Dealing with employee misconduct is a difficult part of managing a business. Australian employers have legal obligations to ensure a safe and respectful workplace. Effectively managing allegations of misconduct is key to providing a healthy work environment and protecting your business.
This article provides insight to help employers manage misconduct. The information is general only and does not constitute legal advice. Obligations and processes can vary depending on circumstances, the applicable industrial instruments, and laws in your state or territory. Always obtain professional advice tailored to your situation.
What is Misconduct?
Misconduct generally refers to behaviour by an employee that breaches their employment contract, a company policy, or a fundamental duty owed to their employer. It can range from minor infractions to serious breaches. Examples include:
- Misuse of company property
- Frequently late or unexplained absences
- Ignoring safety procedures
- Inappropriate behaviour affecting work and/or others
Serious misconduct is defined in the Fair Work Regulations 2009 (Cth) made under the Fair Work Act 2009 (Cth). It generally concerns wilful or deliberate behaviour that is inconsistent with the continuation of the employee’s employment; or conduct that causes serious and imminent risk to health and safety, or to the employer’s reputation, viability, or profitability.
Examples of serious misconduct might include:
- Theft, fraud, or other serious dishonesty in the course of employment.
- Serious and wilful breach of safety obligations that place others at risk.
- Refusing a lawful and reasonable instruction that is part of the employee’s job, particularly where the refusal is wilful and significantly impacts the business.
- Intoxication at work to the point where the employee is unfit for duty or endangers others.
- Assault, threats of violence, or other violent behaviour in the workplace.
- Serious harassment, discrimination, or bullying.
A key feature of serious misconduct is that it may justify termination of employment without notice (summary dismissal), provided the conduct is substantiated, and a fair process has been followed. The threshold is high, and the process must be carefully managed. You cannot simply dismiss an employee ‘on the spot’ without putting the allegations to the employee and providing an opportunity for them to respond. Whether conduct amounts to serious misconduct is ultimately a factual and legal question in each case, not just a label applied by the employer.
Unfair Dismissal and the Importance of Carefully Managing Misconduct
If you dismiss an employee for misconduct, you must ensure the dismissal is fair and reasonable in all the circumstances. An eligible employee may lodge an unfair dismissal claim with the Fair Work Commission if they believe the dismissal was harsh, unjust, or unreasonable. If the employee is found to have been unfairly dismissed, the consequences can be significant for the employer. Employers are encouraged to seek legal advice if they are considering dismissing an employee, facing a claim, or suspect a claim will be made against them.
Managing Misconduct
1. Have Clear Rules in Place
Employees cannot be expected to follow rules they are unaware of.
Practical steps:
- Implement policies: Clear policies help set expectations, support consistent decision‑making, and provide important evidence if a dispute arises. Comprehensive workplace policies should define expected standards of behaviour and cover issues such as:
- Code of conduct
- Anti‑bullying, harassment, and discrimination
- Social media use
- Drug and alcohol use
- Work health and safety (WHS)
- Use of company property and IT systems
- Communicate and train: Ensure every employee receives, or has easy access to, these policies. Induct new employees on key policies and provide refresher training where appropriate. Record that employees have received, read and understood the policies, for example, by using signoff forms or electronic acknowledgements.
2. Act Quickly and Assess Allegations
When an allegation of misconduct is raised, the employer must act promptly. Ignoring an issue can worsen the situation and may breach WHS duties to provide a safe workplace.
Practical steps:
- Initial triage: Make a preliminary assessment of the allegation. Identify what is being alleged, who is involved, and whether there is an immediate risk to health, safety, or the integrity of any evidence. Avoid jumping to conclusions.
- Confidentiality: Limit information to those who need to know and remind all participants, including witnesses, to maintain confidentiality.
- Suspend if necessary: If the alleged conduct is serious, or if the employee’s continued presence poses a risk (for example, to safety, other employees, clients, or evidence), consider suspending the employee on full pay while the matter is investigated. Document the reasons for suspension, the terms, and the expected next steps.
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- Suspension should be temporary and no longer than reasonably necessary to complete the investigation. In award-covered workplaces, any specific suspension provisions in the relevant award should also be checked.
- Unpaid suspension will generally only be lawful where permitted by the employment contract, enterprise agreement, or relevant industrial instrument, and should be used with caution.
3. Conduct a Fair and Thorough Investigation
A decision to discipline or dismiss an employee without a proper investigation can lead to an unfair dismissal claim or other legal risks. A solid investigation process is the foundation for lawful disciplinary action and forms critical evidence if a decision is later challenged.
Practical steps:
- Appoint an investigator: Choose someone impartial and suitably skilled. In smaller businesses, this may be an owner or manager. For serious, sensitive, or complex matters, consider an external investigator.
- Gather evidence: Collect all relevant material, such as emails, documents, CCTV or security footage, access logs, and applicable policies. Take written witness statements where possible.
- Interview key parties: This includes the complainant (person raising the concern), the employee accused of misconduct (respondent) and any relevant witnesses.
- Provide the respondent with details and the right to respond: The employee must be given enough detail about the allegations, including dates, times, locations, and key evidence where appropriate, so they can properly understand and respond. Give them a genuine opportunity to provide their version of events and allow them to have a support person present if they wish.
- Keep records: Document each step of the investigation: who was interviewed, when, what was said in substance, what documents or other evidence were considered, and the investigator’s findings. Keep these records secure.
4. Determine the Outcome
Once the investigation is complete, the employer must weigh the evidence and make a finding on whether the misconduct occurred. Before implementing the decision, it is best practice to present the proposed outcome to the employee, allow them a chance to comment, and then confirm the final decision.
Practical steps:
- Determine findings: Base findings on the evidence gathered, not on rumour, assumptions, or irrelevant factors.
- Consider the appropriate outcome: If misconduct is substantiated, consider the full range of possible responses.
Factors may include:
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- The seriousness and nature of misconduct
- Whether the conduct was deliberate, reckless, or inadvertent
- The employee’s position and responsibilities
- The employee’s length of service and overall work record
- Any prior warnings or similar issues
- How similar matters have been handled in the past (consistency)
- Any mitigating factors (for example, personal circumstances or provocation)
Possible outcomes may include:
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- No further action (for example, if allegations are not substantiated)
- Informal counselling or training
- Formal verbal warning
- Written warning and final written warning
- Transfer or change in duties (where lawful, reasonable and permitted by the contract or industrial instrument)
- Termination of employment
Key Takeaways for Employers
- Preparation is key: Have clear, documented, and well‑communicated policies in place.
- Act promptly, but not rashly: Address allegations quickly to manage risk but avoid making a final decision until a thorough and impartial investigation is complete.
- Ensure procedural fairness: Clearly explain the allegations, give the employee a reasonable opportunity to respond, and allow them a support person if they wish.
- Serious misconduct still requires fairness: Even for the most serious alleged conduct, investigate, put the allegations to the employee, and allow them to respond before termination.
- Document everything: Keep detailed, contemporaneous records of the complaint, investigation steps, evidence, communications, and the final decision (including reasons).
- Recognise the risk of unfair dismissal: Consequences can include compensation, reinstatement, and reputational damage. A structured, fair process is your best protection.
If you or someone you know wants more information or needs help or advice, please call (02) 5127 5261 or email [email protected].