Sick leave timing concerns tested against valid performance dismissal reasons
The Fair Work Commission (FWC) recently dealt with an unfair dismissal application from a general manager who was terminated during sick leave for performance and conduct issues.
The case arose when the accommodation management company dismissed the worker following unresolved cash reconciliation discrepancies totaling over $30,000 and unauthorised access to leased premises that resulted in failed lease negotiations.
The worker argued he was unfairly dismissed while on legitimate sick leave without proper training or support, maintaining that financial discrepancies resulted from inadequate systems and Electronic Funds Transfer at Point of Sale (EFTPOS) problems rather than performance failures.
He contended that the employer fabricated reasons for dismissal and failed to provide procedural fairness throughout the disciplinary process.
Financial management issues dominate performance concerns
The employment relationship involved a general manager responsible for café operations within an accommodation facility, where the worker progressed from casual general worker in 2015 to full-time general manager by June 2024.
His role encompassed daily café management, staff supervision, and financial reconciliation duties critical to the new business venture operating at a loss.
Significant cash reconciliation discrepancies emerged during 2024, with $30,201 unexplained and unaccounted for between February and September, plus incomplete reconciliations from October through December.
The director expressed concerns about the general manager's ability to manage finances effectively, viewing the discrepancies as evidence of inadequate capacity rather than dishonesty or theft.
The general manager attributed financial problems to inadequate cash management systems, faulty EFTPOS equipment causing incorrect cash sale recordings, and a lack of training in monthly reconciliation procedures.
He maintained that operational challenges, including delayed creditor payments, forced him to use personal credit cards and allowed staff to pay suppliers with cash, contributing to documentation gaps and accounting irregularities.
Unauthorised premises access creates lease complications
The general manager changed locks on adjacent premises known as Lot 24 in December 2024, installing electronic swipe card access systems to secure the space the café was already using.
He believed he was acting under management instructions after being informed by the director that lease agreements had been signed for the area, though formal lease execution had not yet occurred.
The premises owners withdrew from lease negotiations after discovering the unauthorized lock changes, preventing the accommodation company from securing additional space for café operations.
Email evidence revealed that owners had previously objected to the café's use of the area and explicitly requested removal of all items, contradicting the general manager's claims about accepted common area usage.
The Commission found the general manager acted precipitously without proper authorization, despite potential benefits to the business. While acknowledging good intentions, the FWC determined that he should have proceeded more carefully, given known owner objections and uncertain lease status, treating this as conduct-related performance failure rather than misconduct.
Procedural fairness standards largely satisfied
The employer initiated formal disciplinary procedures in January 2025 by inviting the general manager to a meeting about performance concerns, providing written notification of specific allegations, including cash reconciliation issues and unauthorised premises access.
The meeting was recorded and transcribed, with the worker confirming the general accuracy of discussions despite some automatic transcription errors.
Following the initial meeting, management provided additional opportunities for the general manager to explain discrepancies and account for missing funds through follow-up correspondence.
The employer summarised the worker's previous responses and requested further information with clear deadlines, while maintaining warnings about potential disciplinary consequences, including termination.
The Commission found that adequate procedural fairness was provided through multiple notification opportunities and chances to respond to allegations. While the general manager claimed surprise at dismissal threats, documentary evidence clearly indicated potential employment termination throughout the process, undermining claims of inadequate warning about job security risks.
Sick leave timing raises fairness concerns
The general manager commenced sick leave on 22 January 2025 with medical certification covering the period until 5 February, citing personal illness and family care responsibilities.
Management called the worker during sick leave on 5 February to inform him of dismissal, followed by a formal termination notification the following day with payment in lieu of notice.
The director acknowledged making the dismissal decision while the general manager was on sick leave, stating he believed medical certificates were obtained to avoid answering outstanding questions rather than for genuine illness.
This admission raised concerns about whether sick leave usage influenced dismissal timing, contrary to legislative protections against leave-related adverse action.
The Commission recognized this factor weighed toward finding unjust dismissal, particularly given the general manager's lack of opportunity to address suspicions about leave motivations.
However, the FWC concluded that the worker's subsequent response largely replicated previous explanations, suggesting additional discussion opportunities would likely have only delayed rather than prevented termination.
Small business context affects procedural expectations
The employer operated through 20 separate corporate entities managing specific accommodation assets, with a small head company providing finance, sales, and marketing support across the group.
The business structure lacked dedicated HR specialists, relying on general managers and the director for employment management functions.
This organizational limitation affected procedural sophistication but did not significantly weigh for or against unfair dismissal findings.
The Commission acknowledged that resource constraints may have influenced processes while maintaining that basic procedural fairness standards were still achieved through written notifications and response opportunities.
The general manager raised additional grievances about workplace bullying and harassment by senior management, plus complaints about inadequate action on misconduct allegations he had made against other staff.
However, the FWC found these historical issues did not materially affect the validity of performance-based dismissal reasons or create relevant disparities in treatment warranting intervention.
Valid reasons outweigh procedural concerns
The Commission determined that cash reconciliation failures and unauthorised premises access, when considered together, provided valid reasons for dismissal based on capacity and conduct, respectively.
While individual issues might not have justified termination alone, their combined impact demonstrated performance inadequacies warranting employment termination.
The FWC found the employer's concerns about financial management capabilities were well-founded, given unexplained discrepancies and the general manager's apparent lack of concern about accounting imbalances.
The premises access incident, while well-intentioned, showed poor judgment that ultimately harmed business interests through failed lease negotiations.
Despite acknowledging concerns about dismissal timing during sick leave, the Commission concluded that valid performance and conduct reasons outweighed procedural deficiencies.
The decision emphasised that employers can dismiss employees while on leave, provided the decision is not because of leave-taking, finding insufficient evidence that leave usage was the primary dismissal motivation.
