Defence Department case at Fair Work Commission shows fired staff have path to reinstatement

For those based in Canberra, where the federal public sector is the largest employer across its many agencies and authorities, having one's employment in the APS terminated is, to put it lightly, a real problem.

Thankfully, the law provides protections. Under the unfair dismissal regime in the Fair Work Act 2009, a fired public servant can argue that their dismissal was harsh, unjust or unreasonable in the Fair Work Commission.

The focus of this month's column is on what happens if they succeed.

Can a dismissed public servant get their job back? The answer is yes, sometimes. A recent case, involving a bizarre and heavy-handed dismissal by the Department of Defence, provides a timely illustrative example.

First, some context. Section 390 of the Fair Work Act provides that the Fair Work Commission must consider the appropriateness of reinstating an unfairly dismissed employee before it can consider alternative remedies (such as compensation - up to a maximum of six months).

This sequencing was deliberate; it has been said by the commission that "Parliament intended to give primacy to reinstatement". Reinstatement can also be accompanied by related remedies, such as an order for continuity of service and an order to restore lost pay.

Understandably, an employer who dismisses an employee is unlikely to want them back, no matter what the Fair Work Commission thinks of the fairness or otherwise of the dismissal. Accordingly, despite being the primary remedy in the Fair Work Act, reinstatement is by no means the most common remedy.

Of course an employee might not want their job back - they might instead be seeking vindication and compensation. But for those who do seek reinstatement, they are often met by a response that the employer has lost trust and confidence in the employee, such that reinstatement is impractical.

This is where the battle is typically fought: is the employer's assertion of a lack of trust and confidence "soundly and rationally based"?

In one of the leading cases, Perkins, the court highlighted the need to "carefully scrutinise" an employer's objections to reinstatement. Welcoming an employee back to the workplace, when the employer believed them guilty of wrongdoing, may well be difficult, embarrassing or inconvenient for the employer. But, as was said in Perkins, such problems are "of the employer's own making".

Which takes us to Gao v Department of Defence, a decision of the Fair Work Commission last month.

Mr Gao was an EL2 with the department and an army reservist. Early in the morning in September 2020, Mr Gao and his wife were awoken by the Australian Federal Police executing a search warrant on their home. They were strip-searched and told Mr Gao was facing life imprisonment. It was a nightmarish experience, particularly as it was unfounded - almost a year later, Mr Gao was told that no charges would be laid.

Nevertheless, in September 2021 Mr Gao was dismissed from his employment with Defence following an APS Code of Conduct investigation.

The details of the case are lengthy and not material for present purposes, so our summary will be brief. In short, Mr Gao had taken photos on his personal phone of certain work documents, largely relating to his own employment (references and so on). It was alleged, and the delegate accepted, that in doing so Mr Gao breached Defence policies around information security.

Mr Gao lodged unfair dismissal proceedings - and succeeded. In a noteworthy decision, Commissioner Bernadette O'Neill was critical of Defence's heavy-handed treatment of their employee. The commissioner held that there was no valid reason for dismissal, as the Code breaches were minor, explainable and did not warrant termination of employment, and that, in any event, dismissal was harsh in the circumstances.

Having accepted that the dismissal was unfair, the commissioner considered whether to order reinstatement. Defence submitted it was not appropriate, with Mr Gao's conduct having "irreparably damaged the relationship." Commissioner O'Neill's analysis of this submission is noteworthy for considering two issues commonplace in APS reinstatement disputes.

First, public servants have a relative advantage in seeking reinstatement over private sector colleagues given the size of most public sector agencies.

"The respondent is a very large and varied organisation and the applicant has skills that could be utilised in different parts of the organisation," noted O'Neill.

"The applicant has also demonstrated a willingness to undergo training."

Particularly in large agencies like Defence, it will be difficult for the employer to argue that the lack of trust and confidence is so universal that an unfairly-dismissed public servant could not be reinstated elsewhere within the agency. (Arguably, given the Commonwealth is an indivisible legal entity, reinstatement could even take place at another agency - although this approach has not found favour in the commission or APS).

Secondly, the case raised a common dilemma - if a dismissed employee challenges their dismissal, in doing so have they showed a lack of contrition, such that an employer cannot trust they won't repeat their alleged misconduct?

Defence submitted that "the applicant failed to be remorseful and recognise his responsibilities to comply with its policies, and that this meant the behaviour posed an ongoing risk to Defence". Obviously in cases where the alleged wrongdoing is unfounded in the view of the commission, this is irrelevant. But in Gao, and many cases, the situation is somewhere in the middle - some failure to comply with workplace policies, but insufficient to ground a valid reason for dismissal.

Commissioner O'Neill did not accept Defence's submissions.

"The applicant has acknowledged his responsibilities and I accept his evidence that he is deeply contrite and consider that his remorse is genuine and sincere. While the applicant exhibited poor judgment by his actions, I am satisfied it is highly unlikely to be repeated," she said.

This element of the decision should still serve as a reminder for other public servants - in disputing allegations or a dismissal, there can be merit in nonetheless indicating contrition. Ultimately, Commissioner O'Neill ordered that Defence reinstate Mr Gao to either his prior role or "to another equivalent and appropriate EL2 role in Defence, noting his skills and experience".

In sum, the good news for public servants who are unfairly dismissed is that reinstatement is typically available. The Gao case underscores that the Fair Work Commission will carefully scrutinise a public sector agency's claim to have lost trust and confidence.

As a Federal Court judge said two decades ago, resort to assertions around a lack of trust and confidence "cannot be a magic formula for resisting" reinstatement. That remains true today.