A summary dismissal of employment (often called a summary dismissal or instant dismissal) is the immediate termination of an employee due to their behavior, the basis of which is gross misconduct. With a summary dismissal, the employee can be terminated without notice and without a payment in lieu of notice.
This can often be legally referred to as summary termination for breach and repudiation. When an employee has committed a serious breach or repudiation the employer has the right to elect to terminate employment with immediate effect. This is different to a right the employer might have under a term of the employment contract to terminate for serious misconduct.
Serious Breach or Repudiation
A serious breach refers to breach of a condition of the employment contract. An example of a condition is the term imposing a duty on the employer and employee not to unreasonably derogate from the relationship of trust and confidence between the employer and employee. Examples of a breach of trust and confidence are if an employer accuses an employee of theft knowing that this accusation is false or suggests to an employee that if they do not resign, they will be dismissed.
However, not every breach of a term of a contract will entitle summary termination by the employer if breached. For example, there is an implied term in an employment contract imposing a duty on the employee to obey directions about the performance of contracted work that are lawful, reasonable, and consistent with the employment contract and the scope of employment. However, a breach of this term will only justify summary termination if wilful and sufficiently serious.
Similarly, a breach of the implied contractual term giving rise to the employee’s duty to exercise reasonable care in the performance of work will not justify summary termination unless sufficiently serious, having regard to the impact on the employer.
In both above cases, one-off breaches will rarely justify summary termination
Repudiation is where the conduct of an employer or employee evinces an unwillingness or inability to perform their obligations under the employment contract. An example of repudiation by an employee is where the employee refuses to attend for work and does not have authority for the absence. An example of repudiation by an employer is where the employer unilaterally and substantially changes the duties of an employee in a manner that is not permitted by the employment contract.
Repudiation and serious breach entitle the innocent party to terminate the employment contract with immediate effect. However, if the right is not exercised and the contract is “affirmed” then the innocent party loses that right. For example, if an employer knows that an employee engaged in a dishonest act but fails to act to terminate the employee’s employment the employer cannot later exercise that right.
Termination for serious or gross misconduct
Serious or gross misconduct may constitute a serious breach or repudiation. However, if the employment contract contains an express term entitling the employer to dismiss for serious misconduct without notice, the exercise of that right is not termination for serious breach or repudiation.
For misconduct to justify summary dismissal, it must be sufficiently serious as to make the continuation of the employment contract impractical. This depends on the consequences of the misconduct for the employer, and the extent to which the conduct of the employee displays to a reasonable employer that the employee is unwilling to perform either all the contract or a fundamental part of it.
Many types of misconduct will not justify summary dismissal if engaged in by the employee as “a one-off” act. However, an exception applies for more serious conduct such as sexual assault or fraud. In addition, persistent, repeated breaches may have a cumulative effect amounting to repudiation of an employment contract.
An employer can rely on evidence acquired after the summary dismissal of an employee to justify the summary dismissal.
For more information, please visit the Fair Work website: Unfair dismissals benchbook.
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Updated February 2022