Unfair Dismissal: Condonation and Toleration

Full decision here.

We have all had to deal with a problem employee, right? This very long decision is reflective of the lack of action taken by management in managing an employee’s poor behaviour. Whilst, in this case, the company “won”, with the application being dismissed; it did come at a cost of a three day arbitration and more than nine witnesses.

Read on… https://www.gregreiffelconsulting.com.au/unfair-dismissal-condonation-and-toleration/

Introduction

Because the Deputy President’s decision was extremely long-winded, I have set it out in two parts: Firstly, the decision itself, and secondly the preponderance of citations used in establishing a “Valid Reason”, the DP’s opening with the information around “Condonation and Toleration”. There was a great deal of effort by the DP to explain the absence of a “real” definition of serious misconduct, but I have chosen not to include this as it was apropos to nothing.

Background

A dispute with a work colleague about a car battery was the catalyst for a series of events which quickly led to the applicant’s summary dismissal from his employment with the company.

This hearing was heard over three days, with the calling of at least nine witnesses.

Reason for the termination of employment

The company dismissed the applicant’s employment for the following reasons, with the Deputy President using the “Briginshaw” principle to each point:

·        Unreasonably resisted returning a car battery to another employee (not enough proof);

·        Deflated a tyre on another employee’s car by removing the valve from the tyre (proved);

·        Made a threat (concerning the other employee) to the other employee’s father (who also worked for the company) (not proven);

·        Took an unauthorised absence from work (one day) (“rejected”);

·        Engaged in aggressive behaviour in the workplace over a period of time:

“Because [the company] had full knowledge of the alleged aggressive conduct on [the other employee] by [the applicant’s] part and, despite this, chose to retain [the applicant’s] services, [the company] did not have a valid reason to dismiss [the applicant] on the basis of such conduct. However, the alleged aggressive conduct on which [the company] relies and its response, or lack thereof, to such conduct are matters which I will take into account…”

·        Took wood and a sheet of melamine (a building material used in kitchen cabinetry and other internal areas) without permission from the company’s workplace and used them for his own purposes. The applicant’s argument was that it was common practice for employees to take materials home for their own use. However, the DP had a contrary view (also noting that this action was not discovered until after the company had already decided to dismiss the applicant):

“It is apparent from the CCTV footage of [the applicant] cutting the melamine into strips and then taking those strips and the wood and loading them on to his ute in clear vision of the camera that he was not acting by stealth or in an attempt to hide what he was doing. I accept that [the applicant] honestly believed that he was entitled to take the melamine and wood from [the company’s] premises and use them for his own purposes. However, [the applicant] did not have a reasonable basis for holding that belief. There was no practice of the kind for which he contends. He did not seek permission from [the company] or any…manager to take the material. Instead, [the applicant] thought he knew best and assumed that he was entitled to take the material, which he thought was scrap and would otherwise have to be cut up and put in the bins for disposal at [the company’s] cost. As a Metal Fabricator, [the applicant] did not work with the wood in the wood shop and plainly did not appreciate how the material in the wood shop was used across [the company’s] production processes. That was all the more reason why [the applicant] should have sought and obtained permission to take any material from his employer’s wood shop.

“…I am satisfied that…[the applicant] attended work and took wood and a sheet of melamine from [the company’s] workplace without his employer’s permission…[and this] gave [gave the company] a sound, defensible and well-founded reason for [the applicant’s] dismissal”.

·        Secretly recorded the meeting in which he was informed that his employment was terminated. The DP:

“[The applicant] gave evidence that he recorded his termination meeting…did not obtain permission to record that meeting [and he] did not inform [those at the meeting] that he was recording the meeting. [The applicant] attended the meeting with his mobile phone (already recording) inside an envelope.

“[The company] contends that [the applicant’s] conduct in secretly recording the meeting was destructive of trust and confidence in the employment relationship. [However, the company] does not suggest that Mr Ashley-Cooper’s recording of the termination meeting was unlawful.

[The company representatives] attended the termination meeting with a termination letter already typed up and signed. The decision to dismiss [the applicant] had been made before he attended that meeting. The first thing that happened in the meeting was [the company representative] handed [the applicant] the termination letter and told him that his employment was terminated immediately for gross misconduct. Having regard to that sequence of events, the secret recording of the termination meeting did not in fact destroy or damage trust and confidence in the employment relationship, because prior to the commencement of the meeting (and the secret recording of it) [the company] had already made a final decision to terminate the employment relationship…In those particular circumstances, the act of secretly recording the termination meeting did not, in my view, provide a valid reason for the dismissal. The secret recording of the termination meeting would have been significant to my consideration of whether or not to order the reinstatement of Mr Ashley-Cooper, had he succeeded in his argument that his dismissal was harsh, unjust and/or unreasonable”.

