Rudolf Kustic v ACT Government as represented by the Justice and Community Safety Directorate

[2014] FWC 3798

[2014] FWC 3798

The attached document replaces the document previously issued with the above code on 6 June 2014.

The details of the employer’s representative at paragraph [2] of the decision have been changed to reflect that he is ‘of Counsel.’

Sarah Meier

Associate to Commissioner Deegan

Dated 16 June 2014

[2014] FWC 3798

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Rudolf Kustic
v
ACT Government as represented by the Justice and Community Safety Directorate
(U2013/17277)

COMMISSIONER DEEGAN CANBERRA, 6 JUNE 2014

Application for relief from unfair dismissal

[1] On 10 December 2013 Mr Rudolf Kustic (the applicant) under lodged an application pursuant to s.394 of the Fair Work Act 2009 (the Act) alleging that the termination of his employment by the Act Government as represented by the Justice and Community Safety Directorate (the employer) was unfair.

[2] The matter was listed for conciliation on 3 February 2014 which was unsuccessful. Directions were issued for exchange of the relevant documentation and a second conciliation was conducted which was also unsuccessful. The matter was listed for hearing, which took place on 15 April 2014. At the hearing the applicant was represented by Ms Lucy Saunders from the “Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union” known as the Australian Manufacturing Workers’ Union (AMWU) and the employer was represented by Mr Douglas Jarvis of Counsel.

Background

[3] The applicant has been a permanent employee of the employer since 1991. He was first employed in the Parking Operations area of the employer in 2003. In November 2011 he was promoted to the position of Team Leader.

[4] In late November 2012 the applicant was handed a letter advising him that an investigation would be conducted into allegations of misconduct against him and he was removed to another workplace while that investigation took place. The allegations against him were described in that letter as follows:

‘The allegations relate to the falsification of Territory records, by you, to reflect an audit of the coin content of the parking meter churns had been conducted, however it would appear that an audit churn count has not been conducted.’ 1

[5] A churn count audit refers to a requirement for the Parking Operations area to randomly select, on a regular basis, a churn containing coins collected from parking meters and perform a count of those coins. The coins are then returned to the churn and the churn sent to the security firm for counting of the coins in the normal manner. The coin counts are compared to ensure that the coin counting performed by the security firm is accurate. A record of the churn count audits is kept. Any discrepancies between the count conducted in house and that conducted by the security firm would be the subject of an investigation.

[6] The applicant was not contacted further about the investigation until May 2013. On 15 May he received a letter advising him of arrangements for an interview with the investigator Ms Myfanwy Greenwood. Attached to that letter was a policy document PDU-4 Coin Collection Policy.

[7] The applicant was interviewed by the Ms Greenwood on 7 June 2013. He was provided with a transcript of the interview on 19 June 2013. On 1 October 2013 he was stood down on pay and asked to respond to a letter which indicated that consideration was being given to the termination of his employment. On 5 November 2013 the applicant’s union responded, on his behalf, to the letter. On 22 November 2013 the applicant received a letter advising that his employment was terminated with effect from that date.

The Applicant’s evidence

[8] In his statement of evidence 2 the applicant outlined his work history with the employer and then described the manner in which a ‘churn count’ is conducted. It was his evidence that each churn is locked with two padlocks and that only two keys to those padlocks are held, one kept by the security firm and one kept in the safe of the Manager, Parking Operations (MPO). The MPO for the majority of the time the applicant was the Team Leader was Colin Lyons. According to the applicant the responsibility for carrying out the churn count audit rests with the Team Leader and the MPO. The coins are counted and then a Random Churn Count Record completed by the Team Leader and approved by the MPO. At paragraph 17 of his statement the applicant said:

17. I never conducted a churn count correctly. When I started as Team Leader, Colin Lyons and I had a conversation to the following effect:

Me: ‘How do you want to do the churn counts?’

Colin: ‘Just do it like it’s been done in the past, on paper. Just make it look good for the auditors -sometimes randomly put it out by five or ten cents, so the numbers aren’t always spot on”

Me: ‘Alright - you sure?’

Colin: ‘Yep’

[9] The applicant stated that, following this conversation, he merely copied onto the Random Churn Count Record the amount the coin collectors at the security firm had put on the spreadsheet for a particular churn and then sent the form to Colin Lyons for approval.

[10] It was the applicant’s evidence that he was on leave from March until June 2012. When he returned the MPO was on leave. About this time the applicant became concerned about the manner in which churn counts were being conducted. He questioned other employees about the coin counting machine that was stored in a shed and was advised that it was not accurate and that the printer facility did not work. He was advised by the same employees that they had never seen a coin count done in the time they had been employed in the Parking Operations area. The applicant continued to perform the churn counts ‘on paper’ as he believed that they had always been performed that way. He claimed that he remained uncomfortable with the process. He stopped doing churn counts in about August 2012.

