Fair Work Act 2009
s.604 - Appeal of decisions

Appeal against decision [2014] FWC 7310 and Order [PR556674] of Vice President Catanzariti at Sydney on 15 October 2014 in matter number U2014/634.

Introduction and factual background

[1] Mr Owen Sharp has filed a notice of appeal under s.604 of the Fair Work Act 2009 (Act) in which he seeks permission to appeal and appeals a decision of Vice President Catanzariti issued on 15 October 2014 1 (Decision). The Decision concerned an unfair dismissal remedy application which Mr Sharp lodged under s.394 of the Act in relation to his dismissal from his employment with BCS Infrastructure Support Pty Limited (BCS) on 21 February 2014. Mr Sharp’s dismissal arose from a drug and alcohol test which he was required to undergo at work on 10 February 2014, the results of which showed that he had tested positive for cannabinoids at a level of 112�g/L, which was in excess of the permitted threshold of 15�g/L. In summary, the Vice President found that there was a valid reason for Mr Owen’s dismissal, that he was accorded procedural fairness, and that his dismissal was not harsh, unjust or unreasonable, and dismissed his application.

[2] Mr Sharp’s notice of appeal stated five grounds for appeal contending that the Vice President erred:

(1) in concluding that Mr Sharp’s dismissal was not harsh, unjust or unreasonable within the meaning of s.387 of the Act and accordingly was not unfair;

(2) in finding (at paragraphs [33]-[38] of the Decision) that “return[ing] a confirmed positive test result whilst at work” formed a valid reason for termination;

(3) in finding, in his consideration of “any other matters that the FWC considers relevant” under s.387(h) (at paragraphs [55]-[56] of the Decision), that a non-negative urine test result constituted serious misconduct within the ordinary meaning of that term, outside of the types of serious misconduct contemplated by BCS’s policies or reg.1.07 of the Fair Work Regulations 2009 (Regulations);

(4) in finding (at paragraphs [57]-[58] of the Decision) that Mr Sharp’s conduct was serious misconduct within the meaning of reg.1.07(2)(b)(ii) - that is, that it caused a serious and imminent risk to the reputation of BCS’s business;

(5) in finding (at paragraphs [59]-[61] of the Decision) that the termination was not harsh; and

(6) in finding (at paragraphs [39]-[44] of the Decision) that Mr Sharp was accorded procedural fairness in the sense that he was adequately notified of the reasons for termination.

[3] As noted in the Decision, the facts of the matter were not in dispute, and they may be stated briefly. BCS held a contract with Qantas at Sydney Airport to maintain and service various types of equipment including baggage carousels and aerobridges. This work constituted “Safety Sensitive Aviation Activities” (SSAA) under the Civil Aviation Safety Regulations 1998 (Cth). Mr Sharp was employed by BCS to perform work in relation to this contract in November 2006. In April 2011 he was promoted to the position of team leader.

[4] On 31 January 2014, the Sydney Airport Corporation Limited (SACL), the operator of Sydney Airport, required of BCS that all of its employees and sub-contractors who performed SSAA who had not yet been subjected to drug and alcohol testing must be tested no later than 21 February 2014. On Monday 10 February 2014, Mr Sharp upon attendance at work at 6.00am was informed by his supervisor that he was required to undertake a drug and alcohol test, whereupon Mr Sharp informed the supervisor that he had consumed marijuana the prior Saturday. Nonetheless Mr Sharp was not stood down, but continued to work that day and the following day. The test was undertaken that afternoon when Mr Sharp provided a urine sample at the Sydney Airport Medical Centre.

[5] Mr Sharp was informed prior to starting work on 12 February 2014 that his test had returned a non-negative result, and he was stood down pending the provision of a report from the Medical Review Officer. On 13 February 2014 Mr Sharp’s supervisor received the results of confirmatory tests which, as earlier stated, showed that Mr Sharp had tested positive for cannabinoids at a level of 112�g/L, which was in excess of the permitted threshold of 15�g/L. The test results were sent to Dr Forbes, the Medical Review Officer, who confirmed in a report that Mr Sharp had tested positive for THC (the primary psychoactive ingredient in cannabis). Mr Sharp was informed that he would be subject to a formal disciplinary process under BCS’s Drug and Alcohol Management Plan (DAMP).

