A Full Bench of the Fair Work Commission (FWC) has upheld Deputy President Alan Colman’s decision that reinstatement was not the appropriate remedy for a former Esso Australia employee found to have abused and harassed other workers during the long-running Longford gas plant dispute.

The power and control technician was found to have been unfairly dismissed in an initial Full Bench decision that supported the Deputy President’s finding that the use of offensive language towards other workers is a valid reason for dismissal, however it found the dismissal to be harsh and determined that other factors warranted a disciplinary response short of dismissal.

The Full Bench granted the worker leave to appeal the remedy decision on public interest grounds, stating the appeal raised “a significant issue of general application” for determining unfair dismissal remedies where an applicant has failed to show remorse for any wrongdoing despite a valid reason for dismissal being found.

Background: Did the behaviour warrant dismissal?

Esso dismissed the worker, also an ETU site delegate, from its Longford gas plant on 30 October 2017 for his conduct and involvement during an industrial dispute regarding the changeover of contractors performing maintenance work at the plant and offshore gas platforms. After an investigation, Esso found the worker’s behaviour and use of offensive language, such as “f—ing scab,” towards a contractor employee breached the company’s Harassment in the Workplace Policy.

In his original decision, Deputy President Alan Colman found the worker’s dismissal was not harsh or unfair, that to “call a person a ‘f—ing scab’ in the circumstances of his findings is a very serious matter” and a valid reason for dismissal.  Further the Deputy President found that the worker had engaged in other conduct, constituting deliberate exclusion of the contractor employee from a lunch room.

A Full Bench of the FWC overturned the Deputy President’s decision despite accepting the offensive language used by the worker constituted a valid reason for dismissal. The Full Bench found that the allegation regarding deliberate exclusionary behaviour was not substantiated, and said that other factors should have been considered in relation to the worker’s conduct under s 387(h) of the Fair Work Act, and that these factors warranted a disciplinary response short of dismissal.

The broader factors that warranted a disciplinary response short of dismissal in this case included the HR manager’s view that a single use of the word ‘scab’ would not normally warrant dismissal, the protracted industrial dispute and hostility of the workplace, the fact that two other workers who had used similar language had received lesser disciplinary penalties and the significant adverse effects of the dismissal on the worker and his family.

The Full Bench remitted the decision to Deputy President Colman to determine if a remedy should be granted and if so, what the remedy should be.

Reinstatement not an appropriate remedy: Deputy President

In determining whether reinstatement was the appropriate remedy in this case, Deputy President Colman gave consideration to the worker’s failure to acknowledge his behaviour and show remorse for any wrongdoing, and Esso’s contention that the worker was dishonest during the investigation.

Deputy President Colman heard the worker repeatedly denied any wrongdoing throughout the investigation and refused to show remorse despite being given ample opportunity. Esso also submitted that the employee’s proven dishonesty during the investigation would warrant a further investigation if the employee was to be reinstated.

The employee’s failure to recognise the seriousness of the misconduct led the Deputy President to conclude there was a reasonable risk that the behaviour would be repeated. Deputy President Colman also found there was a sound and rational basis for Esso’s loss of trust and confidence in the former employee, based on his continued denial of any wrongdoing and failure to acknowledge the seriousness of the misconduct.

The question for Deputy President Colman was the appropriate remedy for the dismissal. In the context of all the circumstances, he found it difficult to see how reinstatement was appropriate in this case where the worker “does not recognise any wrongdoing or that the conduct that was found to have been committed (but may still deny) was wrong.”

The worker was instead awarded $68,443 – the maximum amount of compensation permitted under the Fair Work Act.

Permission to appeal in public interest: Full Bench

The worker appealed the remedy decision on four grounds contending the Deputy President erred in not ordering reinstatement.  Prior to considering the worker’s grounds of appeal, the Full Bench first considered the question of permission to appeal.

The Full Bench considered that the grant of permission to appeal was in the public interest for two reasons. The first was that the appeal raised a significant issue of general application concerning the relevance to the evaluation of whether reinstatement is an appropriate remedy, of a failure of an applicant to apologise or acknowledge wrongdoing where there has been found to be a valid reason for the dismissal based on the applicant’s misconduct.

The second reason for granting permission to appeal was that the Full Bench held it was in the public interest for the question of whether the Deputy President had determined the question of remedy consistent with the basis upon which that question had been remitted to him by the Full Bench to be resolved, in the interests of the proper administration of justice.

Before dealing with the grounds of appeal, the Full Bench made some opening remarks about the nature of the power conferred on the Deputy President by s 390 of the Fair Work Act with regard to making an order on remedy for unfair dismissal.