[11] According to the applicant’s statement Richard Siddall began acting as MPO in September 2012. The applicant advised him that he had not ‘done a churn count in ages’ as the coin counting machine didn’t work. In late September or early October, when Mr Siddall became aware that the applicant had completed Random Churn Count Records in July and August, he asked the applicant about them and the applicant told him that ‘ I just did them on paper, that’s how I was told to do it’ 3. He also told Mr Siddall that Colin Lyons had told him to do them that way. Mr Siddall had responded that it was ‘fraud’ and that he would report the matter.

[12] The applicant continued to work in Parking Operations until 22 November when he was informed that an investigation would be conducted into the churn counts and that he would be removed from Parking Operations while it was occurring. He then performed other duties (document scanning) at a workplace away from the Parking Operations worksite.

[13] The applicant heard nothing about the investigation until May 2013 when he was advised he would be interviewed. The interview took place on 7 June 2013. He had a support person at the interview which was conducted by Ms Greenwood. He was provided with a transcript of the interview and agreed that it was correct. On 1 October 2013 the applicant received a letter from Brett Phillips, Acting Deputy Director-General Community Safety, attaching the investigation report of Ms Greenwood and advising that he was considering terminating the applicant’s employment for serious misconduct. The applicant was suspended from duty and invited to respond to the proposed termination. A response to Mr Phillips was provided on 5 November by the applicant’s union on his behalf.

[14] The applicant received a letter by courier on 22 November 2013 advising that his employment was terminated with effect from that day and that he would be paid five weeks pay in lieu of notice.

[15] At the hearing the applicant stated that he was seeking reinstatement.

[16] Under cross-examination the applicant was taken to the application 4 he made when he applied for the position of Team Leader. He agreed that he had stated at the time that all the details in that document were true and correct. He conceded that under the heading Undertake Inspections and Monitoring in the Statement in Support of the Selection Criteria, the first dot point read:

• Managing the implementation of and ongoing role of random audits with monies collected, the balance is then checked against the private contractor’s figures to ensure consistency.

[17] The applicant further agreed that he understood the purpose of the random audits was to check the private contractor’s figures to ensure consistency. He did not agree that the Random Churn Count was the only way to check the figures: the ticket machine cash totals were checked as well. The audit tickets produced by the ticket machines were checked against the data base entry.

[18] The applicant conceded that at the time he was promoted to the Team Leader position he had been acting in the job for some time and was aware of the contents of the Policy and Procedure Document known as PDU4 5 which set out the procedures relating to coin collection. He also agreed that he had read the section of the document titled ‘Fraud Control’ and the measures to prevent fraud. When asked if, in those circumstances, he must have known that it was not right for Colin Lyons to tell him that he should not perform the churn counts and should falsify the records to say that he had, the applicant said that he did not ‘feel comfortable with it’. The applicant agreed that when interviewed during the investigation he had told Ms Greenwood that it was ‘probably’ not right for Colin Lyons to have done so.

[19] It was the applicant’s evidence that he knew the proper procedure for carrying out a churn count but that Mr Lyons told him not to do it. He conceded that he had not told anyone else about Mr Lyons’ direction until after he was placed under investigation.

[20] The applicant was questioned about the Random Churn Count Records that were attached to his witness statement. He agreed that the forms indicated that he had carried out a Random Churn Count and that the totals were the same as those reached by the security firm. The forms were signed by both the applicant and Mr Lyons. He conceded that no churn count was conducted prior to completing the forms. It was his evidence that he completed a number of forms in the same manner and put them in Mr Lyons’ in-tray for his approval.

[21] Finally, the applicant stated that he did not go to any managers higher up to report that Mr Lyons had told him not to carry out the churn counts because ‘they wouldn’t have believed (him)’ 6

[22] When re-examined, the applicant stated that the he had read the Policy Document PDU-4 but that it had never been explained to him and that he wasn’t that familiar with it. He also claimed that no-one had ever explained to him the importance of a churn count. When asked why he had not reported Mr Lyons’ directions to more senior managers he reiterated his earlier evidence that he did not think they would believe him and also thought that Mr Lyons would ‘make (his) life hell’.

[23] It was the applicant’s evidence that he ceased filling out the Random Churn Count Reports after he returned from leave in 2012 and another person was acting as MPO because Mr Lyons was on leave. He explained that he had advised Richard Siddall about his failure to conduct the churn counts before the investigation was commenced. He also stated that he ticked every box on check list on the checklist despite not all of them having relevance.

[24] The applicant conceded that at least one of the Reports in evidence was countersigned by someone other than Mr Lyons.

The Employer’s Evidence

[25] Four witnesses were called by the employer.

