A valid reason, but an unfair dismissal: where the investigation went wrong
An employee working with young children admitted that she had been dishonest with her employer. The Fair Work Commission accepted that the dishonesty provided a valid reason for dismissal.
The dismissal was still found to be unfair.
The decision in [2026] FWC 3487 shows how deficiencies in an investigation and disciplinary process can undermine an employer’s decision, even where there is strong evidence of misconduct.
What happened?
The employee worked as an educator in an early childhood education service. She had been employed for approximately five years and held responsibilities relating to the care and safety of young children.
With the employer’s encouragement and support, the employee enrolled in a diploma course. She later withdrew from the course because she intended to look for work outside the sector.
When the employer asked why the employee’s trainer hadn’t attended the workplace as expected, the employee said she didn’t know. She also indicated that her training was going well.
The employer subsequently received an email from the training provider showing that the employee had withdrawn from the course approximately two weeks earlier. The employer confronted the employee by text message, and the employee apologised.
The employee was told not to attend work the following day. She was then dismissed without attending a disciplinary meeting.
The dishonesty was a valid reason for dismissal
During the Fair Work Commission proceedings, the employee accepted that she hadn’t been honest with her employer.
She explained that she feared she would be dismissed if she disclosed that she had withdrawn from the course. The Commission found that this explanation didn’t excuse her conduct.
The Commission took account of the employee’s responsibilities for the care and safety of young children. In that setting, the employer was entitled to expect honesty and candour from her.
The conduct provided a sound basis for the employer to lose trust and confidence in the employee. The Commission therefore found that there was a valid reason for dismissal.
Mistake 1: treating an expectation as an employment condition
The termination letter stated that maintaining a “working towards” status in the diploma course was a core condition of the employee’s employment.
The evidence didn’t support that claim.
Completing the diploma wasn’t required by the employee’s contract or her applicable award classification. Although the employee had agreed to undertake the course, her withdrawal didn’t amount to a breach of her employment contract.
Before drafting allegations, employers should verify the source of every obligation said to have been breached. A workplace obligation may arise from:
an employment contract;
a policy or code of conduct;
an applicable award or enterprise agreement;
legislation or professional standards;
a lawful and reasonable direction; or
a clearly communicated workplace requirement.
An expectation or professional-development arrangement shouldn’t be described as a contractual requirement unless the relevant documents and evidence support that characterisation.
Mistake 2: failing to formulate clear allegations
The employer questioned the employee about the trainer’s absence and later challenged her by text message about her apparent dishonesty.
Those exchanges identified a concern. They didn’t clearly set out the allegation the employee was required to answer.
A properly drafted allegation could have identified:
what the employee was alleged to have said;
when and to whom the statements were made;
why the statements were alleged to be false or misleading;
the evidence contradicting the statements;
the workplace obligation allegedly breached; and
the potential consequences if the allegation were substantiated.
The employer had already obtained the email from the training provider. That adverse information should have been put to the employee as part of a structured process.
Mistake 3: failing to explain that employment was at risk
The Commission accepted that the employee knew her employer was concerned about her honesty. It found, however, that she hadn’t been clearly informed that her employment was at risk.
This prevented the employee from understanding the seriousness of the process and preparing a complete response.
Where dismissal is under consideration, correspondence with the employee should say so clearly. It should also confirm that no decision has been made.
For example:
If the allegation is substantiated, the organisation may consider disciplinary action, up to and including termination of your employment. No decision has been made. You will have an opportunity to respond before any decision is reached.
This wording gives the employee fair notice of the possible consequences without suggesting that the outcome has been predetermined.
Mistake 4: treating an apology as a sufficient response
The employee apologised after being confronted by text message. The employer proceeded to dismissal without holding a disciplinary meeting or inviting a more complete response.
An apology may form part of an employee’s response. It may leave important questions unanswered.
The employee should have been allowed to address:
why she gave the answers;
whether she intended to mislead the employer;
her understanding of the diploma arrangements;
whether she understood the course to be an employment requirement;
the effect of the incident on the employment relationship;
any relevant mitigating circumstances; and
whether an outcome short of dismissal was appropriate.
The employer was then required to consider that response before deciding the outcome.
Mistake 5: relying on an unproven warning
The employer relied on two previous warnings.
The employee accepted receiving the first warning. The Commission found that it had some relevance, although it wasn’t a final warning.
