Summary dismissal of employment is a serious step, as the employment comes to an end forthwith with no payment of notice. An employer's right to do this rests upon the principle that an employee's serious misconduct is inherently incompatible with the continuation of employment.
A recent decision of Commissioner Cambridge of the Fair Work Commission emphasises that once an employer is aware of the relevant misconduct it can't sit on its hands and defer the decision to terminate summarily to a later time of the employer's choosing (Nash Wong v Taitung Australia Pty Ltd  FWC 7982).
An alleged joint criminal enterprise is discovered
The employee had worked for the employer for just over nine years. In February 2016, the employer became aware of allegations that a group of its employees were involved in an alleged "joint criminal enterprise" involving the theft of produce. An informant implicated the employee.
In late February 2016 the matter was reported to police. They suggested that the employer not take any immediate action against the alleged participants so that further evidence could be obtained for a possible criminal prosecution.
On that basis, the employer deferred any disciplinary action against them, including the employee.
Critically to the final outcome, the employee remained in employment until May 2016. On 12 May 2016, the employee raised a complaint about the mechanical condition of a truck that he was driving. The employer rejected this claim and believed the applicant was being "unnecessarily difficult". He was suspended from duty for 24 hours.
A disciplinary meeting was scheduled for 17 May 2016. For the purpose of this meeting, a letter was provided to the employee that included the allegation that he had participated in the "joint criminal enterprise". The meeting was conducted in which the employee denied allegations put to him. By letter dated that day, the employer summarily dismissed the employee on the basis of serious misconduct found by the employer in relation to the "joint criminal enterprise".
This was the "valid reason" relied upon by the employer for the dismissal. The employer submitted that while the applicant's complaints about the truck occurred a few days before the decision to raise the "joint criminal enterprise" issue, it did not form part of the reason for the dismissal of the applicant.
A valid reason, but not a valid process, for summary dismissal
Commissioner Cambridge found that there was a sound basis upon which to conclude that the employee was one of those involved in the joint criminal enterprise, and this constituted a "valid reason" for dismissal.
Interestingly, however, Commissioner Cambridge identified what he considered to be a fatal flaw in the procedure adopted by the employer in effecting the dismissal:
"The procedure adopted by the employer included one unfortunate and important error. The employer consciously permitted the applicant to continue to perform work up until the dismissal on 17 May 2016, in the full knowledge of the nature and extent of the misconduct for which it subsequently invoked a summary dismissal. This circumstances appeared to have arisen as a result of the suggestion/request of the police. Although it may have been understandable that, in the context of any potential criminal prosecution, there was a clear desirability for further evidence gathering, the continuation of the employment removed the capacity for the employer to subsequently summarily dismiss the employee".
Commissioner Cambridge continued:
"Consequently, the employer applied a level of severity to the misconduct of the applicant which was inconsistent with permitting him to continue to work as part of some potential for obtaining further evidence. This continuation of the applicant in the performance of work meant that the employer could not subsequently summarily dismiss on the basis of the misconduct the employer was aware of when it permitted the applicant to continue work. In such circumstances, notwithstanding the severity of the applicant's misconduct, the failure to suspend the applicant from duty meant that the employer was required to implement any dismissal with notice, rather than summarily" [emphasis in original].
Commissioner Cambridge went on to find:
"...the employer invoked a summary dismissal in circumstances where the employee had been continued in duty, and thus it was deprived of the capacity to dismiss without notice. This particular procedural error made by the employer has rendered what would have otherwise been an entirely fair dismissal with notice, to be an unjust summary dismissal".
Accordingly, the decision to terminate summarily, as opposed to terminating with notice, rendered the dismissal unfair.
It's worth noting that, even though the summary dismissal was found to have been unjust, no order for either reinstatement or compensation was made. In practical terms, it was a hollow victory. Compensation was, however, ordered in an earlier case where the same principle was applied.
Lessons for employers contemplating a summary dismissal
Given the severity of a summary dismissal, the hurdles employers need to clear to justify such a termination are commensurately high.
A few matters to keep in mind arising from the decisions above:
- Once an employer has either allegations or facts that could give rise to a right to dismiss summarily, it needs to give serious consideration as to whether the employee should remain in their position working, or be suspended or put on leave (which will almost always be with pay). Leaving an employee in place might prejudice a right to terminate the employee summarily at a later date. Ideally (although not necessarily) a right to suspend or put on leave pending investigation will be pursuant to a term of the contract of employment.
- If an employee is suspended or put on leave, it should be made clear that it isn't a predetermination of the final outcome of any factual investigation or disciplinary determination being undertaken.
- As was the case in Wong, there might be a bigger picture in relation to criminal investigations or other considerations which means the employee should ideally remain in place. In such circumstances, where there is a subsequent dismissal on the basis of the underlying misconduct, you should consider terminating employment by making a payment of in lieu of notice, to avoid an unfair dismissal finding.