The appellant in Dafallah v Fair Work Commission [2014] FCA 328 was employed as a clinical assistant by Melbourne Health. Her colleagues complained that she had failed to be punctual, present, awake and responsive to messages and directions throughout her shifts. Dafallah's employer met with her to discuss the concerns, and subsequently issued her a letter which purported to contain both first and second warnings. Further complaints were received, and Dafallah was issued a further letter containing a "final warning". Following still more complaints, she was dismissed from her employment.

The employee brought a claim against Melbourne Health in the Fair Work jurisdiction. Dafallah claimed that the disciplinary process breached the relevant Enterprise Agreement (that required the first performance-related warning to be verbal, and the second and third warnings to be discrete and in writing), breached her contract of employment (which included the employer's own disciplinary policy that also had not been complied with) and was a breach of the employer's implied contractual and common law duty to maintain a relationship of trust and confidence with the employee.

The Fair Work Commission found against Dafallah. On appeal to the Federal Court, the court agreed that the employer had substantively breached the disciplinary procedures in the Enterprise Agreement with the result that Dafallah's termination was accelerated without due opportunity for her to improve her performance; consequently, Dafallah was entitled to compensation of $15,500. However, the court did not find that the alleged breach of the employer's own policy entitled Dafallah to damages as the employer's policy did not form part of the employee's contract and she had never actually read the policy. Finally, the court found against Dafallah on the breach of the obligation to maintain a relationship of trust and confidence on the basis that the claimant simply had not articulated and evidenced a breach of sufficient seriousness. 

Lessons for Employers 

Firstly, if employers have disciplinary policies in place (or are covered by an enterprise agreement containing express policies and procedures), then it is critical that the employer follow them. Secondly, if other documents (such as codes of conduct) are incorporated into employees' contract of employment, then it is critical that the employees be provided with a copy of those documents and acknowledge having read them. 

Finally, following the decision in Commonwealth Bank of Australia v Barker[2013] FCAFC 83, a duty of trust and confidence has been implied into Australian contracts of employment. However, in this case the court was at pains to point out that while it was bound by Barker, the issue is not "settled" under Australian law, and that claims in tort or arising from an employee's termination would be difficult to support.

Viv Jones, Andrew Berriman