Fair Work Act 2009
s.604 - Appeal of decisions

Appeal against decision [[2017] FWC 2866] of Deputy President Hamilton on 1 June 2017 in matter number U2017/1404 - application for permission to appeal – breach of policy – whether finding as to proportionality of summary dismissal – permission to appeal granted

[1] Mr Robert Johnson has applied for permission to appeal a decision of Deputy President Hamilton issued on 1 June 2017 (Decision).¹ In that Decision, the Deputy President found that Mr Johnson’s dismissal by North West Supermarkets Pty Ltd (company) was not unfair, and dismissed his application for an unfair dismissal remedy.

[2] Mr Johnson’s employment was terminated summarily on 7 February 2017. He was found to have taken several items of produce from the Castlemaine IGA where he worked. The Deputy President found that, although Mr Johnson’s action was authorised by a supervisor, it breached company policy and constituted a valid reason for his dismissal.

Permission to appeal

[3] The Commission’s powers in relation to an appeal under s.604 of the FW Act are only exercisable if there is error on the part of the primary decision maker.² There is no right to appeal and an appeal may only be made with the permission of the Commission.

[4] The decision subject to appeal was made under Part 3-2 of the FW Act, which relates to unfair dismissal. Section 400(1) provides that permission to appeal must not be granted from such a decision unless the Commission considers that it is in the public interest to do so. Further, in such matters, appeals on a question of fact may only be made on the ground that the decision involved a “significant error of fact” (s.400(2)). In Coal & Allied Mining Services Pty Ltd v Lawler and others, Buchanan J (with whom Marshall and Cowdroy JJ agreed) characterised the test under s.400 as “a stringent one”.³

[5] The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment.⁴ In GlaxoSmithKline Australia Pty Ltd v Makin a Full Bench of the Commission identified some of the considerations that may attract the public interest. These include where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters.⁵

[6] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error.⁶ However, the fact that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.⁷

[7] An application for permission to appeal is not a de facto or preliminary hearing of the appeal. In determining whether permission to appeal should be granted, it is unnecessary and inappropriate for the Full Bench to conduct a detailed examination of the grounds of appeal.⁸

Background

[8] On the day of his dismissal, Mr Johnson left the store with three products for which he had not paid. Mr Blake, a director of the company, stopped Mr Johnson, searched his bag and discovered the items. Mr Johnson said that his supervisor had authorised him, and others, to take certain items (samples and offcuts) without payment. However, all were saleable items. The employer had clear policies against theft and removing stock without payment. Mr Johnson signed the policy when he commenced employment in 2008. 9 The police were called to the store but no charges were laid.

[9] Mr Blake did not contest Mr Johnson’s claim that his supervisor had authorised him to take the items. He did not contend that Mr Johnson’s claim was untruthful. Rather, he said that he had no knowledge of any authorisation having been given by the supervisor. The Deputy President accepted that Mr Johnson had been authorised to take the items. 10

[10] The Deputy President concluded that there was a valid reason for the termination of employment, namely the removal of stock without payment in breach of the employer’s policy. 11 He noted the presence of mitigating circumstances, but did not include among them the authorisation of the supervisor.12

Grounds of appeal

[11] The Appellant advanced three grounds in support of its application for permission to appeal. First, it contended that the Deputy President erred in failing to make a finding as to whether Mr Johnson’s conduct justified summary termination. In a summary dismissal case, the determination of whether the conduct that constituted the reason for the dismissal justified summary termination is a relevant consideration that should be taken into account in determining whether the termination was harsh, unjust or unreasonable. 13 If the conduct did not justify summary termination, this bears on whether the termination was unfair.14

[12] The Deputy President found that Mr Johnson acted in breach of the company policy. However, he also accepted Mr Johnson’s evidence that he was authorised to take the items. The Deputy President made no finding that Mr Johnson acted dishonestly. Rather, the Deputy President states, somewhat equivocally, that Mr Johnson ‘was aware, or suspected, or should have suspected, that these arrangements may not have been ideal or appropriate or fully authorised by the employer, even if he was not directly told by anyone that these arrangements were inappropriate.’

[13] It is evident from the Deputy President’s decision that he was alive to the question of proportionality, that is, whether breach of the policy justified summary termination. At paragraph 21 of the Decision, he notes that the employer effectively conceded that the size of its enterprise and the absence of dedicated human resources personnel (the considerations in s.387(f) and (g) of the Act) were not relevant in the present matter. 15 The Deputy President observes that, had this concession not been made, he would likely have found that the termination was made without expert knowledge, ‘given that it was a summary dismissal without notice, rather than a dismissal with notice, that the employer did not first undertake a full investigation, and other matters.’

[14] This passage suggests that, had the employer invoked the considerations in s387(f) and (g), the Deputy President would have taken them into account in explaining the employer’s process and conclusion; that, had specialist advice been available etc., an investigation might have been conducted, and a decision reached to terminate on notice instead of summarily. Evidently the Deputy President had concerns about the decision to summarily dismiss Mr Johnson. However, he did not expressly consider the proportionality of summary dismissal to the breach of policy.

[15] The Deputy President concludes that there was a valid reason for termination, and that despite mitigating factors, the dismissal was not unfair. Perhaps it is implicit in the decision that the Deputy President considers that summary dismissal was appropriate in the circumstances. However, in our view, there is at least an arguable case that the Deputy President erred by not considering whether the summary dismissal of Mr Johnson for breach of the policy was warranted.

