When a manager gives a direction and an employee refuses it, or the refusal comes with abuse, the disciplinary process begins whether you are ready for it or not. The incident itself is rarely what sinks an employer. What sinks an employer is the response: a decision made in anger, a process run without evidence, or a termination that ignores the employee's right to be heard.
The process you run over the following days should end with a documented, proportionate decision: a coaching conversation, a formal warning, a change of duties, or a termination. If the employee challenges the outcome in the Fair Work Commission, the Commission looks at both the reason for the dismissal and the way you reached it. Even conduct that clearly qualifies as serious misconduct does not excuse a process that was not fair. And one common assumption is wrong from the start: standing an employee down without pay while you investigate is not something the Fair Work Act 2009 (Cth) lets you do whenever you like.
What you need in place before you start
Work through these before you take any formal step. Each one is a prerequisite for the next, and the first two are the ones that decide whether everything after them can hold up.
- The direction and the refusal, recorded: What was asked, by whom, when, and what the employee said or did in response. A direction only counts if it was lawful and reasonable: within the employee's role, consistent with the contract and the law, and reasonable in the circumstances. A refusal of a direction that was not lawful and reasonable is not insubordination at all.
- The evidence, identified early: Witnesses, emails, chat logs, CCTV and rosters. The Commission decides whether the alleged conduct actually occurred on the balance of probabilities, so the material you gather now is what any later decision will rest on. If the evidence is not gathered, the decision has nothing to stand on.
- Your governing documents: The employment contract, the applicable award or enterprise agreement, and your policies such as a code of conduct and a disciplinary procedure. They set notice periods, suspension rights and who makes the decision, and they are the first place a tribunal will look when assessing what was fair.
- The employee's status: Whether they are on probation, casual or permanent, and whether they have completed the minimum employment period of six months, or twelve months if you are a small business employer with fewer than fifteen employees. An employee who has not completed the minimum employment period cannot bring an unfair dismissal claim, but the other risks, including general protections claims, remain.
- Interim arrangements: Who covers the employee's duties while you investigate, and whether the situation requires you to move the employee, change their shift or suspend them on full pay. Decide this deliberately and record the reason, rather than reacting on the spot.
The prerequisite that most often trips employers up is the first one. If the direction was not written down, or was not clearly lawful and reasonable, the whole process is built on sand. The second is assuming the minimum employment period protects you from every claim, which it does not.
The response process, step by step
The order below is the order the process imposes. Skip a step and you will usually have to go back to it later, with a claim already on foot.
Secure the workplace and assess immediate risk
Your first obligation is safety. If the conduct involved a safety instruction or created a risk to staff, customers or the business, act to remove the risk before you do anything else. Options include alternative duties, a different shift or location, or a short suspension on full pay where your contract, award or enterprise agreement allows it.
Suspension is where employers misunderstand the law. Section 524 of the Fair Work Act 2009 (Cth) allows an employer to stand down an employee without pay only in limited circumstances: industrial action, a breakdown of machinery or equipment, or a stoppage of work for which the employer is not responsible. Investigating alleged misconduct is not one of those circumstances. An unpaid stand-down while you investigate is therefore high risk. If you need the employee away from the workplace, suspension on full pay under the contract or an applicable agreement is the safer route, and it should be communicated neutrally as a precaution, not as a finding of guilt.
Investigate before you form a view
The purpose of the investigation is to find out what happened, not to confirm what you already suspect. Interview the witnesses in private, collect the documents, emails, chat logs and CCTV, and keep clear notes of everything. The file you build here is the file that will be tested later.
- Keep an investigation file: who was interviewed, when, and what they said. Note the date and time of every step.
- Maintain confidentiality so witnesses and the employee are protected, and warn everyone involved not to discuss the matter.
- Allow a support person at meetings where the employee requests one, if your policies or the applicable industrial instrument require it.
- Keep the investigation scope proportionate. The more serious the allegation, the more thorough the inquiry needs to be, but a single incident of defiance rarely needs a month of interviews.
If the matter reaches the Fair Work Commission, it will decide on the evidence before it whether the conduct actually occurred, not whether you held an honest belief on reasonable grounds. The quality of your investigation file is therefore the quality of your defence.
Put the allegations to the employee and invite a response
Before you decide anything, the employee is entitled to know the case against them. A show cause letter should set out the specific allegations, the evidence you are relying on, and a reasonable time to respond, and it should invite the employee to bring a support person.
Then actually listen. The response may reveal a misunderstanding, an unclear instruction, a health issue or inconsistent treatment of other employees. Those explanations may not change the outcome, but they must be considered before you decide. The fairness factors in s 387 of the Fair Work Act 2009 (Cth) require that the employee was notified of the reason for dismissal and given an opportunity to respond to it, and that any unreasonable refusal of a support person is weighed against the employer.