Valid reason

“For the reasons given, I am satisfied on the evidence adduced that there was a sound, defensible or well-founded reason for [the applicant’s] dismissal related to his conduct in deflating [another employee’s] tyre and taking [company] wood and melamine from its premises without its permission. Accordingly, there were valid reasons for [the applicant’s] dismissal...”

The art of tactfulness

His Honour summarised the applicant’s employment as follows:

“[The applicant] was employed by [the company] for about 8.5 years prior to his dismissal. I accept [the company’s] evidence that [the applicant] did a good job most of the time. There is no doubt that [the applicant] is an experienced and highly competent Metal Fabricator. There is no evidence to suggest that the quality of his work was ever questioned or below expectations. However, it is apparent from the evidence adduced in these proceedings that [the applicant] can be abrasive and difficult to work with. These interpersonal difficulties seem to stem from what [the company] described as [the applicant’s] strongly held beliefs about how particular tasks should be undertaken:

‘It was sort of, there is the right way, the wrong way and [the applicant’s] way to do things’.

“[The applicant’s] response to conflict in the workplace became apparent during his cross examination, including his acceptance that he said to [another employee], ‘Bye bye little boy, off you go’. [The applicant’s] answer to the following question was also revealing:

‘You’re not slow to try and put people in their place, are you…? --- No, of course not. I haven’t got time to be tactful.’

How to express oneself

“[The applicant] has the right to express his view about the way work should be undertaken, particularly where a person’s health or safety may be at risk or where there is the prospect of damage to equipment or property if work is undertaken in a particular manner. However, [the applicant] needs to appreciate that his view will not always be accepted by his employer and, ultimately, management within [the company] has the authority to issue lawful and reasonable directions in the workplace and employees, including [the applicant], must comply with them.

Problematic attitude

“One good example of [the applicant’s] problematic attitude and approach concerns the locking of a shed on [the company’s] premises around Christmas 2018 and Easter 2019. [The applicant] placed his own personal lock on the shed in question on public holidays. The shed contains [company] tools and equipment, as well as some of [the applicant’s tools. The shed has its own lock.

“In Christmas 2018, [a company manager] instructed another employee…to remove [the applicant’s] locks from the shed, which he did, so that employees could access tools in the shed and undertake work. On Good Friday 2019, [the company manager] cut [the applicant’s] lock off the shed so that [other employees] could obtain the tools and equipment they needed to do their job.

“On Saturday, 20 April 2019, the day following Good Friday, [the applicant] attended work and saw that his locks had been cut off the shed. He welded his locks back together on the Saturday afternoon so that employees of [the company] could not access the shed and use the tools in it on Sunday, 21 April 2019 or Easter Monday, 22 April 2019.

“On Tuesday, 23 April 2019, [the applicant] confronted [his manager] about cutting off his locks from the shed. [The manager] gave evidence, which I accept, that he had the following discussion with [the applicant] in the board room:

‘I said words to the effect of “I cut the locks off as [other employees] needed to do their work”.

‘He said “Those blokes aren’t qualified to use the machinery.”

‘I said “Yes they are and it’s our container and we need to let guys work.”

‘[The applicant] stood up and slammed two fists down on the desk and started shouting at me words to the effect of “You don’t have the right to do that, they are not qualified.”

“On 26 April 2019, [the applicant] participated in a discussion with [the company’s management] in relation to the placement of locks on the shed. At the conclusion of the conversation [the applicant] took home a boot load of his tools from the shed”.

Two-way street

The DP found the applicant to be both, at times, abrasive and aggressive in the workplace when other employees disagreed with him about how or what work was to be done. But in relation to allegations that the applicant had alleged to have “pushed, shoved or pulled another employee from equipment physically”, it was a “two-way street”, with both employees involved to a similar extent. In His Honour’s own words:

“Further, because of the inaction taken by [the company] in response to such matters, the conduct was condoned and not addressed in a satisfactory way.

“[The applicant] was good at the technical parts of his job and was largely left to run his own race. He was confrontational about matters of importance to him. Management effectively took the view that [the applicant] was too hard to deal with and, as a result, did not seek to counsel or discipline him”.

