Abuse of company credit card was valid ground for dismissal

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Abuse of company credit card was valid ground for dismissal

Business development manager “Mr T” lost his claim for unfair dismissal after the Fair Work Commission held that his employer had a reasonable belief that Mr T was abusing the company credit card.

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Business development manager “Mr T” lost his claim for unfair dismissal after the Fair Work Commission held that his employer had a reasonable belief that Mr T was abusing the company credit card. 

Facts and background


Mr T was employed in an unspecified role with a Melbourne-based company from 7 September 2016 to his dismissal on 13 November 2017. There was considerable confusion over the exact identity of the employer as two companies were involved. The first, Donna Italia, is a fine food chain. The second company is a company of an unspecified nature called “3 Keys Global”. The directors and shareholders of both Donna Italia and 3 Keys were the same people. About five employees worked for 3 Keys. 

It later became a point in issue as to which company actually employed Mr T. During his employment, Mr T had Donna Italia-branded business cards, his email account was a Donna Italia email account, payments to his bank were made from “DI”, and various documents, which Mr T claimed formed his contract of employment, had the Donna Italia letterhead. 

At some point during Mr T’s employment (the judgment does not specify exactly when) the directors of the company because suspicious that Mr T was committing theft by making unauthorised purchases on the company credit card. The directors quizzed Mr T on 70 transactions varying in amount from $10 to $20 made during the course of a year. The amounts totalled just under $1400. There was also at least one incident of a relative using Mr T’s credit card for online gambling. There was a break in credit card use from January 2017 and then a resumption in September 2017.

In early November 2017, one of the directors asked Mr T to justify a list of transactions within seven days. But Mr T did not respond and the directors of 3 Keys dismissed him. It was only then, after he had been fired, that Mr T responded to the director’s enquiries. 

In late November Mr T applied to the Fair Work Commission claiming he had been unfairly dismissed. 

The law


Employees are, subject to certain conditions, protected from being unfairly dismissed (s382 of the Fair Work Act). If a person is dismissed, and that dismissal is harsh, unjust or unreasonable, then it is unfair (s385). 

A person who has been unfairly dismissed may apply to the Fair Work Commission for a remedy (s394), which can be compensation, reinstatement, or both (s390). 

The Small Business Fair Dismissal Code applies to business employers with less than 15 employees and so it applied to 3 Keys. Employees of small businesses cannot make a claim for unfair dismissal in the first 12 months after being hired. 

It is settled law that an employee cannot be transferred to another employer without the employee’s consent (see the Federal Court of Australia case McCluskey v Karagiozis 2002). Secondly, the Fair Work Act provides that there is a transfer of employment from one employer to another if both employers are associated entities and the new job starts within three months of the old (s22(7)). 

Another relevant factor is the law relating to summary dismissal for serious misconduct. In the case of Ryman v Thrash, a Full Bench of the Fair Work Commission held that the code’s version of summary dismissal owing to serious misconduct applies in the same way as r1.07 of the Fair Work Regulations. That regulation applies to summary dismissal because of serious misconduct in non-small business cases. 

Immediate dismissal without warning or notice under the code is fair if the employer reasonably believed there was serious misconduct. While the employer must reasonably believe that there was misconduct, it is not necessary for the employer to prove that the misconduct actually took place or that the employer was correct in its belief. Serious misconduct includes, but is not limited to, theft.

In issue


There were several questions to be answered. Who was Mr T’s employer? Had Mr T completed at least 12 months of service with that employer? Or, alternatively, had there been a transfer of employment between two associated entities? And, finally, was there a fair summary dismissal consistent with the code? 

Arguments


Mr T argued that he was unfairly dismissed because of repeated requests to be paid commission under his contract of employment. 

3 Keys responded by arguing that Mr T was not eligible to apply for an unfair dismissal remedy as he had not completed one year of service. Although he had been working for about 14 months, the company claimed he was first employed by Donna Italia from September 2016 and then, from July 2017, by 3 Keys. The company argued that because his service had been split between two different companies he had therefore not completed 12 months of service with 3 Keys as required by the Small Business Fair Dismissal Code. 

The company also argued that Mr T was validly fired for misconduct in accordance with the code. 

Considerations


Firstly, the Commission determined which company employed Mr T and how much service he had completed with that company.  Given the weight of evidence (business cards, email addresses, bank details and so on), the Commission concluded that he had originally been hired by Donna Italia and there was no evidence that he had ever agreed to change employer. Accordingly, it concluded that Mr T was employed by Donna Italia from September 2016 until November 2017. 

The Commission also considered an alternative “transfer of employment” argument under s22(7). It noted the close relationship between Donna Italia and 3 Keys. Each company had the same directors and shareholders who were materially interested in the operations, resources, and affairs of both companies. Accordingly, both companies were associated entities. So even if Mr T had been first employed by one company and then by the other, then s22(7) of the Fair Work Act transferred the employment of Mr T from one company to the other so that the service with Donna Italia counted as service with 3 Keys Global. 

Therefore, regardless of whether Mr T had worked just for one company or both, he had completed the minimum employment period and was protected from unfair dismissal. 

Secondly, the commission turned to the question of whether Mr T had been fairly dismissed according to the Small Business Fair Dismissal Code. The Commission noted that Mr T had admitted to a history of inappropriate use of the company’s credit card and had never repaid any of the money. He had resumed making unauthorised purchases on the credit card and, when asked about this usage, did not give any explanation prior to being dismissed. 

The Commission was therefore satisfied that the directors of 3 Keys had an objectively reasonable belief, based on reasonable grounds, that, at the time of dismissal, Mr T was stealing by using the company credit card for personal expenses. 

Decision 


Although Mr T was a person who was protected from unfair dismissal, having served the minimum employment period, the company Donna Italia was a small business employer and the dismissal of Mr T was consistent with the Small Business Fair Dismissal Code. The Commission therefore dismissed Mr T's application. 

The Bottom Line: When the identity of an employer is in dispute then a court or tribunal will examine contemporaneous documentation (letters, emails, payslips etc) to work out the identity of an employer. Alternatively, when there is a complex corporate structure, then a court or tribunal may deem that service with related organisations will count as one period of employment. A person can be validly fired without notice for serious misconduct if the employer had an objectively reasonable belief, based on reasonable grounds, that the employee was engaging in serious misconduct. 

Read the judgment


PT v 3 Keys Global T/A 3 Keys Food Group [2018] FWC 3244 (5 June 2018)
 
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