When can employers use summary dismissal?

Its not as straightforward as you might think

One Minute Summary

The employee had incorrectly completed his worksheets resulting in discrepancies between the worksheets and payroll data. This resulted in him being paid for time he had not worked.
The Commission in this case examined whether the employee intended to deceive the employer with inaccurate worksheet and payroll entries.
While the employees were regularly trained on using worksheets the site supervisors did not apply the policies consistently.
Despite questioning the validity of his evidence and credibility the Commission found in favour of the employee awarding him $23,889.
The legal ability to use summary dismissal (termination without notice) is very limited. It is recommended the default position in most terminations should be to pay notice.

We recently dealt with a termination involving a serious breach where the employer asked whether they had to pay notice or whether a summary termination without notice was possible. While not paying notice and trying to save money for the employer has its benefits, we needed to keep in mind the legal implications resulting from a summary dismissal when the termination was challenged through unfair dismissal proceedings.

Most employers would be aware that summary dismissal can only be used in terminations resulting from serious misconduct. Firstly – what is serious misconduct?

Secondly, if an employee challenges a summary dismissal the employer is on the back foot during unfair dismissal proceedings. During normal unfair dismissal cases (where an employee was given or paid notice) in the Fair Work Commission the employee must show the employer’s decision to terminate was not justified. In summary dismissal cases the onus of proof is reversed and the employer must show their decision to terminate was justified.

For this employer I recommended against a summary dismissal as incidents leading up to the termination were borderline serious between giving notice of termination and summary dismissal.

This discussion was reflected in an interesting case involving Linfox which was recently published.

The employee, Mr Basanti, was dismissed summarily for serious misconduct related to ‘worksheet falsification and dishonesty’. Mr Basanti’s role included truck deliveries as well as yard duties with Linfox.

Linfox had provided clear policies in relation to the completion of worksheets and work time recording (using Kronos) including clearly informing employees that the deliberate inaccurate completion of worksheets is fraudulent and could lead to instant dismissal. They also provided initial training and regular refresher training on this topic. Mr Basanti had undertaken this refresher training multiple times over his 10 years with the company.

In 2022, after a compliance audit Mr Basanti was given a final written warning, in lieu of termination, after discrepancies were discovered in his worksheets when compared to his Kronos (hours and wages) log.

In 2024 Mr Basanti faced three further allegations of falsifying time sheets after Linfox undertook a further investigation. These again involved discrepancies between the Kronos system and the worksheets completed by Mr Basanti.

One such example was where he went to collect lunches from a takeaway shop for all the employees others including some supervisors. This occurred on a rotation where one employee collected the lunches to avoid a mass exodus of employees from the site at lunch time. The allegation was that Mr Basanti extended his 30 minutes lunch break to 52 minutes to collect the lunches on that day. Mr Basanti did not record the extra time he was off site stating this was the common practice. However, the time logged by other employees indicated that even when they were several minutes late they logged the accurate time and explained it to the supervisor.

The three incidents that led to the termination were discussed and analysed in great detail during the unfair dismissal proceedings. It would appear that site practices (how the policies were applied or if at all) varied between supervisors.

Mr Basanti relied on the fact that the supervisors knew his work sheet times were inaccurate but did not raise it and indeed signed them off regardless.

The Commissioner commented unfavourably on certain evidence provided by Mr Basanti indicating a lack of credibility. The evidence provided in witness statements differed on a number of occasions to the evidence given by him under examination as well as what was revealed during cross examination.

The Commissioner took the view that even if certain supervisors had not enforced the rules in respect to employees such as Mr Basanti, this does not remove Mr Basanti’s obligation to accurately complete the time sheets and record reasons for any delays.

“To continue a method of completing the worksheet which was prone to errors and inaccuracies was reckless” and “the fact Mr S…had signed off on the worksheets does not absolve Mr Basanti of his duty to record his time accurately.”

The Commissioner then discussed the question of dishonesty. He states ‘the plain meaning of dishonesty is a lack of honesty, fraudulent or deceitful. Worksheet falsification means the act of deliberately misrepresenting information or manipulating data’

Thereafter he stated, ‘In order to be satisfied that his conduct amounted to serious misconduct, I must be satisfied that Mr Basanti consciously sought to deceive Linfox. There was no direct evidence before me to establish the failure to record accurately in each case was wilful, deliberate and intended.’

The fact Mr Basanti was on a final written warning, has a mixed history of accurately and inaccurately reporting worksheet information, and had a good knowledge of the policy were insufficient to prove dishonesty and falsification.

Simply stated – in this case serious misconduct (and therefore summary dismissal) requires intention and a higher standard of proof.

The Commissioner then proceeded to analyse the background to the termination and question whether there was a valid reason for termination as required in the Fair Work Act. Referring to the final written warning issued two years prior he highlights the last line which states “you should be aware that any future misconduct…is likely to result in the termination of your employment”.

The Commissioner found there was a valid reason for termination BUT the reason was not sufficiently serious enough to warrant summary dismissal. The decision to terminate without notice was harsh due to Mr Basanti’s 10 years of service and because of the financial impact the decision to dismiss without notice had on him as the primary bread winner.

The Commission awarded Mr Basanti $23,889. (This amount equated to just under 7 weeks wages at his weekly rate of $3460. Under the NES he would have been entitled to 4 weeks’ notice, or 5 weeks if over 45 years of age.)

Commentary

While the decision does not clearly state this there is an implication that if Mr Basanti had been paid his statutory notice the dismissal is unlikely to have been unfair.

This was because the seriousness of the ‘offence’ was downgraded because the Commission did not believe that Mr Basanti acted with the intention to deceive. A less serious offence does not justify summary dismissal.

The worrying implication is that you require ‘intention’ to initiated summary dismissal. There will be situations where intention may be irrelevant such as in serious safety breaches.

In this very detailed decision it became clear how deeply the Commission looked at the facts to determine what actually happened. This was especially important in relation to how supervisors worked within or around the policies. It became clear that despite all the training on Kronos and completing work sheets, there were inconsistent application between supervisors at the site. Many unfair dismissal cases are lost by employers on inconsistent practices between supervisors and between employees.

Given the information that was revealed during the hearing it would appear that the Linfox investigation was not very thorough.

In this case the Commissioner reverted back to the two-year-old final written warning stating that, while it was near its use-by date, it was still valid. I recommend against putting time periods or expiry dates on warning letters. The duration of their validity will be based on a number of factors including how well they are written.

The legal use of summary dismissal has substantially narrowed over the years and can now only be used for very serious matters. The default position should be termination with notice before deciding not to pay notice.

Employers should also conduct proper professional investigations prior to initiating summary dismissal. This is an unwritten Fair Work Commission expectation.

Given the legal complexity around unfair dismissal cases employers are advised to seek professional advice prior to terminating employment. There are many factors where the risks can be minimised.

Kind Regards
Michael Schmidt
M 0438 129 728
[email protected]
www.hunteremployeerelations.com.au