[26] Mr Colin Lyons did not file a statement of evidence but an earlier statement prepared for Ms Greenwood’s investigation was provided. An email to Mr Lyons sent by the ACT Government Solicitor’s Office and Mr Lyons’ reply email were filed 7. Mr Lyons stated that he had resigned his position with the ACT public service and prior to that had been on leave without pay since 2012. He conceded that disciplinary action had been commenced against him prior to his resignation. He also agreed that he had prepared a statement8 in relation to the investigation into the applicant conducted by Ms Greenwood. Mr Lyons had also been shown a copy of the applicant’s statement in these proceedings.

[27] When asked about paragraph 17 of the applicant statement (at [7] above) Mr Lyons claimed that he didn’t recall the conversation. When pressed the following exchange occurred:

“If it had happened do you think you would have recalled it?---Look, to be honest at the time that I was there at parking operations I was under-qualified, over-stressed, over-worked, no resources. This statement made by Mr Kustic, I don’t recall it, however I don’t deem him to be a dishonest person, I wouldn’t myself say that and I’ve never given a one answer “yep” answer in my life, it would be a long-winded information about why and why not and so forth. So I don’t recall that conversation and I just - I don’t 9.”

[28] Mr Lyons was asked if, when telephoned by a representative of the ACT AGS, he had told her that he had not had the alleged conversation with the applicant. Mr Lyons responded that he wasn’t taking notes and that it was a quick phone call, which came without any warning, but if that is what the solicitor had written, he presumed he had said it. 10

[29] Mr Lyons claimed that he had performed churn counts in accordance with PDU4 when he held the position of Team Leader. He noted that he ‘was never supervised by anyone’. The witness agreed that he had countersigned the Records in evidence after ensuring that the figures matched those sent by the security company.

[30] Under cross-examination Mr Lyons agreed that the Records presented to him had both the figure from the churn count and that from the security company filled in. He also agreed that as MPO his office was upstairs and the depot, where the Team Leader worked, was downstairs. He claimed that the applicant spent a lot of time in the office when he was the Team Leader. According to the witness, the MPO managed 5 team Leaders and about 30 other staff. He agreed that part of his role as MPO was to develop, implement and approve procedures.

[31] According to Mr Lyons there was a special key used for opening the coin churns. He claimed that the key was kept in the Team Leader’s bottom drawer, which could be accessed only by him.

[32] It was Mr Lyons’ evidence that both he and the applicant had difficult jobs. There was no support from the top, everything changed from day to day, and people would not do what they were supposed to. He agreed that he had not trained the applicant and had never given him the Standard Operating Procedures. He also stated that he did not have time to supervise the applicant as he was overworked.

[33] The witness reiterated that he did not recall the conversation with the applicant in which he told the applicant not to perform the churn counts. The exchange continued:

‘So that conversation could have happened given the work load? Sorry, I’ll need an answer, Mr Lyons?---Not in that context, no. If you want me to answer if it was in that context then no.

But in another context?---In another context it could have, yes.

You never saw Mr Kustic do a churn count?---No.

You just assumed that it was done?---Yes.

You signed off on Mr Kustic’s churn counts (indistinct)?---I signed off on consolidating against the computer screen, yes.’ 11

[34] Mr Lyons agreed that he had designed the Churn Count Form in about 2005. It was his evidence that when he was Team Leader he did not perform churn counts by himself. When he was directed to a contrary claim in his statement Mr Lyons claimed that the account in that statement was correct. He agreed that the information contained in the statement was more reliable than his evidence from the witness box, where the two differed. When taken to a claim in his earlier statement that the churn key was kept in the manager’s office, Mr Lyons then claimed that the key was kept in the Team Leader’s office.

[35] According to Mr Lyons, at the time he was interviewed during the investigation into the applicant’s churn count records the document known as PDU-4 was still in draft form and had not been signed off.

[36] When asked who had completed the churn counts when the applicant was on leave for three months in 2012, Mr Lyons claimed that he had. He could not account for the fact that there were no records of those counts.

[37] Mr Richard Siddall lodged a statement of evidence 12. The statement, signed on 12 February 2013 was taken on 19 December 2012 as part of the investigation into the churn count conducted by Ms Greenwood in 2012-2013. In the statement Mr Siddall noted that he commenced as Acting MPO on 10 December 2012. He stated that the applicant, a substantive Team Leader under his management, supervised a team of 8 maintenance employees. It was Mr Siddall’s evidence that, in October 2012 the applicant had advised him that the coin counting machine was faulty, and had not been used for some time and that churn counts had not been carried out for many months. Another employee had informed him that the count machine had not been used for about 12 months. It was also his evidence that the applicant had at different times informed him that he was not responsible for carrying out churn counts, and that he had carried out counts in the presence of his manager.