[6] On 17 February 2014 Mr Sharp was sent a letter which notified him of a requirement to attend a formal disciplinary meeting in light of the test results. He attended a meeting with representatives of BCS about the matter on 19 February 2014, and had a union official with him as his support person. He was provided with Dr Forbes’ report, but was not provided with the initial or confirmatory test results or told of the level of THC which had been detected. At his request, Mr Sharp was given an opportunity to respond in writing, and a further meeting was arranged for 21 February 2014.

[7] On 20 February 2014 Mr Sharp provided BCS with his written response, in which he stated that:

● he was not a regular user of cannabis;
● he had smoked a single “joint” with friends on the Saturday prior to the test;
● he did not feel impaired when he attended for work;
● he acknowledged he had made a serious mistake;
● he was prepared to submit to a program of ongoing or random testing if he were given a second chance; and
● his length of service, his work record, his willingness to transfer to another worksite, his cooperation with the investigation process, and his status as the primary breadwinner in his family should be taken into account by BCS.

[8] At the further meeting on 21 February 2014, Mr Sharp was informed that he was dismissed effective from that date, and he was paid four weeks’ pay in lieu of notice and his accrued leave entitlements. He was subsequently provided with a copy of the initial and confirmatory drug test results on 10 April 2014.

The Decision

[9] In the Decision, the Vice President gave separate consideration to each of the matters he was required to take into account under s.387 of the Act in determining whether Mr Sharp’s dismissal was harsh, unjust or unreasonable. In relation to s.387(a), he found that there was a valid reason for the dismissal. The Vice President acknowledged that “the Commission must consider the entire factual matrix in determining whether an employee’s termination is for a valid reason” 2, and then went on to find as follows:

“[35] I do not accept the Applicant’s submission that the Respondent took into account the Applicant’s out of hours conduct in an impermissible manner. I am satisfied on the basis of the evidence before me that the reason for Applicant’s dismissal was that he returned a confirmed positive test result whilst at work. While the Respondent had been informed by the Applicant that he had consumed cannabis on the weekend prior to the drug test, it was not this information that formed the basis of his termination. This is established by the evidence of Ms Canfield, Mr Hiland and the termination letter that was sent to the Applicant.

[36] The Applicant submitted that the Respondent was in error in asserting in its termination letter that the return of a positive test result would likely affect the Applicant’s ability to obtain an ASIC. Ms Canfield’s evidence in cross-examination revealed that there was scant basis for this assertion. However, even were the Respondent mistaken about the impact of the positive test result on the Applicant’s ability to obtain an ASIC, the Applicant’s positive test result provides a valid reason for dismissal in the circumstances.

[37] The Applicant also submitted that there was no evidence that the Applicant was suffering from impairment due to the consumption of drugs or alcohol, and no evidence that he had consumed drugs or alcohol on site. It was further submitted that there was no suggestion that the Applicant was a habitual drug user, and that the Applicant had never previously returned a non-negative result on a drug test. These are not issues that arise on the facts of this matter. The Respondent did not allege that the Applicant was suffering from impairment or that he was a habitual drug user. These issues have no relevance in considering whether or not there was a valid reason to terminate the Applicant in circumstances where such reasons had no bearing on the Applicant’s termination. To raise them at this stage merely serves to distract from the true issues in dispute.

[38] I find that there was a valid reason to terminate the Applicant relating to his conduct. While the mitigating circumstances submitted by the Applicant may go towards other factors to which I will now turn, they are not sufficient to negate the validity of the reason for the Applicant’s termination.

[10] In relation to paragraphs (b) and (c) of s.387, the Vice President found that Mr Sharp was notified of the reason for his dismissal when he was told of his non-negative test result on 12 February 2014 and informed that he would be subject to a formal disciplinary process and via the “show cause” letter of 17 February 2014 3, and was given an appropriate opportunity to respond at the meeting on 19 February 2014 and subsequently in writing.4 The Vice President rejected a submission that the fact that Mr Sharp was not provided with the results of the drug tests until after he was dismissed meant that he was not informed of the reason for his dismissal, finding: “...given that the Applicant had already admitted to the use of cannabis and had been made aware that his test results had returned positive in breach of the Respondent’s DAMP, the exact level of THC in the Applicant’s sample was not a material concern.”5

