[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 COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Kevin Cooper
v
Australian Taxation Office
(U2013/15300)
DEPUTY PRESIDENT LAWRENCE |
SYDNEY, 6 NOVEMBER 2014 |
Application for relief from unfair dismissal.
Introduction
[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:
(11) The APS employee must at all times behave in a way that upholds the APS values and the integrity and good reputation of the APS.
Value 10(1)(d) was not upheld - “that the APS has the highest ethical standards”.
[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:
“[12] It is clear that the existence of simultaneous criminal proceedings does automatically lead to an adjournment of a civil proceeding.
[13] Senior Deputy President Watson in Sanford v Austin Clothing Company Pty Ltd 1considered the relevant authorities and I adopt the approach set out in that decision.
[14] Mr Cooper gave evidence in his criminal matter and was cross examined. There will be no prejudice to Mr Cooper is he gives evidence in his unfair dismissal application.
[15] The matter before the Commission is not the same as the matter before the Court. The Commission does not have to decide if Mr Cooper is guilty of any criminal offence. The Commission must decide if the termination of Mr Cooper’s employment was harsh, unjust or unreasonable.
[16] Mr Fitzpatrick submitted that because the ATO relied on Mr Cooper’s conviction to justify the termination of his employment, the question of whether Mr Cooper’s conviction is overturned is relevant and that should be determined prior to the hearing of his unfair dismissal application.
[17] The ATO submitted that its defence of this application can proceed notwithstanding that Mr Cooper may appeal his conviction.
[18] In all the circumstances, I do not consider that a further adjournment is warranted. Mr Cooper had not appealed his conviction and he may not. If he does, his conviction may stand or fall. It is not clear how long that will take or when a decision will be handed down. The success or otherwise of any appeal if filed will not determine the outcome of unfair dismissal application. The ATO is entitled to have this matter heard and determined.
[19] Directions will be issued for the parties to file material in support and opposition to this application.”
[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:
● Submissions dated 14 July 2014.
● Witness Statement of Robert Lumb, Business Leader, Client Account Services, Sydney Office, ATO.
● Witness Statement of Vivienne Daniels, Executive Director, Plan and Manage Review, ATO
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:
“382 When a person is protected from unfair dismissal
A person is protected from unfair dismissal at a time if, at that time:
(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and
(b) one or more of the following apply:
(i) a modern award covers the person;
(ii) an enterprise agreement applies to the person in relation to the employment;
(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.
[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:
“385 What is an unfair dismissal
A person has been unfairly dismissed if the FWC is satisfied that:
(a) the person has been dismissed; and
(b) the dismissal was harsh, unjust or unreasonable; and
(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and
(d) the dismissal was not a case of genuine redundancy.
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:
(1) A person has been dismissed if:
(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.
(2) However, a person has not been dismissed if:
(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or
(b) the person was an employee:
(i) to whom a training arrangement applied; and
(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;
and the employment has terminated at the end of the training arrangement; or
(c) the person was demoted in employment but:
(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and
(ii) he or she remains employed with the employer that effected the demotion.
(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.”
[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:
“387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:
(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and
(b) whether the person was notified of that reason; and
(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and
(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and
(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(h) any other matters that the FWC considers relevant.
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:
“... It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”
[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:
“In my view whether there has been a `fair go all round’ is a matter which I think is relevant and hence I am to have regard to it determining whether the termination was harsh, unjust or unreasonable. It is not necessarily determinative but it is a factor to be taken into account.”
[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:
● The Applicant was dismissed because he was convicted of two criminal offences. There is no allegation of poor work performance. The main issue is the employer’s disciplinary power in respect of non-work related conduct.
● The Applicant had 25 years service with the ATO. He was a manager supervising 17 staff. The role of his unit in the Goulburn Street office, is the processing of Business Activity Statements and Income Tax Returns.
