The Fair Work Commission has recently ordered an employer to pay an unfairly dismissed employee the maximum of six months compensation because of how the dismissal was carried out. This recent case in the baking industry highlights the care that must be taken when terminating employees for sexual harassment or other misconduct.

A Sydney factory manufacturing desserts employed a baker in late August 2000. He was summarily dismissed in April of 2023 by the bakery on the basis of serious misconduct. It was alleged that the employee made inappropriate comments about a co-worker in the dinner room of the facility. The comments were made in Vietnamese to a co-worker, which were then overheard by third fellow worker who could understand Vietnamese. That employee made a formal complaint which then led to the employee’s dismissal.

The essential facts are that the employee was provided with a letter of termination which stated that during the dinner break the employee had been overheard talking about another within the room and that was against company policy. The comments that the employee made were about the person’s physical appearance and the comments were made in a demeaning way, and these comments could not be tolerated by the bakery. The employee making the complaint said she did not feel safe working in the same section as the terminated employee.

The employee was terminated on the basis of serious misconduct warranting summary dismissal. Strangely, the letter also included a final written warning, which the Commission described as an unorthodox termination letter.

Management met with the employee who admitted using the words ‘big breasts, big bum, and big hips’. However, in the hearing before the Commission, the employee denied ever saying these words. The Commission put it down to a language misunderstanding between management and the employee. In circumstances where the employee had not been offered a support person to be present at the meeting, the Commission said it would not be fair to accept the terminated employee made these admissions of wrongdoing.

After hearing the evidence, the Commission could not be satisfied that the terminated employee had made the inappropriate comments about a co-worker in the dinner room. The two men accused were adamant before the Commission that they did not say the alleged words, whereas the complaining employee did not attend the Commission to give evidence. The terminated employee had been a long-term employee with an unblemished disciplinary record.

The Commission, therefore, found that the alleged serious misconduct had not been established on the balance of probabilities and found that there was not a valid reason for the dismissal.

One of the criteria for finding whether a dismissal is unfair is whether the employee was offered an opportunity to have a support person. The Commission in this case found that the bakery unreasonably refused to allow the employee to have a support person as he was not given any advance notice of the disciplinary meeting and was not told he could bring a support person. The lack of support person and an interpreter had very practical consequences given the dispute about whether the employee had admitted to using the words.

The Commission turned its mind to the financial loss suffered by the terminated employee and determined that the payment of compensation was appropriate. The Commission took into account the employee’s clearly long-term employment and considered that his length of service may have supported increasing the amount of compensation ordered. The Commission also considered that it seemed likely, given his 23 years of service, that the terminated employee would have continued working for the bakery until his retirement, as he clearly liked his job and would have remained in employment, and he would have been unlikely to have sought a career change late in life. A further 10 years of service was a reasonable estimate of when he may have retired.

The Commission then addressed whether the employee had sought to mitigate his loss (i.e., looked for another job) since his dismissal but was not satisfied he took any meaningful steps to find other work. Because of the failure to provide evidence about job seeking and any medical evidence about mental health challenges he faced to inhibit seeking other work, the Commission considered that a 30 per cent reduction in the total figure was appropriate.

Interestingly, the Commission also took into account that the bakery was trying to do the right thing by treating the allegation seriously and attempting to protect the complaining worker. The Commission seriously considered making a further reduction in compensation, but given that the employer had lost his long-term job in certain embarrassing circumstances and the termination drastically changed his life, the Commission did not provide for any further deduction.

Lessons for employers

While matters may appear to be very serious, including regarding matters of sexual harassment and misconduct, employers need to ensure that the process of termination is fair, consistent, and reasonable, which also means taking into account an employee’s length of service. So slow down, take a breath, seek professional advice, and plan out the steps carefully before making a decision that could cost you thousands of dollars.