The Employee Did It — But It Still Wasn’t Misconduct

[2026] FWC 3703

A senior property development manager arranged for a block of land to be assigned to herself and her husband at the original contract price.

The employer later treated that transaction as serious misconduct and dismissed her.

There was one major problem.

Her manager had approved it.

That distinction became central when the Fair Work Commission considered whether there was actually a valid reason for dismissal. The Commission ultimately found there was not, and the employee was awarded $23,309.87 in compensation.

The case is a useful reminder that establishing that an employee did something is only one part of a misconduct investigation.

The employer also needs to establish why that conduct breached an obligation.

What happened?

The employee was a Senior Development Manager working for a property development business.

One of the company’s property sales was at risk of falling over because the purchasers were unlikely to complete the transaction.

The employee asked her manager, who was the General Manager for South Australia, whether the property could instead be assigned to her and her husband.

He approved the arrangement.

The property was subsequently assigned to the employee and the sale settled.

The employer later alleged that the employee had obtained a financial benefit through her employment, acted against the company’s commercial interests and failed to properly disclose a conflict of interest.

She was summarily dismissed for serious misconduct.

The problem with relying on an unwritten process

A significant difficulty for the employer was that there was no written policy governing the assignment of properties in these circumstances.

The employer said there was an informal process employees were expected to follow if they wanted to purchase a property.

But it also accepted that the employee may not have known about that process.

That creates an obvious problem when misconduct is alleged.

Before concluding that an employee has breached a process, an investigator should be able to answer some fairly basic questions:

What was the requirement?

Where was it documented?

Was the employee aware of it?

How had it previously been communicated or applied?

If an organisation cannot clearly identify the obligation said to have been breached, a misconduct allegation may be difficult to sustain.

Approval from the employee’s manager

The employee did not secretly arrange the transaction.

She sought approval from her manager.

The Commission found that the manager had either actual or apparent authority to approve the assignment. The evidence included his authority to sign contracts on behalf of the vendor entity and communications connected with the transaction.

The employer relied on internal policies to argue that the manager had acted outside his authority.

However, the Commission noted that the employer did not take the Commission through those policies in sufficient detail, and there was no evidence demonstrating that the employee knew her manager lacked authority to approve the transaction.

For investigators, this raises an important issue.

When an employee says, “My manager approved it”, that needs to be investigated properly.

It may require evidence about:

• the manager’s actual authority;

• the authority the manager appeared to have;

• previous practice;

• applicable policies and delegations;

• what the employee knew about any limits on that authority; and

• whether the organisation had communicated those limits.

The existence of an internal delegation document does not necessarily establish that an employee knew their manager was acting outside it.

Was there really a conflict of interest?

The employee’s contract required her to disclose an actual or potential conflict of interest and obtain approval.

The employer argued that she had failed to do that.

The Commission disagreed.

By asking her manager for approval to purchase the property, she had disclosed the potential conflict.

The Commission also found that her contract did not say she needed to make a separate disclosure to the executive or finance team.

This is another useful lesson when drafting allegations.

It is not enough to allege:

“You failed to disclose a conflict of interest.”

An investigator should establish:

• what the employee was required to disclose;

• who they were required to disclose it to;

• when that disclosure was required;

• whether they actually made a disclosure; and

• the policy, contract or direction creating the requirement.

The more serious the allegation, the more important it is to identify the specific obligation said to have been breached.

The alleged financial harm was not established

The employer also argued that the employee had obtained a financial benefit at the company’s expense.

There was no real dispute that she obtained some financial benefit by purchasing the property at the original contract price.

But the Commission found that there was insufficient evidence to establish the extent of that benefit or the impact the assignment had on the employer.

No evidence was provided about the potential repricing of the property or the financial effect of assigning it rather than cancelling and reselling it.

The employer had therefore moved from:

the employee obtained a benefit

to:

the employee improperly obtained a benefit at the employer’s expense

without sufficient evidence establishing the second proposition.

That is an important distinction in workplace investigations.

An allegation needs to reflect what the evidence can actually establish.

The decision had already been made

The most significant procedural problem came at the termination meeting.

The employee argued that she had not been given a proper opportunity to respond before the decision was made.

The Commission found that the termination meeting was the first time the allegations were put to her.

Evidence also showed that a letter confirming her termination had already been prepared.

The Commission concluded that the decision to terminate her employment had been made before the meeting, depriving her of a genuine opportunity to respond.

This is one of the clearest lessons from the case.

If an employee is being asked to respond to allegations, their response needs to be capable of affecting the outcome.

A meeting held after the decision has effectively been made is not a genuine opportunity to respond.

What managers can take from this case

There are several practical lessons.

Identify the actual rule before alleging a breach.
If the process is informal or undocumented, carefully consider whether the employee could reasonably have been expected to know about it.

Investigate claimed approval.
Where an employee says a manager authorised their actions, investigate the manager’s authority and what the employee reasonably understood that authority to be.

Draft allegations precisely.
Separate the underlying conduct from the conclusion you are seeking to draw from it.

Prove the alleged consequence.
If the allegation says the employee caused financial loss, reputational damage or another adverse outcome, obtain evidence demonstrating that consequence.

Keep an open mind until the response has been considered.
A show-cause or disciplinary meeting should occur before the final decision has been made.

The Commission ultimately found there was no valid reason for dismissal and that the employee had not been given a genuine opportunity to respond before the decision was made.

The case is a useful reminder that serious misconduct requires more than conduct that initially looks concerning.

The investigation still needs to establish the rule, the breach and the evidence supporting the conclusion.

FAQs

Can an employee be dismissed for breaching an unwritten workplace rule?

Potentially, but an employer may face difficulty establishing misconduct where the expectation was unclear, informal or had never been communicated to the employee. The surrounding evidence will be important.

Does approval from a manager prevent misconduct?

Not automatically. It depends on whether the manager had authority, appeared to have authority, and whether the employee knew or should have known that the approval was outside that authority.

What should an investigator do when an employee says their manager approved the conduct?

Obtain evidence about the manager’s authority, relevant delegations, policies, previous practice and what the employee understood about the manager’s authority.

Can an employer prepare a termination letter before a disciplinary meeting?

Employers should be very careful. If the evidence demonstrates that the decision was already made before the employee was given an opportunity to respond, that can create a significant procedural fairness problem.

Does obtaining a personal benefit automatically establish a conflict of interest?

No. The investigation should identify the relevant conflict-of-interest obligation, what disclosure was required, whether disclosure occurred and whether approval was obtained.