[11] In relation to paragraphs (d), (e), (f) and (g) of s.387, the Vice President found that there was no suggestion that Mr Sharp was unreasonably refused a support person 6, that Mr Sharp was not dismissed on the basis of unsatisfactory performance7, that the size of BCS’s enterprise was not a relevant factor, and that BCS had dedicated human resources expertise and a relatively sophisticated set of procedures that applied to the dismissal.8

[12] The Vice President then considered other relevant matters pursuant to s.387(h). In response to a submission from Mr Sharp that BCS’s DAMP did not require Mr Sharp’s dismissal and contemplated a return to work following drug and alcohol counselling, the Vice President found:

“[50] ... While the DAMP does not require the Respondent to terminate an employee who has returned a confirmed positive test result, it does allow the Respondent to do so. Paragraph 11 of the DAMP provides that ‘BCS will take disciplinary action against an SSAA employee who fails to comply with their responsibilities an obligations under the DAMP, including but not limited to... returning a confirmatory test result. BCS’s Disciplinary Policy and Guidelines set out the disciplinary options and processes for breaches of company policy and procedures, including the DAMP.’”

[13] The Vice President then turned to whether Mr Sharp’s conduct constituted “serious misconduct” arising from submissions which he summarised as follows:

“[52] The Respondent submitted that the Applicant’s conduct constituted serious misconduct justifying immediate dismissal. The Applicant submitted that his misconduct did not fall within any of the examples outlined in the Code of Conduct nor the meaning of “serious misconduct” as set out in reg 1.07 of the Fair Work Regulations 2009.”

[14] The Vice President first made a finding that Mr Sharp’s conduct constituted “serious misconduct” within the ordinary meaning of that expression:

“[55] In the circumstances of this case, I am satisfied that the Applicant’s conduct was sufficiently serious to constitute serious misconduct. While the Applicant gave evidence that he had not been explicitly trained in the Respondent’s DAMP, he conceded that he was aware of the policy. Further, the evidence of the Respondent shows that the Applicant had undertaken specific training in relation to the Qantas DAMP, which was in substantially similar terms to the Respondent’s DAMP.

[56] The Applicant was aware that the Respondent considered drug and alcohol use to be serious issues. This is evidenced by his attempt to dilute the test results by consuming large quantities of water immediately prior to his drug test. The nature of the work undertaken by the Applicant explains the seriousness with which the Respondent treats the use of drugs and alcohol. It is clear that safety is a significant concern for individuals performing work such as that the Applicant performed. Further, the fact that the work was undertaken at an airport would clearly heighten tensions around issues such as access to, use of and possession of illegal substances due to security concerns. Ms Canfield also pointed out in her oral evidence that the Applicant’s place of work was somewhat unique, in that the work was undertaken inside the client’s premises, and that due to the nature of the workplace, up to three different DAMPs applied to the Respondent’s employees. In these circumstances, it is clear that the Applicant’s conduct constituted serious misconduct within the ordinary meaning of the term.”

[15] There was also a finding made by the Vice President that Mr Sharp’s conduct constituted misconduct as defined in reg.1.07 of the Regulations as follows:

“[57] I also find that the Applicant’s conduct had the capacity to cause serious and imminent risk to the reputation, viability or profitability of the Respondent within the meaning of reg 1.07 of the Fair Work Regulations 2009. Given the background set out above, I am satisfied that a confirmed positive test result for illegal drug use by an employee would cause serious and imminent risk to the Respondent’s reputation. Contrary to the Applicant’s submissions, it is not necessary for the Respondent to prove that its reputation, viability or profitability was affected by the Applicant’s actions. It is sufficient that his conduct caused serious and imminent risk thereof. Given the highly sensitive nature of the work performed by the Respondent’s employees, it is reasonable to conclude that issues such as employees returning confirmed positive test results for illegal drugs could affect its reputation, particularly given the Respondent’s complex relationship with its clients.

[58] I do not accept the Applicant’s submissions that the risk to reputation was created by the Respondent by choosing to share the test results with its clients. I am not satisfied on the evidence before me that the Respondent was not obligated to share the Applicant’s test results with its clients. However, even if no obligation existed, the Respondent is entitled to conduct its relationship with its clients in the way that it sees fit. Should the Respondent choose to be open and transparent with its clients in relation to the implementation and results of its drug testing, it is entitled to do so. If this openness and transparency were to hurt its reputation, it could only be due to the actions of its employees.”

