Use it or lose it: Terminating employment and police investigations

The decision of the Fair Work Commission (the Commission) in NW v Taitung Australia Pty Ltd [2016] FWC 7982 reminds employers of the requirement to act quickly where an employee has been found guilty of serious misconduct even if the matter is the subject of a police investigation.

NW was working as a delivery driver for an Asian speciality food business that supplies Asian ingredients and seafood to restaurants and other commercial kitchens.

In February 2016, a Storeperson admitted to the Warehouse Manager that he and other employees were involved in an arrangement where they would steal stock by adding additional items not listed on the orders for delivery.  The additional items would be sold by various drivers who obtained direct payment for the stolen produce.  The drivers then distributed some of the proceeds from the sales to other employees as a reward for their participation in the arrangement. 

The General Manager became aware of the Storeperson’s admission and reported the matter to the NSW Police.  The Police requested that the General Manager not take any immediate action so that they could continue with their investigation and try to obtain further evidence of the theft.  The General Manager agreed with the Police request to defer any disciplinary action against any of the employees who had allegedly been involved in the theft.

In May 2016, NW was advised by the Employer that it had suspicions relating to theft and directed NW to attend a disciplinary meeting. At the disciplinary meeting, NW denied any allegations relating to theft.

After considering NW’s responses, the Employer advised NW that his employment was terminated on the basis of serious misconduct and accordingly, he was not entitled to receive notice or payment in lieu.

In considering whether there was an unfair dismissal, the Commission concluded that the Employer had a valid reason to terminate NW’s employment (as the theft of the employer’s stock had been verified).  However, the Employer erred when it allowed NW to continue working until May 2016. The Employer had full knowledge of the nature and extent of the serious misconduct in February 2016 but had not acted on it promptly. 

The Commission said it was understandable that the Employer allowed NW to work at the request by the Police so they could gather further evidence.  However, the Commission noted that for the purposes of employment law, allowing NW to continue to work negated the Employer’s capacity to summarily terminate NW’s employment.  By delaying the termination of employment it made the summary dismissal harsh, unjust and unreasonable.

The Commission noted that NW had not been paid notice as he was dismissed for serious misconduct.  In these circumstances, the Commission indicated that it would have awarded monetary compensation to NW equivalent to the notice he would have been entitled to (had he not been summarily dismissed).  However, given the circumstances and the severity of NW’s actions, the amount of compensation was reduced to zero.  Therefore, NW was not awarded any compensation despite the Commission determining the dismissal was “unjust.”

Practically speaking, employers will need to balance any requests by the police with the need to take prompt action in accordance with basic employment law principles to protect the employer’s position when it comes to employment related matters. Employers should seek their own legal advice and engage in an open dialogue with the police to come up with an approach that balances all interests. 

Shane Koelmeyer is a leading workplace relations lawyer and Director at Workplace Law. Workplace Law is a specialist law firm providing employers with legal advice, training and representation in all aspects of workplace relations, employment-related matters and WH&S.

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