● The ATO alleges that the Applicant’s convictions are a breach of the APS Code of Conduct as set out in the Public Service Act 1999. The report of Mr Davey on 13 August 2013 found a breach of 2 provisions of the Code:
s.10(1)(d) - “The APS has the highest ethical standards”
s.13(11) - “An APS employee must at all times behave in a way which upholds APS values and the integrity and good reputation of the APS.”
● 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:
● The Applicant was terminated for breach of the APS Code of Conduct. It was considered “detrimental to the reputation and the interests of the ATO, from the perspective of your colleagues and the community in general”.
● The Applicant breached the Code of Conduct. Such a breach has been found to constitute a valid reason for dismissal.
● The Code does extend to an employee’s private life and not just work related activities - This submission is particularly based on the words of s.13(11) - “must at all times”.
● The ATO also relies on the “special nature” of public sector employment and its requirements. The convictions are sufficient grounds for beach of the Code in themselves. In the content of the Rose decision, the relevant connection between the convictions and the employment is the APS values and Code of Conduct.
● In the ATO’s submission, the convictions do reflect on the ethical standards and good reputation of the APS. S.13(11) and s.10(1)(d) clearly go to the ethical standards of APS employees. The Applicant failed to meet the highest ethical standards expected of ATO employees. The community’s view of the ATO depends on its confidence in its employees.
● Even if the frustration argument is rejected, the Applicant’s imprisonment is a relevant factor to be taken into account under s.387(h) of the Act.
● Reinstatement is, in any event, not appropriate because:
● His position does not exist.
● It would not be appropriate for him to manage staff (see statement of Robert Lumb, Exhibit D).
● Vivienne Daniels’ witness statement (Exhibit D2) sets out the process undertaken by the ATO leading up to the dismissal and the reasons for decision. Attached is the Practitioners Guide to Managing Suspected Misconduct in the ATO (19 July 2013) which provided the basis of the ATO’s approach.
[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:
“PN345
The fundamental question to be determined is whether the incarceration until 20 December 2014 had the consequence of frustrating the contract because it would have rendered the performance something radically different from that which was contemplated at the time that the parties entered into the employment contract. That’s the question. We have said in our submissions that that would be a question which is decided in favour of the ATO. It could hardly have been contemplated at the time the parties entered into the contract that he would be imprisoned for such a length period of time and it’s clear that the consequences of that imprisonment meant that he wasn’t in a position to provide his services being the fundamental obligation of an employee under a contract of employment.
...
PN371
MR DARAMS: We’ve not ever suggested that he abandoned his employment. It’s something much more fundamental and as the cases say, one needs to look at what’s the effect of the incarceration and abandonment might also, and I haven’t thought about it, but that might be something more akin to the tensions of the party when it’s clear that frustration doesn’t depend upon the intention of the parties. The simple fact is, I think we’ve articulated in our submissions, the simple fact is that his imprisonment or the passing of a sentence on 15 March 2013 meant that he wasn’t in a position to perform his obligations under the contract and would not be in a position at any time for, and still not in a position to do it today, before the end of this year, 20 December.
PN372
The fundamental obligation of an employee and that which is the base obligation is to make themselves available to provide their services under the contract of employment. What one has to look at or consider, did the passing of that sentence in March 2013 render performance of the contract something radically different than what was contemplated at the time the parties entered into the contract. Our submission says clearly yes. The vast number of the cases, in my respectful submission, that deal with it don’t have any hesitation in that regard, that is considering a lengthy period of sentence, the consequences of it.”
[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:
“In its context in s.170DE(1), the adjective “valid” should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s.170DE(1). At the same time the reason must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must ‘be applied in a practical, commonsense way to ensure that the employer and employee are each treated fairly ...”
