Honestly! Let’s talk about employee dishonesty

In Brief

An employee owes a duty to their employer to be honest in their dealings with it. This is no more apparent than when the employee is the subject of an investigation into alleged misconduct.

A recent dismissal case1 before Fair Work Australia (“FWA”) provides useful guidance for employers about the effect of an employee’s dishonesty during an HR investigation.

The Gunning case

The dismissed employee (Gunning) had worked as a sales representative at the Burleigh Heads Branch of the employer’s lighting products business. A customer’s attempt to return a product for a refund uncovered an apparently fraudulent scheme by Mr Gunning’s flatmate (who had formerly worked as a sales representative for the employer) involving a diversion of refund monies to a joint bank account of Mr Gunning and his flatmate.

The employer conducted an investigation and subsequently dismissed Mr Gunning for “theft and misconduct” over his alleged involvement in the fraud.

At the unfair dismissal hearing, FWA found that the evidence did not support a finding that Mr Gunning was involved in the fraud originally investigated. However, FWA went on to find that Mr Gunning was not honest with his employer when he was interviewed about his knowledge of the fraud concerns and that of itself formed a valid reason for his dismissal. Accordingly, the employee was found to have been validly dismissed.

FWA made the following important points about an employee’s duty during an HR investigation:

1. An employee owes a duty to his employer to be honest in his dealings with it.
2. To do otherwise is to compromise the necessary trust and confidence that is an integral part of the employment relationship
3. This does not mean that an employee must answer any and all questions posed to him or her by his employer in an investigation or interview.
4. But it does mean that an employee must respond honestly to any genuine enquiry made of the employee that is relevant to the conduct or other issues in question or under investigation.

Points to take away

1. The existence of the relationship of trust and confidence is vital to an employment relationship.
2. During an investigation into employee misconduct, employers may uncover or be faced with misconduct outside of that which is being investigated.
3. A dishonest response to a genuine and relevant enquiry is destructive of the relationship of trust and confidence.
4. A failure to respond to questions honestly can form a stand alone (valid) reason for an employee’s dismissal.
5. If in doubt, employers should seek advice.

1 Gunning v Cetnaj Queensland Pty Ltd [2012] FWA 6627 (3 August 2012)