Valid reason relating to capacity or conduct

See Fair Work Act 2009 s.387(a)

The reason must be 'sound, defensible or well founded.'[1] A reason which is 'capricious, fanciful, spiteful or prejudiced' cannot be a valid reason.[2]

'[T]he reason for termination must be defensible or justifiable on an objective analysis of the relevant facts.'[3] It will not be enough for an employer to say that they acted in the belief that the termination was for a valid reason.[4]

The valid reason for termination is not to be judged by a legal entitlement to terminate an employee, 'but [by] the existence of a reason for the exercise of that right' related to the facts of the matter.[5]

The Fair Work Commission does not 'stand in the shoes' of the employer but will need to be satisfied that the termination of the employee was for a valid reason.[6]

It would be harsh, unjust and unreasonable for an employer to dismiss an employee summarily on the ground of serious misconduct without taking reasonable steps to investigate the allegations of misconduct and give the employee a fair chance of answering them.[7]

It is the reason or reasons for the act which must be discerned. An investigation of the reason or reasons for the act will involve, as a matter of meaning and language, an enquiry into the explanation for the act or why the act was done.[8]

Findings made by an inquiry established by the employer will be relevant to the Commission's determination of the issues before it provided it is established that:

• the employer conducted a full and extensive investigation into all of the relevant matters as was reasonable in the circumstances
• the employer gave the employee every reasonable opportunity to respond to allegations, and
• the findings were based upon reasonable grounds.[9]

An employee is entitled to both substantive and procedural fairness in respect of a dismissal. Substantive fairness will be satisfied if the grounds upon which dismissal occurs are fair grounds. Broadly speaking a dismissal will be procedurally fair if the manner or process of dismissal and the investigation leading up to the decision to dismiss is just.

Where the dismissal is based upon the alleged misconduct of the employee, the employer will satisfy the evidentiary onus which is cast upon it if it demonstrates that insofar as was within its power, before dismissing the employee:

• it conducted as full and extensive investigation into all of the relevant matters surrounding the alleged misconduct as was reasonable in the circumstances
• it gave the employee every reasonable opportunity and sufficient time to answer all allegations and respond thereto
• that having done those things the employer honestly and genuinely believed and had reasonable grounds for believing on the information available at that time that the employee was guilty of the misconduct alleged, and
• that, taking into account any mitigating circumstances either associated with the misconduct or the employee's work record, such misconduct justified dismissal.

A failure to satisfactorily establish any of those matters will probably render the dismissal harsh, unjust or unreasonable.[10]

Related information

• Valid reason relating to capacity
• Valid reason relating to conduct