Can employee misconduct risk compensation pay?

In a recent decision, the Fair Work Commission considered whether an employee’s misconduct, which her employer discovered after her dismissal, could reduce her compensation. The applicant was employed as a casual sales assistant at Bed Bath N’ Table for eight months between June 2018 and February 2019.

At a hearing in August 2020, the respondent relied on three allegations of misconduct to warrant the applicant’s dismissal, including her non-compliance with company policy and her behaviour towards the regional manager, which was described as “disrespectful, insubordinate and intimidating”.

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The Commission was not satisfied that any of these allegations gave rise to a valid reason. It found that the only valid reason present was one discovered after the applicant’s dismissal, namely that she covertly recorded a conversation with the regional manager, which the Commission said was “inappropriate and damaging of a relationship of trust and confidence.”

Despite this, the Commission found the dismissal was unfair, due to the lack of notice and opportunity to respond afforded to the applicant. In considering compensation, the Commission took into account the remuneration that would have been received but for the applicant’s dismissal. In the totality of the circumstances, the Commission was satisfied that the applicant’s employment would not have continued for longer than two months.

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Based on a history of her working hours, it found that the applicant would have received a total income of $4,495.64 less taxation plus superannuation during this time. The Commission also considered whether it was obliged to reduce the applicant’s compensation based on her misconduct in covertly recording her conversation with the regional manager.

However, the Commission found that given the respondent was unaware of this recording at the time of dismissal, it could not have contributed to the decision to dismiss the applicant.

The Commission ordered compensation of $4,495.64 less taxation plus superannuation to the applicant. 

Key Takeaways:

• The Commission may reduce the amount of compensation ordered to an employee on account of employee misconduct
• However, this misconduct must contribute to the employer’s decision to dismiss the employee