[16] The Vice President then considered a number of other matters, and stated the conclusion that the dismissal was not harsh, unjust or unreasonable as follows:

“[59] The Applicant submitted that the following factors were relevant to finding that his dismissal was harsh:

● The sanction of termination being disproportionate to his conduct;

● Sanctions issued to other employees of the Respondent for similar conduct;

● The applicant’s length of service and work record;

● The personal and economic circumstances of the Applicant.

[60] I have addressed the first of these factors above in my discussion of serious misconduct. In relation to the second, I am not satisfied that the Applicant has been treated harshly when compared to other employees of the Respondent. There was some evidence that other employees of the Respondent had been terminated at a similar time to the Applicant for returning non-negative test results. While there was some evidence to suggest that individuals who had returned non-negative results due to the consumption of prescribed medications had not been terminated, I am satisfied that the circumstances of the matter before me are sufficiently distinguishable that no harshness can be found.

[61] I have considered the applicant’s length of service, work record and his personal and economic circumstances and I am not satisfied that these factors negate the serious misconduct engaged in by the Applicant. I am not satisfied that the Applicant’s dismissal was harsh.”

Submissions

[17] Mr Sharp submitted, in relation to his second appeal ground concerning the Vice President’s “valid reason” finding, that the Vice President erred by determining to disregard the facts that it was Mr Sharp’s first non-negative test, he was not impaired, he was not a habitual drug user, and that the positive result arose from out of hours conduct, and by not having regard to the facts that the test was not conducted in accordance with the DAMP, BCS took into account the illegality of cannabis use, and the lack of any surrounding misconduct (that is, it was a random test rather that a test “for cause”). This, it was submitted, was an error of principle in that it was well established that the consideration of whether a valid reason exists must take into account all of the circumstances, including the relative seriousness of the conduct. Taking into account these matters, there was no valid reason for the dismissal.

[18] The third appeal ground concerned the finding that Mr Sharp had committed serious misconduct within the ordinary meaning of that expression. Mr Sharp submitted that this finding was in error because the evidence did not support the proposition that the misconduct was wilful or deliberate, and of such gravity that it effectively constituted a repudiation of the employment contract. The Vice President’s finding that Mr Sharp knew or ought to have known of his obligations under the DAMP and that his conduct would place his job at risk was a significant error of fact given that Mr Sharp:

● had never been drug tested before;
● had not been trained in the BCS DAMP, but only in relation to the different Qantas DAMP under which he would not have been dismissed for his conduct;
● understood that his obligation was not to perform SSAA whilst impaired, and complied with that obligation;
● immediately advised his supervisor that he had consumed cannabis when informed that he would be tested, which constituted an honest attempt to comply with his obligations as he understood them; and
● did not know that BCS had, in effect, a zero tolerance policy in relation to positive test results.

[19] It was further submitted that:

● the fact that Mr Sharp attempted to flush out his system by drinking large amounts of water prior to the test did not demonstrate knowledge on his part of his obligations at the relevant time, contrary to the Vice President’s finding to that effect.
● the Vice President erred in finding that the “heightened tensions” around illegal drugs at Sydney Airport supported a conclusion that Mr Sharp had committed serious misconduct, because there was no suggestion that Mr Sharp had engaged in illegal conduct during working hours;
● the Vice President erred in taking into account that “safety is a critical concern” for BCS in circumstances where, because there was no evidence that Mr Sharp was impaired while at work, there was never any risk to safety.

[20] In relation to the fourth appeal ground, Mr Sharp submitted that the Vice President erred in finding there was misconduct as defined in reg.1.07 because there was no serious and imminent risk to BCS’s reputation, viability or profitability caused by Mr Sharp’s conduct. Insofar as BCS’s reputation was concerned, there was no proper basis to conclude that BCS’s reputation with Qantas, its client, was put at serious and imminent risk, in circumstances where BCS was not required to but voluntarily disclosed Mr Sharp’s positive test result to Qantas, and Qantas itself did not require a zero tolerance approach to any positive test.

