Termination of Employment Contract for Serious Misconduct

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What is Serious Misconduct?

An employer may dismiss an employee on the grounds that the employee has engaged in serious misconduct.

But what is considered ‘serious misconduct’?

The Fair Work Regulations 2009 (Cth) (the Act) defines ‘serious misconduct’, or ‘gross misconduct’,  as “wilful or deliberate conduct that is inconsistent with continuation of the employment contract”.1 This may include conduct that could be considered dangerous to the health and safety of a person, or which may be damaging to the reputation, viability, or profitability of the employer’s business.2

Examples of conduct that may be considered ‘Serious Misconduct’ includes, but is not limited to:

  • 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.

Can employees be terminated without being given a reasonable notice period?

There are very few instances where an employer is justified in dismissing an employee without notice, which is commonly referred to as ‘summary dismissal’. The Act provides that an employee who is found to have engaged in serious or gross misconduct may be summarily dismissed, which means that the reasonable notice requirements otherwise provided for under the Fair Work Act  will not apply (i.e. the employee can be dismissed instantly or without notice).3

Summary dismissal is only permitted in cases where it is found that a serious and fundamental breach of an employment contract has occurred. A ‘serious and fundamental breach’ refers to a breach of the employment contract which would alow for the finding that ‘by the standards of fairness and justice, the employer should not be bound to continue the employment.’4

Only serious misconduct will generally be sufficient to support a finding of summary dismissal. This means that in the event an employee is dismissed by the employer, without notice, but their behaviour leading to the dismissal was not serious enough to warrant a summary dismissal, the employer may be found to have breached their employment obligations, and the employee would consequently have a claim for breach of employment contract, or alternatively for unfair dismissal, against the employer.

It is relevant to note that employees have an implied duty to obey an employer’s lawful and reasonable instructions.5 If an employee refuses to obey their employer’s instructions, and they have been provided with multiple warnings to this effect, that conduct may justify summary dismissal as the employee has effectively 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.

How to properly respond to 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, in some circumstances, summary dismissal of the employee may be considered excessively harsh if it is found to have been a disproportionate response to the misconduct in question.

Furthermore, the fact that an employee may have evidenced a loss of trust and confidence in the employer is not a sufficient reason to justify a summary dismissal. The employer must be able to point to some evidence supporting the reasonableness of the termination. In some circumstances, such evidence may include conduct engaged in by the employee outside of work.

Some of the common reasons why an employee may be justly terminated by way of summary dismissal include:

  • Poor attitude or behaviour;
  • Issues relating to repeated poor conduct (e.g. lateness, continuous failure to wear personal protective equipment when required to do so, etc.);
  • 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 other employees or the employer);
  • Breach of workplace policies;
  • Dishonest 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 different grounds on which an employee could be reasonably dismissed. As such, it is always important to consider each individual case separately on the facts pertaining to that particular case as they arise.

I was dismissed for conduct engaged in outside of work. Is my employer entitled to terminate my employment?

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

The case of Rose v Telstra Corporation Limited6 relevantly provided that in order for an employer to be justified in terminating an employee for conduct engaged in outside of work:

  • 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.

The employer must be able to point to some evidence to support a finding that the employee’s conduct outside of work hours will somehow impact the employer/employee relationship, for instance that it 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 Limited7 further held that the fact the employee has engaged in criminal conduct outside of work does not alone warrant dismissal; the same rule applies here in that there must be some form of connection between the criminal conduct and the employment to warrant dismissal. However, if an employee is unable to attend work by reason that they have been convicted of a serious criminal offence, this will generally be sufficient grounds for dismissal as the employer would be able to terminate the employment contract on the grounds of frustration.

Compensation and remedies for unjust termination

If you are an employee who considers you have been unjustly terminated due to conduct engaged in outside of the workplace, you may be able to seek compensation from your employer if it is found that the termination was indeed unjust, which may include things such as  reinstatement and/or other damages. 

However, it is important to note that the amount of compensation awarded, if any, will be at the discretion of the court, or alternatively the Fair Work Commission, and will as such be determined on a case by case basis. Furthermore, reinstatement may be considered an inappropriate remedy in some circumstances depending on the facts pertaining to each individual case.

Contact Gibbs Wright Litigation Lawyers

Contact Gibbs Wright Litigation Lawyers today for a free and confidential discussion with one of our employment solicitors 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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