Termination toothache: Suspension and summary dismissal for not following a reasonable direction

What you need to know

• An employer has a common law right to issue a lawful and reasonable direction requiring an employee not to perform work (i.e. a right to "suspend") for a specified period pending a disciplinary investigation.
• Whether a direction not to attend work will be reasonable depends on the circumstances of the particular case, but may be justified if the employer has concerns that allowing the employee to remain in the workplace during the investigation may risk the health and safety of other employees or prejudice the investigation.
• The right to direct an employee not to attend work extends beyond circumstances where a formal disciplinary investigation has commenced.
• A direction to attend a disciplinary meeting may not be reasonable if the purpose of the meeting is not adequately explained or if the employee does not have sufficient information to provide responses in the meeting.
• An employer may have a right to terminate an employee's employment where the employee refuses to follow a lawful and reasonable direction or otherwise demonstrates that they no longer intend to be bound by their contract of employment. 

What you need to do

• Ensure that directions issued to employees are lawful and reasonable in the circumstances.
• Be clear in communications with employees about disciplinary matters.
• Be cautious when using precedent documents, such as allegation or suspension letters. Documents should be tailored to  the particular circumstances.

The Federal Court has found that an employer did not contravene the general protections provisions of the Fair Work Act 2009 and did not breach an employee's contract of employment when it summarily terminated his employment for refusing to attend a meeting to discuss allegations about his conduct and for attempting to redirect the business's mail whilst he was stood down from his employment. The Court found these actions by the employee repudiated the employment contract, giving the employer the right to dismiss for serious misconduct.

Teething problems

In 2016, the employer acquired the employee's existing dental practice and employed the employee as the Principal Dentist in its new clinic.

Following a number of complaints from other employees about his "aggressive" emails and "abrasive" behaviour, the employer suspended the employee on full pay and directed him to attend a meeting to discuss allegations about his conduct.  The employee refused to meet with the employer and there followed a series of aggressive exchanges between the employee's solicitor and the employer.

In the meantime, the employer discovered that the employee had attempted to redirect all of the clinic's mail to an alternative address.

Ultimately, given the employee's continued refusal to attend a meeting and the revelation about his attempt to redirect the clinic's mail, the employer sent a letter to the employee asking him to show cause as to why his employment should not be terminated.  The employee then obtained an interim injunction from the Federal Court restraining the employer from terminating his employment.

In the course of these proceedings the injunction was discharged and the employer terminated the employee's employment summarily for serious misconduct. The employee then claimed that the employer had breached the general protections provisions of the FW Act  and his contract of employment.

The general protections claim

The employee claimed that the employer had taken adverse action against him when it issued him with the show cause letter, threatened to terminate his employment and ultimately when it terminated his employment, because the employee had exercised his workplace right to complain about the letter suspending him.

However, the Court was satisfied that the action was not taken for a prohibited reason, finding the employer and its managers were motivated only by a desire to fix what they perceived to be a serious problem in the Brisbane clinic and they only decided to terminate the employee's employment when the employment relationship broke down irretrievably.

The breach of contract claim

The employee argued that the employer had breached his contract of employment by:

• suspending his employment with pay 
• issuing him with a show cause letter; and
• summarily terminating his employment.

The claims were based on both express and implied terms. The Court found it unnecessary to determine whether there was an implied term to afford procedural fairness or good faith, due to the express terms of the employment contract.

The breach of contract claims were not upheld. (A breach of contract claim unrelated to the employment succeeded.)

Employer had a right to suspend the employee

The employee argued that the employer had breached his contract of employment by suspending him.

The Court found:

• at common law an employer has a right to temporarily suspend an employee on full pay for a proper purpose pending an investigation
• a suspension can be no longer than is necessary to undertake and conclude the relevant enquiry or investigation; and
• the right to suspend an employee may be exercised even when no formal disciplinary investigation has commenced, but in circumstances where the employer is seeking reasonably to determine issues or find facts relevant to allegations or suspicions of employee misconduct.

In this case Justice Lee accepted that the employer had formed the view that the employee would not be able to continue to work harmoniously with the other employees after being put on notice of their complaints.

His Honour held that the employer's direction to suspend the employee's employment on full pay was reasonable in circumstances where "the suspension was a step taken by [the employer] in furtherance of its duties to enquire into or investigate allegations of inappropriate behaviour when such behaviour could constitute a risk to the safety, health and welfare of its staff and/or its duty to provide a safe place of work for its staff."

Direction to attend meeting was lawful and reasonable

The Court also considered whether the employer's direction that the employee attend a response meeting was a lawful and reasonable direction. The employee's contract of employment contained an express provision requiring him to comply with all reasonable directions of the employer.

The Court held that the direction in the initial suspension letter for the employee to attend a response meeting was not reasonable because the letter suggested that at the meeting the employee would be required to respond to allegations as part of a formal disciplinary investigation, after which his employment may be terminated, and the employee had not yet been provided with sufficient information about the allegations against him.

However, after receiving correspondence from the employee's solicitor, the employer had clarified that the matter was at a preliminary stage and the purpose of the meeting was for the employee to provide a preliminary response to the complaints against him after which the employer would decide how to progress the matter.  In light of this clarification, Justice Lee held that the employer's subsequent direction that the employee attend a meeting was reasonable. The employee had been provided with sufficient information as to the purpose of the meeting and what was proposed to be discussed in order to participate.

The employee failed to comply with this direction and did not attend the meeting.

Summary dismissal was lawful

The Court found that the employee's refusal to follow a lawful and reasonable direction to attend a meeting with management and his conduct in attempting to redirect the clinic's mail each amounted to a breach of his duty of fidelity as an employee.

Justice Lee accepted that the refusal amounted to a wilful breach of his duties of a character which showed (in effect) that he was repudiating the contract, or one of its essential conditions, being the duty to obey the reasonable directions of his employer, and gave the employer a right to terminate for serious misconduct.

Making the case: Insights from Geoff Giudice

This case deals, among other things, with employment law principles relating to suspension of employment, investigative/disciplinary interviews and summary dismissal for serious misconduct. The employee adopted a relatively high-risk strategy, refusing to engage with the investigation and even obtaining an injunction restraining the employer from terminating the employment. Despite this, the Court ultimately upheld the termination because the employer had acted reasonably and solely for proper business reasons, including safety. 

Authors: Trent Sebbens, Partner; Talia Firth, Senior Associate; Ben Lyttle, Graduate.