[21] Mr Sharp submitted in relation to his fifth appeal ground that the Vice President erred in not finding that the dismissal was harsh, because he failed to take into account relevant mitigating circumstances, including that Mr Sharp did not understand he could be dismissed simply for returning a positive test result, the test was not conducted in accordance with the DAMP, that the test was a random one rather than “for cause”, it was a first test, the DAMP did not require termination, Mr Sharp was honest and co-operated with the testing and investigation process, his use of cannabis was a one-off and uncharacteristic, he was allowed to continue to work after he disclosed his cannabis use, and he expressed remorse and willingness to undergo rehabilitation and future random testing. It was also submitted that the Vice President erred by not considering whether Mr Sharp’s dismissal was proportionate to his conduct. In relation to the sixth appeal ground, it was submitted that Mr Sharp was denied procedural fairness because he was not supplied with the test results until after he had been dismissed.

[22] Finally Mr Sharp submitted that he should be granted permission to appeal because the issue of drug and alcohol testing was a fraught one which involved balancing the management of legitimate safety concerns and the avoidance of illegitimate interference with the private lives of workers and consequently attracted the public interest, the Decision was attended by appellable error, the issue of the correct construction of reg.1.07(2)(b)(ii) was a novel one, and the Decision manifested an injustice and involved a counter-intuitive outcome.

[23] BCS submitted that permission to appeal should not be granted because the appeal did not raise any questions of importance and general application, there was no diversity of relevant first instance decisions, the appeal did not raise any issue of the proper construction of reg.1.07(2)(b)(ii), and did not involve any issue concerning the “illegitimate interference with the private lives of workers”. The decision was a discretionary one in relation to which no error of the type identified in House v The King 9 had been identified. In relation to the specific appeal grounds, BCS firstly submitted that there was no error in the Vice President’s conclusion that there was a valid reason for the dismissal. The DAMP was a lawful and reasonable policy, and in circumstances where it was breached by Mr Sharp, there was a proper basis to find that this constituted a valid reason for dismissal. BCS further submitted that there was no error in the Vice President’s conclusion that Mr Sharp’s conduct constituted serious misconduct, that Mr Sharp was afforded procedural fairness in the dismissal process, and that the Vice President properly considered Mr Sharp’s case as to harshness and his complaint on appeal about this was no more than that he was not happy with the outcome.

Consideration

[24] Before we turn to Mr Sharp’s appeal grounds, it is convenient to make a general observation about this matter. As the Vice President correctly found, the issue in this case was not Mr Sharp’s “out of hours” conduct in smoking cannabis, but rather that he attended for work (which involved the performance of SSAA) with a level of cannabinoids that was above (and very significantly above) the permitted threshold. That was “at work” conduct. Undoubtedly from Mr Sharp’s perspective it seems harsh that he was dismissed as a result of this in circumstances where he did not consider himself to have been impaired or to have represented a risk to anyone’s safety. However, a critical consideration in assessing whether a dismissal in these types of circumstances was unfair is the fact that there is currently no direct scientific test for impairment arising from the use of cannabis. 10 Saliva testing can more accurately detect recent cannabis use than urine testing, which means that it may be a better proxy indicator of the possibility of impairment, but it remains the case that it cannot conclusively demonstrate impairment or non-impairment.11 Therefore, where an employee who shows no obvious signs of impairment undergoes a drug test at work and tests positive for cannabis use, the employer is placed in a difficult position. In practical terms, it will be unlikely that the employer will be in a position to independently ascertain when the relevant employee consumed cannabis and the quantity that was consumed. Apart from reliance upon the employee’s own explanation about the matter, which will probably not be verifiable, the employer will therefore not be in a position properly to assess whether the employee is impaired as a result of cannabis use and therefore represents a threat to safety. For that reason, employer policies which provide for disciplinary action including dismissal where an employee tests positive for cannabis simpliciter may, at least in the context of safety-critical work, be adjudged to be lawful and reasonable. Likewise, depending on all the circumstances, it may be reasonably open to find that a dismissal effected pursuant to such a policy was not unfair.

Valid reason conclusion

[25] The correct approach to the assessment, pursuant to s.387(a) of the Act, as to whether there is a valid reason for an employee’s dismissal relating to the employee’s capacity or conduct where the employee is alleged to have committed misconduct was that stated by the Full Bench (Lawler VP and Cribb C) B, C and D v Australian Postal Corporation T/A Australia Post 12 as follows:

“[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.”

