Worker implies 'financial mismanagement' in court evidence
The Federal Circuit and Family Court of Australia recently dealt with the unfair dismissal claims of a manager who also tried to imply that his company engaged in financial mismanagement in his application. The employer counterclaimed in the same lawsuit that he was the one who committed fraud which was the reason for his termination.
The manager was employed as the company’s finance manager for almost four years until he was terminated for “dishonest behaviour” and “failure to follow reasonable and lawful directions.”
The manager denied the allegations and claimed the company had breached the Fair Work Act 2009 by conducting a disciplinary process that was “materially unjust, unfair and misleading” and “failing to comply with the company’s internal instruments and policies regarding consultation and redundancy.”
The employer denied the manager’s claims and brought a cross-claim for almost $65,000 for alleged misappropriation of money discovered after he was dismissed.
Background of the case
The company primarily provides medical advisory and independent health services to insurers, government agencies, corporations and law firms.
In August 2017, the employee started as its finance manager. As part of his role, he was responsible for processing payroll for all the company’s employees, including his own pay.
According to records, payroll was processed fortnightly using computer-based software. Employees were paid in arrears.
As the finance manager, he was entrusted with the responsibility of preparing payroll and ensure that it accurately reflected the hours worked by all employees.
Meanwhile, the employer said its CEO was responsible for authorising the payments to go through once the finance manager prepared them using computer-based software. The CEO gave evidence that he” did not usually review each employee’s payroll, and it was rare he would ever need to question a payment.” He said that he “trusted” his finance manager.
Around January 2021, the finance manager received a first formal warning letter about certain allegations, including that he had “made a verbal employment offer and a formal written employment offer to a prospective candidate without the consent of the CEO; refused to carry out a lawful and reasonable management instruction including a direction to hold a second interview with the candidate; and continued to advise the CEO that he was organising a second interview when a verbal and written offer had already been made and accepted.”
Later, a second formal warning was issued in July 2021 for allegations of dishonest behaviour; acting in a way that is inconsistent with the company’s best interests; and failure to follow lawful and reasonable direction from the company or an authorised representative.
Performance review
The underlying issue was a 3-month performance review that the finance manager claimed to have conducted with one of his two direct reports. The direct report in question was the employee subject of the offer of employment, which resulted in the first formal warning letter.
The relationship between the finance manager and the company turned sour after that, and the latter considered that the relationship of trust and confidence “had been lost” and said his “continued employment was no longer viable.” A month later, in August, his employment was terminated immediately.
Aggrieved with the company’s decision, the finance manager filed an unfair dismissal, but the company answered with a cross-claim, saying that he had paid himself “in excess of what was payable under the employment contract in both wages and annual leave accruals.”
It also said that he had “recorded superannuation payments more than what was payable as to avoid the superannuation guarantee charge.”
“[There’s] fraud on the part of [the financial manager] in this respect, given he was required to obtain and did obtain the approval of the CEO or the executive general manager for each alleged overpayment,” the employer argued.
Manager tried to prove financial mismanagement
While the financial manager was arguing against his dismissal, the court noted that he “placed some focus” on describing the financial affairs and financial management of the company.
He gave evidence about the company’s alleged superannuation liabilities, tax liabilities and non-payment of debts throughout his employment.
“Such analyses were presented as his own assessment and, to the extent it was intended to demonstrate financial mismanagement or wrongdoing,” the court said, but these “were strongly denied by the company.”
In short, the financial manager was trying to attribute faults to his employer while questioning his dismissal, likely implying that his employment was terminated because he “knew” about the alleged “misconduct.”
‘Flawed disciplinary process’ vs. ‘financial mismanagement’
In its decision, the court explained that if his allegations of employer misconduct were the source of his termination, his actions did not reflect it.
“For example, [he didn’t] make a complaint to a corporate or financial regulator. Nowhere did [he] suggest that he had made or even foreshadowed such complaint before his termination as for this to underscore a motive for termination,” the court said.
It said the only thing he did was to request a “copy of the company’s whistle-blower policy in July 2021 meeting,” but said the request happened after the issue of the formal warning.
“He only made that request during the disciplinary meeting in July because he considered his employment was about to be terminated and he wanted to ensure that he was protected from any failures by the company and/or adverse consequences in relation to what he perceived to be the company’s financial mismanagement,” it said.
As for the financial manager’s doubts over the internal policies of the company and how they handled his personal violations, the court said:
“The disciplinary investigation may have been flawed, [or] not consistent with the company’s own policies and/or unfair, however it is not the task of this court to speculate about what is intended by the claim or embark on a broad inquiry as to whether he has been subjected to a procedurally or substantively unfair outcome,” it said.
Thus, since his unfair dismissal and financial mismanagement allegations were not sufficiently proven, the court dismissed the financial manager’s claim.
Additionally, it also dismissed the company’s cross-claim against him for misappropriation of funds, saying it was also “not substantiated,” the court said.
