An employee in a small business was summarily dismissed for misconduct, which the Fair Work Commission later found to be unfair. This case is a reminder for both small and larger employers about the need to ensure that procedural fairness is afforded to any employee who is the subject of dismissal.1

Ms Sharon Kaibel was employed by  CKI People Pty Ltd (CKI) as a Senior Consultant. CKI employs less than 15 people and is therefore a small business for the purposes of the Fair Work Act 2009 (Cth) (FW Act).

When she was in the office, Ms Kaibel had access to CKI’s full Z drive, where most of its IP was stored. When working remotely, Ms Kaibel was required to use material from her C drive on her work laptop or a USB device.

On 18 December 2014, Ms Kaibel left work during the course of the day to seek treatment for a migraine. As 18 December 2014 was the last day of work before the Christmas break, Ms Kaibel advised Sue Crawford, General Manager, that she would not be coming back into the office that day.

That afternoon, Karola Laventure, Business Operations Manager, noted that Ms Kaibel’s laptop was still on. As Ms Kaibel was not expected to return to work that day, Ms Laventure went to shut down the laptop and as she was doing so, noticed that files were being copied from the C drive (Ms Kaibel’s personal drive) and the Z drive to an external hard drive, which did not belong to CKI.

Upon inspecting the laptop further, Ms Laventure along with Ms Crawford, took the view that the hard drive had been “hidden”.

Ms Crawford spoke with Ms Kaibel later that afternoon and asked her if she had downloaded company files to her personal drive. Ms Kaibel responded that she had and it was to enable her to work from home (or remain mobile). Ms Crawford indicated that Ms Kaibel did not need the entire Z drive and that only Ms Laventure had permission to copy it.

Ms Crawford then told Ms Kaibel that  the owner of CKI, Mr Jim Iliveski, had instructed her to terminate Ms Kaibel’s employment immediately and to advise her not to return to the office. Ms Kaibel indicated that she wanted to talk to Mr Iliveski and when she did speak with Mr Iliveski, he told Ms Kaibel that she had stolen company records and information.

Ms Kaibel told Mr Iliveski that downloading the Z drive was “a silly thing to do” and reiterated that she was simply seeking to work from home but that there could have been a better way to do that.

Mr Iliveski confirmed that Ms Kaibel was in serious breach of her employment conditions, that she had been dismissed and was not to return to the office. A letter of dismissal was subsequently forwarded to Ms Kaibel. Following her dismissal, CKI then reported Ms Kaibel’s conduct to the police. 

Ms Kaibel issued proceedings in the Fair Work Commission alleging that she had been unfairly dismissed. In particular, Ms Kaibel contended that CKI had not complied with the Small Business Fair Dismissal Code (Code) because it had not carried out a reasonable investigation and summarily dismissed her without giving her any opportunity to provide her version of events.

CKI contended that its conduct was consistent with the Code, as it believed on reasonable grounds that Ms Kaibel’s conduct was sufficiently serious to warrant immediate dismissal.

Commissioner Hampton first had to decide whether CKI had complied with the Code. If it had, then Ms Kaibel’s dismissal would be fair.

Decision

Commissioner Hampton said that for a small business to summarily dismiss an employee consistent with the Code, the employer must hold a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. This belief must be established on reasonable grounds and, as such, it requires the Commission to consider whether the employer knew the relevant facts or carried out a reasonable investigation before determining its course of action.

After discovering Ms Kaibel’s laptop, CKI had it assessed by a forensic IT company who confirmed the downloading to be true. Accordingly, CKI said that it had a reasonable belief that Ms Kaibel’s conduct warranted dismissal.

Commissioner Hampton found that the evidence showed CKI believed that Ms Kaibel had downloaded (or was in the process of downloading) the Z drive to a personal external hard drive and that this had occurred without authorisation.

However, Commissioner Hampton found that this was not enough to meet the requirements of the Code. The Commissioner found that CKI did not explore and did not know what Ms Kaibel would do with the material from the Z drive, or on what basis Ms Kaibel considered that it was appropriate to download the material beyond her explanation that the files were needed for remote access.

The Commissioner found that CKI had reasonable grounds to believe that Ms Kaibel had acted inappropriately and without authorisation. However, CKI  only had reasonable grounds to suspect that Ms Kaibel had acted in a manner that could have been in breach of her obligations as an employee and potentially put the business at risk.

Therefore, the Commissioner concluded that CKI did not have a reasonable basis  at the time of Ms Kaibel’s dismissal to conclude that she had committed serious misconduct. As such Ms Kaibel’s dismissal was not consistent with the Code.

Commissioner Hampton went on to find that, despite there being a valid reason for her dismissal (ie for misconduct), Ms Kaibel was unfairly dismissed due to the lack of procedural fairness in the termination process.

Bottom line for employers

  • Where a small business dismisses an employee for serious misconduct, the employer must have a reasonable belief that the conduct occurred.
  • To discharge this requirement, the employer must conduct a reasonable investigation or, at the very least, make enquiries into the conduct to enable it to conclude that the conduct is “sufficiently serious to justify dismissal”.
  • It is not enough to have a mere suspicion that an employee engaged in serious misconduct.
  • There is still a standard to be met for small businesses in dismissing employees. This case highlights that small businesses should follow due process and conduct a proper investigation, even if they suspect serious misconduct has occurred.
  • Employers that are not small businesses will be held to a higher standard. This case reinforces that procedural fairness should be followed even where there is evidence of only misconduct. A proper investigation should be undertaken in every situation