A number of recent cases heard by the Fair Work Commission show that serious misconduct is often far from clear-cut. Understanding where the legal threshold sits can help HR avoid legal exposure.

Recent Fair Work Commission (FWC) decisions suggest the bar for ‘serious misconduct’ may be higher than many employers think.

Serious misconduct is defined by the Fair Work Regulations 2009 as “deliberate or wilful conduct inconsistent with the employment contract”. This can include behaviours such as theft, fraud, assault, sexual harassment, intoxication at work and the refusal to carry out lawful and reasonable instructions. 

On paper, these are the kinds of actions that can often justify dismissing an employee on the spot.

However, in reality, it’s rarely that straightforward. What an employer characterises as serious misconduct is routinely picked apart in cases heard by the FWC, and often fails to meet the legal threshold – particularly if the response appears disproportionate, the evidence is disputed or the process falls short.

“The threshold for serious misconduct is high, and requires deliberate conduct, including an element of dishonesty or intent to deceive,” says Mariam Chalak, ​Senior Associate and Team Leader at Harmers Workplace Lawyers. “The Commission [also] expects clear and cogent evidence given the gravity of the consequences for the employee.”

The Commission will look at the broader context, she says, including factors such as: 

• The employee’s tenure and past conduct 
• What policies outlined (or didn’t)
• What behaviours were tolerated in practice
• Whether expectations were clearly communicated and consistently enforced.

Below, Chalak provides insight on three recent cases which provide valuable lessons for HR on how serious misconduct is assessed in a legal setting.

Case 1: Dismissal for alleged theft

Earlier this month, the FWC heard an unfair dismissal case involving an employee who was sacked over alleged theft.

The employee in question, a long-serving pharmacy assistant, was accused of consuming confectionery items from the pharmacy during work hours without paying for them. Her employer was able to produce CCTV footage showing her taking and consuming the confectionery on multiple occasions.

The employee did not deny taking the items, but stated that she intended to pay for them after her shift. She was able to provide evidence of payment in at least one instance.

In its assessment, the FWC noted that the employee showed no intent to hide her conduct, taking items openly and often sharing them with colleagues. It observed that there was no evidence she had not intended to pay for the items.

“The Commission also found that there was an established workplace culture of staff consuming items during shifts and paying later,” says Chalak. “It would be unfair and inconsistent to single out one employee for disciplinary action [for] conduct that reflected an accepted workplace norm.”

Read AHRI’s article on when unwritten rules can become enforceable.

Taking these factors into account, along with the employee’s unblemished 14 years of service with the employer, the Commission concluded that the dismissal was unfair and ordered the employer to pay nearly $24,000 in compensation.

Learnings for HR:

This ruling underscores the risks of moving straight to summary dismissal when misconduct is uncovered, even if it involves serious allegations such as stealing.

“A common misconception is that conduct labelled as ‘theft’ or ‘fraud’ will automatically justify dismissal,” says Chalak. “In reality, the Commission looks beyond the label and requires sufficient evidence to substantiate the allegation, including any element of dishonesty, before finding serious misconduct.”

In this case, a more proportionate response would have been clarifying and formalising expectations for employees before initiating disciplinary action.

“This could have been achieved by updating workplace policies or issuing a clear direction specifying whether, and in what circumstances, confectionery may be consumed during a shift and paid for later,” she says.

If those expectations were clearly communicated and consistently enforced, and there was concrete evidence the employee knowingly breached them regardless, the Commission may have been more likely to view the behaviour as serious misconduct.

However, Chalak warns that a strict zero-tolerance policy on any kind of workplace behaviour is not a blanket protection for employers.

“Such a policy does not remove the employer’s obligation to establish, on the evidence, that the conduct occurred and meets the threshold of serious misconduct.” 

“A common misconception is that conduct labelled as ‘theft’ or ‘fraud’ will automatically justify dismissal.” – Mariam Chalak, ​Senior Associate and Team Leader, Harmers Workplace Lawyers

Case 2: Dismissal for multiple misconduct allegations

In another recent case, a senior academic with nearly three decades of service claimed she had been unfairly dismissed for concerns about her workplace conduct.