[38] According to Mr Siddall the policy document PDU-4 was still in draft form when he took over the position of Acting MPO. It was also his evidence that he found a bag full of keys in his office without a key register. He found this bag when looking for the key to the churn padlocks. At the same time he was informed that churn counts had not been done for a long time and that the applicant did not have a key for the churn padlocks. He was then advised by another employee from the Finance Area that records existed which showed that churn counts had been performed on occasions in 2012. He retrieved the records, which showed that counts had been done on 19 January 2012, 2 February 2012, 17 February 2012 and 3 August 2012. As he had received such contradictory information Mr Siddall arranged a meeting with the applicant. At the meeting, on 14 November, the applicant informed Mr Siddall he had not performed a churn count for a long time and that the records held in the system were false. According to Mr Siddall he was ‘surprised by the answers that Mr Kustic had provided to my questions without any regard to the seriousness of the matter’ 13. The applicant had also said that he had prepared the records to ‘keep the auditors happy’ and that Colin Lyons was aware of this fact.

[39] Mr Siddall then reported the matter to a senior manager, Mr Snowden.

[40] Under cross-examination Mr Siddall agreed that Mr Snowden, his direct manager, could give him directions about his work, and that he could direct the five team leaders he supervised. He also agreed that he could approve changes to procedures, with final approval being given by Brett Phillips. It was his evidence that the churn counts were performed to ensure that the security company responsible for counting the parking meter coins was conducting the counts correctly.

[41] It was the evidence of Mr Siddall that, from the time he became the actingMPO, he was never given the impression that churn counts had been conducted. He agreed that the applicant had informed him that the coin counting machine was both old and not fully functioning. Further investigation had revealed that the machine had not been used for a period which may have been up to six years, predating the applicant’s appointment as Team Leader.

[42] Mr Siddall agreed that the churns used for collecting coins are padlocked and that only two keys to the padlocks exist. One is held by the security firm the other is held in the safe of the MPO. Further he agreed that the fact that a bag of keys had been found in that safe, but no key register, was a serious breach of policies and procedures. He was also informed by the applicant that he did not have a key to the churns.

[43] The witness reiterated his evidence that when he questioned the applicant about the churn counts the applicant confirmed that these had not been carried out for a long time and that the records relating to the counts were false and completed to keep the auditors happy. It was also his evidence that the applicant had told him that Colin Lyons knew that the records were false.

[44] Ms Myfanwy Greenwood was the employee of the ACT Shared Service Directorate who conducted the investigation and completed an investigation report concerning the allegations against the applicant. In completing the investigation report 14 Ms Greenwood conducted an interview with the applicant15 and took statements from Mr Siddall16 and Mr Lyons17.

[45] Under cross-examination Ms Greenwood agreed that the investigation concerned two matters: whether the applicant had conducted random churn counts and whether he had created false records. The witness conceded that the applicant had admitted both matters prior to the investigation being commenced and that what was actually being investigated was why the applicant had done those two things. It was Ms Greenwood’s evidence that the applicant that told her that ‘he had been instructed to randomly select amount churns from spreadsheets provided by SNP, which was the private company that undertook the counting, and to randomly select a figure from that to transpose onto the random churn count record. So in effect yes, being instructed not to undertake a random churn count and to simply extract a figure’ 18

[46] According to the witness, when she had interviewed Colin Lyons he did not admit telling the applicant to create a fraudulent record but did not deny doing so. Ms Greenwood stated that the applicant’s six team members informed her that churn counts had not been done for a long time (potentially for up to 20 years) but that records of churn counts existed from 2007. One witness stated that he had been asked to bring in a churn in the previous two years and Mr Lyons had claimed that the counts had been done and that he had done them when the applicant was on leave in 2012. She conceded that, to her knowledge, no records existed for the period the applicant was on leave and that it was possible that Mr Lyons was not being ‘entirely truthful’ 19. Further, Ms Greenwood agreed that Mr Lyons, as supervisor, had signed off on the applicant’s churn count records and had told her that he believed the applicant had conducted the churn counts.

[47] According to her evidence, at the time she wrote the investigation report Ms Greenwood had been informed by Mr Lyons that the procedure for conducting a churn count required the MPO to be present for the count and that only the MPO had a key to the churn padlocks. She agreed that she had asked the applicant if he had a key and had been told that he did not have a key or access to the safe where the key was kept. She also conceded that the relevant policy, PDU-4, required the MPO to be present at a churn count. It was her evidence that Mr Lyons had told her that he had never seen the applicant do a churn count. In those circumstances she stated that Mr Lyons statement struck her as odd. Similarly she agreed that Mr Lyons would have to know if the applicant was about to perform a churn count as he would have to provide the applicant with a key for that purpose.

[48] It was put to the witness that in all the circumstances it was more likely than not that Mr Lyons was not telling the truth in his statement. Ms Greenwood replied that her role had been to present information not make a determination. She claimed that at the time she had no reason to believe that Mr Lyons was not credible. She had not made a finding as to whether the applicant had been instructed as he had claimed by Mr Lyons, in the light of the lack of other evidence and the fact that she was investigating the applicant and not Mr Lyons 20 . The exchange continued:

‘Yes, but you’re looking at why Mr Kustic took his actions, weren’t you, you agreed to that before?---Yes.

