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Breakdown of trust justifies dismissal, court rules

EMPLOYERS may have reasonable grounds to summarily dismiss workers found to be exploiting company benefits for personal gain due to a breakdown in employer-employee trust, a Victorian County Court has ruled.

The decision followed a dispute between Melbourne Stadiums Limited and a former executive who, in the first instance, was awarded compensation after a single judge of the Victorian County Court found he had been summarily dismissed without justification.

The organisation had terminated the executive’s employment contract after he was found to have bartered high-end access passes in exchange for goods and services for personal use, and used his position to compel an employee to attain match tickets for personal use.

The executive was also said to have made ‘disparaging, disrespectful and derogatory comments’ about the Stadium’s chief executive to an employee of the company’s primary sponsor.

Further, the executive was found to have contravened a direction from the chief executive not to involve himself with consortium bidding for the construction of a new stadium in Perth. Specifically, the executive gave an unauthorised tour of the company stadium to a competing bidder, knowing the purpose was to aid in their bid.

Following the outcome, Melbourne Stadiums appealed the decision of Judge Graham Andersen, taking the matter to a five-member Full Bench of the Victorian County Court, which overturned the ruling.

Specifically, the Bench said Judge Andersen had erred by ‘paying no attention to the destruction of the relationship of trust essential to the employment relationship’.

“The problem with the reasoning which founds the conclusion is that it focuses not on what [the employee] actually did, nor on the effect of what he did on the employment relationship with [the employer], but on things [the employee] perhaps could have done better,” the Full Bench said.

“Apart from the breach of the chief executive’s direction, each of the other classes of misconduct was deliberate, involved elements of dishonesty, and of its very nature struck at the heart of the trust relationship between [the employee and employer].

“Each of those three, individually, justified summary dismissal. Taken together, with the breach of the chief executive’s direction, no other conclusion was reasonably open other than that [the employer] had made good its case that [the employee’s] conduct justified summary dismissal.”

The Full Bench ordered in favour of Melbourne Stadium Limited.

Click here to read the full decision.

Implications for Employers

This case is of interest to resource industry employers as it highlights the importance of a trusting relationship between employer and employee, and the impact misconduct may have on that relationship.

Specifically, the misuse of company property and benefits for personal gain of employees may constitutes a breakdown in the relationship of trust, but a clear and concise company policy will ensure employees are aware of behaviours constituting misconduct.

AREEA members are encouraged to contact our workplace relations experts for advice, guidance and information before acting to terminate an employment contract to ensure the risk of disputation can be minimised. Contact your local AREEA office for more information.

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