If an investigation uncovers further evidence of misconduct after you’ve already dismissed an employee, can you use it to strengthen your case?

A recent decision from the Fair Work Commission (FWC) has confirmed that employers are able to rely on the “full extent” of misconduct, including information discovered after dismissing an employee, to justify a valid reason for dismissal when faced with an unfair dismissal claim.

Facts discovered after dismissal

The case involved a senior asset manager who was dismissed after their employer discovered an email chain in which sensitive information was shared with a client.

In the email, the asset manager advised a client that contractor rates were significantly above the threshold contained in the Services Agreement, requiring investigation. Asserting that in the absence of consultation with their superiors, the email embarrassed the company and breached contractual obligations, the company stood the employee down pending an investigation, ultimately moving to terminate the employment relationship. The employee then filed an unfair dismissal application with the FWC.

During the unfair dismissal proceeding, the company presented evidence discovered after the dismissal, including a handwritten note strategising to persuade the client to extract the role from the company and install the asset manager as a dedicated liaison between the client and the company. It also presented evidence that the confidential Services Agreement was emailed to the asset manager’s partner, a former employee of the company. 

Contending that the employee had lacked truthfulness in disclosing their relationship, the company said the decision to email a copy of the Services Agreement to a former employee further breached their contractual confidentiality obligations and caused a loss of trust and confidence.

“Dismissals cannot be an ‘act now, defend later’ course of action. Employers must always ensure procedural fairness when moving to terminate an employee.” – Andrew Jewell, principal at Jewell Hancock Employment Lawyers.

Commissioner Platt stated that although it was only after dismissal that the company became aware of the extent of the misconduct, the company could rely on the “full extent” of the misconduct as a valid reason for dismissal. 

Without the additional evidence of misconduct, the FWC may have found this dismissal harsh, unjust and unreasonable, leaving the employer forced to pay compensation to the dismissed employee. However, after the FWC found that a valid reason for terminating the employment existed, supported by the post-dismissal evidence, the employee’s application was unsuccessful.  

Lessons for HR

This case builds on previous decisions by the FWC that allowed information acquired after the dismissal took effect to be considered when determining whether a termination was harsh, unjust or unreasonable, even if the employer was unaware of that information and did not rely on it when the dismissal occurred.

Whether an employer can rely on details acquired after dismissing an employee to justify termination will depend on the circumstances and how the dismissal occurs. For example, failure to make reasonable inquiries that would have exposed existing facts before dismissing an employee might not result in a circumstance where employers can use post-dismissal knowledge as a justification. 

Dismissals cannot be an ‘act now, defend later’ course of action. Employers must always ensure procedural fairness when moving to terminate an employee, including the employee’s right to be notified of alleged misconduct and allowed to respond to any allegations. 

Employers who seek to rely on a reason for dismissal other than the grounds given to the employee, or relied upon at the time, will have to contend with the consequences of not allowing the employee opportunity to respond to the new reason. 

Ultimately, the FWC must determine whether, on the evidence provided, facts existed at the time of termination to justify the dismissal. 

Andrew Jewell is a principal at Jewell Hancock Employment Lawyers.

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