DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Robert Johnson
v
North West Supermarkets T/A Castlemaine IGA
(U2017/1404)

Application for an unfair dismissal remedy.

[1] On 9 February 2017, Mr Robert Johnson (the applicant) made an application to the Fair Work Commission (the FWC) seeking relief from unfair dismissal pursuant to s.394 of the Fair Work Act 2009 (the Act). Mr Johnson was employed by North West Supermarkets T/A Castlemaine IGA (the respondent).

[2] Mr Matthew Minucci sought permission to appear on behalf of the applicant pursuant to s.596 of the Act. Mr Brendan Blake for the respondent objected to permission being granted. Pursuant to s.596 of the Act, permission was granted to assist the efficient conduct of proceedings. By agreement the proceedings were conducted by way of determinative conference. It was agreed that Mr Johnson is a person protected from unfair dismissal and that there were no jurisdictional issues, and that the only issue to be determined was that pursuant to s.387 of the Act.

Authorities

[3] The ambit of the conduct which may fall within the phrase “harsh, unjust or unreasonable” was explained in Byrne v Australian Airlines Ltd 1 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.”

[4] This matter concerns detailed instructions to an employee given in an employer policy document and other employer directions. Such policies have been considered in a range of decisions which include the following:

[5] In Bostik (Australia) Pty Ltd v Gorgevski (No 1) 2, Sheppard and Heerey JJ observed:

“Employers can promulgate polices and give directions to employees as they see fit, but they cannot exclude the possibility that instant dismissal of an individual employee for non-compliance may, in the particular circumstances of an individual case, be harsh, unjust and unreasonable.”

[6] In Woolworths Limited (t/as Safeway) v Brown 3, a Full Bench of the Commission said:

“[34] In summary, a breach of an employer’s policy involving or amounting to a failure to obey a lawful and reasonable direction of the employer sufficient to justify dismissal at common law will amount to a valid reason for termination of employment within the meaning of s.170CG(3)(a) in the sense of a reason that is ‘sound, defensible or well-founded.’ A failure to comply with a direction to do or refrain from doing something in compliance with an employer’s policy will not provide a valid reason for termination of employment where:

(a) the policy, or a direction to comply with the policy, is illegal;

(b) the policy does not relate to the subject matter of the employment or matters affecting the work of the employee; or

(c) the policy, or a direction to comply with the policy, is unreasonable.

[35] What is reasonable will depend upon all the circumstances including the nature of the employment, the established usages affecting it, the common practices which exist and the general provisions of the instrument governing the relationship. A policy will be reasonable if a reasonable employer, in the position of actual employer and acting reasonably, could have adopted the policy. That is, a policy will only be unreasonable if no reasonable employer could have adopted it. A policy will not be unreasonable merely because a member of the Commission considers that a better or different policy may have been more appropriate. As the Full Bench observed in the XPT Case, albeit in a somewhat different context, it is not the role of the Commission ‘...to interfere with the right of an employer to manage his own business unless he is seeking from the employees something which is unjust or unreasonable.’

[36] Even where a breach of policy (or failure to comply with a direction to observe a policy) provides a valid reason for termination of employment, it is well established that the termination may nevertheless be harsh, unjust or unreasonable. For example:

• the employee may establish ignorance of the policy;



• termination of employment may be a disproportionate response to the breach having regard to its nature and the employee’s length of service and prior history;



• the employee may demonstrate prior non-enforcement or inconsistent application of the policy which, in the particular circumstances, render termination for breach of the policy harsh, unjust or unreasonable (although it should be noted that ‘…merely because in the past, another employee in breach of the policy may have been dealt with in a particular way other than dismissal is not, of itself, a reason why subsequent dismissals in similar circumstances might be said to be harsh.’);



• the evidence may disclose that the policy is being applied in a discriminatory fashion or is used as a pretence to disguise a real reason that is impermissible (eg union membership or non union membership).

This list is not intended to be exhaustive and each case will turn on its own facts.” [References omitted]

[7] In David Dawson v Qantas Airways Limited 4, the Full Bench said:

“[30] We note that the Qantas Group Cabin Crew Operations Manual makes it clear that the removal of aircraft stores from the aircraft is strictly prohibited and may lead to termination of employment. Further, under section 15.24 of the Qantas Group Standards of Conduct Policy, employees of the Respondent are not to engage in conduct including deliberately providing incorrect or misleading information, at any time, which is relevant to the employee’s employment.

[31] It is not disputed that, on 14 February 2016, alcohol was found to be in the possession of the Applicant. Further, the Applicant admitted that his explanation regarding how the alcohol came into his possession was “not true” in his letter to Ms Elliott dated 22 March 2016.

