Misconduct

Being a business owner or employer in Australia comes with challenges. You must ensure the smooth running of your business, manage the workforce, keep up with obligations, and maintain decorum in the workplace. A significant part of managing your workforce involves keeping up ethical and professional standards in the workplace. You must be on the watch for any wrongdoing or issues like misconduct in the workplace. Misconduct is often dealt with a case-by-case basis in the workplace as the process is tricky and the rules differ in different contexts.

In this guide for employers, we address:

• What is misconduct in the workplace?
  
• Types of Misconduct.
• Tips on managing workplace misconduct.
• Legal considerations on misconduct.
• Managing employee performance.

Misconduct

Misconduct is behaviour or action considered unacceptable or improper in the workplace that breaches company policy and procedure. There are different types of workplace misconduct, and understanding those types may help you understand the scope of what you are dealing with.

Types of misconduct

Misconduct may be classified in many ways. However, in many cases, it is codified as follows:

General misconduct

General Misconduct is behaviour inconsistent with employee obligations or duties; a breach of company policy or procedure; or generally unacceptable or improper behaviour. Examples include unauthorised absences, lateness, and bad language.

Serious or gross misconduct

The Fair Work Act 2009 refers to (and defines in the accompanying regulations) serious misconduct, the term used most frequently rather than gross misconduct. The term gross misconduct was used historically.

Fair Work defines serious misconduct as wilful and deliberate behaviour inconsistent with the continuation of the employment contract or causes a serious and imminent risk to the reputation, viability, or profitability of the business, or the health and safety of a person. It includes theft, fraud, assault, intoxication at work, or failure to follow a lawful and reasonable instruction that is in keeping with the employment contract.

Tips for managing misconduct

There are several steps you can take to prevent misconduct in the workplace and manage it when it happens.

• Have an employee handbook - To reduce the risk of confusion or misunderstanding, and to set employee expectations, it is recommended that you include policies on standards of behaviour, misconduct, and disciplinary action in your employee handbook. An employee handbook is a document usually given to employees when they start work that outlines your company’s policies, culture, and expectations of behaviour and performance in the workplace. A policy regarding disciplinary action might also include relevant examples and outline the disciplinary procedure in detail, as well as the possible consequences. It is also recommended that you specify in your employment agreements that misconduct may be grounds for the termination of employment. The distinction between the two is important as it may impact the disciplinary procedure (you may need to stand the employee down with pay if there is a risk of harm to a person or the business) and serious misconduct can result in summary dismissal, i.e. dismissal without entitlement to a notice period.
• Act quickly and fairly - Once you know about misconduct in the workplace, you must act efficiently but fairly. You must investigate the incident soon before the incident causes friction or tension among your other employees. During this time, you may consider suspending the full-pay employee while conducting the investigation. However, please note that any decisions regarding suspension or dismissal should be taken in consultation with experts and specialists.
  
• Conduct a disciplinary meeting - Once your investigation is completed, invite the employee to a disciplinary meeting. Before holding the meeting, you should:
  
  • Invite the employee to the meeting in writing.
  • Provide the employee with advance notice of the meeting (usually between 24-48 hours).
  • Allow your employee to have a support person present during the disciplinary meeting.
  • This will make sure the meeting is procedurally fair.

In this meeting, formally present the allegations to the employee, including your investigation. Explain the potential outcomes of the meeting and give the employee a chance to respond. Listen to their responses fairly and patiently. Before you decide the outcome of the meeting, consider the facts and the responses at your disposal.

• Document everything - Always have everything in writing. These can act as documents and written records should an employee file an unfair dismissal case or general protections claim against you. These documents should include written records such as:

  • The investigation - steps, how long it took, people responsible for it, and the outcome of the investigation.
    
  • Evidence - including statements from other employees and any other related proof.
    
  • Emails - emails or letters that discuss the investigation and the invite to the employee, explaining the disciplinary meeting.
    
  • Minutes from the disciplinary meeting.
  • Previous records - If the employee has been involved in any other disciplinary matters or misconduct.
  • Outcome - The reasons for the outcome including how you addressed the employee’s response.
    
  • Consider precedence – how you’ve delt with other similar situations before in the workplace.
  • Email/Letter informing the employee of the outcome in writing.

• Make your decision rationally - Misconduct is dealt with on a case-by-case basis. Even if this conduct has happened before, the context of the current situation needs to be considered.

Legal considerations on serious misconduct

If one of your employees engages in serious misconduct, you may have reasonable grounds to dismiss that employee without notice or pay instead of notice, after first implementing a disciplinary process. If you are required to undertake disciplinary action, you should follow the steps outlined above before taking any action.

The disciplinary meeting is the employee’s opportunity to present extenuating circumstances (if any). You should close the meeting to consider or further investigate the employee’s responses before deciding on the balance of probabilities if the allegations are substantiated.   

Consider the most appropriate outcome. A warning may be appropriate in the circumstances, or other outcomes, such as a letter of concern, reprimand, no action, final written warning, verbal warning, or even termination may be justified.

If an act of misconduct is deemed serious enough – even for a first offence – if substantiated, the employee may be dismissed without notice or paid instead of notice. This is called summary dismissal. When this happens, the employee must leave the workplace immediately following the disciplinary process and the outcome being issued. Before an immediate dismissal, a fair process still needs to be followed. You should be consistent in how you respond to an act of serious misconduct.

Out-of-hours conduct

Only in exceptional circumstances will an employer have any right to address an employee’s out-of-hours behaviour. An employer can include provisions in the employment contract and policies in the employment handbook, that set certain standards of behaviour when performing work duties outside of work and at work functions, or that prevent an employee from wearing work clothes with a company logo out of work, or from posting disparaging comments about the business on an online site with public access.

The provision or policy should indicate the consequences of any breach of the employment contract or employment handbook, i.e. that a disciplinary procedure will follow that may have consequences for the employee’s employment.

There must be a relevant connection to the employment relationship for the employer to take any action against the employee. The conduct must be likely to cause serious damage to the relationship between the employee and employer or damage the employer’s interests. The employer must provide actual evidence of how the conduct affects the company.

Managing employee performance

To reduce the risk of misconduct and repeated misconduct, your employees should be aware of what the expectations are concerning how they are expected to behave, the standard of performance that needs to be maintained, and how to align behaviour and performance with the objectives and values of the business.

There are many ways you can manage and improve employee performance. The key is to be consistent and ensure that the system is getting the desired results. If that fails, rework the process until you achieve an optimal result.

Below are some effective ways to manage and improve employee performance:

• Conduct regular performance appraisals and reviews.
• Provide relevant training and coaching.
• Give employees a platform to provide honest feedback – without fear of retribution.
• Set clear expectations – verbally and in writing – regarding conduct, performance standards, and company goals.
• Use employee feedback to update company policies and agreements.
• Be sure management is consistent in how they follow company policies.

Preparing your business

As a business owner and employer, you need to be prepared to deal with complicated situations like misconduct in the workplace. Peninsula resources, advice, and tools can ensure you make the right and fair decision. Our team has worked with thousands of business owners and employers in Australia, guiding them through tough times. Call for free initial advice to get your questions answered.