When an employee has been unfairly dismissed, an employer may claim that reinstatement is not appropriate due to a loss of trust and confidence in the employee, rendering the employment relationship no longer viable or productive. However, previous case law has indicated that a degree of friction or tension in the workplace is not enough to avoid an order for reinstatement. An employer’s assessment that they have lost trust and confidence in the employee must be credible, genuine and rationally based.

Two recent cases have addressed this issue. In the Supreme Court of Western Australia[1], the court had to consider whether an order for reinstatement would be appropriate after an employee deliberately and dishonestly made false allegations against her supervisor. In addition, the employee alleged that other members of staff lied and conspired against her. After an investigation into an incident between the employee and her supervisor, it was found that the employee knowingly gave false accounts about what occurred and her employment was terminated as a consequence.

In the first instance, an order for reinstatement followed a finding that the dismissal was unfair, based on the view that it was not ‘impracticable’ to reinstate the employee. The decision was appealed to Western Australia’s Supreme Court where the orders for reinstatement were set aside. It was argued that that the Full Bench had erred by misinterpreting and misconstruing the correct meaning of the word ‘impracticable’. On appeal, it was found that reinstatement would be ‘impracticable’ because of the breakdown of trust and confidence between the employer and employee. The employer successfully argued that it could not sustain a future employment relationship with the employee due to her failure to provide an accurate and reliable account of events. Furthermore, it is unlikely the employee would be able to re-establish good working relations with her colleagues who she believed lied and engaged in acts of conspiracy to have her dismissed.

In another case[2], the Fair Work Commission took a slightly different approach after it was found that a worker was unfairly dismissed because his employer failed to give “reasonable consideration” to redeployment in a redundancy situation.

It was decided that, despite a finding that his position no longer existed and his employer’s claims that the employment relationship had “broken beyond repair”; there was hope that the strained relationship between the employee and his managers could be managed and salvaged. This was partly owing to the fact that the employee had once regarded the manager as a mentor. The difficulty mending the relationship was acknowledged, yet Deputy President Anderson stated “that difficulty does not outweigh the factors which weigh in favour of a finding that reinstatement is not inappropriate.” The employee’s employment record was strong and he had developed friendly relations with colleagues with whom he worked with on a day-to day basis.

As a result, an order was made to reinstate the worker to another position consistent with his skills and capability, on terms and conditions no less favourable than those immediately before his dismissal.

The take-home message of these two cases reveals that the FWC may make an order for reinstatement where it can be established that the working relationship between the employee and employer is capable of repair. However, where it is found that there is no possibility for either party to move forward, it is likely that an order for reinstatement will be deemed inappropriate.

Lessons for Employers

• The onus lies on the employer to successfully prove that they have lost trust and confidence in the employee which renders re-engagement impractical.
• Employers must ensure that appropriate workplace behaviour policies are put in place.
• When terminating an employee, employers must ensure they have a valid reason and have followed a procedurally fair process.