Workplace Insights & Timely Tips | Managing Employee Bad Behaviour

Employee ‘bad behaviour’ is something most employers hope they do not have to deal with.

It is par for the course for employees not be suitable for the role for which they are hired, or to underperform or that the business just cannot support the role being required anymore. These are all traditional reasons for the resultant termination of the employment relationship. However, most bosses find it challenging to deal with employees who are in breach of their employment contract or obligations because of their bad or inappropriate conduct. This article considers employee bad behaviour by examining the conduct that can get employees and their employers into trouble if not dealt with appropriately.

So, what do we mean when we talk about employee bad behaviour? Conduct of this nature can fall into a number of different categories both within the workplace and outside work.

Employee bad behaviour (in the workplace)

It is far easier to recognize and deal with inappropriate or harmful employee conduct when that conduct occurs during the course of employment. An employer has the right to set the tone and culture of the workplace and to demand that employees as far as reasonably practicable, adhere to those standards. This is usually done by setting out these expectations in company policies and the contract of employment. However, it is generally accepted both at common law and by statute that certain conduct is incompatible with the continuation of the employment relationship.

An employer has the right to terminate the contract of employment summarily in circumstances where the conduct of the employee is so egregious as to be incompatible with the continuation of the employment relationship. At common law, such conduct will include any conduct that is incompatible with the fulfilment of the employee’s duties or impedes the ability of the employee to perform their obligations faithfully and properly or is destructive of the necessary trust and confidence between an employer and the employee. The Fair Work Act 2009 (Cth) (FW Act) defines conduct that justifies summary termination as the following:

• wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment.
• conduct that causes serious and imminent risk to:

(i)  the health or safety of a person; or

(ii)  the reputation, viability, or profitability of the employer’s business.

• theft, fraud, assault, sexual harassment, employee being intoxicated at work and the employee refusing to carry out a lawful and reasonable instruction.

In addition to the matters set out above, the following bad behaviour may also give rise to the right to summarily terminate an employee’s employment (depending on the severity of the conduct in question):

• bullying and intimidation in the workplace;
• dishonest behaviour;
• misuse of confidential company information; and
• acting in conflict with the employee’s duty to the employer.

If an employee has engaged in conduct of the nature set out above, before the employer takes steps to terminate the employment, it should ensure it takes the proper procedural steps to safeguard the business. Employees dismissed summarily may still be able to bring claims for unfair dismissal or breach of the general protection provisions of the FW Act. To ensure that the employer can successfully defend any such proceedings, it should conduct an investigation into the alleged conduct. In this regard, it is important to ensure that the employer has a valid reason for dismissal and the reason is not based on supposition, assumption, or incorrect information. We recommend the employer take the following steps before making any decision to terminate the employment:

• immediately suspend the employee and depending on the circumstances take necessary steps to secure the premises or company property. This may include restricting access to the site and to its electronic information systems;
• inform the employee you intend to conduct an investigation;
• provide the employee an outline of the allegations and the process to be followed;
• conduct an investigation into the alleged matters of concern, taking care to ensure that confidentiality is protected, and the employees concerned are kept informed of progress;
• if the outcome of the investigation is that it is reasonable to assume that the employee is guilty of the conduct in question, and it has the requisite level of seriousness; provide the employee a show cause letter as to why the employment should not be terminated summarily;
• allow sufficient time for the employee to properly respond; and
• consider the employee’s responses and if termination remains appropriate, confirm the termination in a meeting with the employee, followed by a written letter of termination.

It is not unusual for employers to exacerbate an employee’s right to bring a claim by mismanaging an investigation or moving to terminate the employment prematurely.

Employee bad behaviour (outside of the workplace)

It is usually quite straightforward to recognize and deal with employee bad behaviour that occurs at work (whether that is at the physical work location or whilst the employee is performing work, or at a work-related event). However, what can an employer do in circumstances where the conduct of the employee occurred in the employee’s private time? For example, can an employer terminate the employment of an employee caught stealing from a store on the weekend? Can an employer terminate the employment of a drunk employee who sexually harassed or assaulted a member of the public after hours? What about behaviour online that is racist or offensive but occurs in the employee’s private time on private social media accounts?

In Little v Credit Corp Group Limited t/as Credit Corp Group [2013] FWC 9642, the employee in question made two divisive and offensive comments about a client of the employer, in his own time, on the client’s own Facebook account. Upon receiving a complaint from the client, the employer elected to terminate the employee’s employment and was subsequently able to defend an application for unfair dismissal.

The answer to these vexing questions depends in large part on the company’s policies regarding the manner in which employees are expected to behave, and the impact on its brand and reputation as well as its values and principles. It also very much depends on whether the employer has terms in its contracts of employment that allow for termination in such circumstances.

