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Lessons for employers from Westpac unfair dismissal case - HRM

By Alan J. McDonald

Lessons for employers from Westpac unfair dismissal case - HRM

The recent Westpac v Deng decision acts as a warning to the big banks: follow the rules or risk being called out.

In a hearing late last year, the Fair Work Commission ruled that Westpac banking employee Kefeng Deng should be reinstated to his original position after he was not afforded procedural fairness into allegations against him.

Under section 387(c) of the Fair Work Act 2009 (Cth), the criteria for considering whether a dismissal is harsh, unjust or unreasonable includes whether the employee was given an opportunity to respond to allegations.

In Westpac v Deng, Mr Deng was given only 24 hours to respond to detailed and complex correspondence, a timeframe which Commissioner Riordan ruled “grossly inadequate and procedurally unfair”.

Commissioner Riordan also noted the five-hour investigation without refreshments, in which Deng was shown some 30-40 documents with only two short breaks, resembled a “star chamber”.

Deng had eight “substantiated” allegations brought against him, including mishandling customer information by using his personal email account to send confidential files.

The FWC acknowledged this breach of policy was a valid reason to terminate Deng’s employment and yet allowed him to successfully bring an unfair dismissal claim; ruling that Westpac did not follow process as per the Fair Work Act 2009 (cth).

Right to response

An employee has a right to procedural fairness during an investigation process into allegations raised against them and they have a right to respond.

The employee must be given the substance of the complaint and be provided with all credible, relevant and significant material that needs to be addressed. It is essential the employee be provided with the relevant details of the allegations to allow them to adequately respond before an outcome is determined.

Importantly, the employer must not simply go through the motions of an investigation, with a decision already predetermined.  In Westpac v Deng, Commissioner Riordan endorsed the principle as per Wadey v YWCA Canberra [1996] that “…the opportunity to defend, implies an opportunity that might result in the employer deciding not to terminate the employment if the defence is of substance”.

The Commissioner ruled that Westpac requiring a response within 24 hours is not pragmatic and blatantly unfair; “this denial of natural justice cannot be condoned. As a result, I find the Applicant’s termination to be unreasonable”.

This decision highlights that following due process under the Fair Work Act 2009 (Cth) is critical during disciplinary proceedings.

Reinstatement as a resolution

Reinstatement is considered by the government to be the primary remedy in the circumstances of unfair dismissal. As quoted by Commissioner Riordan, “the Parliament deliberately determined this outcome for a reason, not because it was easy, but because it was fair”.

That being said, reinstatement is rarely the preference of either parties, with many feeling as though an employment relationship is untenable after court proceedings. Accordingly, Westpac made a strong attempt to avoid reinstatement based on a loss of trust and confidence, which Riordan rejected, citing Nguyen v Vietnamese Community… [2014]: “the fact that it may be difficult or embarrassing for an employer to be required to re-employ an employee… [is] not necessarily indicative of a loss of trust and confidence”.

By reinstating  Deng, Commissioner Riordan sends a clear message that a company cannot solve an unfair dismissal claim merely by the payment of money (often referred to as “go-away money”).

Other factors which are to be considered in a situation of reinstatement are:

  • Whether the employer no longer conducts a business into which the employee may be reappointed
  • whether an employee is incapacitated because of illness or injury
  • whether the employee would ‘impose an unreasonable burden on the employer or other employees’

The final decision by Commissioner Riordan to accept the unfair dismissal claim and issue reinstatement could be interpreted as a signal to the banks. Regardless of their size and concentration of power, their internal policies and procedures must comply with an Australian standard of fairness and the Fair Work Act 2009 (Cth). This isn’t merely in the interest of the company or individual, but for the wider Australian public, which holds fairness as a core value.

Reference: ‘Lessons for employers from Westpac unfair dismissal case’, HRM, Monday 7th January, 2019.