And the reason he gave was because my supervisor told me to, wasn’t it?---Yes.

So your role is in fact to determine whether that’s true?---Yes.

So despite all these inconsistencies in Mr Lyons’ evidence, despite the lack of a clear denial from Mr Lyons, despite Mr Kustic’s adamant and consistent evidence that Mr Lyons told him to do it, you couldn’t make a finding?---Perhaps in hindsight it might be a different outcome but at the time that was what the finding was.

In hindsight, given everything we’ve just gone through, it’s probable that Mr Lyons gave that instruction, isn’t it?---Probable.’ 21

[49] In response to further questioning the witness;

• Agreed that the applicant was not interviewed until some 8 months after being told he was being investigated and being removed from the workplace;

• Conceded that she had determined that the applicant knew what he was doing was wrong at the time he was doing it despite him having told her that:

• He didn’t approve it but as Mr Lyons approved it, it was out of his hands;



• That it was what he was told to do and that was how it was done with previous managers;



• That he had sought reassurance about the practice from Mr Lyons and had been assured that it was the correct way to do it and that it was the way it had been done in the past; and that



• It was probably not right for Mr Lyons to tell him to do it but that it was what he had told him to do.

[50] Ms Greenwood also confirmed that the applicant had never told her that he had created the records to keep the auditors happy but that this had been part of Mr Siddall’s statement. She had not raised this claim by Mr Siddall with the applicant. She also agreed that the applicant had told her that he didn’t think he had done anything wrong as he had done as he was directed by his manager and he was not responsible for approving the paperwork. Mr Lyons had approved it. She also agreed that Mr Siddall’s statement implied that the applicant did not appreciate the seriousness of his conduct.

[51] According to her evidence Ms Greenwood determined that the applicant had never been trained in his role as a team leader and requested advice from Mr Lyons from time to time. She agreed that the applicant had told her that he had never had the churn count record check list explained to him and that it was apparent from his answers at the interview that he did not understand the check list, and that he may not have understood his role in record keeping, despite her finding that he did understand his record management obligations. Ms Greenwood also found that even if the applicant had been directed by Mr Lyons to create the false record he had an obligation to report this to senior management. She did not believe his excuse that senior management stick together excused him from this failure to report Mr Lyon’s conduct.

[52] Mr Brett Phillips, Executive Director, Office of Regulatory Services (ORS) filed a witness statement 22 in the proceedings. It was his evidence that the MPOis required to comply with the procedures set out in the document PDU-4 Coin Collection and has no authority to countermand orally any directions made in that document. At the hearing it was his evidence that PDU-4 had been originally prepared in the Department of Urban Services and approved at manager level. He noted that in the ORS the document would be approved through all levels of management and ultimately through the Executive Director. He noted that Parking Operations moved to ORS in 2006.

[53] When cross-examined Mr Phillips was unable to advise the level of management that would have approved PDU-4 in the Department of Urban Services. He agreed that the Team Leader, Parking Operations reports to the MPO. It was Mr Phillip’s evidence that Mr Siddall advised him of problems in the Parking Operations area in late 2012. He confirmed the process for the investigation of those concerns. He was unaware that no contact was made with the applicant about the investigation until some seven months after he was removed from the workplace.

[54] Mr Phillips was unable to recall whether, when he saw the investigation report prepared by Ms Greenwood he also saw the witness statements and transcript of interview on which the report was based. He stated that he made his decision to terminate the applicant on the basis of the investigation report alone. He agreed that the report was dated 30 August 2013, and that he wrote to the applicant about it on 10 October 2013, stating that he agreed with the report findings and had decided that the appropriate remedy was termination. He stated that before he made his final decision he took into account the response prepared for the applicant by the AMWU. He conceded that under the relevant enterprise agreement there were a number of other remedies, other than termination, available. He agreed that termination was the most serious remedy and that, under the terms of the enterprise agreement, there were a number of factors that needed to be taken into account when determining the remedy.

[55] The witness confirmed his findings as set out in the termination letter, including the finding that the applicant had deliberately engaged in the conduct alleged and that Mr Lyons had not given him an instruction to do so. He had based the latter finding on the investigation report and agreed that it was an important finding. When asked if he would be surprised to learn that Mr Lyons had never denied giving the instruction to the applicant, Mr Phillips stated that it would surprise him. Further, Mr Phillips agreed that aspects of the report called into question the accuracy of Mr Lyons’ testimony.

