March 2015 . . . A recent Employment Court case (Peter Hall v Dionex Pty Limited) saw a former manager receive six months’ pay and $9,000 in compensation after he was dismissed. His employer (Dionex) alleged that he used his work computer to access pornographic material and store questionable photos, and used his company credit card excessively and, in part, to pay for food and alcohol for Thai escorts while overseas.
The employee might have got more money if the Court hadn’t been convinced that his employment would have ended anyway after six months, because of his poor attitude and lack of insight.
The case contains three important lessons for employers.
Only the legal employer can dismiss
The suspension, investigation, and dismissal was carried out by the HR Manager of Dionex’s parent company. In part, this was because the only other two more senior Dionex employees were also being investigated for similar conduct, and both ended up leaving. Dionex had two other directors (both based overseas) but they didn’t have a meaningful involvement in the process. Nor did they formally delegate the parent company’s HR Manager to act on Dionex’s behalf.
The Court said that it wouldn’t have mattered whether there was a formal delegation or not. The employer/employee relationship is personal, and an employer cannot delegate the ultimate decision to dismiss to anybody else outside the company. The decision to fire should have been made by Dionex, and not by an employee of the parent company.
This is a tricky point which can easily catch out businesses that employ staff through different companies but effectively operate as a single group.
In this situation:
One or both of the directors of Dionex should have taken the role as ultimate decision maker.
The directors should have formally delegated to the HR Manager the job of investigating and making recommendations (but not making the actual decision).
The employee then should have had an opportunity to make submissions to both the HR Manager and the directors (employees must always be given access to both the investigator and then the ultimate decision maker before the decision is made).
Avoid knee-jerk suspensions
The Court said Dionex should not have suspended Hall during the investigation. His contract did not contain a suspension clause and, whilst that wasn’t fatal, the situation could have been managed in other ways (the employee worked from home, so wasn’t going to be in the office).
A suspension is a drastic move and employers shouldn’t automatically jump to this step, even where they are investigating reasonably serious allegations. Remember the employee is innocent until proven otherwise. Ask yourself if suspension is actually necessary in the circumstances – you can’t use it to punish, or just to get the employee out of the building because you think they’ve done something wrong. That said, if it is genuinely too risky for the employee to keep coming to work while the allegation is unresolved, then suspension is an option.
If at all possible you also need to give the employee a chance to understand why you think suspension is needed and listen to their comments, before you make the call. Also, don’t have a suspension letter ready to hand over, because it makes it look like you’ve made up your mind. Send the letter along later.
Lastly Dionex was criticised for rushing - in particular, it seemed that it wanted to make a decision before the HR Manager went on parental leave.
“Immediate” dismissal for serious misconduct is a misnomer. Unless the situation is very straightforward (and they usually aren’t), these investigations normally take a few weeks, and in some cases can go on longer. Rushing through the process simply gives the impression that the employer’s mind has been made up and it is looking to execute its decision as quickly as possible. That will be fatal if the matter later goes to Court.