[26] The Full Bench went on to say in B, C and D, in relation to a dismissal for misconduct, that matters raised in mitigation concerning the broader workplace context in which the misconduct occurred, or the personal or private circumstances of the employee that bear upon the substantive fairness of the dismissal, are not to be brought to account in relation to the specific “valid reason” consideration required by s.387(a) but rather in the overall consideration of whether the dismissal was harsh, unjust or unreasonable. 13

[27] We consider that the Vice President’s reasoning and conclusion concerning whether there was a valid reason for Mr Sharp’s dismissal was consistent with the approach described in B, C and D above. The Vice President focused, correctly, on whether Mr Sharp’s admitted conduct in testing positive for cannabinoids above the permitted threshold while at work constituted a valid reason for his dismissal. This did not require a consideration at that point of the mitigating circumstances relied upon by Mr Sharp to demonstrate that his dismissal was unfair, and the Vice President therefore did not err by not having regard to them at that point.

[28] While the seriousness of the conduct found to have been committed by an applicant for an unfair dismissal remedy is undoubtedly relevant in an assessment of whether that conduct constituted a valid reason for dismissal, in this case the conduct was undoubtedly serious. It was conduct in breach of BCS’s DAMP. Clause 11 of the DAMP provided that: “BCS will take disciplinary action against an SSAA employee who fails to comply with their responsibilities and obligations under the DAMP, including but not limited to ... returning a confirmatory test result”. The permitted threshold for cannabinoids for testing purposes of 15�g/L was specified in clause 1 of the DAMP. It was an agreed fact between the parties that Mr Sharp was sent an email on 15 January 2014 which contained a link to a number of BCS policies including the DAMP, and it was also an agreed fact that “As a result of receiving this email, the applicant was aware of the BCS DAMP”. BCS’s requirement for compliance with the DAMP was a lawful and reasonable one, having regard to the significance of drug and alcohol issues in a safety-critical working environment. In those circumstances, we consider it was reasonably open to the Vice President to find that there was a valid reason for the dismissal.

Serious misconduct

[29] Mr Sharp has challenged the Vice President’s finding in paragraphs [55] and [56] of the Decision that the conduct on his part constituted “serious misconduct”, and the further finding at paragraph [57] that Mr Sharp’s conduct “had the capacity to cause serious and imminent risk to the reputation, viability or profitability of the Respondent within the meaning of reg.1.07...”. However, the precise nature of those findings, and the circumstances in which they were made, require some analysis.

[30] In its written submissions at first instance, BCS identified the reason for Mr Sharp’s dismissal as being “for serious misconduct as a result of the positive drug test result he returned on 10 February 2014”. The characterisation of “serious misconduct” appeared to be primarily relevant, from BCS’s perspective, to its Disciplinary Policy, which provided that an employee might be summarily dismissed for serious misconduct, which was defined to include certain types of conduct. BCS appears to have also contended that Mr Sharp committed serious misconduct justifying dismissal in a more general sense. BCS contended that this serious misconduct constituted a valid reason for the dismissal for the purposes of s.387(a), and that the misconduct was serious was also a relevant matter for the purpose of s.387(h).

[31] In his written submissions in reply at first instance, Mr Sharp acknowledged that he had committed misconduct, but denied that this amounted to serious misconduct. He then referred to serious misconduct being defined in reg.1.07 of the Regulations, identified reg.1.07(2)(b) as the relevant part of that definition, and made lengthy submissions by reference to reg.1.07(2)(b) as to why his conduct did not cause serious and imminent risk to the health and safety of a person or the reputation, viability or profitability of the employer’s business.

[32] The submissions in this respect had a certain quality of “ships passing in the night”. They did not make it entirely clear for what purpose in the application of the statutory scheme in Pt 3-2 they were engaging on the question of whether Mr Sharp’s misconduct constituted “serious misconduct”. It is certainly well established that, for the purposes of s.387(a), it is not necessary to demonstrate misconduct sufficiently serious to justify summary dismissal on the part of the employee in order to demonstrate that there was a valid reason for the employee’s dismissal (although established misconduct of this nature would undoubtedly be sufficient to constitute a valid reason). 14 Nor is the existence of a valid reason to dismiss assessed by reference to a legal right to dismiss.15 Therefore whether Mr Sharp’s admitted conduct amounted to misconduct serious enough as to give rise to the right to summarily dismiss him under the terms of his contract of employment was not relevant to the required s.387(a) consideration. It may be noted in any event that Mr Sharp was not summarily dismissed, but dismissed with a payment in lieu of notice.

