The District Court of New South Wales has ruled that an employee who was dismissed summarily for being drunk on duty was entitled, in the particular circumstances, to damages for wrongful dismissal. The damages were calculated on a basis which exceeded the 6 month notice period that applied under the contract to a termination without cause. As a consequence the employee recovered nearly AUD 300,000 in damages.
Facts
The employee commenced employment with the employer in 2004. In 2011, he was promoted and signed a new contract of employment.
The contract provided that either party could terminate the employment on 6 months’ written notice or payment in lieu by the employer. The contract also provided that the company could summarily terminate the employment for “serious misconduct” by the employee.
The contract referred to a Code of Work and certain company policies.
The Code of Work described “intoxicated behaviour as an example of misconduct that may lead to disciplinary action.
In the Disciplinary Counselling Policy “intoxication” was listed as an example of gross misconduct justifying summary dismissal.
On Sunday 30 October 2012, the day before a sales training conference, the employee attended a work-related dinner followed by a stint at a pub. The employee conceded that he drank 14 to 17 standard drinks during this time.
At 7 am on 31 October 2012, the hotel manager found the employee asleep on the floor in the hotel lounge area.
A number of witnesses reported seeing the employee drunk at the conference. They said he smelled strongly of alcohol, spoke loudly, was unsteady on his feet, slurred his words, had red eyes, and was making animal noises and throwing lollies.
The employer summarily dismissed the employee for serious misconduct. The employee claimed for wrongful dismissal on the basis his conduct did not warrant termination of employment.
The Litigation
The trial judge concluded that the Code of Work and the policies were part of the contract of employment. But in spite of the manner in which intoxication was referred to in those extraneous documents, the basis for summary dismissal remained the same as the common law – gross misconduct or “serious misconduct in serious circumstances.”
The trial judge held that intoxication at work could constitute gross misconduct if the employee’s conduct was severe, brought the company into disrepute or was frequent.
Then judge concluded that although the employee was intoxicated during the conference session, there was little in the employee’s behaviour that added seriousness to his intoxication. The lolly throwing passed without comment by the target. The animal noises related to a description of a recent safari the employee had taken.
There was no evidence of any aggression, violence, offensiveness, swearing or unsafe behaviour. The hotel manager testified that no damage to the employer’s reputation had occurred.
The trial judge also noted that one of the other staff members who had been drinking with the employee failed to attend the conference but she was not summarily dismissed.
Damages
The trial judge therefore found that the employer had breached the contract of employment by summarily dismissing the employee in circumstances not authorised by the contract. The employee was entitled to damages reflecting such losses as were directly caused by the breach.
In this respect the employer argued that the damages could not exceed 6 months’ pay because the contract permitted termination for any reason (or no reason) on 6 months’ notice. This result was said to follow because of the “least burdensome performance rule”.
The trial judge held that the proper course was to consider the likely circumstance if the employee was not wrongfully terminated. This involved an assessment of the prospects of termination on notice being proper.
No evidence was given by any person who had authority to terminate the employment. Nor was there any documentary evidence that the employment would have been terminated on notice if it could not be terminated summarily.
The trial judge commented that although he should not readily draw the inference that the employer would have immediately terminated the employment by notice in November 2012 if it could not do so summarily, that did not mean that he should assume that the employee would hold his job indefinitely.
In the end the judge awarded damages as if the employee was given notice on 31 July 2013. His employment would thus cease on 31 January 2014 (nearly 15 months after the date of actual termination). On this approach he was awarded 100% of the anticipated benefits until 31 July 2013, 100% of the anticipated benefits that would accrue to a person on notice in the period 1 August 2013 to 31 January 2014 and none of the anticipated benefits thereafter.
Lessons
The outcome in the case might have been different if the contract had said that summary termination could occur where the employer had formed the opinion that the employee was guilty of serious misconduct. As it was, the contract was interpreted as requiring the employer to establish as an objective fact that the employee was intoxicated AND that this caused the employee to behave in way that was disruptive or harmful to the employer’s reputation. On the evidence the facts did not allow the employer to meet this standard.
The absence of evidence that, failing summary termination, the employer would have sacked the employee on notice anyway was also a big issue. This allowed the court to award damages as though the employment would have continued for several more months.