[56] It was the evidence of Mr Phillips that it was possible that the policy PDU-4 was approved by a person in the role of MPO and that someone in that role could approve variations to the policy. He also stated that the applicant had not had training in his role and that he did not appreciate the significance of not completing the churn count and falsely completing the record. 23 He agreed that the applicant gained no personal benefit from not doing the counts and creating the false records and had never sought to conceal his actions. He also stated that it was his understanding that the applicant had an excellent work record.

Submissions for the Applicant

[57] It was put for the applicant that the question before the Commission was not whether the applicant had failed to conduct churn counts yet filled out paperwork claiming that he had but whether he did this on the instruction of his direct supervisor and merely continued a longstanding practice.

[58] The applicant’s representative submitted that in order to prove serious misconduct the employer must demonstrate that fraud had, in fact, occurred. It was put that the accepted definition of fraud in this tribunal is that ‘fraud requires that the employee is dishonest with the intent of gaining a benefit to which he or she is not entitled to the detriment of the employer   ‘ 24.

[59] It was argued for the applicant that it was not contested that he had received no training for the role of team leader or in relation to his responsibilities for records management. The applicant did not understand the significance of the churn counts or the records relating to them. He had merely followed the directions of his supervisor, whom he believed had the authority to direct him. The applicant’s evidence on the point did not waver while Mr Lyons did not at any relevant time deny giving him the direction. Given that the manager was to be present at the count and held the only key, Mr Lyons’ claim that he believed the applicant was performing the churn counts was not credible. Similarly Mr Lyons evidence that he had performed counts in the applicant’s absence was also not credible, particularly as no records existed.

[60] It was put that the applicant was open about what had occurred and had told Mr Siddall what had occurred. He did not try to hide his actions. Further his reasons for not reporting the direction given by Mr Lyons to more senior management was understandable in the circumstances. It was clear he did not appreciate the significance of his actions. The applicant received no benefit from his actions.

[61] It was not reasonable for the investigation report to find some failure on the applicant’s part for not seeking out training for himself or to have found that he should have known that Mr Lyons would not have the authority to give him the direction about the churn counts. It was reasonable for the applicant to believe that Mr Lyons had that authority.

[62] Essentially, it was argued that the decision to terminate the applicant’s employment was taken solely on the basis of a flawed investigation report and the applicant’s statement and response were not taken into account. There was no evidence that the applicant had ever said that he had taken his action to ‘keep the auditors happy’. It was put that the applicant had exercised poor judgement but had not committed fraud or any action amounting to serious misconduct. He would not be likely to repeat his behaviour and had expressed remorse. In the circumstances the termination of his employment was not warranted.

[63] The applicant sought reinstatement and it was put that reinstatement was practicable. There was no reason for any loss of trust or confidence that could not be restored 25.

Submissions for the Employer

[64] It was the employer’s submission that the critical question in this matter is whether or not as a matter of fact the applicant was given an instruction by his then supervisor not to carry out an important part of his duties and secondly to create a false record to suggest that he had carried it out. Further it was argued that even if the Commission found that the instruction was given there is a question of what legal construction should be put upon the applicant’s conduct. According to the submissions of the employer while Mr Lyons denied that he gave such an instruction, it was accepted that the applicant, at least once confronted with possible discipline action, was consistent in his claim that he was given such an instruction.

[65] The employer took issue with the claim put for the applicant that he both sought reassurance about his actions and had not concealed his conduct. It was argued that the applicant’s answers in his record of interview with Ms Greenwood did not support these claims.

[66] It was the submission put for the employer that the test as to whether conduct or behaviour is fraudulent or dishonest is not a subjective one. According to the employer the applicant acquiesced in conduct which he knew or had very good reason to suspect was at the very least improper. He told no one about it. He acknowledged to Ms Greenwood that it was ‘probably’ not right for Mr Lyons to tell him to do what he did.

[67] It was also argued for the employer that the applicant had agreed in cross-examination that in his job application he had claimed that he understood very well what the purpose of the churn counts was and why the records of the counts were undertaken. In the interview with Ms Greenwood he made it clear that he understood that the records would be scanned and then entered into the departmental data base. In the circumstances it was argued that it was not possible for the applicant to claim that he didn’t understand what he was doing was wrong. He had deliberately not asked questions about conduct he suspected was improper, which was tantamount to, and should be treated as, fraudulent conduct.

[68] An argument was also put for the employer that it could not be argued that the employer had condoned the applicant’s conduct 26 as for such a defence to be available the employer had to have full knowledge of the conduct to be condoned.27 Further, the employer presented authorities28 for the proposition that if a person receives a representation from an agent, which that person knows or have reason to suspect the agent has no authority to give, then the person cannot make a claim of apparent authority. It was argued that the applicant knew that what Mr Lyons was telling him to do was wrong.

[69] Finally, it was argued that the bond of confidence between the applicant and the employer could not be repaired and in those circumstances, reinstatement was not an appropriate remedy.