The Full Bench held that notwithstanding there may be a finding that a dismissal was unfair, that did not automatically mean that reinstatement was the appropriate remedy.  The Full Bench stated that the power conferred on the Deputy President by s 390 of the Fair Work Act with respect to making a decision on remedy for unfair dismissal is a broad and largely unconstrained discretionary power.

Further, the question of appropriateness of remedy is to be determined by the relevant Commission member – unlike s 387 of the Fair Work Act, there are no specific matters that must be taken into account by a Commission member in evaluating what the appropriate remedy for unfair dismissal is in a particular case. This means the exercise can involve consideration of many different matters (including the applicant’s behaviour at the time of the dismissal incident and subsequently) and in making the decision as to the appropriate remedy, the Commission member has considerable latitude.

The Full Bench held that because it had not given any specific directions to the Deputy President as to how he was to deal with the matter of remedy that was remitted to him, he had the same amount of latitude in that decision as any other Commission member would have, had they made the decision on remedy at the conclusion of the initial hearing.

All grounds of appeal rejected

Turning to the grounds of appeal, the worker’s main ground of appeal was that the Deputy President was wrong in giving determinative weight to the issue of him failing to apologise, or acknowledge his wrongdoing, in making his decision that reinstatement was not appropriate.

The Full Bench rejected this ground, finding that the worker’s lack of acknowledgment of wrongdoing/lack of contrition was a material consideration to be taken into account by the Deputy President and it was appropriate that he treated this as a matter to which he gave significant weight in making his decision on remedy.

The Full Bench stated that even after the matter was remitted to Deputy President Colman to determine the remedy, the worker still failed to demonstrate that he understood the conduct found to be a valid reason for his dismissal was “inappropriate, unacceptable and not to be repeated.”  While an apology from the worker, a statement via his counsel or a commitment from him to not engage in such conduct again would have shown to the Deputy President that it was possible that confidence in the working relationship could be re-established, the worker chose not to take any of those actions.

Accordingly, this led the Deputy President to find that there was a risk his behaviour would be repeated, and the Full Bench held that this (amongst other matters) was sufficient for the Deputy President to give that matter significant weight in deciding that it would be unlikely for an effective working relationship to be re-established if reinstatement were ordered, meaning that reinstatement was not appropriate.

The worker contended that because the previous Full Bench found the conduct warranted a disciplinary response short of dismissal, reinstatement was appropriate.

Deputy President Colman agreed with the worker that his conduct, while being a valid reason for dismissal, did not mean reinstatement was not an appropriate remedy. However, he also found that the worker’s attitude regarding his conduct, including his dishonest responses during Esso’s investigation, were relevant matters to be taken into account in determining an appropriate remedy, and taking all of those matters into account, decided that reinstatement was not the appropriate remedy.

This view was supported by the Full Bench who found that there was a sound and rational basis for Esso’s loss of trust and confidence in the worker which meant it would not be possible to restore a productive employment relationship.

Several of the worker’s grounds of appeal criticised the weight the Deputy President assigned to various matters in determining the remedy. The Full Bench found Deputy President Colman had given due consideration to all matters in determining reinstatement was not appropriate. Given the discretionary nature of the decision, he was also entitled to give more weight to some matters than others, and to make a decision having weighed up all of those matters.

Having rejected all grounds, the Full Bench dismissed the appeal.

Implications for employers

This decision arises out of the long-running Esso Longford industrial dispute and delivers a positive outcome both for Esso and for employers in general.

In assessing whether trust and confidence in the employment relationship could be restored (which goes to the heart of whether reinstatement was the appropriate remedy), the Fair Work Commission appropriately considered the attitude taken by worker, in particular his failure to make any apology, or acknowledge any wrongdoing in circumstances where his conduct had been found to be a valid reason for his dismissal (notwithstanding the dismissal was found to be harsh for other reasons).

This case is a firm reminder for employers that in order to argue against reinstatement as the remedy in an unfair dismissal case, there needs to be more than friction or doubt about the ongoing employment relationship.

It is not enough that the business may suffer embarrassment or difficulties where an employee who was dismissed returns to the workplace. Esso was successful in arguing that the loss of trust and confidence in the worker, as demonstrated by his continued failure to apologise or acknowledge his wrongdoing and breach of company policies, was significant enough to demonstrate that a future productive working relationship was not viable and could not be re-established if reinstatement was ordered.

Unfair dismissal proceedings can be complex and costly for employers, especially given the growing trend in recent years for members of the Fair Work Commission to seek reasons to reinstate and/or compensate applicants who have clearly been found to have acted inappropriately in the workplace.

This has been an area of ongoing advocacy for AMMA and one of the key priorities for the next term of government. In principle, it is AMMA’s position that where misconduct as a valid reason for dismissal has been found, an employer’s decision to terminate an employee should be supported.

For more information on this case or advice on unfair dismissal proceedings or any other workplace relations matter, contact your local AMMA office.