A Full Bench of Fair Work Australia has issued its first decision on the operation of the Small Business Fair Dismissal Code, ultimately finding that it operated to protect the employer from a dismissed employee’s unfair dismissal claim.
Implications for employers
Employers seeking to rely on the Small Business Fair Dismissal Code should ensure they still carry out a reasonable investigation into an employee’s misconduct before deciding to terminate the employment. This should be more than a mere “tick the box” exercise. Employers should engage in a dialogue with the employee and give the employee an opportunity to respond to the alleged misconduct. However, immediate dismissal may be appropriate where the termination is based on reasonable grounds, such as a genuine belief that the employee posed a workplace safety hazard.
RoseVi.Hair.Face.Body (RoseVi) is a small hairdressing business in NSW owned by Mr and Mrs Pinawin. RoseVi employed a small number of employees, including Mr Dominigo. Mr Dominigo was employed in January 2007, and had developed a close relationship with the Pinawins.
In May 2011, Mr and Mrs Pinawin became concerned about Mr Dominigo’s ability to perform as a hairdresser at the salon. Specifically, they were worried by his behaviour, his unprofessional appearance, his unreliability and his increasing inability to perform his professional duties. Mrs Pinawin informed Mr Dominigo that she was dissatisfied with his attitude and asked him to begin looking for another job.
A few days later, Mr Dominigo went to Mr and Mrs Pinawin’s home early one morning, claiming somebody had poisoned him and that his apartment had been set alight. Mr and Mrs Pinawin accompanied him back to his apartment but found no evidence of a fire. Later that day, Mrs Pinawin overheard a conversation between Mr Domingo’s cousin and his ex-partner, where it was revealed that Mr Domingo had been using drugs for an extended period of time.
The following day, Mr Dominigo was admitted to Nepean Hospital, where he was declared unfit to perform normal occupational duties until 23 May 2011. Mr and Mrs Pinawin were informed of Mr Dominigo’s hospitalisation and told it was due to mental illness and drug use.
In a letter dated 23 May 2011, Mr Pinawin informed Mr Dominigo that his employment had been terminated with immediate effect on the basis that “the business is not doing so well due to the financial crisis”.
Mr Dominigo lodged an unfair dismissal application with Fair Work Australia (FWA).
In the course of proceedings, Mrs Pinawin gave evidence that she and Mr Pinawin decided to terminate Mr Domingo’s employment because of risk of injury to a customer or employee from Mr Dominigo’s erratic behaviour, which they believed was due to drug use. Mrs Pinawin explained they had given a different reason in their letter of 23 May 2011 because Mr Dominigo was a long term friend.
FWA decided that Mr Dominigo was unfairly dismissed and awarded him $3,092 in compensation. RoseVi appealed the decision, claiming that the reason for termination was in fact serious misconduct, and that the Small Business Fair Dismissal Code Checklist, and examples of serious misconduct published by the Fair Work Ombudsman, had been consulted before terminating Mr Dominigo. RoseVi argued that these factors should have been considered by FWA in making its decision.
Full Bench decision
The relevant section of the Small Business Fair Dismissal Code provides that immediate dismissal will be justified where an employee’s conduct is sufficiently serious to warrant it. Examples of such conduct are listed, and include theft, fraud, violence and serious breaches of occupational health and safety procedures.
The Full Bench of FWA concluded that there are two steps in deciding whether the Code’s requirements are satisfied:
- first, there needs to be consideration of whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal; and
- second, it is necessary to consider whether that belief was based on reasonable grounds. This element incorporates a requirement that the employer carry out a reasonable investigation into the matter. The Full Bench considered that acting reasonably would not require a single course of action; rather, there should be a consideration of whether the employer, in determining its course of action in the circumstances, carried out a reasonable investigation and reached a reasonable conclusion.
Mr and Mrs Pinawin claimed that prior to the dismissal, they had consulted the Small Business Fair Dismissal Code checklist and ticked the box indicating that the dismissal was for serious misconduct. Mr and Mrs Pinawin claimed they had also considered examples of serious misconduct published by the Fair Work Ombudsman, which indicated that conduct that is serious misconduct includes “conduct that causes a serious and imminent risk to health or safety of a person or the reputation, viability or profitability of the employer’s business”.
Based on Mr and Mrs Pinawin’s personal experiences of Mr Dominigo’s erratic behaviour in the salon, as well as his attendance at their home, the Full Bench was satisfied that Mr and Mrs Pinawin believed Mr Dominigo to be an occupational health and safety hazard.
The Full Bench then assessed whether Mr and Mrs Pinawin’s belief was based on reasonable grounds. The Bench accepted that generally employers have no right to control an employee’s out of hours conduct. However, they held that where such conduct resulted in behaviour which was inconsistent with the employee’s duty of fidelity and good faith, it could constitute grounds for termination. Whilst the Full Bench was concerned that no discussions took place about the implications of Mr Dominigo’s behaviour, it was satisfied that Mr and Mrs Pinawin’s belief was based on reasonable grounds, and that the dismissal was consistent with the Small Business Fair Dismissal Code.
The Full Bench ultimately held that Mr Domingo’s dismissal was not unfair because it was consistent with the Small Business Fair Dismissal Code.
John Pinawin T/A RoseVi.Hair.Face.Body v Mr Edward Domingo  FWAFB 1359