Consideration

[70] I am satisfied that no jurisdictional issues arise in this matter and that, at the time of the termination of his employment, the applicant was a person protected from unfair dismissal. The respondent is not a small business and there is no claim that the dismissal was a case of genuine redundancy.

[71] In determining whether the applicant has been unfairly dismissed I must take account

of those matters set out in s.387 of the Act which is as follows:

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.”

Valid Reason

[72] In this matter the applicant has admitted to the conduct for which his employment was terminated. The question is whether this conduct amounts to a valid reason for the termination of his employment. In this respect I am satisfied, on the evidence given by Mr Phillips, that the applicant’s employment was terminated on the basis of the information provided, and the findings made, in the investigation report prepared by Ms Greenwood. In such circumstances I am unable to find that the there was a valid reason which was ‘sound, defensible or well-founded’. 29

[73] Having heard all the evidence and having assessed both the applicant and Mr Lyons giving their evidence, there is no doubt in my mind that the evidence of the applicant is to be preferred to that of Mr Lyons. When cross-examined Ms Greenwood admitted that the evidence available supported the applicant’s version of events. While she prefaced some of her answers with the words ‘with hindsight’, it must be said that those matters put to her by the applicant’s representative were matters that she was, or should have been aware of, at the time of preparing the report.

[74] It is unsurprising that Mr Phillip’s took the decision he did given the tone of the report prepared by Ms Greenwood. Little consideration is given to the applicant’s claim that he was directed by his supervisor, Mr Lyons, to prepare churn count records without actually performing a count. The report makes a bare statement that the applicant had agreed that he had created false random churn count records, had not undertaken churn counts and ‘stated that he knew what he was doing was wrong’. I do not accept that the applicant ‘knew’ that what he was doing was wrong at the time he created the false records. He may well have reached this conclusion when interviewed eight months into the investigation and in light of Mr Siddall’s statement to him that it was ‘fraud’.

[75] While I accept that the applicant was not comfortable with following Mr Lyons’ directions about the churn counts, I also accept his evidence that he was reassured by his superior that the counts were always done that way, and that he sought confirmation of this fact from other employees, who advised him that no-one had conducted churn counts for years. In those circumstances, and in light of the difficult working conditions in the Parking Operations (described by Mr Lyons), I am able to understand, though not excuse, the applicant’s decision to follow the direction. In my view the repeated claim made in the report, that the applicant knew that what he was doing was wrong, was not substantiated on the evidence. At best Mr Phillips should have been advised that the applicant was uncomfortable with the direction given to him by his superior but was reassured by Mr Lyons’ statement that the procedure he had been told to adopt had been in place for some time, and that this was further confirmed by other staff.

[76] Additionally, Ms Greenwood’s statement that the applicant had created the records to satisfy the auditors was put forward in a manner that suggested that he had made that statement to the investigator. This was not the case. In this respect the investigator was relying on Mr Siddall’s statement for this claim and agreed under cross-examination that she had never asked the applicant about this claim. It was the applicant’s evidence that Mr Lyons had advised him to, on occasion, include some small discrepancies in the count records, ‘for the auditors’. While this comment probably should have alerted the applicant to a problem with Mr Lyons’ directions, it does not amount to an admission by the applicant that he was creating false records for the purpose of satisfying the auditors, as suggested in the report.

[77] While the investigator accepted, under cross-examination, that on the evidence it appeared that it was more likely that the applicant’s version of events was true than the version put forward by Mr Lyons, this point was not made in the report. The investigator merely stated that the evidence of the applicant and Mr Lyons on the question of the direction was ‘at polar opposites’ and stated that, ‘with no further evidence available....no judgment of this aspect can be made’. Given that a plethora of other evidence was available, all of which pointed to Mr Lyons statement having no credibility, this did not fairly represent the applicant’s case to the decision-maker.

[78] That the applicant was given a direct instruction by his supervisor is a very important factor in determining whether the applicant’s conduct was such that he ought to have had his employment terminated. The applicant was new into the position of Team Leader, he was given no training and expected to manage a group of workers in, if anything Mr Lyons said can be believed, a stressful and dysfunctional workplace. Both Mr Siddall’s statement that the applicant did not appear to understand the seriousness of his actions, and the investigator’s same assessment, was not consistent with the investigator’s statement in the report that the applicant ‘knew what he was doing was wrong’.

[79] Too much weight was given in the investigation report to a suggestion that the applicant had some ‘mutual obligation’ to train himself and to question the legality of Mr Lyons’ instruction. The applicant was a relatively junior employee, new to his position and, it would appear to some degree, at the mercy of a stressed and not particularly pleasant 30, supervisor. His claim that Mr Lyons would have made his life hell if he had queried this instruction with senior management was never challenged.

