cth) define “serious misconduct” or “gross misconduct” as wilful or deliberate conduct that is inconsistent with continuation of the employment contract.[1] It also includes conduct that is dangerous to the health and safety of a person or to the reputation, viability, or profitability of the employer’s business.[2]

Examples of serious misconduct include:

  • wilful or deliberately reckless behaviour;
  • activities that cause serious risk to the health and safety of a person;
  • theft;
  • assault;
  • intoxication at work;
  • refusing to carry out lawful and reasonable instruction consistent with the employment contract.

Am I entitled to a reasonable notice period if I have been terminated for serious misconduct?

There are very few instances where an employer is justified in dismissing an employee without notice. This is known as summary dismissal. The Fair Work Act 2009 (the Act) provides that an employee who engages in serious or gross misconduct may be summarily dismissed. The effect of summary dismissal is that an employee can be dismissed instantly or without notice because the reasonable notice requirements under the Act do not apply.1

Summary dismissal is only permitted in cases where a serious and fundamental breach of an employment contract has occurred. This refers to a breach of the employment contract that allows for the finding that “by standards of fairness and justice, the employer should not be bound to continue the employment”.2  

It follows that only serious misconduct is sufficient to support a finding of summary dismissal. In other words, if an employee is dismissed without notice and their behaviour leading to the dismissal was not serious enough to warrant summary dismissal, the employer may have breached their employment obligations, and the employee would consequently have a claim for breach of employment contract, or alternatively for unfair dismissal.

However, employees have an implied duty to obey an employer’s lawful and reasonable instructions.3 If an employee refuses to obey instructions and has been provided with multiple warnings to this effect, this may justify summary dismissal because the employee has evidenced an intention to not be bound by the terms of the employment contract by refusing to obey the employer’s instructions. However, summary dismissal for this form of breach would only be justified in the most severe cases.

Managing employee misconduct

It is important for employers to consider a proportionate response to an employee’s alleged misconduct. Evidence that the employee repeatedly chose to disobey instructions and/or engaged in acts that evidence a wilful and substantial breach of company policy will often be considered reasonable or sufficient evidence to allow for summary dismissal. However, dismissal without notice in some circumstances may be considered excessively harsh if it is found to have been a disproportionate response to the misconduct in question.

It should also be said that the fact that an employee has lost trust and confidence in the employer is not a sufficient reason to justify summary dismissal. As in all cases, the employer must be able to point to some evidence to support the reasonableness of the termination. In some circumstances, this may include conduct engaged in by the employee outside of work.

Common reasons an employee may be terminated justly include:

  • poor attitude or behaviour;
  • issues relating to repeated conduct (e.g. lateness, continuous failure to wear personal protective equipment (PPE) when required to do so);
  • recklessness and carelessness (e.g. avoidable forklift accident);
  • social media use by an employee (e.g. making serious negative or threatening comments against or concerning another employee or the employer);
  • breach of workplace policy;
  • dishonesty offences (e.g. stealing);
  • improper use of information obtained at work;
  • assault; and
  • failure to follow lawful and reasonable instructions.

This list is not exhaustive. There are many grounds that an employee may be reasonably dismissed. It is always important to consider each individual case separately on the facts pertaining to that case as they arise.

I was dismissed for conduct outside of work. Is this justified?

The case law is relatively clear on this point: dismissal based on conduct engaged in by the employee outside of the workplace will be justified only in exceptional circumstances. Generally, there must be a relevant connection between the conduct and the employment relationship to warrant dismissal.

The case of Rose v Telstra Corporation Limited4  provided that the conduct:

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

It is also important to note that the employer must point to some evidence to support a finding that the employee’s conduct outside of work will affect the employer’s reputation, or that the conduct will limit the employee’s capacity to perform his or her duties at work. The court in Rose v Telstra Corporation Limited5 further held that the fact the employee has engaged in criminal conduct outside of work does not alone warrant dismissal. The same rule applies in that there must be a connection between the criminal conduct and the employment to warrant such a dismissal.

However, it is relevant to note that if you are unable to attend work because you have been convicted of a serious criminal offence, this will generally be sufficient grounds for dismissal as the employment contract would be terminated justly due to frustration.

Compensation and remedies for unjust termination

If you are an employee and it is found that you were unfairly terminated due to conduct engaged in outside of the workplace, compensation available to you may include reinstatement or damages. However, the amount of compensation awarded, if any, is at the discretion of the court, or alternatively the Fair Work Commission, and is provided only where it is held that reinstatement would be inappropriate in the circumstances.

Contact Gibbs Wright Litigation Lawyers

Contact Gibbs Wright Litigation Lawyers today for a free and confidential discussion about your employment dispute to explore your legal rights and options.

[1] Fair Work Regulations 2009 (Cth) reg. 1.07(2)(a)

[2] Ibid reg. 1.07(2)(b)

[3] Ibid s123(1)(b).

[4] North v Television Corp Ltd (1976) 11 ALR 599, 600.

[5] R v Darling Stevedore & Litherage Co Ltd (1938) 60 CLR 601,621 (Dixon).

[6] Rose v Telstra Corporation Limited, Print Q9292 (AIRC, Ross VP, 4 December 1998).

[7] Ibid.

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The content of this publication is intended as general commentary only and may not be suitable or applicable to your personal circumstances. It is not intended to replace independent legal advice. You can contact us at our Brisbane Office for a free consultation on a range of litigation matters on (07) 3088 6364.

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