[2014] FWC 7551

The attached document replaces the document previously issued with the above code on 6 November 2014.

The document has an error in paragraph 5. The word “Pacific” has been replaced with the word “Public”.

Associate to Deputy President Lawrence

Dated 21 November 2014

[2014] FWC 7551 [Note: An appeal pursuant to s.604 (C2014/7943) was lodged against this decision - refer to Full Bench decision dated 11 March 2015 [[2015] FWCFB 868] for result of appeal.]


Fair Work Act 2009

s.394—Unfair dismissal

Kevin Cooper
Australian Taxation Office



Application for relief from unfair dismissal.


[1] An application pursuant to s.394 of the Fair Work Act 2009 (the Act) for a remedy for unfair dismissal was lodged with the Fair Work Commission (the Commission) by Mr Kevin Cooper (the Applicant) against his former employer the Australian Taxation Office (the ATO) on 25 October 2013.

[2] The Applicant was employed by the ATO on 10 July 1987. He was notified of his dismissal on 11 October 2013 and it took effect on 14 October 2013.

[3] At the time of the application and the hearing the Applicant was serving a sentence in the Malabar Correctional Facility (Metropolitan Special Programs Centre) in Sydney. On 20 December 2012, the Applicant was convicted of two counts of indecency on a person who was under 16 years of age outside of Australia. On 15 March 2013, he was sentenced to three years and two months imprisonment. He is due for release on 20 December 2014.

[4] The F2 form states that the Applicant was dismissed for a breach of the Australian Public Service Code of Conduct arising from these convictions. Sole reliance on these convictions, he claims, is not a valid reason for dismissal. The Applicant asserted his innocence and intention to appeal the convictions. The offence, it is submitted, had no link to the employment relationship. The Applicant seeks reinstatement or, in the alternative, compensation. It was clear, at the hearing, that no appeal had been proceeded with.

[5] The ATO agreed that it had dismissed the Applicant because he had breached the APS Code of Conduct because of his convictions. A Notice of Suspected Breach was issued to the Applicant on 9 May 2013. An investigation was then commenced by Mr Roy Davey. A detailed submission was made by the Applicant’s solicitor on 23 July 2013. The decision to terminate was made by the ATO’s delegate Vivienne Daniels on 11 October 2013 and the grounds of a serious breach which was detrimental to the ATO’s reputation and interests. The ATO denies that it should have investigated the facts behind the conviction or waited on the result of an appeal. The Applicant’s conduct has fallen short of the requirements of the Public Services Act for the highest standards of ethical conduct.

[6] The specified breach of the APS Code of Conduct was:

[7] The termination of employment notice on 11 October 2013, was issued by Ms Daniels after an internal investigation. It was a summary dismissal for serious misconduct.

[8] The matter was listed for conciliation on 25 November 2012. It was not settled.

[9] In the months that followed the conciliation there were a number of mentions and requests by the Applicant for adjournments based on the possibility of an appeal proceeding in the criminal matter. Deputy President Gooley issued a decision on 6 May 2014 [2014] FWC 2931. She decided that the unfair dismissal matter should proceed. She stated:

[10] The ATO lodged an F4 Objection to the Applicant’s application on 14 July 2014 on the ground that there was no dismissal.

[11] I conducted a programming teleconference on 25 July 2014.

[12] The hearing before me took place in Sydney on 4 August.

[13] The Applicant was represented by Mr K P Smark of counsel and the ATO by Mr J Darams of counsel. I granted both permission to appear pursuant to s.596 of the Act.

[14] The Applicant relied on outline of submissions filed on 19 June 2014 and his witness statements filed on the same day (Exhibit S1). Counsel reached agreement on a statement of facts (Exhibit S3). The Applicant was not required to give evidence in person and be cross-examined. The Applicant also lodged written submissions, on 31 July, in response to the ATO’s “Non Dismissal” Objection, referred to above. A witness statement from the Applicant’s solicitor, Denis Fitzpatrick, was also lodged on 31 July (Exhibit S2).

[15] The ATO relied on:

Protection from Unfair Dismissal

[16] An order for reinstatement or compensation may only be issued where I am satisfied the applicant was protected from unfair dismissal at the time of the dismissal.

