While it may appear obvious that an employer is entitled to hire and fire employees with reference to criminal conduct, both the Australian Human Rights Commission Act 1986 (Cth) (AHRC Act) and recent unfair dismissal cases make clear that employers should proceed with caution before making any prejudicial decision based on these factors.

Criminal Record

There are a number of laws that make it mandatory for certain employers to screen their employees by means of a criminal record check, a common example being those employees who will work closely with children. However, in the absence of a mandatory requirement, many employers still request potential employees to provide police clearances or authority for the employer to conduct a criminal history check.  

If upon receiving this information the employer chooses not to employ an individual, they are potentially engaging in unlawful discrimination in contravention of the AHRC Act. The AHRC Act covers employers and employees in all states and territories and while it is the focus for this article, it is also worth keeping in mind an employer may be in breach of state and territory laws as well.  

The AHRC Act does not have a specific direction that states an employer cannot discriminate due to a criminal record, which may appear misleading on its face. However upon closer inspection the powers of the Australian Human Rights Commission (Commission) under the AHRC Act include the power to inquire into any act or practice that may constitute “discrimination”. Relevantly, discrimination is defined under the AHRC Act to include “…any distinction, exclusion or preference made…on the ground of…criminal record.” Therefore any decision by an employer not to employ or terminate an individual, due to their criminal record may fall under a type of “distinction” or “exclusion” which the Commission has powers to deal with.  

The definition of discrimination does have an “inherent requirements” exclusion, in that it will not be discrimination where the person’s criminal record means that he or she is unable to perform the inherent requirements of the particular job. However an employer will need to demonstrate that the criminal record really is related to the inherent requirements of the position. For example, those with serious finance related convictions such as fraud, laundering and stealing are unlikely to fulfil the inherent requirements of a senior position that gives them responsibility and discretion over financial matters. Similarly, a history of driving offences may be a relevant factor in refusing to employ someone in a position which involves the transportation of people or goods by motor vehicles.  

Nonetheless a criminal record should not be considered an automatic bar to a position, especially if the criminal behaviour has no bearing on the position’s requirements. Potentially even the most serious criminal record may not be considered a reasonable factor in refusing to employ an individual: Could a twenty year old conviction for manslaughter mean an individual cannot fulfil the inherent requirements of a call centre operator?  

While the Commission does have the power to inquire and deal with complaints of discrimination due to a criminal record, it only a very limited powers to penalise or compensate, in comparison to the penalty and compensation regimes for other types of discrimination such as age, gender or disability. While the Commission can inquire into the matter and endeavour by conciliation to effect a settlement of the matters that gave rise to the inquiry, they do not have power to make any binding findings or orders. Indeed it may be seen as a toothless tiger in this respect, as if the matter fails at conciliation the Commission is limited to making recommendations by way of a report for tabling in federal Parliament. There is no requirement for the respondent to comply with these recommendations.  

Unfair Dismissal  

Some recent decisions have also highlighted the need for employers to exercise caution before terminating an employee due to criminal conduct during the employment. In the first case set out below, a failure in the dismissal procedure resulted in the termination being found to be unfair. In the second case the Full Bench of the Fair Work Commission (Commission) found that the employer did not correctly apply the law before terminating the employee, in that while the employee was disqualified from working with children due to a criminal charge, he was not disqualified from working in other positions.  

Deeth v Milly Hill Pty Ltd [2015] FWC 6422  

In this case the employer was a meat supplier and a small business employer in a country town. The applicant, Mr Deeth was an apprentice butcher in the final year of his apprenticeship. On 21 September 2014 Mr Deeth was charged with accessory after the fact to murder. Upon being charged his father contacted Mr Strelitz of the employer and advised him that Mr Deeth was in custody and unable to attend work. Mr Deeth was released on bail few days later and his mother contacted Mr Strelitz to advise him that Mr Deeth wished to return to work. However Mr Strelitz advised that this could be a problem and he was concerned about how the business may suffer by Mr Deeth’s return. On 26 September 2014, Mr Strelitz advised Mr Deeth’s mother that Mr Deeth had been replaced and his return to work would cause the employer to lose customers and possibly staff.  

