Background

Recent case law has highlighted the evidentiary difficulties frequently faced by employers in summarily dismissing employees. For instance, in two recent decisions1 an employer was ordered to pay compensation to two employees who had been summarily dismissed for allegedly forcing a colleague to purchase the amphetamine ‘ice’ for their use. The Fair Work Commission found that there was ‘insufficient evidence’ of the drug allegations, notwithstanding that the employer had received complaints about the two employees from a number of other employees.

However, the Supreme Court of New South Wales in Bartlett v ANZ2 recently reached the view that the ANZ’s opinion that an executive had committed serious misconduct was sufficient to justify summary dismissal. A termination clause in ANZ’s carefully crafted contract of employment meant that the Bank did not have to prove that the executive actually committed serious misconduct, but only that the Bank held the opinionthat the executive committed serious misconduct.  

Mr Bartlett (an ANZ executive) came to the attention of the Bank in June 2012 when a journalist from the Australian Financial Review (AFR) advised the Bank that he had received an email in the post. The email had been doctored with the addition of a number of false statements.

The Bank commenced an investigation into the leaking of the doctored email. Out of the ten recipients of the original email, the evidence suggested that Mr Bartlett was the culprit for a number of reasons, including that:

  • he was the only one of the recipients who knew the AFR journalist,
  • he was one of six recipients of the original email based in Sydney (i.e. the place where the envelope was posted),
  • a handwriting expert (engaged by ANZ) concluded it was highly probable he wrote the envelope that the journalist received,
  • he stood to suffer financially from ANZ’s proposal to tighten lending, and
  • the key decision-maker behind Mr Bartlett’s dismissal was aware of tensions between Mr Bartlett and the sender of the original email, which may have established a motive for Mr Bartlett’s conduct.

Under Mr Bartlett’s employment contract, he could be dismissed without notice if ‘in the opinion of ANZ’ he engaged in serious misconduct. As a result of the evidence, ANZ formed the opinion that Mr Bartlett had committed serious misconduct and summarily dismissed him without notice.

Mr Bartlett commenced a $9 million claim against the Bank alleging that the Bank had breached his employment contract. Mr Bartlett argued that:

  1. the Bank had to prove that he was actually guilty of misconduct in order to validly dismiss him. Prior to the dismissal, the Bank had only formed the opinion that Mr Bartlett had committed serious misconduct, and
  2. in the alternative, there was an implied term in the contract that the Bank’s opinion had to be reasonable, correct, formed in good faith, with proper regard for his interests and in compliance with the relevant performance policy, and neither capricious, arbitrary nor unreasonable.

However, the Supreme Court rejected Mr Bartlett’s arguments, instead finding that the determining matter was the opinion of ANZ. The Court rejected that there was an implied term that the opinion had to be reasonable and correct, on the basis that such an implied term would be contrary to the express words.

As to Mr Bartlett’s argument that the opinion had to be formed in good faith and be neither capricious, arbitrary nor unreasonable, the Court was not satisfied that any such term ought to be implied.

Mr Bartlett has filed a notice of intention to appeal this decision.

Implications

  • The decision in Bartlett v ANZ illustrates the importance of carefully crafting employment contracts. Where such employment contracts contain clear and express terms regarding termination, the courts may be willing to give such clauses their full force and effect.
  • Where clear and express terms are included in an employment contract, the courts are not willing to imply a term that is inconsistent with the contract. In this case, the Court was unwilling to imply a term that the Bank’s opinion had to be reasonable and correct because this would have been contrary to the express clause.
  • Given the significant impact of this decision, employers may wish to re-visit their current standard employment terms (used for new hires) to consider whether the provisions dealing with misconduct should be amended to provide employers with greater scope to summarily dismiss employees and further protection from dismissal-related claims.