[17] Section 382 sets out the circumstances that must exist for the applicant to be protected from unfair dismissal:

[18] There is no dispute and I am satisfied the Applicant has completed the minimum employment period, is below the high income threshold earning $89,764 per annum at the time of the dismissal and is covered by the ATO enterprise agreement. Consequently I am satisfied the Applicant was protected from unfair dismissal.

Was the dismissal unfair?

[19] A dismissal is unfair if I am satisfied, on the evidence before me, that all of the circumstances set out at s.385 of the Act existed. Section 385 provides the following:

Was the Applicant dismissed?

[20] A person has been unfairly dismissed if the termination of their employment comes within the definition of “dismissed” for purposes of Part 3–2 of the Act. Section 386 of the Act provides that:

[21] There is no question that s.385 (c) and (d) do not apply. The ATO submitted that a dismissal did not take place, because in summary, the contract of employment was frustrated as a result of the Applicant’s imprisonment. I will deal with this argument separately.

Harsh, unjust or unreasonable

[22] Having dealt with each of s.385(a),(c)-(d) of the Act and leaving to one side for the moment the “frustration of contract” submission, I must consider whether I am satisfied the dismissal was harsh, unjust or unreasonable. The criteria I must take into account when assessing whether the dismissal was harsh, unjust or unreasonable are set out at s.387 of the Act:

Approach of the Commission

[23] The ambit of the conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 at 465 by McHugh and Gummow JJ as follows:

[24] Vice President Ross, as he then was, in B Rose v Telstra Corporation Limited (1998) Q9292 (Rose) restated the above proposition and also stated:

The Parties’ Main Arguments

[25] This was not a case where there was a conflict about the facts. The witnesses who provided statements were not required for cross-examination. The main issue was whether the ATO’s dismissal because of his conviction was a valid reason for dismissal. The ATO had an alternative argument that with his imprisonment he could not carry out his contract of employment and therefore the dismissal action was, in effect, unnecessary.

[26] The Applicant submits the dismissal was harsh, unjust and unreasonable because:

● A “show cause” letter was sent on 19 September 2013.

● Ms Daniels acted on that recommendation on 11 October 2013. The Applicant does not take issue with the process. The APS processes are Annexure C to the Applicant’s witness statement (Exhibit S1).

● The Applicant submits that there is no valid reason because the convictions were not work related. There was no work nexus at all of the convictions.

● The Applicant submits the convictions did not reflect on the ethical standards and integrity and good reputation of the APS. The convictions relate to events exclusively within the private life of the employee. S.13(11) is confined to conduct which has some connection with the employment relationship.

● Applying the criteria set by Vice President Ross (as he then was) in Rose, it is submitted that the conduct must be likely to cause serious damage to the employer / employee relationship but in this case:

● The conduct occurred outside Australia and in an exclusively private context.

● There was no relationship to work or other ATO employees.

● The Applicant submits there is no evidence of damage to the ATO’s reputation. The Applicant does not generally deal with the public in his work.

● The Applicant is 55 years old, has significant injuries (see annexure A to Exhibit S1) and would be unlikely to obtain alternative employment.

● The Applicant objects to the ATO’s objection to jurisdiction alleging frustration of contract. He submits that it was raised late (14 July 2014). The Applicant was suspended from duty on 21 December 2012, the day after his conviction. The suspension took effect on 2 January 2013 (Attachment A to Exhibit S2). The suspension was indefinite. The Applicant was advised of the internal investigation on 23 January 2013 and accumulated leave was paid.

[27] The ATO submits the dismissal was not harsh, unjust or unreasonable because:

[28] As an alternative, the ATO submits that the Applicant was not dismissed because the imprisonment resulted in the termination of the employment contract by reason of its frustration. The Commission therefore lacks jurisdiction to deal with the application. This submission is particularly based on the duration of the sentence and the fact that the Applicant could not work. The action of the ATO was, in a sense, a recognition of the frustration of the contract rather than a dismissal.

[29] I will consider each of the criteria contained in s.378 of the Act separately. However, I will deal first with the ATO’s frustration of contract argument.

