Lessons in Procedural Fairness from the Unfair Dismissal of the Employee of the Month
In a recent decision by the Fair Work Commission (FWC), a Sydney-based club (the Club) faced significant scrutiny over the dismissal of an employee for alleged theft. This case underscores the critical importance of procedural fairness and thorough investigations in the workplace.
The Incident
The Club conducted an external audit revealing substantial stock discrepancies, including missing alcohol, beer, and snack items. Following these findings, a staff meeting was held to address the issue and reiterate the club's policies on theft and stock control. Employees were reminded that all food and beverages must be paid for, and any violation would be treated as theft.
The Aftermath
Shortly after this meeting, CCTV footage showed several staff members, including (the Employee), who was a three time employee of the month, receiving drinks without paying for them. The footage revealed the Employee consuming a drink that was not processed through the till by (the Bartender). This led to the suspension of multiple staff members pending an investigation. All of the staff members who had been seen taking free drinks were given the choice of resigning or being terminated. All, except the Employee, opted to resign. Whilst other staff members had been seen receiving multiple free drinks the Employee only received one. Additionally, the Employee had paid for her drinks before and after the one that she had received for free. She maintained that if she had received the drink without paying for it she had done so inadvertently.
Investigation and Suspension
The Employee received a show-cause notice outlining allegations of theft and fraud. She was required to attend a meeting to respond to these allegations. The club's handling of the investigation raised several concerns, particularly regarding procedural fairness.
Investigation Flaws and Lack of Transparency
The investigation process revealed several procedural flaws:
Initial Allegations and Miscommunications: The club’s initial letter to The Employee incorrectly alleged multiple unpaid drinks based on CCTV footage, whereas only one unpaid drink was involved. This correct allegation was not communicated until the show cause meeting.
Response and Lack of Further Investigation: The Employee’s response indicated she could not remember the drink and asserted that any failure to pay was unintentional. However, the Club Representative did not explore this explanation further and dismissed it outright.
Private Discussions and Lack of Transparency: The Club Representative concluded privately that the Employee was dishonest based on the CCTV footage but did not share these concerns or the footage with the Employee during the meeting.
Statements from The Bartender: The Bartender’s statement indicated that the Employee had not requested a free drink, suggesting her actions were at worst opportunistic rather than premeditated. This evidence was also not shared with the Employee.
CCTV Footage Analysis: The footage showed the transaction but did not support the club’s theory that the Employee was attempting to mislead by pretending to pay. Instead, the footage suggested that she might have assumed she had already paid.
Procedural Fairness and Flaws
The FWC highlighted significant procedural fairness breaches in the club’s handling of the case:
Immediate Dismissal and Lack of Consideration: The club immediately dismissed the Employee’s explanation without considering her lack of prior misconduct or the possibility that her actions were unintentional.
Procedural Fairness and Inconsistencies: The club’s procedural handling had significant flaws, including incorrect initial allegations, lack of transparency in the investigation, and inconsistencies in treating similar cases of misconduct among employees.
Outcome
The FWC concluded that the Employee's actions were unintentional. The FWC found her dismissal harsh, unjust, and unreasonable, highlighting significant procedural fairness breaches, including the failure to adequately inform the Employee of the investigation's findings and not allowing her to know of crucial evidence i.e. she was not given the opportunity to view the CCTV footage and she was not advised that the Bartender had corroborated her version of events.
The Intimidatory Language: Fraud and Theft
The Commission emphasised that the use of terms like ‘fraud’ and ‘theft’ by the Club in correspondence with the Employee was not only intimidating, particularly for a young staff member, but also unfounded. These terms have specific legal implications, requiring a high standard of proof—beyond a reasonable doubt. The Commission found it unconscionable for the Club to suggest criminal behavior without substantial evidence. The Employee’s explanation of her actions being unintentional was supported by her clean employment record and corroborating evidence, which the Club’s representative deliberately withheld. This not only mischaracterised the Employee’s conduct but also jeopardised her future employment.
Financial and Professional Impact
The Commission considered the severe financial and professional repercussions on the Employee, concluding that the dismissal was not just harsh but also unjust and unreasonable. The wrongful labelling of her actions as criminal and the lack of a thorough, fair investigation were critical factors.
Conclusion
The case serves as a vital reminder for employers to prioritise fairness and transparency in their operations. The FWC’s decision underscores the necessity for balanced responses to allegations of misconduct, ensuring just treatment and avoiding rushed judgments based on incomplete or misinterpreted evidence.
Key Takeaways for Employers:
Precision in Language: Avoid using terms like ‘fraud’ and ‘theft’ without solid evidence and a thorough understanding of their legal implications.
Fair Investigations: Ensure investigations are comprehensive, transparent, and considerate of the employee’s context and history.
Impact Awareness: Be mindful of the potential long-term effects of disciplinary actions on an employee’s career and well-being.
At Insight Investigations, we specialise in helping organisations navigate these challenging situations. Whether you're conducting a workplace investigation, dealing with a complex grievance, or simply need guidance on how to manage sensitive issues within your team, our experienced team is here to assist.