Manager was informed of termination through a coworker’s text, after business owner shared theft allegation
The Fair Work Commission (FWC) examined whether an office manager's dismissal was consistent with the Small Business Fair Dismissal Code after the business owner became aware of stock discrepancies in a sawdust product used for animal bedding.
The business owner conducted a stocktake and interviewed staff members, then obtained written statements from four employees over several days while the manager was overseas on holiday.
The employer issued a letter of demand through a solicitor stating the business had no wish to have any further dealings with the manager and would not agree to continue employment.
The manager denied allegations of theft and provided bank statements showing payments to the employer.
Employer became aware of stock discrepancies
The employer's business involved selling garden and landscape supplies, including a sawdust product used for animal bedding. In mid-May, the business owner claims she became aware of discrepancies in the product stock, which prompted the employer to conduct a stocktake.
After the stocktake, the business owner interviewed staff members and alleges that conversations with employees revealed the manager had been instructing staff to deliver the product to her stables.
The business owner spoke to one employee regarding the sawdust being delivered to the manager's house. That employee had been employed by the employer for less than two months and said she was pulled aside by the business owner and was told that the manager had been terminated for theft.
The employee said she found that hard to believe and was not asked to provide a statement, as the business owner was aware she was a personal friend of the manager.
Manager informed of termination while overseas
The coworker texted the manager, who was overseas at the time, to inform her that her employment had been terminated for theft.
The coworker gave evidence that between eight and twelve bags of the product were delivered to the manager's house while the manager was on holiday, but that the manager intended to pay for that once she returned. The manager paid for the product upon her return.
At the time, the manager was living on a property next door to the workplace with sixteen horse stables rented from the employer.
The manager's evidence was that she had three horses, while the employer argued there were more horses. The employer argued that the manager stocked the product for the purpose of maintaining her horses.
Employer obtained statements from four employees
In the week of the stocktake, the manager was on holiday and would not return for another week. However, the business owner gave evidence that she was "livid" and wanted to act quickly, contacting lawyers and making an appointment for the next available time.
In the five days following the stocktake, the business owner obtained written statements from four employees, with the exception of a second statement provided by one employee dated weeks later.
The statements described employees delivering the product to the manager's residence next door, with one employee stating he always assumed the product had been paid for by doing the transaction herself and not by another staff member.
Another employee was asked whether he ever witnessed the manager falsifying timesheets and responded that he had not seen that, but she would take at least an hour in the morning or afternoon to look after horses.
Employer reviewed accounting records and invoices
The business owner contacted her bookkeeper and asked her to provide records of invoices so she could review the business's product purchases for a certain year. The business owner also reviewed the accounting records and determined that hundreds of bags had been purchased over several years.
A certain number of sales had been recorded in the system, with the manager having recorded a portion of purchases in the point-of-sale system. A further number of bags were sold to members of the public.
According to the employer, this gave a total of hundreds of bags that were unaccounted for. The business owner estimated that this amounted to a specific dollar figure based only on the purchase invoices and recorded computer sales.
Through a solicitor, the employer issued a letter of demand to the manager in a larger amount, stating "despite the losses being in the vicinity of" an even higher figure.
The letter was not in the form of a termination letter but noted that the employer had no wish to have any further dealings with the manager, would not agree to continue to employ her, and she was no longer welcome to reside at the property.
Manager denied allegations and provided bank statements
There was an exchange of letters between the manager and employer's solicitors following the initial letter, in which the manager denied the allegations of theft.
The business owner filed a police report weeks later, though the manager gave evidence that she had not been contacted by police.
The manager admitted to purchasing bags of the product and having them delivered to her stables, and admitted to having the bags delivered and then paying later, including for bags which she had delivered while on holiday.
She denied the allegations of theft and noted that the quantity of bags she purchased varied from order to order.
The manager led evidence, including from two former employees, that there was a practice amongst employees to leave a post-it note on the counter to record what an employee was purchasing, with the employer then paying later on their pay day.
According to the case, this was obviously not an ideal system and was likely to lead to discrepancies, including if the post-it note went missing.
The business owner's evidence was that she did allow staff discounts, but was not aware of the practice of using post-it notes.
FWC finds no reasonable basis for belief
The business owner said that when she interviewed employees, she became increasingly concerned with all the loose processes described, and upon hearing that employees had delivered this product to the stables next door, she formed the view that there was only one explanation—that the manager stole the product.
It was clear from the testimony and the business owner's evidence that she did hold a belief that the manager had stolen from the business at the time of the dismissal.
The employer held a belief that the manager had engaged in conduct sufficiently serious to warrant summary dismissal.
The basis for the business owner's belief that the manager stole the product was circumstantial, noting that the manager trains horses and has a stables next door to the workplace, that the product is used for horse bedding, and that she obtained statements from employees in which they said the manager had bags delivered to her stables.
Together with the discrepancies identified through the invoices and point-of-sale systems, it seemed to the employer that the manager was responsible for the missing product.
FWC finds statements consistent with manager's account
However, as was put to the business owner during the hearing, none of the statements described the manager having the product delivered and not paying for it.
The manager's evidence was that she did ask staff members to deliver the product to her house, and in that regard, the employee statements were consistent with the manager's account.
The employer was aware that the manager did purchase the product for her own use and had recorded purchases in the point-of-sale system.
Where the statements from employees were consistent with the manager having the product delivered to her house and paying for it, as she said was her practice, further evidence was required for the employer to have reasonable grounds to believe that the manager had stolen from the business.
What was required was for the employer to present the allegations to the manager to see if she could explain the discrepancies and to test whether her evidence contradicted that of the other employees.
FWC finds dismissal harsh, unjust, and unreasonable
The FWC was not satisfied that the employer had a reasonable basis for the belief that the manager had committed serious misconduct. Accordingly, the dismissal was not in accordance with the Small Business Fair Dismissal Code.
Given the seriousness of the allegation, the evidence was not sufficient to persuade the FWC that the manager stole the product, noting the manager had provided bank statements with numerous payments made to the employer, which she said were for the product.
The FWC stated that there was no valid reason for dismissal, which weighed in favour of finding that the dismissal was harsh, unjust or unreasonable.
The manager was notified through her coworker that her employment had been terminated for theft, and later received a letter from the employer's solicitor terminating her employment for theft.
The manager was not given an opportunity to respond to the allegations, which weighed in favour of finding that the dismissal was harsh, unjust or unreasonable.
The FWC added that, considering all factors, there was no valid reason for dismissal, and the dismissal was harsh.
The employer advised during the hearing that the business ceased operating due to compulsory land resumption of the business's property, making reinstatement inappropriate.
The FWC ordered the employer to pay compensation gross plus superannuation within a specified timeframe to the manager's nominated bank account.