Frustration of Contract

[30] I have summarised the argument by the ATO already. In addition, Mr Darams put it this way at the hearing:

[31] The ATO relies on Gidon v Isis Primary Care Ltd (2010) FWA 2101 where Deputy President Ives accepted that if an employment contract terminates by effect of the legal doctrine of frustration of contract there is no termination within the meaning of s.386 of the Act and therefore no jurisdiction of the Commission to entertain a claim pursuant to s.394. (at PN25). In that case, however, Deputy President Ives found that there was not ‘impossibility of performance’ as required. The case related to the suspension of a drivers licence.

[32] I accept that the fact that the ATO raised this issue after they had gone through the investigation and dismissal procedure is not fatal to the argument. It is true that this submission was not raised until July 2014. It was not put, for example, in the F3 response or in the other preliminary steps in this litigation. Nevertheless the Applicant had plenty of notice of it and was able to respond.

[33] I also accept that frustration of a contract is a matter to be determined by an objective test. A contract may be frustrated even though both parties acted as though it was still operative. Penrith District Rugby League Football Club Ltd v Fittler (an unreported NSW Supreme Court case, Santow J, 8 February 1996, which was tendered at the hearing). The test is whether the contract “has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract”. Davis Contractors Ltd v Fareham UDC (1956) AC 696 at 729.

[34] In the circumstances of this case, it seems to me that the submission must fail because the contract was, in fact, still in operation at the time of dismissal on 11 October 2013. The Applicant was suspended from duty on 21 December 2012. On 23 January 2013 he was advised of an internal investigation and accessed his leave. The suspension was re-confirmed in March 2013, after sentencing. The Applicant then cooperated, especially thorough his solicitors, in the investigation carried out by Roy Davey for the ATO. The Applicant did what he was required to do by the ATO, consistent with the contract.

[35] I find therefore that the contract of employment of the Applicant was not frustrated and was still on foot and capable of being performed at the time of the dismissal.

Valid Reason - s.387(a)

[36] In Container Terminals Australia Limited v Toby [2000] Print S8434, a Full Bench said ‘In our view, the consideration of whether there was a valid reason for termination is a separate issue from the determination of whether a termination was harsh, unjust or unreasonable’.

[37] Northrop J in Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 said:

[38] In Parmalat Food Products Pty Ltd v Wililo, (2011) FWAFB 1166, the Full Bench held:

[39] The Full Bench majority in B, C and D v Australian Postal Corporation T/A Australia Post [2013] FWCFB 6191 provides a useful summary of the approach to be taken by the Commission in weighing the factors to be considered under s.387:

[40] I respectfully adopt this approach.

[41] The Applicant denies that the convictions and, subsequent sentence, were a valid reason for the dismissal of the Applicant because the conduct and the convictions were not work related and were therefore not within the scope of the Code of Conduct. Further it is submitted the convictions did not reflect on the ethical standards of the ATO or its good reputation. There is no relevant nexus between the non-work related misconduct and the interest of the employer.

[42] The convictions, it is agreed, were not work related. They occurred outside Australia. They did not relate to other employees of the ATO. They were, however, for very serious offences which were, it was agreed, highly unethical.

[43] In Rose, VP Ross considered the extent to which an employee’s conduct out of their working hours can provide a valid reason for their termination.

[44] He concluded, at page 12 of the print:

[45] His Honour analysed the facts of several cases and concluded that a valid reason for termination for conduct outside work would require “requisite connection to his employment”.

[46] In Anthony Farquharson and Qantas Airways Limited [PR971685], 10 August 2006, a Full Bench, VP Lawler, SDP O’Callaghan, Raffaelli C dealt with “the peculiar circumstances attending slip time in a foreign port that give Qantas a legitimate interest in the slip time conduct of its flight crew that is far greater than the usual interest of an employer in the off duty conduct of its employees.” In that case, Qantas had a legitimate interest in ensuring that incidents did not occur which damaged its interests and reputation.

[47] In Michael King v Catholic Education Office Diocese of Parramatta [PR544488], 20 November 2013, I decided that although the conduct for which the Applicant was dismissed occurred outside school hours and premises, it constituted a valid reason for dismissal. The “requisite connection” to the Applicant’s employment was the students of the college.

[48] This decision was upheld by a Full Bench (2014) FWCFB 2194.

[49] It seems to me that the general approach of the Commission, as summarised in Rose, needs to be applied so that the test is appropriate to the circumstances of the employment relationship. Private, for profit employment will be different to the school situation dealt with in King. In this case, public sector employment is under consideration.