[32] Noting the above and considering the factual matrix as a whole, we are satisfied that the Applicant did remove the alcohol from the aircraft and subsequently misled the Respondent as to how and why the alcohol came into his possession. As such, the Respondent had a valid reason to dismiss the Applicant from his employment.”

[8] In Cameron Woodman v The Hoyts Corporation Pty Ltd 5, the Full Bench said:

“[34] We have concluded that the appellant's lie, being dishonest, was a breach of his obligations pursuant to the Employee Handbook and a breach of his common law duty of fidelity. We have concluded also that there was a valid reason for the termination of the appellant's employment for the purposes of s.170CG(3)(a). That reason related to his conduct in representing that the ice creams had been paid for. We find that the employee was notified of the reason (s.170CG(3)(b)) and given an opportunity to respond (s.170CG(3)(c)). Nevertheless we think that the termination of his employment was harsh. The appellant himself was a participant in the theft only in an indirect way in that his statement that the ice creams had been paid for amounted to an attempt to cover up the theft. But the lie was not premeditated nor was it intended to benefit the appellant. It was not persisted in for long and it was given in connection with the pilfering of goods of fairly low value. We are unable to say what led to the appellant's subsequent admission that he had lied about payment. Although Hoyts challenged his assertion that he had decided to tell the truth when he knew that Wentworth's employment had been terminated, no alternative reason for the change of heart was advanced. We do not think that the resolution of this issue has any real bearing on the outcome of the case. While we do not underestimate the importance of maintaining high standards of honesty amongst staff working in this industry, we think the appellant's conduct warranted a warning and no more. Dismissal for dishonesty had the potential to entirely alter his employment prospects for the rest of his life. In the circumstances that penalty was unwarranted. We have no doubt that this is a case of the kind referred to in Byrne and Frew v Australian Airlines Limited (1995) 185 CLR 410 in which the termination was disproportionate to the gravity of the misconduct in respect of which the employer acted (per McHugh and Gummow JJ at 465).”

Consideration

[9] Section 387 of the Act sets out factors which must be considered to determine if the termination of Mr Johnson’s employment was unfair. I am required to consider, make findings about, and give weight to each of these factors 6. I consider each of these in turn.

Section 387(a) – Valid reason

[10] Many of the basic facts of the matter are not in dispute. It is not in dispute that on 7 February 2017 Mr Blake detected Mr Johnson departing the store with three items removed from the store without any payment offered or made 7. Mr Blake stopped and searched Mr Johnson and found the three items of stock then called police who arrived, but did not charge Mr Johnson8. The employer had clear policies against theft or removal of stock without payment by an employee, which are set out in a formal manual in three places, and also in the probationary employment policy that Mr Johnson signed9. The employer policies are set out in the manual in various places10, and are attached to this decision. Mr Johnson signed and acknowledged the policy11. While Mr Johnson sought to describe the items as samples, all are stock or saleable items and are covered by the employer directions contained in the policy and probation contract.

[11] Mr Johnson was then summarily dismissed on the day without notice. It was agreed that this was a summary dismissal, and to ensure accuracy the employer checked that no notice had been paid, and advised me that it had not been paid.

[12] There are a number of issues which however require some discussion. Firstly, Mr Johnson claimed that he had not really been trained in the policy, and that the induction was in 2008, some 8 years previous to the incident. He sought to claim that he had signed the policy in a purely legal fashion without much knowledge of its contents. However, in my view, he bore responsibility for signing and acknowledging the policy, and cannot escape that responsibility. He agreed to abide by its terms.

[13] Secondly, he also claimed that his supervisor, Ms Penny Royal, authorised him and others to take these items home without payment. The employer in giving evidence was at best not aware of this authorisation and I accept that he was so authorised in some form. I also accept the statement of Mr Blake that Ms Royal herself did not have the actual authority to make this arrangement.

[14] There are a number of difficulties with this claim. The arrangement, if legitimate, would have been known to the various managers, and would have been discussed or disclosed by Ms Royal and employees. Instead Mr Blake, a Director who frequently visited the supermarket, was left completely unaware of the arrangement. Further, while giving evidence, Mr Johnson at times appeared to concede the ambiguity of this arrangement. It is intrinsic in the retail business that employees sell stock and are scrupulous about not mixing personal and employer property and interests. This is almost self-evident, and an intelligent man such as Mr Johnson cannot simply plead ignorance of such matters. In my view, 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. The actions of Ms Royal do not fully excuse Mr Johnson’s conduct.

[15] This is a complex set of factors, each of which has, in my view, to be given weight consistent with authority quoted above.

