Valid reason for dismissal does not mean a dismissed employee cannot receive compensation

Valid reason for dismissal does not mean a dismissed employee cannot receive compensation

Despite acknowledging a building company had a valid reason to dismiss a supervisor, the inclusion of unfound allegations in the letter of dismissal has resulted in the former employee receiving compensation in a recent Fair Work Commission case.

The case, before Commissioner Bruce Williams, involved a building supervisor, ‘DC,’ engaged over a lengthy period by a small size contractor, Transilvania Constructions Pty Ltd (Transilvania). Initially engaged by Transilvania on a per-job basis, the arrangement changed in April 2004 when he became employed as a supervisor.

A revised contract was developed in 2010 when the company sought to have DC nominated as their Supervisor with the Builders Registration Board. The contract terms included that DC was a bona fide employee entitled to standard employee entitlements, including leave, for a flat salary of $32,000 per year and the requirement to work a minimum of 15 hours per week. He did not, in fact, ever access leave in the subsequent years.

DC developed a medical condition in 2020 and 2021, which significantly affected his ability to be available to supervise contractors on-site, although he did not inform Transilvania of his situation. In September 2021, he refused to sign a letter confirming the competency of the company’s managing director as a building supervisor.

The combination of these factors led to his dismissal on 20 September 2021. His termination letter mentioned ‘Grossly Misconduct’ (sic) and included a reference to his refusal to sign the competency testament for the managing director.

The initial determination of Commissioner Williams was to assess whether, in fact, DC was an employee of Transilvania and therefore entitled to pursue an unfair dismissal claim.

Applying the principles from the recent High Court decision in CFMMEU v Personnel Contracting (2022) HCA 1, the Commissioner noted,

“the characterisation of their relationship as one of employment or otherwise is to be determined by reference to the rights and obligations under the 2010 Contract, not how the parties’ relationship has come to play out in practice. The rights and obligations of the parties under the 2010 Contract expressly and unambiguously are those of employer and employee”.

After determining DC was entitled to pursue a claim, Commissioner Williams reviewed the circumstances of the termination. As he noted,

“In all the circumstances, Mr (C) not attending site with the regularity that was required of him and not making his employer aware that he was unable to do so for an extended period of time was a valid reason for the Applicant’s dismissal”.

However, Commissioner Williams determined there was no obligation on DC to sign the document presented to him by his employer, nor any evidence to support claims in cross-examination that DC had provided false pay slips.

After determining the dismissal was unfair, Commissioner Williams reviewed the likely duration that the employment relationship would have continued. In his view, DC’s role as a nominated supervisor was likely to be supplanted by the managing director within three months.

Commissioner Williams deducted an amount of one month’s salary for the employee’s misconduct in not attending site and failing to notify his employer of his situation.

He ordered compensation equating to two months’ salary, being $5,200.

DC v Transilvania Constructions Pty Ltd (U2021/8991)

For queries about employment contracts, misconduct, or other employment questions, please contact Dean Cameron at Workforce Advisory Lawyers – We Know Employment Law on 1300 WAL LAW, 0417 622 178 or via email to dean.cameron@workforceadvisory.com.au

Disclaimer: This information is provided as general advice on workplace relations and employment law. It does not constitute legal advice, and it is always advisable to seek further information regarding specific workplace issues. Liability limited by a scheme approved under professional standards legislation.

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