Audit reveals significant financial discrepancies, including unauthorised credit card purchases and overpayments to staff
The Fair Work Commission (FWC) recently dealt with an unfair dismissal application from an operations manager who argued she was summarily dismissed for alleged serious misconduct involving unauthorised payments and financial mismanagement.
The worker had been employed for eight years when she was dismissed in February 2025 after an audit of the company's financial records.
The employer contended the worker had paid herself unauthorised bonuses, misused a company credit card, and made errors that resulted in significant overpayments to another employee.
The worker disputed the allegations, arguing that payments were authorised and that her dismissal was unfair.
She contended the real reason for dismissal was to avoid redundancy entitlements following a business reorganisation.
Eight years of employment ended abruptly
The worker started employment on 6 February 2017 as an operations manager responsible for office management, administration, property management, trust accounts, bookkeeping, payroll, and managing staff.
On 7 February 2025, the worker's employment was dismissed for serious misconduct. On 6 February 2025, the worker experienced anxiety about her job and left work at around 2:00 pm to see her doctor.
The following morning when she tried to send her medical certificate covering her absence for 7 to 21 February 2025, she discovered her email access had been blocked. She sent the certificate by text to the director.
On 11 February 2025, the worker saw an email from 10 February sent around 8:00pm informing her of her dismissal.
The termination letter stated the reasons as: processing an unauthorised payment of $14,446.04 to her own bank account on 10 July 2024, paying herself an unauthorised phone allowance of $540 in January 2025, paying herself unauthorised overtime in January 2025, taking annual leave in January 2025 without deducting the period from her leave balance, and multiple instances of misuse of company finances for personal expenses discovered in a financial audit.
The worker denied the allegations and said the bonus was authorised in September 2022, but email evidence could not be produced.
She said the phone allowance was approved on 6 December 2024 at $45 per month, so she paid herself for 12 months.
She disputed paying herself overtime, saying her assistant was on leave, so she paid herself eight hours "extra" as was her common practice.
The worker said she did not misuse company finances for personal expenses.
Audit revealed significant overpayments
The director submitted that the business was in financial difficulty, so he engaged an accounting firm to conduct an audit of the company's financial records. A report of 13 March 2025 analysed commissions paid to the lead sales agent against her contracted entitlement.
The review found errors, including administrative staff not accounted for in calculations, individual commissions paid not in accordance with those recorded as income, payments made in the wrong months, commission paid on properties in consecutive months and in some cases twice, and commission recorded as revenue not included in monthly calculations.
These bookkeeping errors resulted in the lead agent being overpaid $133,848.21 gross.
The director gave evidence that he was concerned from 31 January 2025 over financial transactions and the business's viability, and could not ascertain why the business was unprofitable.
He said he planned to meet with the worker on 7 February, but after receiving her medical certificate, he emailed the termination letter.
Following the dismissal, he discovered the worker paid herself an unauthorised bonus of $9,615.00 in 2022 and $11,971.93 in 2023.
He also discovered the worker sent him financial records, but blind copied her private email address and the lead agent's private email address.
The director gave evidence that the worker was dismissed for serious misconduct.
He said as business operations manager, he entrusted the worker with all financial matters, including paying herself and staff.
The director disputed that any bonus was payable as the worker contended, that payment of $540 for a mobile phone was not authorized, and a review of credit card usage found expenses for lunches and dinners totaling $3,677.08.
Small Business Fair Dismissal Code applied
The FWC noted it was not contested that the business employed fewer than 15 employees. The FWC examined whether the dismissal was consistent with the Small Business Fair Dismissal Code.
The FWC stated that there are two steps to determine whether the Code is satisfied:
"First, there needs to be a consideration whether, at the time of dismissal, the employer held the 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 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 their belief that it held."
The FWC also noted: "Acting reasonably does not require a single course of action. Different employers may approach the matter differently and form different conclusions, perhaps giving more benefit of any doubt, but still be acting reasonably."
"The legislation requires a consideration of whether the particular employer, in determining its course of action in relation to the employee at the time of dismissal, carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. Those circumstances include the experience and resources of the small business employer concerned," it added.
The Code defines serious misconduct to include "theft, fraud, violence and serious breaches of occupational health and safety procedures". The FWC noted that with the use of the word "includes", serious misconduct is not limited to those examples listed in the definition.
The FWC also referred to regulations providing that serious misconduct includes wilful or deliberate behaviour inconsistent with continuation of the employment contract, and conduct that causes serious risk to the reputation, viability or profitability of the employer's business.
Evidence and credibility assessed
The FWC examined the evidence given by both parties. The Commissioner stated: "The critical evidence was the witness evidence of [the worker] and [the director]." The worker when giving evidence on credit card use admitted to having been spoken to about control and accountability of its use.
The Commissioner noted: "But despite the card being in her name for business expenses only she freely permitted the Lead Agent to use the card for lunches and dinners without any oversight. She also admitted to taking the team (all women) to a nail salon as a team building exercise on the company's expense without authority."
The Commissioner stated: "Her evidence on the use of the credit card was cavalier and lacked the understanding of the seriousness of permitting use of the business credit card without authority from [the director]. The credit card statement was compelling evidence of its abuse."
The Commissioner stated: "Given the failure of [the worker] to discredit or challenge this evidence together with her inability to logically explain the financials, I prefer the evidence of the independent report prepared by the Field Group."
The Commissioner noted: "Concerningly as the person responsible for payroll, [the worker] was unable to explain the discrepancies in her payslips regarding her ordinary hours and overtime in the context of her employment agreement."
The worker explained she included the lead agent in emails via blind copy containing sensitive commercial material because she wanted her approval.
The Commissioner stated: "This illogical explanation failed to provide a cogent reason for conduct that explicitly breached her employment agreement."
Reasonable grounds for dismissal found
The FWC found the evidence established that the director believed the worker's conduct was sufficiently serious.
The Commissioner stated: "On receipt of the information from the audit, he attempted to act promptly by meeting with [the worker], but as she provided a medical certificate covering an absence of two weeks, he determined he had to act to dismiss her."
The worker was described as a key staff member who held a position of trust and had significant operational responsibility for financial records, trust fund, payroll and management of staff.
The Commissioner found: "Use of the credit card inappropriately was established; it was in [the worker's] name, and she freely let the Lead Agent use the card and no supportive documents or authority for its use could be established. [The worker's] disclosure of company sensitive financial records was disclosed, and this is a serious breach of her employment agreement."
The Commissioner stated: "The credibility of the witnesses has not been of assistance to the Commission. It has not been established whether the bonus payments were authorised."
The FWC stated: "[The worker's] conduct falls within the conduct characterised as serious misconduct, specifically if not theft, at a minimum a breach of an essential term her obligations under her employment contract and/ or incompetence or negligence at its worst."
The Commissioner found the overpayment to the lead agent based on calculations conducted by the accountant showed some underpayments but largely overpayments, with the total sum of overpayment being significant.
Dismissal consistent with Code
The FWC ruled that a worker's dismissal was not unfair under the Small Business Fair Dismissal Code.
The employer, a small business, conducted a reasonable investigation by hiring an independent accountant to audit financial records.
The audit revealed the worker had disclosed confidential information, paid herself unauthorised amounts, made unauthorised credit card purchases, and caused overpayment of commissions.
The Commissioner found the employer had reasonable grounds to believe this misconduct justified immediate dismissal, which is the standard required by the Code—not that the employer's view be proven absolutely correct.
Since the dismissal was consistent with the Code, the unfair dismissal application was dismissed.
