Termination for theft: still okay

Just when some employers were starting to wonder about unfair dismissal claims, two recent FWA cases confirm that, when handled correctly, termination for fraud or theft is still a valid reason.

For SMEs the cases demonstrate how learning from the practices of larger employers in these cases can make dealing with termination a little easier.

In Barton and others v General Motors Holden and Zoumas v TNT Express, Fair Work Australia upheld the dismissal of employees for behaviour of this kind.

What employers have to prove

Usually unfair dismissal cases are decided on the “balance of probabilities” – that is, what the Tribunal members consider is more likely to have occurred after hearing all of the evidence. In cases involving theft or fraud, the employer must also show that there is some precision in the evidence gathered and that some weight is given to the fact that in a criminal proceeding, there is a presumption of innocence.

This does not mean that an employer needs to prove that the theft or frauds occurred “beyond reasonable doubt”, which is the standard applied in criminal cases.

Investigation procedures

GMH used photographic evidence of an alleged stockpile of car parts to assist in supporting allegations that the employees were involved in “smuggling” the parts out of the employers testing site at Lang Lang, Victoria. They also showed evidence of a concealed draw in the floor of a van, which was owned by a contractor to GMH, who also happened to be the son of one of the employees terminated. The employees were questioned extensively in the presence of a union representative.

Although the Tribunal found that some aspects of the investigation could have been handled more fairly, for instance putting the allegations to the employees in writing, it found that the employees were not denied procedural fairness as they understood the allegations and had a proper opportunity to respond to them.

TNT installed a second location tracking device in a vehicle driven by the employee in order to show that he had used an electronic device to block the signal of the primary tracker in the vehicle. He would then claim overtime for periods when the signal was blocked, when in fact he was at home. The case demonstrates that the use of surveillance equipment can be entirely legitimate and the evidence is admissible in unfair dismissal proceedings. It is critical that employers comply with relevant workplace surveillance laws, which are different in each State. In NSW it is generally more difficult to conduct covert surveillance lawfully than in other states. Employers should get advice before using video, GPS or other forms of surveillance. TNT also obtained the evidence of an electronics expert to verify that the device used by the employee was in fact a signal-blocking device.

Grounds of termination

In each case, the employer tried to limit the allegations of misconduct to those matters which they felt they could prove. Many employers make the mistake of drawing inferences from an employee’s behaviour, which are not supported by the facts and risk tainting an otherwise legitimate basis for termination of employment. In GMH, an allegation that the employee has stolen some tools and equipment was quickly withdrawn when it couldn’t be clearly linked to the parts stockpile.

In both the GMH and TNT cases the employees were found to have lied during interviews conducted during the investigations. This dishonesty was found to constitute sufficient grounds for summary termination quite aside from the substantial allegations. Often theft or fraud can be difficult to prove, even to the “balance of probabilities” standard. It is important that employers make clear at the outset of an investigation that employees are expected to answer all questions honestly. This obligation ties back to a common law duty of the employee. In the event that there is insufficient evidence to terminate for theft or fraud, an employee’s dishonesty during the investigation may provide stand alone grounds for termination for serious misconduct.

If you are in doubt about whether you have grounds for termination or whether your investigative and interview procedures are fair, get advice.

This article was originally published on SmartCompany.com.au where Peter is a regular contributor.

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