[16] I find that there was a valid reason for termination of employment, namely the removal of stock without payment in breach of the employer policy and probation contract. There are, however, mitigating circumstances which I deal with below.

Section 387(b) – Whether the person was notified of that reason

[17] Mr Johnson was told about the allegation of theft 12, and appeared to accept that he was notified of the reason for termination, namely removal of stock without payment.

Section 387(c) – Whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person

[18] Mr Johnson acknowledged that he was able to respond to Mr Blake by stating that Ms Royal authorised him to remove the three items of stock. He was literally able to respond and give a relatively relevant response based on his claims in this case. I find that he was given the opportunity to respond, although there are additional issues raised by the applicant namely that the employer did not undertake a proper investigation.

Section 387(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

[19] It is agreed that Mr Johnson did not request a support person therefore there was no unreasonable refusal to provide one.

Section 387(e) – If the dismissal related to unsatisfactory performance by the person--whether the person had been warned about that unsatisfactory performance before the dismissal

[20] The termination was for conduct, not unsatisfactory performance so this is not relevant.

Section 387(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

Section 387(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

[21] The respondent did not claim any discount on conduct because of these factors. I accordingly find that the size of business or lack of human resource professionals did not impact on the procedures followed. However, if the employer had not made this concession, I would likely have found that the termination had all the indicia of one 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. These are indications that the employer was not aware of termination procedural requirements and the possible difficulties of such conduct.

Section 387(h) – Any other matters that the FWC considers relevant

[22] The applicant claims that there are mitigating circumstances, namely his difficult personal circumstances, and the alleged statements and practices of Ms Royal authorising the removal of items, and the lack of a full investigation. I take these issues into account. This was also a summary dismissal.

[23] It is open to an employer to authorise employees to take home various types of stock. However, in this case the authorisation was not open and known to Mr Blake, the Director. It had operated for some time and was kept close to Ms Royal 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 the 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. Employees are or should be aware that it is not appropriate to mix private and employer property, and this may have particular importance in retail where the business is selling stock for a profit. It is probably not even necessary in some or many cases for an employer to tell retail employees that removing stock for personal benefit without payment is not appropriate, given that such conduct may in fact be theft. They would of course be well advised to have a formal policy on this issue, as the employer has in this case. Nor is this a trivial matter.

[24] The policy which Mr Johnson signed was quite clear. Taking stock home without payment was prohibited by the policy, and Mr Johnson agreed to this arrangement when he signed the policy, and signed the probation contract which had similar provision 13.

[25] I have considerable sympathy for Mr Johnson, but he has made a serious mistake. Despite the mitigating factors, in my view the termination was not harsh, unjust or unreasonable. I dismiss the application. An order dismissing the application is contained in PR593193.

DEPUTY PRESIDENT

Appearances:

M Minucci of counsel for the applicant.

B Blake on his own behalf.

Hearing details:

2017.

Bendigo:

May 23.

 1   (1995) 185 CLR 410, 465.

 2   (1992) 41 IR 452, 460.

 3   PR963023.

 4   [2017] FWCFB 1712.

 5   PR906309.

 6   Sayer v Melsteel [2011] FWAFB 7498.

 7   Exhibit B1 at [7].

 8   Ibid at [8]-[12].

 9   Ibid at [34]-[35].

 10   Ibid [23]; Attachment to Exhibit B1 at p.5 [3]; Attachment to Exhibit B1 at p.7 [1] and Attachment to Exhibit B1 at p.7 [3].

 11   Exhibit B1 at [21].

 12   Exhibit J1 at [38].

 13   The Maxi Foods Group Staff Policies and Procedures Manual states:

Printed by authority of the Commonwealth Government Printer

<Price code C, PR593192>

“Any person found consuming or removing goods, regardless of value, from the store without sufficient evidence of payment will be immediately terminated and prosecuted. It is therefore the personal responsibility of each staff member to ensure that any goods in their possession whilst at work are check sealed.

…

All samples received by staff must be placed into stock. Samples or gifts are not to be taken from the store by management or staff.

…

Purchasing stock personally marked down will be treated as theft. Instant dismissal results from personally reduced and purchased stock.

…

Goods passed through the registers without appropriate payment classed as theft.”

The Maxi Foods Group Probation Agreement signed by the applicant states:

“I further understand that theft is a crime punishable by law and the Maxi Foods Group will prosecute and instantly terminate from employment any members of staff who steal or assist others to steal.

I am also aware that I am not permitted to receive any stock, gift or monetary benefits from company representatives or suppliers for my personal use. All items associated with the operation of the business remain the property of the Maxi Foods Group.”