Employment Duties Breach and Termination: A Case Study

Ed owns “Twiggy’s Top Knots”, a dog grooming business which has branches in Norwood, Adelaide and Mawson Lakes. Ed employs Hamish who he has known from the SA poodle club as an experienced trimmer. Hamish is one of 25 Employee’s working 5 days a week for $58,000pa.

Hamish is employed under a common law contract.

For nine months things go well, however, soon Hamish becomes disenchanted with the role, he also has some problems at home and starts to ‘take it out’ on the dogs. When Ed is not around Hamish yells at the dogs, some are so traumatised that they are shaking when their owners pick them up.

One day Ed sees Hamish yelling at a puppy. On other occasions he has found a puppy loose in the back of the shop (it could have escaped). Hamish is also taking shortcuts with the grooming of the dogs (eg by taking these shortcuts the dogs coats are cut much shorter than they should be). Ed verbally tells Hamish to be more careful. Hamish agrees to.

The next week Ed sees Hamish yelling at a puppy again, he tells him to be more careful. Ed also verbally tells Hamish that he does not want any yelling at the dogs and reminds Hamish not to take shortcuts and to keep the dogs secure.

When the dog owners complain about their dogs hair being cut too short Hamish blames Ed. Hamish says things to customers like “it is because we have so many dogs coming through it is like a production line here, it is all about profit here”. He has made similar comments to his friends at the poodle club.

Ed begins to be really concerned about how rough (yelling) Hamish is being with the dogs. He has seen dogs loose in the yard 3 times now. Some customers are complaining about the ‘short’ haircuts their dogs are getting. Ed also hears rumours about what Hamish is saying about his business.

Answer the following questions:

On what basis might Ed be able to say Hamish has breached his employment obligations (duties). Identify relevant case law.

Give Ed advice about what actions he should take to manage Hamish’s performance at work. Consider, in particular what should be considered to prepare for a termination of Hamish’s employment. Explain why care must be taken at each step, including the process of termination. Apply the legislation and include case law.

Employment Duties Breach

Determining the breach of employee’s duties made by Harmish with reference to the scenario

At common law an employee is provided with various duties towards the employer and workplace. Firstly it is the duty of the employee to be ready willing to do the job provided by the employer. It is the legal duty of an employee to obey any reasonable and lawful instructions set out by law or provided by the employer. The employee must also deploy competence and skill towards their job. They also have the duty at common law to ensure the confidentiality of business information. The employees also owe fiduciary duties towards the employers. There is a duty of fidelity imposed on the employees according to which they must work in good faith towards a proper purpose.

In the case of Ottoman Bank v Chakarian (1930) AC 277 it was ruled by the court that an employee has to be obedient towards their job however the instructions provided by the employer has to reasonable. In this case the employee fled as he was being transferred to a dangerous place and thus was terminated. The claim for unfair dismissal was upheld by the court.

In the case of Adami v Maison De Luxe (1924) 35 CLR 143 it was held by the court that opening the dance floor on Saturday was a lawful order.

In the case of Lister v Romford Ice & Storage it was ruled by the court that it is the duty of an employee to exercise competence, care and skill towards work. A failure to do so results in the breach of employment contract and duty

In the given situation, Hamish owes a fiduciary duty towards Ed. This means he has the duty to act in the best interest of Ed and secure his interest. However it has been provided through the scenario that Harmish due to some personal problems at home is not doing his duties properly which is not beneficial for Ed as per the Ottoman Bank v Chakarian case.

Harmish who is a trained trimmer was found to be yelling at the Dogs, cutting the coat shorter than required, and being irresponsible towards the safety of the dogs that were found to be loose in the backyard. These actions and omissions were not reported once but were committed multiple times by Harmish. Therefore it can be stated that he has clearly breach the duty to act with skill, competence and care towards his job as per Lister v Romford Ice & Storage.

The duty of fidelity to act in the best interest of the employer and not in a way which is contrary to their interest have also been violated by Harmish as he was taking against the Ed and giving the business a bad name. he was also leaking out confidential secrets about the business which is a clealr breach of the duty of confidentiality as per Adami v Maison De Luxe

Conclusion

Therefore it is evident from the rules discussed above and the facts of the scenario that Harmish has violated the above mentioned duties in relation to the employment contract.

Termination of Employee

The issue in this case is to determine the steps which are required to lawfully terminate an employee

According to section 387(a) of the Fair Work Act 2009 (Cth) the employer must have a valid reason to terminate an employee which can result out if capacity or conduct.

A person is eligible for making a unfair dismissal claim if they have completed a minimum employment period. In case the business employees less than 15 employees the Small Business Fair Dismissal Code is applicable.

It is the duty of an employer to provide the employee with a reasonable notice of termination both under the provisions of common law and the FWA.

In order to determine whether or not a notice is just and reasonable the circumstances when the notice had been provided have to be considered rather than when their employment contract was formed a provided in the case of Rankin v Marine Power International Pty Ltd (2001) 50 AILR 300.

Before giving the notice of termination the employer has to consider specific factors like nature of Job, level of seniority and the length of services with respect to deciding the length of notice.

The employees have been provided with the right of making a claim within 21 days (394(2)) of dismissal if they believe that they have been terminated unlawfully by the employer under section 385 and 389 of the FWA.

The dismissal of an employee according to section 387 of the FWA therefore must not be unreasonable, Unjust or harsh.

According to section 387 the availability of a valid reason is determined in case the dismissal is related to conduct or capacity for the purpose of analyzing an unfair dismissal.

In the case of Selachandran v Petron Plastics Pty Ltd (1995) 62 IE 371 it had been ruled by the court that a reason for dismissal is valid if it is “sound defensible or well founded”.