[80] Although the investigator noted that the applicant made full admissions and was co-operative throughout the investigation process, the repeated claim that the applicant knew that his actions were wrong meant that matters of mitigation were given less weight by the decision-maker. Nor was the decision maker ever advised that the policy supposedly breached by the applicant was in draft form at the time and only became an official policy after the events occurred. Despite this the applicant was found to have taken a deliberate decision not to follow ‘an official policy’.

[81] In all the circumstances I am not satisfied that there was a valid reason for the termination of the applicant’s employment. There is no doubt in my mind that in creating the false churn reports the applicant was following a direct instruction given to him by Mr Lyons, and merely continuing a practice which had been occurring for many years. I am also satisfied that the applicant, having not been trained in the area, was unaware of the significance of his actions in signing the false records. He seemed to believe that the fact that Mr Lyons actually signed the document meant that he was relieved of any responsibility for its creation.

[82] The applicant’s representative acknowledged, as did the applicant, that the applicant’s actions showed poor judgement and that he should have reported Mr Lyons to senior management. Given that he obviously did not understand the significance of his actions and, most importantly, received no personal benefit from those actions (other than not incurring the wrath of Mr Lyons) the termination of the applicant’s employment was not warranted.

Notified of the reason

[83] There is no dispute that the applicant was notified of the reason for his termination.

Opportunity to respond

[84] The applicant was afforded an opportunity to respond to the allegations made against him both during the investigation and at the time Mr Phillips informed him that he was giving consideration to terminating his employment. He was interviewed by Ms Greenwood on 7 June 2013 and his union prepared a response to Mr Phillips’ show cause letter which was provided to Mr Phillips on 5 November 2013.

Support Person

[85] The only time the applicant was involved in a meeting concerning the allegations was when he was interviewed by Ms Greenwood on 7 June 2013. He was accompanied to that interview by a support person.

Unsatisfactory Performance

[86] The applicant’s dismissal was not connected to any unsatisfactory performance on his part. The evidence of Mr Phillips was that the applicant had a good work record.

Size of employer and HR expertise

[87] The employer is a directorate of the ACT Government. There was no submission that the size of the employer nor any lack of human resources expertise impacted on the procedures adopted in effecting the termination.

Other relevant matters

[88] The applicant is a 55 year old male with a relatively long period of service with the ACT government in various roles. He was relatively new to the position from which he was terminated and was clearly neither properly trained nor supervised. In the current climate in the ACT it is unlikely that he will find comparable employment.

Conclusion

[89] Given all those matters set out above, and in the absence of a valid reason for the dismissal, I find that the termination of the applicant’s employment was harsh, unjust and unreasonable. Even if I am wrong and the applicant’s conduct did amount to a valid reason for the termination I would nevertheless find that the dismissal was disproportionate to the conduct of the applicant, given all the mitigating circumstances and the fact that the applicant derived no personal benefit from his actions.

[90] I am satisfied that it is both practical and appropriate to reinstate the applicant in his employment to a position on terms and conditions no less favourable than those on which he was employed immediately before his dismissal. I also intend to order that the continuity of the applicant’s employment be maintained. I do not consider it appropriate to make an order for payment of the remuneration lost since the termination given the applicant’s misconduct in failing to report his supervisor’s instruction to more senior management.

[91] An order giving effect to this decision is issued separately [PR551577].

Appearances:

Ms L Saunders, of the AMWU, on behalf of the applicant.

Mr D Jarvis, of Counsel, for the employer.

Hearing details:

2014.

Canberra:

April 15.

 1   Exhibit K1 at Attachment B

 2   Exhibit K1

 3   Exhibit K1 at paragraph 33

 4   Attachment G to the Respondent’s submissions

 5   Exhibit ACT3

 6   Transcript PN 170

 7   Exhibit ACT 2

 8   Exhibit ACT1

 9   Transcript PN285

 10   Transcript PN290-294

 11   Transcript PN 404-408

 12   Exhibit ACT

 13   Exhibit ACT4 at paragraph 37

 14   Exhibit ACT 6

 15   Exhibit ACT5

 16   Exhibit ACT4

 17   Exhibit ACT1

 18   Transcript PN 652

 19   Transcript PN687

 20   Transcript PN 735

 21   Transcript PN736 -740

 22   Exhibit ACT7

 23   Transcript PN753

 24   Mourilyan v Jamies Hardie Australia Pty Ltd[2010] FWA 9672

 25   Michael King v. Catholic Education Office Diocese Parramattaand corresponding cross-appeal, [2014] FWCFB 2194

 26   Rankin v. Marie Power Pty Ltd [2001] VSC 150

 27   Australasian Transport Offices v. Department of Motor Transport [1998] 25 IR 235 and the relevant pages are 244, 245.

 28   Alfred v. Wakelin [2008] FCA 1455; Armagas Ltd v Mundogas (The Ocean Frost) [1985] Int.Com.L.R.05/22

 29   Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371.

 30   Transcript PN394

Printed by authority of the Commonwealth Government Printer

<Price code C, PR551571>