16 Mar 2011

Dismissal for serious misconduct: When have you gone too far?

by Saul Harben, Steve Bowler

Employers may feel justified in summarily dismissing employees when they make what is seen as a serious mistake that hurts their business, but the employer might be the one in the wrong.

An employer may believe that where an employee's conduct has damaged the business' relationship with an important client, summary dismissal for misconduct is warranted. However, in dealing with this exact situation in Michelle de Leon v Spice Temple Pty Ltd [2010] FWA 3497, Fair Work Australia (FWA) not only ordered the employer to compensate the employee for 12 weeks' pay, but was also particularly scathing of the approach taken by the employer in the process.

The phone call and the termination

Ms de Leon was employed as a Reservations and Administration Assistant for Spice Temple and Rockpool Bar and Grill in Sydney (owned by high-profile restaurateur Neil Perry). Ms de Leon had received a phone inquiry from the Concierge of the Four Seasons Hotel (a major client of the restaurant) regarding the restaurant's interior design. Ms de Leon informed the Concierge that she did not know the answer to his question, and as no one else was available to assist, he could either call back or she would call him back later.

Unhappy with the way Ms de Leon had handled his inquiry, the Concierge made a complaint to the restaurant manager, claiming that she had been "abrupt and quite unprofessional".

Later that same day, without warning or notice, Ms de Leon was called to a meeting with the General Manager and Administration Manager, where she was advised of the complaint and informed that, as a result, her employment was terminated immediately for misconduct. No letter confirming the dismissal and the reasons for it was provided.

The problem with the termination

In finding for Ms de Leon Deputy President Sams was highly critical of the employer's conduct, describing the circumstances surrounding the dismissal as "nothing short of appalling and manifestly unfair".

In particular, Deputy President Sams focused on the admission by the General Manager that he had been directed by the restaurant's owner, Neil Perry, to dismiss Ms de Leon, despite the fact that Mr Perry had not even spoken to Ms de Leon regarding the incident, making the consequential meeting where the complaint was put to Ms de Leon, as Deputy President Sams described it, "a complete sham".

Deputy President Sams also observed that the unfairness of the process had been exacerbated by the fact that Ms de Leon was :

  • not told the reason for the meeting and was effectively "ambushed" by the allegation;
  • given no reasonable opportunity to respond to the allegation of misconduct;
  • given no opportunity to have a support person present in the meeting (The employer had tried to claim that the Administrative Manager had acted as Ms de Leon's support person, but this was firmly rejected on the grounds that the Manager was Ms de Leon's direct supervisor and had not been asked by her to act in this role);
  • understandably shocked and distressed about being dismissed, yet given no chance to compose herself and respond appropriately to the allegation; and finally
  • not provided with any written warning regarding her conduct or a letter setting out the reasons for her being dismissed, described by Deputy President Sams as "totally unacceptable and a denial of procedural fairness". He also noted that it was no defence to claim, as the employer had, that employees could be provided with this documentation if they requested it.

Importantly, Deputy President Sams also reviewed the case law on the meaning of "serious misconduct", concluding that Ms de Leon's conduct during the phone conversation with the Concierge had not "come 'within a bull's roar' of the commonly accepted definition of misconduct" but was rather "an error of judgment which was neither deliberate, nor wilful".

On this basis, Deputy President Sams found there was no valid reason for the dismissal, as the alleged "misconduct" should have warranted, at most, a verbal counselling. The Deputy President was extremely critical of the employer's actions, stating:

"To think that a young pregnant woman, under pressure in a busy workplace, would be dismissed for a single instance of unacceptable phone manner, which had no adverse ramifications, is incomprehensible… If ever the protections from unfair dismissal, under the Fair Work Act, were so obviously necessary, this case provides a classic example. I strongly recommend that the respondent's personnel, who are in any way responsible for employee or industrial relations, undertake relevant training as to what are acceptable industrial relations practices. The respondent would also be well advised that, in future, it seek appropriate professional advice on how to deal with similar situations. Plainly, it got it hopelessly wrong on this occasion…"

The dismissal was found to be harsh, unjust and unreasonable on a number of levels, not the least being it was grossly disproportionate to the gravity of the conduct, with Deputy President Sams stating "If there was a scale of unfairness, this dismissal would be in the top quartile".


Having found that reinstatement was not appropriate, Deputy President Sams awarded Ms de Leon full compensation for the amount she would have otherwise earned from the time she was dismissed until the time she would have commenced maternity leave, being 12 weeks' pay at $769.23 per week.

Lessons for employers

Employers may not realise that "serious misconduct" is not a subjective term that is up to the interpretation of the individual employer.

In determining whether or not an employee's actions constitute misconduct warranting summary dismissal, FWA will look to previous cases in order to evaluate whether the requisite degree of seriousness is involved – and the emphasis is on "serious". While an employer may think that an employee's carelessness or rudeness to a client is enough to justify summary dismissal on the grounds that it has damaged important business relationships, the reality is that a single act by an employee rarely constitutes "serious misconduct" for the purposes of the Fair Work Act, unless it involves conduct that is criminal in nature, or that puts the safety and welfare of other staff or clients at risk.

On this basis, it is important for employers to step back and objectively consider whether an employee's act of perceived misconduct is serious enough to warrant dismissal, or whether it would be better dealt with through a written or verbal warning, or counselling.

This case also strongly demonstrates the need for employers to implement a dismissal procedure that is fair to employees. Elements such as giving the employee an opportunity to respond to an allegation before the decision is made to dismiss them, allowing them to have a support person present at any meeting and, if the employee is dismissed, providing a letter of dismissal which clearly sets out the reasons, can make a substantial difference to an employer's ability to defend against an employee's claim that their dismissal was unfair.

If employers are unsure of whether they are meeting the requirements of fairness in dealing with an employee accused of misconduct, they should take Deputy President Sams' advice and seek professional advice. Otherwise, employers may find themselves having to deal with costly claims by dismissed employees – not to mention getting a roasting by FWA!


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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.