In order to determine whether a person is capable of doing the job or not the objective test is applied as used in the case of Webb v RMIT University (2011) FWAFB 8336

According to Fair Work Regulations 2009 (Cth) Reg 1.07 summary dismissals may be justified by serious misconduct which may include deliberate or willful behavior which is not in accordance towards the contract of employment. There is imminent or serious risk caused by such conducts to other along with the profitability, reputation and viability of the business. It is the duty of the employer to notify the employee about the reason why such termination is undertaken

Under the case of Stewart v Sea Change Conveyancing Pty Ltd (2012) FWA 1896 derogatory remarks had been made by the employee about the employer, however the employee had been terminated by email and not provided information before the termination thus it accounted to unfair dismissal.

It is also the duty of the employer to provide opportunity to employee towards justifying an allegation if they are to be terminated on the basis of conduct or capacity as stated by Bi-lo v Hopper

Factors to Consider

In the case of Barclay v Nylex Corp Pty Ltd (2003) 126 IR 294 where the employee had allegedly slept during the working hours, it was held by the court that not giving opportunity to justify is wrong on the part of the employer.

It is the duty of the employer to ensure that reasonable support is provided to the employee towards bringing in a person to provide assistance to him in a meeting related to dismissal. The requirement is although not mandatory in all situations but has to be offered by the employer to the employee and also must not be denied in a reasonable manner.

It is also the duty of the employer to warn the employee about their performance before the step of termination is taken where the reason for termination is in relation to unsatisfactory performance. The warning can be provided to the employee through previous counseling or informal or formal manner.

In the case of Allen v New Horizons Ent Ltd (2005) NWSIRC 1179 it had been ruled by the court that the employee has to be provided with an opportunity to enhance performance along with the evidence related to performance concerns.

The employer may be provided the right to immediately terminate employment in case it is found that the employee has committed a serious breach in relation to the employment contract as provided in the case of Anderson v Thiess (2014) FWC 6568.

It is also the duty of an employer to have appropriate inquiry in relation to dismissing an employee. The inquiry should be conducted in a fair basis by analyzing the facts, ensuring confidentiality and interviewing witnesses.

It is important for employers to realize that procedural failures may account to unfair dismissal even when the dismissal has been done for a valid reason as provided in the case of Kool V Adecco Industrial (2016) FWA 925.

In the given situation Ed has to be careful towards dismissing Harmish because any mistake on the part of Ed can lead to an unfair dismissal. Ed has to know that even of the reason was valid, procedural fairness has to be observed in order to terminate Harmish in a proper manner as per Stewart v Sea Change Conveyancing Pty Ltd

Although Harmish can be dismissed immediately by Ed if he considers that Harmish has conducted a serious breach it is advisable that Ed undertakes the normal procedure of dismissal other than summary dismissal as on many instances the court decides whether the conduct was a serious breach or not and may classify a dismissal as an unfair dismissal as per Anderson v Thiess.

In the given situation Harmish has to follow certain steps in relation to terminating the employment of Harmish in order to comply with the provisions of procedural fairness as per Kool V Adecco Industrial (2016) FWA 925.

In the given situation the grounds on which Harmish can be terminated by Ed include, unsatisfactory performance, Breach of fiduciary duties, spreading derogatory remarks for the employer, endangering the safety of the dogs and subsequently posing a threat to the viability, reputation and profitability of the business.

Firstly, it was the duty to Ed to notify in a formal or informal manner his performance towards the business has is unsatisfactory. It relation to unsatisfactory performance in order to avoid risk Ed has to provide opportunities to Harmish to enhance performance which have already been provided by Ed.

It is the duty of Ed to notify Harmish in advance that he is going to be terminated by Ed and such notice has to include the reasons why which Ed is considering the termination.

An competent inquiry has to be conducted by Ed into the matter in the manner as discussed above and the same has to be notified to Hamish

Harmish has to be provided with an opportunity to justify his position and must also be allowing to again assistance from third party for the purpose of the meeting related to the dismissal. Such support cannot be denied by Ed or would not account to procedural fairness as per Allen v New Horizons Ent Ltd (2005) NWSIRC 1179

It is also the duty of Ed to provide Harmish with a notice of termination. The length of the notice has to be determined in accordance with the tenure of employment and the nature of work as discussed above as per Barclay v Nylex Corp Pty Ltd

In addition although it has not been specifically provided through the circumstances, Ed must not enter into any discriminatory practice base on Sex, religion, Race, disability or sexual orientation or else it may result in an unfair dismissal.

Conclusion

Therefore for the purpose of terminating Harmish in a proper and fair manner the above steps have to be observed by ED. In case such steps are not considered it may account to an unfair dismissal where Harmish would have a right to make a claim in 21 days. Harmish would have a right to make a claim for unfair dismissal even if there is a valid reason for dismissal but the procedural fairness has not been observed.

References

Adami v Maison De Luxe (1924) 35 CLR 143

Allen v New Horizons Ent Ltd (2005) NWSIRC 1179

Anderson v Thiess (2014) FWC 6568.

Barclay v Nylex Corp Pty Ltd (2003) 126 IR 294

Fair Work Regulations 2009 (Cth)

Kool V Adecco Industrial (2016) FWA 925.

Lister v Romford Ice & Storage

Ottoman Bank v Chakarian (1930) AC 277

Rankin v Marine Power International Pty Ltd (2001) 50 AILR 300.

Selachandran v Petron Plastics Pty Ltd (1995) 62 IE 371

Stewart v Sea Change Conveyancing Pty Ltd (2012) FWA 1896