Her employer relied on 33 allegations accumulated over several years, including claims her leadership style was overly controlling, discourteous and at times dishonest. It argued that while individual incidents may have been minor, the pattern of behaviour collectively amounted to serious misconduct.

“Aggregating multiple lower-level issues and treating them as serious misconduct is inherently risky,” says Chalak. “Particularly where they span several years and were not raised with the employee at the time. [This] creates evidentiary and procedural fairness concerns.”

A series of minor issues cannot simply be “stacked” into serious misconduct, she explains – the Commission requires each allegation to be independently established and assessed for its seriousness.

In this case, the Commission found that most of the allegations against the employee were not substantiated, and that those proven were insufficient to justify dismissal. It also raised concerns about the credibility of key witnesses and the employer’s failure to address issues through performance management over time.

As a result, the Commission concluded the dismissal was harsh, unjust and unreasonable, and the employee was reinstated.

Learnings for HR:

In cases like this where misconduct relates to ongoing performance and behavioural issues, employers need to explore avenues for resolution before moving directly to dismissal, says Chalak.

“The employee should be given appropriate support and resources to enable genuine improvement,” she says.

“This would involve clearly defining expectations regarding the employee’s leadership style and interactions with colleagues, identifying specific concerns where those expectations are not being met and providing the employee with an opportunity to respond.”

Employers should only initiate disciplinary procedures if concerns persist after these interventions – and when they do, it should be a slow and graduated process with multiple warnings and opportunities to improve.

The FWC’s ruling also highlights the importance of substantiating every allegation with credible and reliable evidence.

“Inconsistent, weak or biased evidence will undermine the employer’s case, and may result in findings that the allegations are not proven,” says Chalak.

Case 3: Dismissal for using company property for private profit

In March, the FWC heard a case involving a maintenance worker who was dismissed for using a company vehicle for personal jobs on his days off.

The employer discovered this through GPS tracking data, which also showed he had often arrived at work late or left early despite submitting timesheets for full days.

In response, the employee argued that he had a “give and take” arrangement with his employer where he often worked unpaid overtime to make up for these discrepancies.

Before proceeding with dismissal, the employer had taken steps to clarify its expectations, including sending a staff-wide email making clear that using company vehicles for personal use was unacceptable. However, the GPS data showed the employee continued to use the vehicle out of hours after this email was sent.

In its ruling, the Commission noted that the dismissal process had some procedural shortcomings, particularly around how it was communicated to the employee.

“Although the employer had raised concerns with the applicant, those warnings did not clearly communicate that his employment was at risk,” says Chalak. “[However], while this may have raised procedural fairness issues, it was not determinative.”

As a result, the employee’s application was dismissed.

Learnings for HR: 

This case carries important lessons in how the FWC assesses ‘dishonest’ conduct, says Chalak.

“Dishonesty or personal gain is often central to establishing serious misconduct, particularly because it supports a finding that the conduct was ‘wilful or deliberate’ within the meaning of the Fair Work Regulations,” she says.

In this case, the fact that the employee used company resources to undertake private work and submitted timesheets that did not accurately reflect his hours meant the Commission was satisfied there had been a fundamental breach of trust.

In contrast to the other cases, the employer was also able to produce credible and reliable evidence of serious misconduct, including GPS tracking data, records of timesheet discrepancies, and documented breaches of company policies.

“The employer had [also] clearly communicated its expectations to the applicant,” says Chalak. “He was provided with, and acknowledged, the company’s policies and handbook, including the motor vehicle use and vehicle tracking policies. These expectations were also reinforced through toolbox meetings and ongoing communications.”

Taken together, these cases show that the bar for serious misconduct is not defined by the label attached to the behaviour, but by the strength of the evidence, the clarity of expectations and the proportionality of the response.

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