A Fair Work Australia full bench has accepted that the summary dismissal of a hairdresser whose work performance deteriorated because of his recreational drug-taking was fair, but warned the same conclusion wouldn't necessarily be reached in all cases involving out-of-hours misconduct or drugs.
In the first full bench decision on the paragraph in the small business code allowing summary dismissal for serious conduct including theft, fraud, violence and serious OHS breaches, Vice President Graeme Watson, Senior Deputy President Peter Richards and Commissioner Danny Cloghan said there were two steps to determining whether an employer had satisfied this aspect of the code.
They said it was necessary to consider first, whether the employer believed the employee's misconduct was sufficiently serious to justify immediate dismissal and second, whether such a belief had a reasonable basis. The second element, the bench said, included that the employer had carried out a reasonable investigation into the matter - it wasn't necessary to determine whether they were correct in the belief they held.
They continued that acting reasonably didn't require a single course of action.
"Different employers may approach the matter differently and form different conclusions, perhaps giving more benefit of any doubt, but still be acting reasonably. The legislation requires a consideration of whether the particular employer, in determining its course of action in relation to the employee at the time of dismissal, carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. Those circumstances include the experience and resources of the small business employer concerned."
The full bench said that Commissioner Barbara Deegan's approach to the relevant section of the code in French v Lufra Investment wasn't consistent with its requirements, but those of Deputy President Karen Bartel in Narong Khammaneechan v Nanakhon Pty Ltd and Deputy President Brendan McCarthy in Harley v Rosecrest Asset Pty Ltd were.
In the hairdresser's case, the tribunal found that the husband and wife owners of the salon believed his conduct was sufficiently serious to justify immediate dismissal.
The full bench said the evidence established he'd displayed erratic behaviour at work and away from it, which the salon owners had observed - including when he visited their home at 3am one morning. The evening of that visit, they'd heard from his former partner he'd been taking drugs, which appeared the most likely explanation for his behaviour. The following day they were told he'd been admitted to hospital for reasons related to mental illness and drug-taking.
The full bench continued that the salon owners, in ticking the box indicating the dismissal was for serious misconduct, had put "Intoxication of Illegal Drugs" as the reason. And, they'd read the FWO's material on serious misconduct, and on that basis didn't pay the hairdresser in lieu of notice because they didn't consider they were obliged to do so.
On the "crucial question" of whether their belief that the hairdresser's conduct justified immediate dismissal was based on reasonable grounds, the full bench said that generally employers had no right to control or regulate employees' out-of-hours conduct.
However, if the conduct had a "significant and adverse effect" on the workplace, then the consequences became their legitimate concern. A range of out-of-hours conduct had been held to constitute grounds for termination because its potential or actual consequences were inconsistent with the employee's duty of fidelity and good faith. This concept was closely allied to the implied term of "trust and confidence" in employment contracts .
The bench said that in this case, the salon owners were concerned about the impact on their business of the hairdresser's drug taking. He was responsible for opening the salon on time, but they had experienced problems with his reliability. The were also conscious of OHS implications of his erratic behaviour.
The bench said that normally, in order to hold a belief on reasonable grounds, it would be necessary to have a discussion with the employee about the perceived serious misconduct and pay regard to his/her explanations and views, and "we are concerned in this case that no discussions took place about the implications of [the hairdresser's] conduct for his future employment".
However, they said, this was a "very unusual case".
"The employer was very small. The owners knew [the hairdresser] well. They directly observed his behaviour. They believed that he had made lifestyle choices that involved drug-taking and this directly related to his capacity to perform his work. His work involved close personal dealings with clients. At the time they made their decision, [the hairdresser] was hospitalised. They were conscientious in considering the grounds for summary dismissal in regulatory material available on the internet. In these unusual circumstances we are of the view that the employer, when considering [the hairdresser's] recent erratic and unusual behaviour, formed the belief that [he] had engaged in conduct that justified immediate dismissal on reasonable grounds. Our conclusion should not be seen as one that would necessarily be reached in all cases of out-of-hours misconduct or drug-taking."
They said it followed that the termination of his employment was consistent with the small business code and was therefore not an unfair dismissal.
The full bench quashed an earlier decision of Senior Deputy President Lea Drake to award the hairdresser three weeks pay ($3092) after finding that while there was a valid reason for his dismissal, doing so without notice made it harsh, unjust or unreasonable.
John Pinawin t/a RoseVi.Hair.Face.Body v Edwin Domingo [2012] FWAFB 1359 (21 March 2012)
March 23 update: This article has been amended to reflect a correction issued yesterday by the full bench.