Tuesday, 27 May 2014

Employee Awarded Six Months’ Damages for Unlawful Dismissal

In a Federal Court decision a General Manager was awarded six months’ wages for unlawful dismissal. There was no written employment contract, and therefore no provision for a minimum notice period requirement. The employer (the Respondent) alleged that the General Manager (the Applicant) had engaged in serious misconduct by using the company credit card for unauthorised spending on an overseas business trip.

The Applicant commenced working for the Respondent in September 2007. His employment terms were agreed on a verbal basis, including his salary and leave entitlements. There was no written employment contract.

Eight months into his employment, the Applicant commenced an overseas business trip to establish international trade for the Respondent. The Respondent provided the Applicant with a company credit card to cover the expenses of the trip.

The Applicant told the Court the Respondent provided the credit card for all expenditure overseas. The Respondent explicitly advised the Applicant not to use his own credit card, and on return the Respondent would calculate how much of his expenses were for personal use. At no time during the overseas trip did the Respondent complain about the Applicant’s use of the credit card. This was evidence supported by another employee of the Respondent.

The Respondent alleged that the Applicant was not authorised to use the credit card for any non-business related expenditure and had the expenses reviewed afterward. Approximately three months after the Applicant returned from overseas, the Respondent suspended his employment without pay. Six days following the suspension, the Applicant’s employment was terminated on the grounds of misconduct for the alleged unauthorised use of the credit card.

The Court was not satisfied that the Respondent had a proper basis for dismissing the Applicant for serious misconduct. As a result, the Respondent was in breach of the Applicant’s employment contract and the Applicant was entitled to damages.

As there was no written employment contract, the Court considered the following factors when deciding the amount of damages the Applicant was entitled to:

  • The length of his employment with the Respondent;
  • His age, seniority, duties; and
  • The prospect of future suitable employment

The Court awarded the Applicant 6 months’ notice.

If you do not have employment contracts in place, or if you suspect an employee is in breach of their employment contract, please call HR Legal before taking any disciplinary action. It is not lawful to suspend an employee without pay, even on the grounds of alleged breach of contract. HR Legal can also assist with drafting employment contracts specific to your business.


This article was produced by HR Legal. It is intended to provide general information only in summary format on legal issues. It does not constitute legal advice, and should not be relied on as such.

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