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Is dishonesty about out-of-hours conduct a valid reason for dismissal?

In determining whether a dismissal was harsh, unjust or unreasonable in an unfair dismissal proceeding, the Fair Work Commission (FWC) must determine whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees).

To be a valid reason for the dismissal, it should be sound, defensible or well founded, and should not be capricious, fanciful, spiteful or prejudiced. The FWC will not stand in the shoes of an employer and determine what the FWC would do if it was in the position of the employer.

A range of outcomes might arise in determining whether employee misconduct provides a valid reason for dismissal. For instance, the FWC might determine the was no valid reason because:

  • it finds on the balance of probabilities the misconduct did not occur; or
  • while on the balance of probabilities the misconduct did occur, the misconduct did not justify dismissal.

In determining whether there was a valid reason for the dismissal, the FWC is not confined to the reason advanced by the employer (either at the time of dismissal or during the subsequent hearing). A valid reason for dismissal can be any valid reason underpinned by the evidence provided to the FWC.

Even if an employer does not rely on a reason about which it knows at the time of dismissal, the FWC can still rule that this reason is a valid reason for dismissal.

You can dismiss an employee for out-of-hours conduct if:

  • the conduct is, when viewed objectively, likely to cause serious damage to the relationship between the employer and you; or
  • the conduct damages your interests; or
  • the conduct is incompatible with the employee’s duty as an employee.

In Newton v Toll Transport (2021), a truck driver was dismissed for fighting a co-worker outside a pub out of working hours. In the unfair dismissal proceeding, the issue arose as to whether the employee was obliged to answer his employer’s questions about the fight, and whether his dishonest answers could provide a valid reason for his dismissal.

The FWC Full Bench observed that an untruthful answer to an employer’s question about the out-of-work conduct may provide a valid reason for dismissal, if the conduct has sufficient connection to employment.

For example, a dishonest answer to a question about out-of-work conduct may provide a valid reason for dismissal if an employee damages your interests by dishonestly and intentionally impugning the character of another employee. Or the dishonesty might mean the employer cannot be confident the employee would be honest with it in the future.

However, the FWC ruled, where there was insufficient connection to employment, dishonest answers to the questions put by the employer about the employee’s out-of-work conduct could not be a valid reason for dismissal.

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