Decide the outcome on the evidence
Assess the conduct against the definition of serious misconduct: deliberate behaviour that is inconsistent with continuing employment, which includes causing serious and imminent risk to the health and safety of another person or to the reputation or profits of the business, theft, fraud, assault, sexual harassment, or refusing to carry out a lawful and reasonable instruction that is part of the job. The Fair Work Ombudsman's guidance on who does not get notice sets this out in practical terms.
Then weigh the outcome. Proportionate responses include coaching or training, a formal warning with a performance improvement plan, a change of duties or reporting lines, dismissal on notice, or summary dismissal. Check the contract, award and enterprise agreement for any requirements, and check how similar conduct has been treated before. The Fair Work Commission's guidance on conduct notes that inconsistent treatment of previous similar conduct by other employees is a relevant issue.
- Is there a valid reason related to the employee's conduct, including its effect on the safety and welfare of other employees?
- Is the proposed outcome proportionate to the conduct, the employee's history and any remorse?
- Would the employee have understood the direction and the consequences of refusing it?
- Does the contract, award or enterprise agreement impose any step, such as a warning, before termination is open?
If you are considering summary dismissal, the conduct must meet the serious misconduct threshold and you must be able to point to the evidence that supports it. If the conduct is serious but falls short of that threshold, dismissal on notice or payment in lieu may still be open to you.
Document the process and communicate the decision
Whatever the outcome, it should be recorded and communicated in writing. Keep the investigation notes, meeting minutes, correspondence and any signed acknowledgements in one file, because consistency and documentation are what a later challenge will be tested against.
If you dismiss on notice, you must give written notice of the day of termination and either work out the notice period or make payment in lieu under s 117 of the Fair Work Act 2009 (Cth). If you dismiss for serious misconduct, no notice is required under s 123(1)(b), but you must still pay the employee's outstanding entitlements: time worked, accrued annual leave and, in some cases, long service leave. The Fair Work Ombudsman recommends written confirmation of the termination as best practice even where notice is not required.
If the employee files an unfair dismissal application, it must be lodged within 21 days of the dismissal taking effect, so treat any correspondence from the Commission as urgent and respond promptly rather than assuming the claim will fail.
Where employers get held up
The pattern of claims shows the same few missteps recurring. Keep an eye on these:
- Deciding before the evidence is in: The Commission decides whether the conduct occurred on the balance of probabilities, so a decision made on assumption rather than evidence is hard to defend, no matter how serious the allegation felt at the time.
- Standing the employee down without pay: Section 524 of the Fair Work Act 2009 (Cth) does not cover misconduct investigations, so an unpaid stand-down can itself become a separate claim on top of the dismissal.
- Skipping the employee's response: Failing to put the allegations and invite a response is the fastest way to turn a valid dismissal into an unfair one, because it strikes at the core of the s 387 factors.
- Treating a claim as hopeless: Even a strong case can be lost on process. An unfair dismissal application must be answered within strict timeframes, and ignoring it does not make it go away.
When to get advice before you decide
Employment lawyers are most useful before the decision is made, not after a claim arrives. A short review at the right time costs far less than defending a process that was run on a misunderstanding of the law.
- Review the contract, award, enterprise agreement and policies for notice periods, suspension rights and decision-making requirements.
- Advise on whether the direction was lawful and reasonable, and whether the conduct meets the serious misconduct threshold.
- Check whether the proposed interim measure, including any suspension, is authorised by the contract or an applicable agreement.
- Draft the show cause letter and the outcome letter, and stress-test the s 387 fairness factors before you commit to an outcome.
- Advise on exposure to general protections claims. If the employee has exercised a workplace right, such as making a complaint, termination must be about the conduct, not retaliation, because s 340 of the Fair Work Act 2009 (Cth) prohibits adverse action for that reason.
- If a claim is filed, respond to it, attend conciliation and, if needed, run the case at arbitration with the investigation file as the centrepiece.
Give the employee their hearing before you decide
The step that determines whether the whole process succeeds is the one employers are most tempted to skip: giving the employee a genuine chance to respond and considering that response before deciding. The Commission does not ask whether you had reasonable grounds to believe the conduct occurred. It asks whether the conduct occurred, on the evidence, and it weighs the s 387 fairness factors alongside the reason for dismissal. A documented direction, a fair investigation and a genuine hearing are what turn a justified dismissal into a defensible one.
Run the process in order: secure the workplace, investigate on the evidence, put the allegations, hear the response, and decide proportionately. Keep the file from start to finish. Remember that summary dismissal is only available for serious misconduct, that unpaid stand-downs are rarely authorised, and that entitlements must be paid even where no notice is required. If you are unsure at any point, take advice before you decide, not after the claim arrives.