Small Business Dismissals 'Need Reasonable Investigation’

Jill McMahon - Wednesday, May 22, 2013

 

 By  Jo Kamira

The Fair Work Commission ordered compensation to an employee dismissed for theft and other misconduct last month in a case that highlights the need for even the smallest of companies to conduct proper investigations before summarily dismissing employees.

In our experience, many small business owners believe they aren’t subject to unfair dismissal laws and don’t have to investigate allegations of misconduct before they terminate someone’s employment.

A ruling in March by the Fair Work Commission – relating to a business that employed just four people - illustrates how this perception is misplaced.

The case involved an employee who was summarily dismissed and handed a letter stating his conduct at work had included “engaging in theft”.

The Small Business Fair Dismissal Code, which applies to businesses that employ 15 or fewer employees, states: “it is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal.”

The code defines “serious misconduct” as including “theft, fraud, violence and serious breaches of occupational health and safety procedures.”

At issue in last week’s ruling was not whether the employee had stolen from his employer, or even if the employer believed he had done so, but rather whether the employer had “reasonable grounds” for his belief.

In concluding that the dismissal was unfair, Commissioner Ryan said the employer “did not carry out a reasonable investigation” and had only looked at his accounts and jumped to a conclusion. The employer alleged that the employee had ordered cutting wheels and electrodes for himself using his employer’s account.

If the employer had investigated the matter properly, he would have had to interview the other employee in the company who also used the equipment. He hadn’t done that. Moreover, the employer hadn’t even asked the employee about the theft before he was dismissed, or even attempted to locate the cutting discs the employee had ordered.

Whilst the small business code gives an employer the ability to summarily dismiss an employee for theft, with no need to report the theft to the police, this case demonstrates employers should conduct an investigation in order to provide supporting information to show reasonable grounds for their belief.
Click here for the full decision. 

Tips for conducting a simple investigation:

  1. Get the specifics of the complaint and write down the information initially provided to you that gives you your suspicions;
  2. Check the information that is provided to you – ask witnesses and look at documents or check store rooms if it is alleged that property has been stolen;
  3. Document what you do and what you are told;
  4. Provide the accused with an opportunity to give an explanation of what has been alleged  - include specifics and provide a copy in writing if you can;
  5. Be prepared to reconsider your response based on the answers your employee gives you;
  6. Make your final decision when all the information has been gathered and the employee given a chance to explain what happened.

Don’t forget, if the conversation with the employee results in termination/dismissal they should have a support person present.

If you need help with an investigation, WISE Workplace provides a supported investigations service, including advice over the phone.

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