Well? What it fair and reasonable to dismiss him? (We already know there was a valid reason).

In taking the attitude (my words, not the DP’s): “You reap what you sew”, His Honour found:

“On balance and having regard to his relatively lengthy period of employment (8.5 years), his technical competence and good work most of the time, and his interpersonal difficulties which were not well managed or addressed, I consider that [the applicant’s] length and quality of his employment with [the company] weighs to a moderate extent in favour of his argument that his dismissal was unfair”.

What about the process then?

The Company readily conceded that its managers who were involved in the process leading up to the termination of the applicant’s employment do not have expertise or experience in human resources. As a consequence, the DP found, that the procedure adopted was less than desirable and weighs in favour of the applicant’s argument that his dismissal was unfair:

“In particular, the only allegation put to Mr Ashley-Cooper for his response prior to his dismissal was the allegation that he deflated [another employee’s] tyre; [the applicant] was not given any opportunity to show cause as to why his employment should not be terminated; the termination letter asserts that [the applicant] engaged in ‘gross misconduct’ and then refers to [the applicant] refusing to return the car battery in circumstances where [the company] had informed [the applicant] two days before the dismissal that there was no issue, ‘move on – end of story’; the termination letter unfairly characterised [the applicant’s] absence from work on 1 July 2019 as a ‘fraudulent offence’; and after deciding to dismiss [the applicant, [the company] went trawling through CCTV footage to see what else they could compile against him”.

The “summary” dismissal

The applicant was summarily dismissed on the grounds of gross misconduct. The DP stating that:

“The proportionality of the summary nature of [the applicant’s] dismissal must be weighed against the gravity of his misconduct in respect of which [the company] acted in deciding to dismiss him”.

The DP went on to (again) seek support from precedents and these supported the notion that there was no specific definition or legal precedent to assist in defining the term “serious misconduct”. The DP commenting:

“…the Applicant’s conduct constituted serious misconduct justifying immediate dismissal”. That is, “serious misconduct” was used as a shorthand expression to described misconduct of a nature that justified summary dismissal”.

“[The applicant’s] conduct in taking [company] material from its premises without permission was inappropriate and wrong on his part. An employee has no right to take their employer’s property for their own use without permission from their employer. However, the seriousness of [the applicant’s] conduct in this regard is ameliorated by reason of his honest belief, albeit a belief held without a reasonable basis, that he was entitled to take the material pursuant to a practice which he believed existed at the workplace. [The applicant] did not intentionally steal his employer’s property. If the only valid reason for [the applicant’s] dismissal had been his taking of the material without permission, I would have readily concluded that his conduct did not warrant his summary dismissal. However, this conduct must be viewed alongside the second valid reason for [the applicant’s] dismissal.

“Central to the second valid reason for [the applicant’s] dismissal is my finding that he removed the valve from [another employee’s] tyre and thereby deflated it. Such conduct was serious, notwithstanding [the other employee’s] evidence that he was able to put another valve into the tyre and inflate it for use. The conduct in which I have found [the applicant] engaged showed a willingness by him to take matters into his own hands in circumstances where he first reported an issue (the taking of the battery from his car) to management and he was not satisfied with the decision to take the matter no further. I am satisfied that [the applicant’s] conduct was wilful and repugnant to the employment relationship”.

Personal circumstances

The DP then considered the applicant’s age (about 64 years old) and he has not been able to find alternative employment since his dismissal. The DP:

“The consequences of the dismissal for [the applicant] and his family have been significant. They support his argument that his dismissal was harsh, but must be balanced against all other relevant circumstances, including the gravity of [the applicant’s] conduct”.

Ta, da! The End

In dismissing the application (yes the company had a “win”), the DP (finally) concluding that:

“After considering and taking into account each of the matters specified in s 387 of the Act, my value judgment is that [the company’s] dismissal of the [the applicant] was not harsh, unjust or unreasonable. [The company] had two valid reasons for [the applicant’s] dismissal. The gravity of [the applicant’s] misconduct outweighs the procedural unfairness associated with the termination process, together with the length and quality of his employment with [the company]. Further, in my assessment, [the applicant’s] dismissal was not disproportionate to his misconduct and was not otherwise harsh”.