[38] In Parmalat Food Products Pty Ltd v Wililo, (2011) FWAFB 1166, the Full Bench held:
“The existence of a valid reason is a very important consideration in any unfair dismissal case. The absence of a valid reason will almost invariably render the termination unfair. The finding of a valid reason is a very important consideration in establishing the fairness of a termination. Having found a valid reason for termination amounting to serious misconduct and compliance with the statutory requirements for procedural fairness it would only be if significant mitigating factors are present that a conclusion of harshness is open.”
[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:
“[20] Northrop J’s reasoning anticipated the reasoning of the High Court in Victoria v Commonwealth – that s.170DE(2) by its operation could render invalid a reason that would otherwise have been a valid reason. The fact that some dismissals are “harsh, unjust or unreasonable” notwithstanding the existence of a “valid reason” means that the class of dismissals that are “harsh, unjust or unreasonable” is greater than the class of dismissals where there is no “valid reason” for the dismissal.
[21] Section 387 specifies a range of matters that must be considered in each case. Section 387(h) requires consideration of “any other matters that FWA considers relevant”. In any given case, there will be a range of matters, beyond those specified in s.387(a) to (g), that rationally bear upon whether the dismissal is “harsh, unjust or unreasonable” and thus are “relevant matters” that must be considered pursuant to s.387(h).
[22] Often it will not make any difference to the ultimate outcome whether a particular circumstance is considered pursuant to s.387(a) in determining whether there is a valid reason, or as a relevant matter pursuant to s.387(h), leading to the ultimate determination of whether the dismissal was “harsh, unjust or unreasonable”. However, in some cases it may matter greatly. That will tend to be so when the particular misconduct, shorn of the personal circumstances of the employee and the broader context beyond the particular acts or omissions that are said to constitute the misconduct, is clearly a matter that a reasonable employer is entitled to take seriously. This is such a case.
...
[34] In considering whether there was a valid reason for a dismissal under s.387(a), the reason(s) being considered are the employer’s reason(s). In a misconduct case, the Commission is concerned with whether the misconduct in fact occurred, not with whether the employer has reasonable grounds to believe that it occurred (eg. Yew v ACI Glass Packaging Pty Ltd (1996) 71 IR 201, Sherman v Peabody Coal Ltd (1998) 88 IR 408; Australian Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1). ”
[35] Subject to that, as indicated by Northrop J in Selvachandran, “valid reason” is assessed from the perspective of the employer and by reference to the acts or omissions that constitute the alleged misconduct on which the employer relied, considered in isolation from the broader context in which they occurred. It is the reason of the employer, assessed from the perspective of the employer, that must be a “valid reason” where “valid” has its ordinary meaning of “sound, defensible or well founded”. As Northrop J noted, the requirement for a valid reason “should not impose a severe barrier to the right of an employer to dismiss an employee”.
[36] A failure to comply with a lawful and reasonable policy is a breach of the fundamental term of the contract of employment that obliges employees to comply with the lawful and reasonable directions of the employer. In this way, a substantial and wilful breach of a policy will often, if not usually, constitute a “valid reason” for dismissal.
. . .
[58] Reaching an overall determination of whether a given dismissal was “harsh, unjust or unreasonable” notwithstanding the existence of a “valid reason” involves a weighing process. The Commission is required to consider all of the circumstances of the case, having particular regard to the matters specified in s.387, and then weigh:
(i) the gravity of the misconduct and other circumstances weighing in favour of the dismissal not being harsh, unjust or unreasonable;
against
(ii) the mitigating circumstances and other relevant matters that may properly be brought to account as weighing against a finding that dismissal was a fair and proportionate response to the particular misconduct.”
[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:
“It is clear that in certain circumstances an employee’s employment may be validly terminated because of out of hours conduct. But such circumstances are limited:
� the conduct must be such that, viewed objectively, it is likely to cause serious damage to the relationship between the employer and employee; or
� the conduct damages the employer’s interests; or
� the conduct is incompatible with the employee’s duty as an employee.
In essence the conduct complained of must be of such gravity or importance as to indicate a rejection or repudiation of the employment contract by the employee.30
Absent such considerations an employer has no right to control or regulate an employee’s out of hours conduct.”
