Unauthorised staff dismissals lead to manager's downfall, FWC examines
The Fair Work Commission (FWC) recently dealt with an unfair dismissal claim brought by a managing director who was sacked after more than three years of employment. The worker argued he had been unfairly terminated from his position at a small organisation with only three employees, challenging whether proper procedures had been followed in his dismissal.
The managing director filed his application within the required timeframe, claiming protection under the Fair Work Act 2009. He was covered by a modern award and earned below the high-income threshold, meeting the basic requirements to pursue an unfair dismissal claim. His case centred on whether his employer, as a small business, had properly followed the Small Business Fair Dismissal Code when terminating his employment for alleged serious misconduct.
The dispute involved questions about board authority, governance procedures, and whether the worker's actions justified immediate dismissal. The employer maintained that the managing director had exceeded his authority and failed to meet his obligations to the board, while the worker sought to challenge the fairness of his termination.
The managing director began working part-time for an Aboriginal and Torres Strait Islander housing co-operative in Gladstone around June 2021. According to the FWC decision, "The [employer] was established more than 50 years ago to provide housing, accommodation, and other support to Australian Aboriginal and Torres Strait Islander people in the Gladstone area."
For over three years, the employment relationship functioned smoothly. However, the FWC decision revealed that "[the managing director's] relationship with [the] board of directors deteriorated in late 2024." This breakdown between the managing director and the board would become central to understanding why the dismissal occurred.
The situation exploded on 25 November 2024 when the managing director made two unauthorised decisions. The FWC noted: "[The managing director] dismissed [the housing officer], on 25 November 2024 without seeking approval from the board. On the same date, [the managing director] sent a letter purporting to remove [the secretary], from her position on the board, again without seeking board approval."
The board responded quickly to these unauthorised actions. The FWC stated: "On 1 December 2024, the [board] met and unanimously carried a vote of no confidence in respect of [the managing director's] position as Managing Director. [The managing director] was subsequently summarily dismissed via a termination letter dated 6 December 2024."
The termination letter detailed seven reasons for the dismissal. According to the FWC decision, these included: "Not providing financial reports to the board as directed. Not providing budgets and other necessary documents to the board as directed. Failing to inform the board about important financial issues. Failing to source insurance for [the employer's] properties as directed."
The list continued with operational failures: "Failing to provide a waiting list for house allocations as directed. Allocating [the employer's] houses to family members without board approval. Failing to provide reports to board meetings as directed." For HR professionals, these allegations demonstrate a clear pattern of ignoring board instructions and operating outside authority.
The managing director filed his unfair dismissal claim on 19 December 2024. The FWC confirmed: "[The managing director's] unfair dismissal application was filed on 19 December 2024, which was within 21 days of his dismissal taking effect on 6 December 2024." This timing matters because workers must file unfair dismissal claims within 21 days of termination.
The organisation received permission to use a lawyer during the proceedings. The Commission explained: "I granted [the employer's] permission to be represented by a lawyer on the basis that representation would enable the matter to be dealt with more efficiently." Legal representation in FWC matters requires permission and isn't automatically granted.
The hearing occurred via video on 19 May 2025. The housing officer and secretary who had been affected by the managing director's unauthorised decisions gave evidence and faced cross-examination. Five board members also testified about their decision. The FWC observed that "none of this evidence was undermined in cross-examination" and "[the managing director] has not provided evidence to establish that any of the allegations against him could not be substantiated during these proceedings."
For small businesses, the FWC applies a specific test when assessing unfair dismissal claims. The Commission explained this two-step process: "First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee's conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds."
The FWC clarified an important point for employers: "The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held." Small businesses don't need to prove misconduct beyond doubt - they need to show they genuinely believed misconduct occurred and had reasonable grounds for that belief.
The FWC found the first requirement was met: "It is clear the board members held a belief that [the managing director's] conduct was sufficiently serious to justify immediate dismissal." The unanimous no-confidence vote demonstrated all board members shared this view.
Examining whether the board had reasonable grounds for their belief, the FWC concluded: "I consider the board members' concerns about [the managing director's] conduct were based on reasonable grounds and based on a reasonable investigation."
The Commission explained the escalating situation: "It is clear the board members' concerns about [the managing director's] conduct had been escalating in late 2024. [The managing director] then acted without board approval in dismissing [the housing officer] and purported to remove [the secretary] as Secretary of the board. These actions brought the issues with [the managing director's] conduct to a head."
The investigation process met the required standard. Board members discussed their concerns during their 1 December meeting, voted on the no-confidence motion, sought legal advice, then proceeded with dismissal on 6 December.
The FWC found: "I consider these actions constituted a reasonable investigation in the circumstances, given the extensive evidence that was before the board about [the managing director's] conduct." The organisation's constitution also supported the board's authority, stating "that a Managing Director can be removed at any time by the board and the Managing Director is not entitled to attend a meeting about their removal."
The FWC concluded: "I find that [the managing director's] summary dismissal was consistent with the [Small Business Fair Dismissal Code]. That finding means [the managing director] has not been unfairly dismissed as defined in s.385 of the FW Act."
While acknowledging the managing director's good intentions, the Commission emphasised: "[The managing director] failed to recognise the paramount role of the board in determining important operational matters for [the employer]. The board needs to have relevant information brought before it by the Managing Director to enable it to properly undertake its important obligations."
