A manager who was summarily dismissed after responding dishonestly to her former employer (Employer) about her pattern of attendance at work, has lost all of her claims against her Employer in the Federal Court (Court) and was ordered by the Court to pay her Employer’s legal costs.
Background
The manager was employed on 6 February 2006 and summarily dismissed on 30 June 2006. She claimed that the circumstances leading to her dismissal were due to her inability, as a result of her family responsibilities, to come to work any earlier than around 9am on most days. The manager had two young sons whose care and transportation to school were a shared responsibility between her and her husband. She argued that her Employer knew about her family responsibilities, but disregarded the difficulties this created for her.
The manager’s employment contract required her to attend for work between the hours of 9am and 5pm each day. However, due to the senior nature of her position, it was expected that she work additional hours outside of the standard office hours.
Just prior to her dismissal, the Managing Director (MD) of her Employer had asked the manager to provide a record of her daily attendance at the Employer’s premises over the last three weeks and to note her time of arrival, lunch break duration and departure time. This request was motivated by the MD’s (and other employees’) concerns over the manager’s poor pattern of attendance at work. A log kept by one employee for a certain period disclosed a general pattern that the manager arrived more often than not substantially later than 9am, never before that time, and left not long after 5pm, and that occasionally she was absent for quite lengthy periods at lunch.
The manager responded to the MD’s request, stating that she could not provide the information as she did not maintain a log of such times. However, she assured the MD that she generally arrived at 9am (or at 8.15am for 8.30 meetings) and departed at 5.20pm with a 20 minute lunch break, with some exceptions, but assured him that these were not excessive and did not result in her working less than a full week. The manager also stated that she was “perplexed and concerned” by the request.
A meeting was held on 30 June between the manager, the MD and another employee, during which the manager was challenged about her response and accused of lying. Her employment was terminated without notice shortly after the meeting. The manager alleged that, shortly after her termination, she was assaulted and battered by the MD when he grabbed her by her sleeve and pulled her away from a conversation with another senior manager, and she was escorted to her office and away from the premises.
Claims
The manager made several claims against her Employer in respect of her dismissal, including:
- breaches of the Workplace Relations Act 1996 (Cth) (the Act), alleging unlawful termination on the ground of family responsibilities and certain provisions in respect of providing notice of absences taken as sick leave and carers leave – these claims were later discontinued
- breach of contract by reason of summary dismissal (ie failure to provide 8 weeks notice in writing or make a payment in lieu thereof)
- breach of contract by reason of failure to follow the performance counselling guidelines contained in the policy document Staff Guidelines
- breach of contract by failing to observe an implied term of mutual trust and confidence
- discrimination on the ground of her family responsibilities in breach of the Sex Discrimination Act 1984 (Cth), and
- assault and battery.
The manager failed in all her claims.
Breach of contract – failure to provide notice (or pay in lieu)
The Court held that there was no breach of contract by the manager’s Employer in failing to provide 8 weeks notice of termination, or payment in lieu of that notice.
The Court held that the manager’s response to the MD was intentionally dishonest and was an act of knowing and “wilful misconduct”. This was sufficient to justify her summary dismissal under her contract of employment, which allowed for summary dismissal on the basis of “serious, wilful or persistent misconduct”.
The manager not only sought damages for breach of contract representing 8 weeks notice, but a further 8 week payment for the loss of any opportunity to proceed through the performance counselling process and damages for loss of a chance to remain in employment.
The Court was satisfied, that even if the Employer had not been able to summarily dismiss the manager under her contract of employment, it would have done so with notice. The Court held that either way, the manager would not have remained in employment. Consequently, there was no basis for her to claim damages for loss of a chance to remain in employment.
Breach of contract – failure to follow the Staff Guidelines
The Court held that there was no breach of the manager’s contract by her Employer for failing to follow the performance counselling guidelines (contained in the Staff Guidelines).