[33] The relevance of the definition of “serious misconduct” in reg.1.07 to the matter is also, with respect, obscure. Section 12 of the Act contains a definition of “serious misconduct” for the purposes of the Act which simply cross-refers to reg.1.07. Apart from s.12 itself, the expression “serious misconduct” is used in only three places in the Act. In s.123(1)(b), a dismissal for serious misconduct is a circumstance in which the notice and redundancy entitlement provisions of Pt 2-2 Div 11 are not applicable; in s.534(1)(b) a dismissal for serious misconduct is one to which the requirements for notification and consultation in Pt 3-6 Div 2 do not apply; and in s.789(1)(b) a dismissal for serious misconduct is one in relation to which the requirements established by Pt 6-4 Div 3 for notification and consultation do not apply. The expression “serious misconduct” is not used anywhere in Pt 3-2, Unfair Dismissal, of the Act. Section 392(3) requires the Commission, in relation to the award of compensation for an unfair dismissal, to reduce the amount that it would otherwise order by an appropriate amount where it is “satisfied that the misconduct of a person contributed to the employer’s decision to dismiss the person”. However, it is clear that conduct may constitute “misconduct” for the purpose of s.392(3) without necessarily being “serious misconduct”. The expression is used in the Small Business Fair Dismissal Code, but that had no application in this case (and it is at least highly doubtful in any event whether the reg.1.07 definition applies to the Small Business Fair Dismissal Code). Reg.1.07 therefore had no work to do in the application of the provisions of Pt 3-2 to the circumstances of this case.

[34] It may be accepted that an assessment of the degree of seriousness of misconduct which has been found to constitute a valid reason for dismissal for the purposes of s.387(a) is a relevant matter to be taken into account under s.387(h). In that context, a conclusion that the misconduct was of such a nature as to have justified summary dismissal may also be relevant. Even so, it is unclear that this requires a consideration of whether an employee’s conduct met a postulated standard of “serious misconduct”. In Rankin v Marine Power International Pty Ltd 16 Gillard J stated that “There is no rule of law that defines the degree of misconduct which would justify dismissal without notice”17 and identified the touchstone as being whether the conduct was of such a grave nature as to be repugnant to the employment relationship.18 “Serious misconduct” is sometimes used as a rubric for conduct of this nature, but to adopt it as a fixed standard for the consideration of misconduct for the purpose of s.387(h) may be confusing or misleading because the expression, and other expressions of a similar nature, have been considered and applied in a variety of contexts in ways which are influenced by those contexts. In McDonald v Parnell Laboratories (Aust) Pty Ltd19 Buchanan J said:

“[48] The terms ‘misconduct’, ‘serious misconduct’ and ‘serious and wilful misconduct’ are often the subject of judicial and administrative attention as applied to the facts of particular cases but there is relatively little judicial discussion about their content and meaning. Naturally enough, when the term ‘serious misconduct’ is under consideration an evaluation of what conduct represents ‘serious’ misconduct is influenced by the (usually statutory) setting in which the phrase must be given meaning and applied. Frequently, for example, the question at issue is whether an employee is disentitled by reason of his or her conduct to a statutory entitlement (eg. in New South Wales, where Ms McDonald was employed, see Long Service Leave Act 1955 (NSW) s 4(2)(a)(iii); Workers Compensation Act 1987 (NSW) s 14(2).”

[35] In the Decision, the Vice President, correctly, did not attempt to address the parties’ submission concerning “serious misconduct” in the context of his consideration of whether there was a valid reason for the dismissal, but only as a relevant matter under s.387(h). His findings at paragraph [55] and [56] that Mr Sharp’s conduct was “serious misconduct” was, we consider, responsive to the submission of BCS noted in the first sentence of paragraph [52] that “the Applicant’s conduct constituted serious misconduct justifying immediate dismissal”. That is, “serious misconduct” was used as a shorthand expression to described misconduct of a nature that justified summary dismissal. A finding of that nature was a matter which was open to be taken into account as relevant under s.387(h) because it involved an assessment of the seriousness of the conduct in question.