[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:
“34. The matter of emphasis, though, is that public service legislation served - and serves - public and constitutional purposes as well as bare employment ones. This is not at all surprising given (i) that such legislation provides for the marshalling of the human machinery to implement the exercise of executive power constitutionally vested in the Crown - and hence facilitates government carrying into effect its constitutional obligation to act in the public interest: Attorney-General for the United Kingdom v Heinemann Publishers Australia Pty Ltd (1987) 10 NSWLR 86 at 191; and (ii) the distinctive position as public officers that public servants in consequence occupy (though not invariably: cf Ex parte Kearney [1917] NSWStRp 68; (1917) 17 SR(NSW) 578) in our governmental order. As to the latter I would merely note that, quite apart from employment obligations, that position can give rise to duties and liabilities to the public directly - as the common law has long recognised: see eg Northern Territory of Australia v Mengel (1995) 129 ALR 1.
35. From 1862, Australian public service legislation has imposed strictures and limitations upon the employment and non-employment (or private) conduct and activities of public servants; the acquisition of personal interests conflicting with duties of office: cf PS Regulations, reg 8B; holding outside offices or employment: cf PS Act s91; making private disclosures of official information: cf PS Regulations, reg 35; and see also PS Regulations, reg 8A(i) and regs 65 and 70.
36. It seems clear that some number of these strictures and limitations were - and are - not designed merely to serve the purposes of the employment relationship as such. Rather, for reasons of governmental and public interest, their object includes securing values proper to be required of a public service in our system of government and, in particular, the maintenance of public confidence in the integrity of the public service and of public servants: for a contemporary treatment of this, see generally Electoral and Administrative Review Commission, Report on the Review of Codes of Conduct for Public Officials, (1992, Qld).
37. For this reason public service Acts and regulations have in some respects gone considerably beyond what would be countenanced by the implied contractual duty of an ordinary employee to serve his or her employer with good faith and fidelity - at least insofar as the regulation of an employee's private activities are concerned: on this implied contractual duty, see eg Blyth Chemicals Ltd v Bushnell [1933] HCA 8; (1933) 49 CLR 66 at 81-82.
38. Perhaps the most contentious illustrations of this legislative regulation of private conduct have been (i) the changing supervision of the political activity of public servants (initially taking the form of a total ban: see Civil Service Regulations 1867 (Vic) reg 23;) but see now eg "Guidelines on Official Conduct of Commonwealth Public Servants" (1995) Chs 5 and 6; and for a comparative treatment see, Ontario Law Reform Commission, Report on Political Activity, Public Comment and Disclosure by Crown Employees (1986); and (ii) the still exceptionally broad and, perhaps today, possibly invalid prohibitions imposed on the private use made of information "of which an officer ... has knowledge officially": see PS Regulations, reg 35.
39. The particular point I wish to make about this enduring and legislatively backed "public interest" regulation of the private conduct of public servants are these. First, to the extent that private conduct is made the lawful subject of employment regulation, it can for that reason provide the subject of a binding employment direction - provided the direction given is itself reasonable.
40. Counsel for the applicant has submitted in contrast that the only binding directions which can be given a public servant are those related to - which have a nexus with - the performance of that person's employment duties. In light of what I have said so far, this submission is untenable as a generalisation.”
[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:
● convictions for such unethical actions caused serious damage to the employer/employee relationship.
● the employer’s interests and reputation, as summarised in the Code, were potentially damaged.
● the conduct was incompatible with the employee’s duty as an employee especially as his position involved supervision of other employees.
[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:
“[73] As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment.”
[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.
Conclusion
[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.
DEPUTY PRESIDENT
Appearances:
K. Smark of counsel for the Applicant.
J. Darams of counsel with J. Kessler for the Respondent
Hearing details:
2014
Sydney:
August 4.
<Price code C, PR556988>
1 S8287
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