[50] The relevant parts of the Code of Conduct are quoted above. Section 13(11) and s.10(1)(d) require an ATO employee to behave “at all times” in a way which maintains the integrity and reputation of the APS. I accept the ATO’s submission that this creates an overriding obligation, not just in work time or workplaces, for an employee to behave with the highest ethical standards so the APS’s reputation is maintained.

[51] The Applicant’s convictions were for a serious offence which was clearly unethical. I find that the Applicant was in breach of the Code of Conduct.

[52] I accept also that public sector employment has a special value. This is particularly so with an agency like the ATO which must maintain the confidence of the general public in dealing with their taxation and financial affairs.

[53] Finn J in McManus v Scott Charlton (1996) 140 ALR 625 described the underlying approach as follows:

[54] The decision in Rose describes the shift in the way in which ‘private” acts are treated. It is noted that a conviction for a criminal offence is not, of itself, sufficient to warrant termination. It depends on the circumstances.

[55] Given the nature of the employment and the convictions in this case, the action taken to dismiss by the ATO, is in my view not contrary to Rose:

[56] Having found that the Applicant’s convictions put him in breach of the Code, I find that the ATO’s action in carrying out a formal investigation and ultimately dismissing the Applicant was a reasonable response to a difficult situation. I find that, in the circumstances of the case, there was a valid reason for the dismissal of the Applicant.

Notification of a Valid Reason - s.387(b)

[57] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made, Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41] in explicit terms, Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151 and in plain and clear terms, Presvisic v Australian Quarantine Inspection Services Print Q3730. In Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 a Full Bench of the Australian Industrial Relations Commission dealing with similar provision of the Workplace Relations Act 1996 stated the following:

[58] There is no doubt the Applicant was notified of the reason for dismissal. He was told that a formal investigation was to take place. He participated in that process, especially through his solicitors. He was made fully aware that dismissal may result from the investigation. The ATO had appropriate, detailed procedures which it followed.

Opportunity to Respond - s.387(c)

[59] An employee protected from unfair dismissal must be provided with an opportunity to respond to any reason for dismissal relating to the conduct or capacity of the person. This criterion is to be applied in a common sense way to ensure the employee is treated fairly and should not be burdened with formality RMIT v Asher (2010) 194 IR 1, 14-15.

[60] Given the process described above, there is no doubt the Applicant had an opportunity to respond to the case against him and did in fact do so.

Unreasonable refusal by the employer to allow a support person - s.387(d)

[61] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, the employer should not unreasonably refuse that person being present.

[62] The Applicant was represented by his solicitor throughout the process.

Warnings regarding unsatisfactory performance - s.387(e)

[63] This is not in issue as the dismissal was for misconduct and breach of the Code of Conduct.

Impact of the size of the Respondent on procedures followed - s.387(f)

[64] The ATO is a large, well resourced employer. I find that the size of the Respondent’s enterprise did not impact on the procedures followed in effecting the dismissal.

Absence of dedicated human resources management specialist/expertise on procedures

followed - s.387(g)

[65] The Respondent had human resources specialists involved in the process as well as a range of technical and legal advice.

Any other matter that the FWC considers relevant

[66] Section 387(h) allows the Commission to consider any other matters it considers relevant. These must be considered in the context of the object of Part 3 - 2 of the Act contained in s.381(2) to “ensure that a ‘fair go all round’ is accorded to both the employer and the employee concerned”.

[67] I have taken into account the Applicant’s length of service and the fact that at 55 years of age he may find it difficult to get a job, at least at the same level, in the future.

[68] Nevertheless, I do not find that there are any other matters which are of sufficient weight to offset my finding on valid reason and the other matters in s.387.


[69] In accordance with s.381(2)of the Act, I am satisfied that each party has been accorded a ‘fair go all round’.

[70] Having considered each of the matters specified in s.387, I am satisfied that the dismissal of the Applicant was not harsh, unjust or unreasonable.

[71] The application for a remedy for unfair dismissal is therefore dismissed. An order in these terms will be issued with this decision.



K. Smark of counsel for the Applicant.

J. Darams of counsel with J. Kessler for the Respondent

Hearing details:



August 4.

<Price code C, PR556988>

 1   S8287

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