The employee denied receiving the second warning. The employer conceded that the document hadn’t been provided to her and couldn’t identify when the alleged warning discussion occurred.
The Commission approached the employer’s evidence with caution and gave the second warning no weight.
Where an employer may later rely on a warning, its records should identify:
the date and participants;
the conduct or performance concern;
the employee’s response;
the improvement required;
the period allowed for improvement;
any support to be provided; and
the possible consequences of further concerns.
The employee should receive a copy and be given an opportunity to identify any factual inaccuracies.
Mistake 6: moving directly from discovery to dismissal
The employer discovered the apparent dishonesty, challenged the employee by text message and dismissed her the following day.
That sequence provided little opportunity for a meaningful investigation or disciplinary process.
A sound process would ordinarily include:
preserving the training provider’s email and related records;
identifying the precise conduct under investigation;
verifying whether the diploma was an employment requirement;
drafting clear and procedurally fair allegations;
providing the employee with the substance of the adverse information;
explaining that disciplinary action was being considered;
allowing reasonable time for a response;
interviewing the employee or obtaining a written response;
making findings based on the available evidence; and
considering the appropriate disciplinary outcome separately.
In a straightforward matter, these steps can be completed promptly. Procedural fairness requires a process proportionate to the seriousness and complexity of the allegations.
The employer’s size didn’t excuse the failures
The employer had limited resources and no internal human resources specialist. The Commission accepted that its size affected the procedures it followed.
The employer had also contacted a government department and received advice that dishonesty could provide grounds for dismissal.
That advice addressed the potential seriousness of the conduct. The employer still needed to determine whether the alleged conduct occurred, give the employee an opportunity to respond and consider the appropriate outcome.
The Commission found that the procedural failures carried greater weight than the employer’s limited resources.
The employer also miscalculated its size
The employer initially stated that it employed 11 people and sought to rely on the Small Business Fair Dismissal Code.
The evidence established that it had 15 employees at the time of dismissal, including the dismissed employee. It therefore wasn’t a small business employer under the Fair Work Act 2009.
Before relying on the Code, employers should verify their headcount. Depending on the circumstances, the calculation may include:
the employee being dismissed;
other full-time and part-time employees;
regular and systematic casual employees; and
employees of associated entities.
An incorrect headcount can result in the employer applying the wrong dismissal framework.
Why the dismissal was unfair
The Commission found that the employee’s dishonesty provided a valid reason for dismissal. It also identified significant procedural failures:
the employee wasn’t properly notified of the valid reason before the decision;
she wasn’t clearly told that dismissal was being considered;
she wasn’t given a proper opportunity to respond;
the employer overstated the status of the diploma requirement; and
one of the previous warnings relied upon hadn’t been established.
The Commission concluded that these failures made the dismissal unjust and therefore unfair.
Compensation was ordered, although the amount was substantially reduced. The Commission applied a 50% reduction because the employee’s misconduct contributed to the dismissal. It also reduced the amount because the employee hadn’t adequately demonstrated her efforts to mitigate her loss.
What employers can learn
The outcome may have been different if the employer had paused before making its decision.
The evidence of dishonesty was strong, and the employee ultimately admitted the conduct. A short, properly documented investigation and show cause process would have allowed the employer to test her explanation and make a more defensible disciplinary decision.
Before dismissing an employee for misconduct, employers should check that:
each allegation is clearly expressed;
each workplace obligation is accurately identified;
the adverse evidence has been disclosed;
previous warnings can be proved;
the employee knows that dismissal is being considered;
the employee has received a genuine opportunity to respond; and
the decision is made after considering that response.
Learn how to write procedurally fair allegations
Clear allegations are the foundation of a fair and defensible workplace investigation. They tell the employee precisely what conduct is alleged, when and where it allegedly occurred, and which workplace obligation may have been breached.
Insight Investigations offers a free practical workshop on writing clear, procedurally fair allegations. The workshop draws on more than 20 years of experience conducting workplace and reportable conduct investigations.
[Find out more about the free allegation-writing workshop.]https://www.insightinvestigations.com.au/free-training-allegation-writing
Insight Investigations also conducts independent workplace investigations for organisations requiring an experienced external investigator.
This article is general commentary based on a published decision and does not constitute legal advice. Names and identifying details have been removed.