For certain conduct such as sexual harassment, assault, and fraud, it will be easier to argue that the termination is valid because the conduct is incompatible with the continued employment relationship. Otherwise, this is really only the case, absent specific policies or contractual provisions, if the conduct is egregious.

For example, in Conrad John Corry v Australian Council of Trade Unions T/A ACTU [2022] FWC 288 a call centre employee was dismissed after the employer discovered social media posts made by the employee that were “completely inconsistent” with its values and policies. The posts made on Facebook “cheered on” anti-vaccine mandate campaigns, applauded aggression against police, mocked domestic violence, disparaged black people, and vilified transgender people. Whilst the posts did not identify him as an ACTU employee, the Fair Work Commission found that the publication was contrary to the employee’s obligations under the ACTU’s code of conduct and its harassment, discrimination and workplace bullying policy. Accordingly, the unfair dismissal application was dismissed.

As such, it is important that employers ensure they have robust policies and contractual terms addressing these behaviours such as to provide a basis for termination should the circumstances arise. It is however important to note that even if the policy may deal with a particular standard of conduct, most employers take care to ensure that the policies do not form part of the contract and therefore any breach of policy does not necessarily give rise to a breach of contract and may be insufficient to constitute a valid reason for dismissal.

This issue becomes even more complex when the conduct by the employee is not itself unlawful but is not within keeping of the employer’s values or principles. For example, could an employer whose business is in healthcare and is vigorously promoting the COVID-19 vaccine, terminate the employment of a vocal anti-vaxxer? What if the employer became aware that one of its employees was also a sex worker in their free time? For the most part, unless the conduct of the employee is such as to make the continuation of the employment untenable, a mere difference in opinion or beliefs is not sufficient to warrant termination of employment, and certainly not on a summary basis.

Is there an obligation to disclose bad behaviour?

Generally speaking, there is no universal obligation on employees to disclose conduct that the employer may find unpalatable. It is incumbent on the employer to conduct its due diligence before engaging the employee. However, prudent employers include specific contractual provisions in the contract of employment regarding the need to disclose certain conduct or circumstances, and the failure to do so may result in termination. Such clauses often deal with the loss of driver’s license for employees who need to drive to perform their duties, the loss of visa rights; the disclosure or use of both illicit and prescription drugs, and disclosure of conflicts.

In such circumstances, if an employee has failed to make disclosure of conduct that may result in the termination of the employment relationship, the failure to disclose may also be a valid ground for termination. Again, the terms of the contract of employment and workplace policies become central to the issue and the remedies available to the employer.

Preventing employee bad behaviour

As is apparent from this article, there are certain types of conduct that will give rise to a right for an employer to immediately terminate the employment, however these clear-cut examples are not common. In order to ensure the employer is properly protected it should:

• ensure it has contractual terms allowing for immediate termination in a broader range of areas than recognised by the common law; and
• ensure it has policies that deal with behaviour expectations, ethics, code of conduct and inappropriate behaviours.

Timely Tip

An important component of developing employees is a comprehensive and well executed performance management system incorporating elements such as regular one-to-one meetings, through to performance reviews and processes to manage underperformance. As we approach the end of the financial year it is prudent for employers to engage in any performance management that may be required with respect to its workforce and to assist the employer in making decisions about performance, remuneration, promotions, disciplinary procedures, terminations, transfers and development needs within the organisation.

Components of a performance management system include:

• The provision of ongoing education, mentoring and training as required;
• discussion of individual goals with employees, allowing employees an opportunity to discuss their own work performance;
• effective compensation and recognition systems that reward employees for their ongoing contribution;
• the provision of promotional/career development opportunities;
• counselling for employees who are underperforming and/or behaviour which is out of alignment with the organisation’s values and goals; and
• conducting exit interviews to understand why employees leave the organisation.

In circumstances where an employee is regularly performing poorly, an employer may take disciplinary action against the employee up to and including the termination of their employment. However, good performance management is a process that affords an underperforming employee every opportunity to remedy their performance before disciplinary action is taken.

Unlike misconduct, which is typically deliberate or reckless misbehaviour, poor performance is not wilful nor deliberate. It usually relates to  the employee not meeting an employer’s expectations or not having the ability to get the job done. It may also include the employee missing deadlines, not following procedures, careless mistakes, continued lateness or unexplained absenteeism. In such a case a coherent performance management system can be instrumental in either turning the employee’s performance or safeguarding the business if termination is the ultimate outcome. Given the time of year, now is a perfect opportunity for employers to consider and implement meaningful performance review processes.

We regularly advise our clients on all aspects of performance management, in addition to the management of employee conduct and behaviour, including providing appropriate contracts of employment, policies, and training.

Please contact us should you require assistance.

This alert and timely tip is not intended to constitute, and should not be treated as, legal advice.