Paid four weeks and shown the door, then accused of misusing his laptop

What happened

Allan Croft was the general insurance manager at Smarter Insurance Brokers, a small broking business in Port Macquarie, New South Wales. The business and its related companies had between 6 and 11 employees. Mr Croft had worked there for about one year and two months.

The relationship went wrong early. Mr Croft described his dealings with one of the directors as "a personality clash almost from day one". From about June to December 2015 the directors were unhappy with parts of his work and conduct, and the emails between them became increasingly tense. The employer said it gave him verbal warnings; he did not remember any, and he was never given a written warning.

On the afternoon of 27 January 2016 he was called to a meeting with a director. He was not told what it was about, and another employee sat in as a witness. The directors had already decided to dismiss him. Instead of relying on misconduct or poor performance, they used clause 21 of his employment agreement, which let the employer end the employment on four weeks' notice or pay in lieu, and paid him four weeks' wages in lieu of notice.

The claim, and what the employer found later

Mr Croft made an unfair dismissal application under s 394 of the Fair Work Act 2009 (Cth). He represented himself at the hearing; the employer was represented by a barrister.

By the time of the hearing the employer was relying on more than the contract clause. It pointed to a list of performance and conduct problems, and to something it found only after he had left: his work phone records and laptop history showed he had accessed and downloaded pornography on work devices. Mr Croft did not deny it, but said it happened during lunch breaks or outside work hours and away from the office. The Commission noted there appeared to be only three such occasions.

The legal test

Under s 385, a dismissal is unfair only if the worker was dismissed, the dismissal was harsh, unjust or unreasonable, it was not a genuine redundancy and, for a small business employer, it was not consistent with the Small Business Fair Dismissal Code. A small business employer is one with fewer than 15 employees.

The Code is a safe harbour. For a dismissal that is not for serious misconduct, the employer must tell the worker why their job is at risk, warn them (preferably in writing), give them a chance to respond, and give them a reasonable chance to fix the problem. If the employer follows the Code, the dismissal is treated as fair.

If the Code does not apply, the Commission weighs the factors in s 387. They include whether there was a valid reason related to the worker's conduct or capacity, whether the worker was told of it and given a chance to respond, whether a support person was refused, and whether a small employer's size and lack of HR expertise explain any shortcomings.

What the Commission decided

Commissioner Cambridge found the employer had not complied with the Code. Mr Croft "was not told that his employment was at risk", and he had no chance to explain or fix anything.

The contract clause was not a valid reason. The Commissioner said that a dismissal relying on a contractual right to dismiss without reason, as long as notice or pay in lieu was given, "would plainly subvert the statutory unfair dismissal laws", adding that "there is no lawful foundation upon which employment can be created at will".

The Commission then looked behind the stated reason to see whether any real valid reason existed, including conduct discovered after the dismissal. The performance issues could not count, because Mr Croft had never been clearly told they put his job at risk.

The pornography was a closer question. The Commissioner accepted that using work equipment this way would ordinarily be misconduct, and found Mr Croft knew it was. But there was "no evidence that the employer had promulgated any particular policy" limiting its equipment to work use, there was contested evidence that some directors may have done the same, and it happened on only three occasions. In those circumstances it was not a valid reason.

The process was also badly flawed: no chance to respond and no support person at the meeting. The Commission found the dismissal harsh, unjust and unreasonable.

How much was awarded

Mr Croft did not want his job back. He was out of work for about 17 weeks before finding a lower-paid job, and he would have earned about $1,250 a week. But the Commission found a significant prospect that the employment would not have lasted beyond a few more months, given the breakdown with the directors. It ordered compensation of about 8 weeks' pay, $10,000.

What this means for you

If you have been dismissed with notice or pay in lieu and no real reason, being paid out does not by itself make the dismissal fair. The employer still needs a valid reason and a fair process, and a small business needs to have followed the Code to rely on it.

Employers can sometimes rely on misconduct found after a dismissal, so it is worth being candid with an adviser about anything that might come up. For employers, the case shows the value of a clear, written policy on the use of work devices, applied consistently from the top down.

The time limit for an unfair dismissal application is short: 21 days from when the dismissal takes effect.