CASE PRECEDENTS USED IN THIS MATTER

Condonation and Toleration

The Deputing President’s decision kicks straight off with:

“The concept of condonation embraces notions of waiver and election. Deputy President Wells helpfully summarised the principles applicable to the concept of condonation in Cannan & Fuller v Nyrstar Hobart Pty Ltd:

“Condonation

“The principle behind the Applicants’ submission of condonation is that an employer, with full knowledge of an employee’s misconduct and continues to employ him, cannot later rely on that misconduct to dismiss the individual. Thus, by knowing the behaviours of Mr Cannan and Mr Fuller and electing to continue the employment of them, Nyrstar ‘condoned’ their conduct and ‘waived’ the right to terminate their employment contracts.

“The practical manifestation of this principle in the employment context is that a wronged party has the right to elect, in the face of a breach of a condition of an employment contract, either to continue the contract or terminate it for breach. In order for condonation to be present, an employee must provide that:

·        the employer had full knowledge of the conduct;

·        despite this, the employer retains the employee’s services; and

·        with this election, the employer has deliberately given up the right to dismiss the employee summarily.”

The DP continued:

“At common law, even if conduct is condoned, it can later be taken into account to evaluate the significance of further misconduct. The principle was explained by Justice Sheppard in John Lysaght (Australia) Ltd v Federated Iron Workers’ Association; Re York:

“It is no doubt possible for the company to waive particular acts of misconduct that would otherwise have justified dismissal without notice. These particular acts could not subsequently be used for this purpose once the decision was made not to rely on them. The act of misconduct however does not then disappear and become irrelevant when further misconduct occurs. It remains and makes up the continuing history and record of a man’s service. That record may always be referred to for the purpose for which the company now points to it and the presence of incidents such as I have described will always be a relevant factor to be weighed in the balance by an employer when he comes to consider whether or not a further breach or other act of misconduct should not bring about a dismissal.”

The DP then citing:

“The majority of the Full Bench of the Commission in B, C and D v Australian Postal Corporation explained the relevance of condonation and toleration in the context of an unfair dismissal application in the following way:

‘Broadly speaking, circumstances bearing upon whether a dismissal for misconduct is harsh, unjust or unreasonable fall into three broad categories:

“(1) The acts or omissions that constitute the alleged misconduct on which the employer relied (together with the employee’s disciplinary history and any warnings, if relied upon by the employer at the time of dismissal) but otherwise considered in isolation from the broader context in which those acts or omissions occurred.

“(2) The broader context in the workplace in which those acts or omissions occurred. [This may include such matters as a history of toleration or condonation of the misconduct by the employer or inconsistent treatment of other employees guilty of the same misconduct.]

“(3) The personal or private circumstances of the employee that bear upon the substantive fairness of the dismissal. [This includes, matters such as length of service, the absence of any disciplinary history and the harshness of the consequences of dismissal for the employee and his or her dependents.]

“The determination of whether there was a valid reason proceeds by reference to the matters in category (1) and occurs before there is a consideration of what Northrop J described as “substantive fairness” from the perspective of the employee. Matters in categories (2) and (3) are then properly brought to account in the overall consideration of the whether the dismissal was “harsh, unjust or unreasonable” notwithstanding the existence of a “valid reason”.

The DP, then cited:

“In Toll Holdings Limited v Johnpulle, a Full Bench of the Commission considered the earlier Full Bench decisions in Cannan & Fuller v Nyrstar Hobart Pty Ltd and B, C and D v Australian Postal Corporation and made the following observations in relation to the relevance of condonation and toleration to the various s 387 considerations…

‘It may be accepted that, under the general law, an employer is disentitled to summarily dismiss an employee for an earlier instance of misconduct on the part of that employee where the employer with full knowledge of the misconduct had decided to retain the employee in employment. It would be difficult to conclude for the purpose of s.387(a) of the FW Act that an employer who had condoned misconduct by an employee in this way and had thus lost the right of summary dismissal at law nonetheless had a valid reason for dismissing that employee. The Commissioner therefore did not err in declining to find that the instances of misconduct described in the second, third and fourth allegations against Mr Johnpulle constituted valid reasons for his dismissal. It may also be accepted that, for the purpose of s.387(h), the Commissioner was entitled to treat as relevant that Toll had previously elected not to dismiss Mr Johnpulle for his earlier instances of inappropriate behaviour towards Mr Karzi. However the fact that Mr Johnpulle had (as the Commissioner found) engaged in the earlier instances of inappropriate behaviour did not thereby become otherwise irrelevant in the consideration of whether his dismissal was harsh, unjust or unreasonable. The Commissioner’s own findings supported the conclusion, stated in Toll’s dismissal letter, that Mr Johnpulle had engaged in a “pattern of unacceptable behaviour” towards Mr Karzi and had persisted in that behaviour notwithstanding that he had been told by the Team Leader to cease such behaviour and he had agreed to do so. That was necessarily a highly material consideration which, while not necessarily being determinative, was adverse to the conclusion that the dismissal was harsh, unjust or unreasonable. It was also relevant to the issue of reinstatement, since it went to the degree of risk that Mr Johnpulle might repeat such behaviour in future if reinstated.