[36] Noting as we have already done the lack of any clear rule of law defining the degree of misconduct justifying summary dismissal, we consider that it was reasonably open for the Vice President to find that Mr Sharp’s conduct was sufficiently serious as would have permitted dismissal on that basis. As the Vice President correctly found, Mr Sharp was aware from his training that BCS regarded drug and alcohol use to be a serious issue, and was further aware of the BCS DAMP which dealt with that issue. There was no dispute that compliance with the DAMP was a lawful and reasonable requirement of Mr Sharp’s employment. The DAMP made clear that a positive confirmatory test result was a breach of the DAMP and could result in dismissal. The Vice President’s observations concerning the “heightened tensions” concerning illegal drugs at Sydney airport and the fact that safety was a critical concern for BCS were not, we consider, directed at Mr Sharp’s particular conduct, but stated to emphasise the importance from BCS’s perspective of compliance with the DAMP and therefore the seriousness of any breach of the DAMP. We find no error in this connection. Nor do we think that Mr Sharp is able to demonstrate error on the basis that the Vice President should have given critical weight to what was said to be Mr Sharp’s erroneous understanding concerning the DAMP and the consequences of breaching it.

[37] Having dealt with the issue of “serious misconduct” on this basis, it was unnecessary for the Vice President to then consider whether Mr Sharp’s conduct constituted “serious misconduct” under reg.1.07 and, in any event for the reasons earlier stated, the relevance of reg.1.07 to the consideration of Mr Sharp’s application under Pt 3-2 of the Act was not made clear by Mr Sharp. Therefore the question of whether there was any error in this part of the Decision cannot be of any significance to the outcome of the appeal. We are not satisfied in any case that Mr Sharp has succeeded in identifying any error.

Harshness

[38] We reject Mr Sharp’s submission that the Vice President did not, in his consideration of whether the dismissal was harsh, take into account a number of identified mitigating factors. At paragraphs [15]-[23] of the Decision, the Vice President summarised in detail Mr Sharp’s case, which included at paragraph [15] a list all the mitigating factors upon which he relied to demonstrate that his dismissal was harsh, and at paragraph [23] reference to Mr Sharp’s length and quality of service. We consider that in paragraph [59]-[61] of the Decision the Vice President dealt with these aspects of Mr Sharp’s case. That he did not make a specific finding about each of the matters raised by Mr Sharp does not mean that he did not take them into account, given that the consideration of whether the dismissal was harsh involved making a finding of a global nature based on the weighing of a range of competing considerations. Nor do we consider that the outcome was manifestly unjust or counter-intuitive. Although the outcome is not necessarily the one we would have arrived at had we considered the matter ourselves, nonetheless it was not outside the range of outcomes within which a proper exercise of the discretion might be expected to reside, particularly having regard to other unfair dismissal remedy decisions concerning drug and alcohol testing. 20

Procedural fairness

[39] We do not consider that Mr Sharp was denied procedural fairness because the actual test results were not provided to him until after dismissal. He was informed, prior to dismissal, that he had tested positive for cannabis in breach of BCS’s policy, and given an opportunity to respond. That constituted the primary basis upon which he was dismissed. No relevant error in this respect has been demonstrated.

Conclusion

[40] We do not consider that Mr Sharp has identified any error in the Decision, and we do not consider that the appeal otherwise attracts the public interest. We are not satisfied that it would be in the public interest to grant permission to appeal. Therefore, in accordance with s.400(1) of the Act, permission to appeal must be refused.

VICE PRESIDENT

Appearances:

L. Saunders with J. Barrow for O. Sharp.

P. Rozen of counsel with M. Branagan for BCS Infrastructure Support Pty Limited.

Hearing details:

2014.

Sydney:

19 December.

 1   [2014] FWC 7310

 2   Decision at [34]

 3   Decision at [40]

 4   Decision at [45]

 5   Decision at [43]

 6   Decision at [46]

 7   Decision at [47]-[48]

 8   Decision at [49]

 9   (1936) 55 CLR 499 at 505

 10   Endeavour Energy v CEPU [2012] FWA 1809 at [40]

 11   Ibid

 12   [2013] FWCFB 6191; note that this decision was not concerned with the situation where the misconduct was discovered by the employer after the dismissal.

 13   Ibid at [42]-[43]

 14   Annetta v Ansett Australia (2000) 98 IR 233 at [9]-[10]

 15   He v Lewin (2004) 137 FCR 266 at [15] per Gray and Mansfield JJ

 16   (2001) 107 IR 117

 17   Ibid at [240]

 18   Ibid at [250]-[257]

 19   (2007) 168 IR 375

 20   See e.g. Harbour City Ferries Pty Ltd v Toms [2014] FWCFB 6249; McCarthy v Woolstar Pty Ltd [2014] FWC 1186

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