Australia: Man sacked over pizza awarded quarter of a million for unlawful termination

A man who was sacked for buying a pizza on his corporate credit card has been awarded $276,000 for unlawful termination.

The man's employer terminated him for what it called "serious misconduct". The company claimed the man had taken a larger hotel room than necessary for a business trip to Melbourne, where his wife and two children joined him.

They accused the man of using his office credit card to buy a $32.50 pizza for his son and asserted that he'd also claimed other personal expenses on his corporate card.

Employee argues credit card expenses were above board

The man filed an unlawful termination claim in the NSW District Court.

The court heard that the hotel room was the only one available, as accommodation was tight in Melbourne due to the Australian Open. Also, the room had been approved by the employee's manager.

Further, the man had paid for his family's flight with his own card and the other expenses had previously been approved by his employer.

Court finds employee was fired one day before redundancy entitlement

The judge accepted the man bought the pizza for his own dinner on the corporate card, as he was entitled to, and his son ate the leftover slices.

It was significant that the man was fired just one working day short of qualifying for a $379,268 redundancy package after more than 20 years' service. Instead, the employer paid him a termination payment of $80,521.

The judge found the employer had set out to dismiss the man the day before his redundancy came due, knowing the company would save $300,000 by this action: "It [the Company] clearly had that intention and to suggest otherwise is an affront to common sense," the judge said. (See Sherry v Toyota Motor Corporation Australia Limited [2020] NSWDC 827.)

In his reasons for judgment, the judge was critical of the company's actions and said the company did not give satisfactory weight to the exemplary work history of its employee and the seriousness of the allegations before he was dismissed.

Employee makes unlawful termination claim due to ineligibility to lodge unfair dismissal claim

The employee, Mr Greg Sherry, was not entitled to the Fair Work Commission's unfair dismissal jurisdiction, as he earnt above the statutory cap of $153,600 per annum.

A person who is paid above the cap is not denied legal avenues for claiming against unfair treatment if they are dismissed. Many of the principles that apply to an unfair dismissal are still relevant in an unlawful termination and must be considered prior to terminating the employment of any employee.

Lessons to be learned from unlawful termination case

There are several factors that employers should consider before dismissing someone whose salary is higher than the unfair dismissal cap, or before a genuine redundancy.

In this case, the judge found the company's HR representatives did not give the employee a fair opportunity to explain himself. They went into the investigation with a predetermined view of Mr Sherry - that he was guilty of misconduct.

The judge found their attitude towards the man to be aggressive. They accused him at the start of lying and dishonesty. The employee, out of "misplaced loyalty to the company" agreed to their demands, to remain on good terms with the company. This, in the opinion of the HR representatives, proved he was guilty.

Further, while the company allowed Mr Sherry to have a support person present, they did not adequately explain the scheme to him.

Employer lacks sufficient reason to sack employee based on serious misconduct

The company, in reaching its conclusions about the hotel room, did not make enquiries of the travel agent, which the court said it was in a unique position to do. In addition, this was the first time the man had been the subject of disciplinary action over expense claims, and the hotel had been approved by his manager.

The court noted the employer has the onus of establishing a right to terminate the contract, but said it was a natural consequence of employment that an employee's misconduct may cause financial loss to their employer. Thus, the employer's reason for dismissal was insufficient to warrant termination for serious misconduct.

While the employee did not do everything that he should have to avoid a breach of the travel policy once he became aware of other options, the employer did not have a right to terminate the contract for serious misconduct.

The breach did not sufficiently deprive the employer of "substantially the whole of the benefit" it was entitled to under the contract. Therefore there was no repudiation of the contract on the part of the employee.

Seeking legal advice before sacking an employee could save you a big payout

The court's verdict was in favour of the employee. He was awarded the balance of the amount of the redundancy payment he would have received had he not been unlawfully dismissed.

Employers should consult a lawyer before dismissing an employee whose salary is above the unfair dismissal cap. Questions need to be asked and an assessment made based on the alleged breach and whether the actions of the employee sufficiently meet the thresholds of misconduct.

Unlawful termination cases can result in big payouts, which could easily be avoided by obtaining and following legal advice.

Emily Wittig
Employment law
Stacks Collins Thompson

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.