“The Commissioner did not have regard to the fact that Mr Johnpulle’s misconduct was not isolated but was part of a “pattern of unacceptable behaviour”. That was an error in the exercise of his discretion of the type described in House v The King as a failure to “take into account some material consideration’.”

Valid reason (General principals)

It is necessary to consider whether the employer had a valid reason for the dismissal of the employee, although it need not be the reason given to the employee at the time of the dismissal. In order to be “valid”, the reason for the dismissal should be “sound, defensible and well founded” and should not be “capricious, fanciful, spiteful or prejudiced.”

The Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer. The question the Commission must address is whether there was a valid reason for the dismissal related to the employee’s capacity or conduct (including its effect on the safety and welfare of other employees).

In cases relating to alleged conduct, the Commission must make a finding, on the evidence provided, whether, on the balance of probabilities, the conduct occurred. It is not enough for an employer to establish that it had a reasonable belief that the termination was for a valid reason.

The employer bears the evidentiary onus of proving that the conduct on which it relies took place. In cases such as the present where allegations of serious misconduct are made, the Briginshaw standard applies so that findings that an employee engaged in the misconduct alleged are not made lightly.

His Honour citing:

“In Patrick Stevedores Holdings Pty Ltd v CFMMEU, Justice Lee made the following useful observations about the Briginshaw standard and its impact on fact finding and the state of satisfaction required:

‘Fact Finding and the State of Satisfaction Required

‘It is trite that both Patricks and Qube are required to prove their case on this liability hearing to the civil standard having regard to the degree of satisfaction required by [section 140 of the Evidence Act]. This section requires the court, in a civil proceeding, to find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities. In deciding, in a civil case, whether it is satisfied that the case has been proved, the court is to take into account: (a) the nature of the cause of action or defence; (b) the nature of the subject-matter of the proceeding; and (c) the gravity of the matters alleged. Although the standard of proof remains the balance of probabilities, the degree of satisfaction varies according to the seriousness of the allegations made and the gravity of the consequences (if the allegations are found to be correct).

‘Importantly, the factual allegations made by both Patricks and Qube are not only foundations for the nature of the relief dealt with at this liability hearing (that is, declarations of contraventions of the FW Act), but are also the foundations for the deferred relief, that is, the imposition of pecuniary penalties.

Forensic context

His Honour, in obvious attention to details, went on (and on):

“It is well-established that s 140 reflects the common law as explained seminally by Dixon J in Briginshaw v Briginshaw. As the Full Court noted in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v Australian Competition and Consumer Commission:

‘The mandatory considerations which s 140(2) specifies reflect a legislative intention that a court must be mindful of the forensic context in forming an opinion as to its satisfaction about matters in evidence. Ordinarily, the more serious the consequences of what is contested in the litigation, the more a court will have regard to the strength and weakness of evidence before it in coming to a conclusion.

‘Even though he spoke of the common law position, Dixon J’s classic discussion in Briginshaw...of how the civil standard of proof operates appositely expresses the considerations which s 140(2) of the [EA] now requires a court to take into account. Dixon J emphasised that when the law requires proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. He pointed out that a mere mechanical comparison of probabilities independent of any belief in its reality, cannot justify the finding of a fact. But he recognised that:

‘No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences...

‘Dixon J also pointed out that the standard of persuasion, whether one is applying the relevant standard of proof on the balance of probabilities or beyond reasonable doubt, is always whether the affirmative of the allegation has been made out to the reasonable satisfaction of the tribunal. He said that the nature of the issue necessarily affected the process by which reasonable satisfaction was attained. And, so, he concluded that in a civil proceeding, when a question arose whether a crime had been committed, the standard of persuasion was the same as upon other civil issues. But he added, weight must be given to the presumption of innocence and exactness of proof must be expected…’

“It follows that for Palm Beach to succeed in relation to its allegations of misconduct against the applicant I am required to reach a state of satisfaction or an actual persuasion that the company has proved its allegations of misconduct, while taking into account the seriousness of the allegations and the gravity of the consequences that could follow if the allegations were to be accepted”.