The employer relied on two reasons for the dismissal:

  • that the other employees at the butcher store would resign if it continued to employ Mr Deeth and so the business would no longer be viable; and
  • that customers would boycott the retail butcher store if it continued to employ Mr Deeth, and so its profitability would suffer.

In support of these propositions, the employer led evidence from two current employees and a neighbouring store owner who suggested she, and her customers, would not frequent the butcher store if Mr Deeth continued to be employed there.  

Ultimately, the Commission found that the termination was unfair and not in accordance with the Small Business Unfair Dismissal Code. However (and very relevantly) the Commission found that while there was valid reason for the dismissal, the process undertaken by the employer was deficient. In particular, it had not conducted any real investigation to support their conclusion that the business would suffer due to customers and staff no longer wanting to attend at the store. Further, Mr Deeth was not notified of the reason for the dismissal until after it took effect, the dismissal was communicated to his mother rather than Mr Deeth himself and the employer “had a knee-jerk reaction to the news that Mr Deeth had been charged, fuelled by reports of customer and employee dissatisfaction” instead of making a considered decision after a proper investigation.  

Ultimately the Commission determined that reinstatement was not appropriate and instead awarded compensation equivalent to 6 weeks wages.  

O’Connell v Catholic Education Office, Archdiocese of Sydney T/A Catholic Education Office, Sydney [2016] FWCFB 1752 In this recent decision, the Full Bench of the Fair Work Commission ruled that a teacher of 35 years standing should not have been immediately terminated after being charged with the indecent assault of a child.  

Mr Paul O’Connell was a teacher employed in the Roman Catholic Archdiocese of Sydney in a catholic school and his job involved ‘child-related work’ within the meaning of section 6 of the Child Protection (Working with Children) Act 2012 (NSW) (Child Protection Act) . In December 2014 he was charged with the indecent assault of a child under 16 years and was ultimately terminated by his employer on 20 February 2015.  

The employer relied on the fact that Mr O’Connell became a “disqualified person” under the Child Protection Act and was therefore prohibited from child related work.  

The charges against Mr O’Connell were ultimately dropped and he proceeded to make an unfair dismissal claim against the employer. The employer ran a jurisdictional argument, that a true dismissal had not occurred but rather the employment had ended by operation of law, i.e. the Child Protection Act prevented continued employment.  

In finding against the employer, the Full Bench made clear that the employer was not barred from employing Mr O’Connell all together but was rather prevented from employing him in child-related work. In considering the application of the Child Protection Act, the Full Bench noted that: …an employer must not commence employing, or continue to employ, a worker “in” child-related work. The ordinary meaning of the words used does not suggest an absolute bar to the continuation of employment. The section does not provide that an employer must not continue to employ a worker at all. If an employer continues to employ a worker other than “in” child related work, no contravention of the section would arise … An employer could, for example, continue to employ the person on suspension, on leave or assigned to duties not involving child-related work. While this decision may still be appealed to the Federal Court, it is worth keeping in mind that this case deals with whether the employer had a proper jurisdictional objection to the application and is not determinative of whether the dismissal was unfair of itself. Nonetheless it serves as a caution to any employer seeking to rely on the application of other legislation as a reason for dismissal. Tips for Employers: What to keep in mind When it comes to criminal record checks, employers need to be mindful of using criminal record checks as a blanket screening device in recruitment. Criminal record checks should only be used to establish whether a person can actually fulfil the inherent requirements of that job.  

As for a person already in employment who is charged or convicted of a crime, there should be no presumption that this alone will be a defence to an unfair dismissal claim. This is especially the case where there is no objective evidence to support the proposition that the employee’s charge or conviction will negatively effect the employment or business, or when there is no connection between the criminal conduct and the employment. In Deeth v Milly Hill Pty Ltd, SDSP Hamberger also noted that there is no presumption that a criminal conviction alone is a valid reason for termination of employment, particularly where the criminal offence was committed outside of work.  

Employers should seek advice before proceeding to hire or fire employees based on their criminal history or conduct. At first glance, what may appear as a reasonable reaction to criminal conduct may result in a claim of unfair dismissal or unlawful discrimination.