The manager had argued that the Staff Guidelines were incorporated by reference into her contract of employment, making them contractually binding not only on her, but also on her Employer. In determining whether the Staff Guidelines had been so incorporated, the Court considered the following factors “for” incorporation:
- the employment contract provided that the Staff Guidelines “governed” the manager’s employment, and
- provided that she agreed “to be bound by” the Employer’s policies.
On the other hand, the Court considered that the following circumstances mitigated against incorporation:
- the employment contract provided that “you acknowledge and accept that it is the prerogative of [the Employer] to vary, change or terminate existing [Employer] policies as well as devise and introduce new policies” – the Court stated that it was difficult to see “much mutuality in such a document”
- the policies were provided to the manager on the commencement of her employment but were not matters to which she committed herself with knowledge at the time she signed the employment contract, and
- the language of the Staff Guidelines was in parts aspirational, as opposed to contractual. In particular, the steps to be taken under the performance counselling guidelines were “available for selection depending on circumstances” which, the Court held, disqualified them from being contractual and that there was no invariable requirement for the guidelines to be followed, much less a contractual requirement to this effect.
The Court noted that even if the procedures for performance counselling had been incorporated into the manager’s employment contract, the reason for her dismissal was not one which could have been performance managed.
Breach of contract by failing to observe an implied term of mutual trust and confidence
The Court held that there was no term of mutual trust of confidence implied into the manager’s employment contract. The manager had relied upon the existence of such a term to support a claim for damages arising from the circumstances of her dismissal, in that she alleged they were distressing and humiliating. The Court applied the case of Addis v Gramophone Company Ltd [1909] AC 488, holding that general damages were not available for the manner of a dismissal.
Discrimination claim
The Court held that the manager’s dismissal had nothing to do with her family responsibilities or any characteristic attributed or imputed (whether generally or particularly) to persons in her position as a working mother.
In finding that there was no discrimination, the Court noted that the manager’s hours of work were clearly set out in her employment contract, that her position was one of senior management and the requirement to work additional hours was clearly foreshadowed, which must have been apparent to her at the time she accepted the position. The Court held that the obligation was on the manager, prior to accepting employment, to assess whether she would be able to meet the requirement for additional work outside the 9am to 5pm, whilst discharging her family responsibilities.
Assault and battery
The manager did not provide any evidence sufficient to support her claims of assault and battery by the MD.
Costs order
The Employer made an application for costs, including indemnity costs, for the amount of $203,909.89. The Employer’s claim for indemnity costs was made on the basis that it had made an offer of compromise in the amount of $30,506.22 to the manager to settle the matter relatively early on in the proceedings, which she had refused.
A party will usually only be entitled to recover “party/party” costs (if at all), which can be substantially less than what the party may have actually spent. Indemnity costs are all costs, including legal fees, charges, disbursements and expenses, incurred by a party to litigation in undertaking proceedings, provided that those costs have not been unreasonably incurred or are not of an unreasonable amount.
In this case, the Court held that in the circumstances, it was “very imprudent” and unreasonable of the manager to not have accepted the Employer’s offer. Accordingly, it awarded costs on an indemnity basis from the last day on which it was open to the manager to accept the Employer’s offer, including costs under s824 of the Act (which prohibits the payment of costs, except in limited circumstances, for matters arising under the Act). Costs prior to that date were awarded in accordance with the Federal Magistrate Court Rules 2001 (Cth) (where the proceedings had initially commenced).
Lessons for employers
The decision demonstrates that, while it is usually available in limited circumstances, immediate dismissal can occur if:
- the employee’s behaviour is sufficiently serious, and
- the behaviour relates to dishonesty or lying – particularly in relation to senior employees.
Employers should exercise their right to immediately dismiss an employee only after careful consideration of the facts and after obtaining professional advice.
For further information, please contact your usual PricewaterhouseCoopers adviser or:
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Neil Napper, Partner
PricewaterhouseCoopers Legal
Employment law
Tel +61 2 8266 6647 |
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Sarah Houghton, Solicitor
PricewaterhouseCoopers Legal
Corporate and Commercial
Tel +61 2 8266 6642 |
