A shoe store manager who committed a retail “mortal sin” when he took cash from a customer and failed to account for it until a week later was unfairly sacked because his employer made significant procedural errors that included luring him to a meeting under false pretences, the Fair Work Commission has found.

The shoe store manager was dismissed for serious misconduct in October last year following allegations of theft and fraud regarding the sale and discounting New Balance shoes and wearing Adidas shoes he had on layby, as well as instances of falsifying time records.

The company investigated the store manager after concerns were raised over stock and inventory irregularities. The company alleged there were five instances of misconduct, including: misusing his ‘family discount’; pocketing $220 from the transaction and failing to account for the sale until seven days later; wearing a pair of Adidas shoes on layby; falsifying time records; and removing four boxes of shoes from the store without explanation.

The company contended that the store manager’s conduct was marked by “subterfuge” and “concealment” and that he had taken “flagrant advantage of the layby system” for his own personal benefit. The company dismissed the store manager during an October meeting for serious misconduct after concluding there were “adverse findings” in respect to four of the five allegations.

The store manager argued that given the alleged seriousness of the misconduct, including allegations of criminal conduct, there was a higher burden of proof and that the evidence relied on by his employer fell well short of establishing theft and fraud. The store manager said that while applying the 20% family discount to a friend was an “undoubted error”, it could not be found to be deliberate misconduct.

He also argued that wearing the Adidas shoes was a “minor infraction” because he had been given approval by the previous store manager to wear them while on layby.

The store manager also said the company’s dismissal procedures were unfair, in that it had already predetermined it would dismiss him, refused to allow him a support person during the September 21 meeting, and used deceitful tactics in luring him to attend, leading him to believe he was going to be offered a commendation.

The store manager also claimed that the dismissal was out of all proportion to any offence he might have committed because the evidence did not support a finding that he had engaged in deliberate criminality.

The Commissioner found that the store manager’s explanation of why he failed to record the New Balance transaction and account for the $220 was “regrettably unconvincing”. “Frankly, anyone with even only limited experience in the retail industry would understand that taking cash from a customer and not immediately recording it in the till amounts to what might be described as a ‘mortal sin’,” he said.

However, he found that the company had “mischaracterised this serious misconduct by describing it as theft”, and that the delay did not satisfy the elements required to establish larceny. “It would appear that the employer has an entirely misconceived understanding of what might constitute larceny. “It may assist the employer if it refrained from using strong, inflammatory language, particularly involving allegations of criminality,” Commissioner Cambridge said.

The Commissioner found that while the company appeared to provide the store manager with opportunities to respond to the allegations, it was clear it had formed a view as to his guilt as early as September.

Given the company had characterised the store manager’s conduct as theft from the outset of the dismissal process, its treatment of any response was “contaminated by the predisposed view” it had formed, the Commissioner said.

The Commissioner also criticised the shoe store for its refusal to allow the store manager a support person during its first meeting, and for deliberately deceiving him about the purpose of the meeting.

He said the company’s dismissal procedures were also inconsistent, particularly in allowing the store manager to continue working up until the September 21 meeting.

The Commissioner concluded that only one of the findings of serious misconduct could be sustained and while there was a valid reason for his dismissal, the procedures adopted rendered the dismissal unreasonable and unjust. “The erroneous procedure adopted by the employer when dealing with the conduct issues which arose with the [store manager] included a significant flaw which established that the summary dismissal of the applicant was plainly unjust.”

The Commissioner noted that the applicant has sought reinstatement as remedy for his unfair dismissal but, in this instance, there was a valid reason for the dismissal of the applicant involving serious misconduct and found “therefore, any remedy of reinstatement would be inappropriate”.

The Commissioner found “alternatively, in the particular circumstances of this case, the appropriate remedy would be some limited compensation”. He awarded the store manager $1,100 compensation for the employer’s procedural errors in what he said would have otherwise been an entirely fair dismissal with notice. “However, the manifestly erroneous approach adopted by the employer when dealing with what has subsequently been established to be both serious misconduct and significantly less serious misdemeanours, has meant that there was not proper basis to justify the summary dismissal of the applicant,” the Commissioner said.

 

In this case, while the employer’s penalty was minimal, there would have been time and cost associated with an entirely unnecessary Commission appearance due to poor processes. One way of avoiding such issues and overcoming procedural issues is to commission a HR Audit of the organisation’s HR function.

An iHR Human Resources Audit is an independent, objective and systematic review of an organisation’s HR function, encompassing legislative compliance, strategy, benefits and compensation, training and staff development, recruitment, employee engagement and performance management.

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