[16] The second ground of appeal contends that the Deputy President erred in failing to take into account a material consideration, namely the nature and extent to which there existed a common practice at the store of giving samples and other items to employees. In relation to the ‘practice’, Mr Johnson gave evidence before the Deputy President that his supervisor authorised him to take the products, and that eight other employees of the company had engaged in the same practice. 16

[17] This evidence was not contested.  17 Mr Blake said he was unaware of these matters, but did not contradict it. It was put to Mr Blake that it was ‘quite possible that [the supervisor]’s practice was in fact to give items of offcuts and things to staff, but you weren’t aware of it’. His response was ‘possibly, I don’t know.’18 Mr Blake was asked whether he had made contact with any other staff members and asked them about a practice of allowing staff to take offcuts and samples. His answer was no.19

[18] We do not accept the contention that the Deputy President erred in failing to consider the evidence about the ‘practice’. On the contrary, he accepted that Mr Johnson was authorised to take the products by his supervisor, and appears also to have accepted that other employees were allowed to take items. 20 The Deputy President states that the practice:

‘had operated for some time and was kept close to [the supervisor] and some employees. In my view, it is not appropriate to condone employees taking the benefit of some sort of semi-covert or private arrangement made by someone without actual authority to authorise such an arrangement, when they knew or should have known that the arrangement was not bona fide and legitimate, or fully bona fide or legitimate.’ 21

[19] Contrary to the second ground of appeal, it is clear that the Deputy President considered the practice. We would note however that it is questionable whether there is a basis to conclude that the practice ‘was kept close’ or that it was ‘semi-covert’. In our view, the tenor of the uncontested evidence of Mr Johnson was that he understood his supervisor ‘was acting appropriately and within the scope of her authority’ 22. He said that it ‘made sense’ to him that he would be allowed to take the products ‘if it was otherwise going to be thrown out’.23 We would also see no basis for a conclusion that Mr Johnson was ‘aware, or suspected or should have suspected’ that the arrangement was not ‘bona fide and legitimate’. However, it is not clear that the Deputy President made any such finding in relation to Mr Johnson. These words appear as part of a formulation that is cast as a general proposition – ‘it is not appropriate to condone employees …’ We do not consider this passage to evidence an arguable case of significant error of fact.

[20] The third ground of appeal contends that the Deputy President erred in failing to give adequate consideration to the fact that Mr Johnson was summarily terminated; the nature and extent of the ‘practice’ referred to above; the lack of procedural fairness given the size of the business; the lack of any policy refresher training; Mr Johnson’s length of service, work history and personal circumstances, and his honesty with respect to his behaviour.

[21] We have addressed the issues of summary termination and the ‘practice’ above. In our view the personal circumstances, service and work history of Mr Johnson were taken into account by the Deputy President (see the ‘mitigating circumstances’ referred to earlier). Considerations relating to procedural fairness were addressed in paragraphs 17 to 20 of the Decision. The question of Mr Johnson’s honesty is discussed above. We are not persuaded there is an arguable case for the purposes of permission to appeal in relation to ground 3, other than to the extent that it repeats ground one.

Disposition of the appeal

[22] In our view the Appellant has made out an arguable case that the proportionality of summary dismissal to the conduct in this case was not considered. In this respect, we are satisfied that the appeal attracts the public interest. It would entail an approach that is disharmonious with other decisions of the Commission which have emphasised the importance of this matter being considered.

[23] In accordance with s400(1), we consider that it is in the public interest to grant permission to appeal and we do so. Directions for the hearing and determination of the appeal will separately be issued.

[24] Finally, we would note that one potential outcome of the appeal ultimately succeeding on the basis that summary termination was disproportionate to a breach of policy is that Mr Johnson may obtain an order for compensation reflecting the notice period he would have received, had he been terminated on notice 24. In light of this observation, the parties may wish to revisit their earlier deliberations as to the settlement of this matter.

PRESIDENT

Appearances:

Mr Minucci (of counsel) appeared on behalf of Mr Johnson

Mr Blake appeared for Northwest Supermarkets Pty Ltd

Hearing details:
2017.
Melbourne:
14 July.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR594823>

¹ [2017] FWC 2866

² See Coal and Allied v AIRC (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ

³ (2011) 192 FCR 78 at paragraph 43

⁴ O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398 at [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others (2011) 192 FCR 78 at [44] to [46]

⁵ [2010] FWAFB 5343, 197 IR 266 at [27]

⁶ Wan v AIRC (2001) 116 FCR 481 at [30]

⁷ GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [26]-[27], 197 IR 266; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089 at [28], 202 IR 388, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663 at [28]

⁸ Trustee for The MTGI Trust v Johnston [2016] FCAFC 140 at [82]

 9   See paragraph 10 of the Decision. The Appellant acknowledged at hearing that there was no contest as to the facts set out in this paragraph, save for a contest concerning certain details of the taken items.

 10   Paragraph 13

 11   Paragraph 16

 12   Paragraphs 16 and 22

 13   Walsh v Ambulance Victoria (2013) 233 IR 15 at 24-25 per Watson VP at 30; Drake SDP and Johns C concurred with the Vice President on the issue of misconduct [1].

 14   Outline of Appellant’s submissions, paragraphs 5 to 9

 15   This is a reference to the considerations set out in s387(f) and (g) of the Act, whereby the Commission must take into account 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 the degree to which the absence of dedicated human resources management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal.

 16   Statement of Mr. Johnson, paragraph 21

 17   Transcript, PN441 to 449

 18   Transcript at PN441

 19   Transcript at PN449

 20   Paragraph 23, in the third line, where reference is made to the practice operating for some time and that it was kept close to the supervisor and ‘some employees’.

 21   Paragraph 23

 22   Statement of Mr. Johnson, paragraph 20

 23   Ibid at 20. Note that, according to the evidence of Mr. Blake, the items were all saleable products. However, Mr Johnson’s statement about his belief that they would be thrown out was not contradicted.

 24   Mr Johnson’s counsel recognized that the remedy, if the appeal succeeded, may be limited to notice: PN80.