Where there is a factual dispute about allegations made against an employee, employers must ensure that the allegations are properly tested before proceeding to a disciplinary process. This will ensure that the employee has been provided with procedural fairness and any reasons relied on by the employer as grounds for dismissal are valid.
In the recent decision of Panchal v Bulla Mushrooms (Aust) Pty Ltd [2024] FWC 2784, the Fair Work Commission (FWC) found that an employer did not have a valid reason for terminating an employee because the allegations it relied upon for termination were unsubstantiated.
The employee was employed as a Harvest Team Leader for Bulla Mushrooms (Aust) Pty Ltd (the Employer). She was terminated from her employment in June 2024 after the Employer found that she had engaged in bullying and discrimination against multiple workers over a two-year period.
The Employer first notified the employee of the allegations against her in May 2024, including that she had:
The Employer informed the employee that she would be stood down on pay pending an investigation into the allegations, during which time she would be provided an opportunity to respond.
The investigation conducted by the Employer included an anonymous survey which asked workers if they had been bullied at work. The Employer did not provide any evidence before the FWC as to what the results of this survey were.
The employee also provided responses to the Employer as part of the investigation, which largely denied the allegations and provided explanations as to why each allegation was unfounded. The employee also raised issue with the fact that the allegations were said to have occurred over a two year period and that many of the workers had since left the company.
A day after providing her responses, the Employer notified the employee that the allegations were substantiated. The Employer then commenced a disciplinary process which ultimately resulted in the employee being summarily dismissed from her employment.
The employee filed an application for unfair dismissal against the Employer, arguing that her dismissal was unfair because the allegations against her were unfounded.
The Employer submitted that it had a valid reason for terminating the employee based on what it considered to be “compelling evidence” of her bullying and discriminatory conduct over the years. The Employer relied on 26 separate complaints made by workers in addition to the allegations outlined to the employee during the investigation.
The FWC stated that in cases where an employee is accused of misconduct, it is required to consider the evidence available and determine whether, on the balance of probabilities, the misconduct actually occurred.
In doing so, the FWC considered the evidence relied on by the Employer for termination to be “scanty, conclusory, and largely second hand, that is to say, hearsay” and did not substantiate the allegations of misconduct at all.
The FWC found that the Employer’s evidence was directly refuted by the “clear and persuasive” evidence provided by the employee in her responses, and the Employer made no real effort to contradict this direct evidence prior to finding that the allegations were substantiated.
The FWC was particularly critical of the allegations involving discriminatory conduct, stating that the appropriate response would have been for the Employer to investigate the matter and reach a reasoned conclusion as to whether the allegations were true. It found that the Employer failed to do this and therefore could not have been satisfied on the balance of probabilities that the allegations were substantiated.
The FWC stated that it was clear that the Employer held the belief that the sheer number of allegations against the employee presented a persuasive case of guilt but noted that this alone “does not lower the standard of proof”.
In considering the above, the FWC held that there was no valid reason for dismissal as no single allegation of misconduct against the employee had been substantiated by the Employer. The dismissal was therefore found to be unfair.
Finding reinstatement to be an inappropriate remedy in the circumstances, the FWC considered compensation should be awarded within the range of six months as this is the period of time the employee would have remained employed had she not been dismissed by the Employer.
However, the FWC discounted this range of compensation to only six weeks’ pay on the basis that the employee had not applied for any jobs since her dismissal.
When relying on allegations of misconduct as grounds for dismissal, employers must ensure that the allegations are properly tested to ensure that it is satisfied on the balance of probabilities that the conduct actually occurred.
As demonstrated in this decision, the standard of proof cannot be lowered if there are a large number of allegations against an employee. If the allegations are not substantiated and the employee is terminated, employers may be exposed to a finding that there was no valid reason for dismissal.
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