Small Business Dismissals 'Need Reasonable Investigation’

Jill McMahon - Wednesday, May 22, 2013


 By  Jo Kamira

The Fair Work Commission ordered compensation to an employee dismissed for theft and other misconduct last month in a case that highlights the need for even the smallest of companies to conduct proper investigations before summarily dismissing employees.

In our experience, many small business owners believe they aren’t subject to unfair dismissal laws and don’t have to investigate allegations of misconduct before they terminate someone’s employment.

A ruling in March by the Fair Work Commission – relating to a business that employed just four people - illustrates how this perception is misplaced.

The case involved an employee who was summarily dismissed and handed a letter stating his conduct at work had included “engaging in theft”.

The Small Business Fair Dismissal Code, which applies to businesses that employ 15 or fewer employees, states: “it is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal.”

The code defines “serious misconduct” as including “theft, fraud, violence and serious breaches of occupational health and safety procedures.”

At issue in last week’s ruling was not whether the employee had stolen from his employer, or even if the employer believed he had done so, but rather whether the employer had “reasonable grounds” for his belief.

In concluding that the dismissal was unfair, Commissioner Ryan said the employer “did not carry out a reasonable investigation” and had only looked at his accounts and jumped to a conclusion. The employer alleged that the employee had ordered cutting wheels and electrodes for himself using his employer’s account.

If the employer had investigated the matter properly, he would have had to interview the other employee in the company who also used the equipment. He hadn’t done that. Moreover, the employer hadn’t even asked the employee about the theft before he was dismissed, or even attempted to locate the cutting discs the employee had ordered.

Whilst the small business code gives an employer the ability to summarily dismiss an employee for theft, with no need to report the theft to the police, this case demonstrates employers should conduct an investigation in order to provide supporting information to show reasonable grounds for their belief.
Click here for the full decision. 

Tips for conducting a simple investigation:

  1. Get the specifics of the complaint and write down the information initially provided to you that gives you your suspicions;
  2. Check the information that is provided to you – ask witnesses and look at documents or check store rooms if it is alleged that property has been stolen;
  3. Document what you do and what you are told;
  4. Provide the accused with an opportunity to give an explanation of what has been alleged  - include specifics and provide a copy in writing if you can;
  5. Be prepared to reconsider your response based on the answers your employee gives you;
  6. Make your final decision when all the information has been gathered and the employee given a chance to explain what happened.

Don’t forget, if the conversation with the employee results in termination/dismissal they should have a support person present.

If you need help with an investigation, WISE Workplace provides a supported investigations service, including advice over the phone.

Lessons from FWC on inferring facts without evidence

Jill McMahon - Wednesday, April 03, 2013


By WISE Legal Counsel Alison Page

Investigators can learn a valuable lesson from an unfair dismissal decision by the full bench of the Fair Work Commission, handed down in March 2013.

Although the case was concerned with the application of regulations in the child care industry, it is a timely reminder not to make assumptions, or infer facts. There must be evidence for all findings. The case is also instructive for child protection investigations, particularly those involving the question of "ill-treatment".

In this case, the employee was a director of a child care centre. A parent had recently left a very distressed three-and-a-half-year old in her care. The director was the sole carer on duty when the phone rang in another room about five metres away. She momentarily left the distressed child to answer the phone in the neighbouring room, leaving the door open. She felt compelled to take the call because she thought it may have been an employee phoning in ill.

The child care centre’s supervision policy stated that children should be actively monitored at all times: “Carers should avoid carrying out activities that will draw their attention away from supervision such as reading or speaking on the phone.” If a carer had to stop actively supervising a child, they had to ensure another carer replaced them.

On the basis of this incident, plus another unrelated incident, the centre’s management decided the director has breached the centre's supervision policy and sacked her.

The director brought an unfair dismissal action against the centre, which was initially dismissed. The Commissioner found that the "crucial matter" was not whether the toddler was out of the director's sight for a few seconds, but rather that she had "switched her mind to another matter" and left the child unsupervised. In addition "the child was in a state of some distress makes the actions of the [director] of greater concern".  

However, on appeal, the Full Bench of the FWC ruled in favour of the director. They held that the incident was not a valid reason for dismissal. The bench criticised the Commissioner for inappropriately inferring from the evidence provided that the director had "switched her mind to another matter" when she went to answer the phone, and was therefore "no longer giving her attention to the supervision of the child".

The bench did not believe those inferences were available from the evidence.

“While there was evidence to the effect that Ms Read knew the telephone was ringing, thought it may have been a staff member ringing in ill and left the infants’ room to answer the telephone, we do not think it follows that she had switched her mind to another matter and was no longer giving her attention to the supervision of the child.

“This is particularly so when the evidence was that the child was only five metres away, was out of her sight for no more than a couple of seconds and she could hear the child crying. Further, the Centre Policy on Supervision deals specifically with telephone calls and provides that carers ‘should’ avoid speaking on the telephone, not ‘must’ avoid speaking on the telephone…