Unfairly dismissed despite serious safety breach

In this case, an employee dismissed for a significant breach of safety procedure has been successful in his unfair dismissal application.

Facts

The employee was engaged by the employer on one of the country’s largest natural gas operations. The employee was appointed to the role of Acting Permit Coordinator in 2012.  He was subsequently terminated from this role in early 2014 and he commenced an unfair dismissal application soon after.

The circumstances of the incident and the employee’s role were not in dispute.

As part of ensuring that the necessary safety controls were in place, the employer operated a permit system when conducting maintenance and repairs on equipment.  A person who needs to perform work then seeks a permit to work from the Permit Coordinator whose job it is to ensure that jobs do not conflict with other jobs and compromise safety. The Permit Coordinator also closes off permits at the conclusion of the work.

The incident that led to the employee’s termination related to a compressor that needed to be repaired and thus needed to be shut down.  It was critical in this case to note that:

“Associated with the compressor is a fire and gas detection system. As the name suggests this system is a critical safety system. In the event of a fire or a gas leak an alarm is sounded which automatically causes the compressor to shut down and alerts the workers.  If the fire and gas detection system is not operative no alarm will sound, creating a risk to health and safety.”

The employee was responsible for the relevant permits for the job.

The work commenced and the employee left the site for 14 days.  The work was done and the clearance was signed for the electrical isolations.  However, the certificate relevant to the detection system was not cancelled and remained isolated.

It was not disputed that the fire and gas detection system remained off line for about a month.

During the intervening period, the operators completed daily checks and the isolation was not noted. Further ‘the person who completed the “integrity critical maintenance work instruction” did not note …that the isolation key was in bypass and no action was taken by anyone in response to that report’.

About a month on, a gas leak was detected and it was found that the fire and gas detection system was still turned off.   An investigation was subsequently conducted.

The employer’s Operations Manager reviewed the investigation report and asked for the names of those involved. He then determined what he considered the order of culpability and made the recommendation to terminate the employee’s employment.  The employee was dismissed for misconduct.

The decision

Deputy President Gooley said that the Operations Manager’s evidence appeared to be that the employee was responsible for closing out the permit.  However, it was also a fact that the employee was not on the site when the permit was to be closed out.

DP Gooley noted, in relation to the Operations Manager’s decision to terminate the Employee:

“[34] He acknowledged that there were a number of people who could have stopped the breach but he focused on how the incident started. He identified the critical reason for recommending the termination of [the employee’s] employment was that [the employee] permitted the compressor to run after 9 February 2014 and he did not either tell the operators to turn it off or turn on the fire and gas detection system.”

The other people who could have stopped the breach were also disciplined, but were not terminated.  It was accepted that the employee had not intended to cause the breach but had made a deliberate decision to avoid proper procedure.

DP Gooley considered whether there was a valid reason for the dismissal, finding that:

“The employee’s] conduct in authorising the de-isolation of the compressor without ensuring that the Inhibit Certificate was closed off and his continued failure to notice that the Inhibit Certificate was not closed off was a breach of a significant safety procedure. There was a valid reason for the termination of his employment.

To the extent that [the employer] relied upon the running of the compressor without the fire and gas system being operational to justify his termination, I do not accept this submission. While I accept that [the employee] should have been alert to the existence of the outstanding permit, [the employer’s] safety systems did not work. There were a string of employees who did not comply with the tenets. That the fire and gas system was tagged out was obvious. That no operator noticed this is to say the least surprising.”

Despite DP Gooley finding that there was a valid reason for the dismissal in the form of the significant breach of procedure, she also found that there were significant mitigating factors.  To this end DP Gooley stated:

“There is no evidence that [the employee] had at any time in his 27 year work history any performance or conduct issues. His most recent performance appraisal was positive.

… I accept that there was a failure in [the employer’s] safety systems…[The employer’s] checks and balances did not pick up that [the employee] and other employees were not completing permit applications in accordance with those procedures. Had this been done earlier this incident may have been prevented. This was a serious failure.

…. I accept that his breach was serious. I accept that other employees who were involved in this incident were not dismissed because they were assessed as less culpable. It is not clear to me why the persons who signed off on the first Hot Work Permit were treated differently. …  That another Permit Coordinator who was not dismissed equally failed to have regard to the existence of the Inhibit Certificate on the whiteboard, supports a finding that [the employee’s] dismissal was harsh”.

DP Gooley ultimately held that the dismissal was harsh and therefore unfair. She ordered that the employee be reinstated.  In a subsequent decision, DP Gooley also ordered that the Employee was entitled to compensation for lost earnings to the value of $35,347.74.

Appeal

The employer appealed the orders for compensation and reinstatement, and the Full Bench of the Fair Work Commission was asked to determine the appeal.  The appeal against reinstatement was dismissed, however the Full Bench overturned the compensation order.  The Full Bench relevantly commented:

“The importance of safe operations on the employer’s worksite cannot be underestimated; we are of the view the Deputy President made a significant error in exercising her discretion to award compensation in addition to the reinstatement of [the employee]. The disablement of the Fire and Gas Detection System exposed persons and plant to a potential catastrophic event. In having regard to the breach of safety and in seeking to act as a deterrent for other breaches of safety procedures or policies at the workplace, no compensation ought to have been ordered.”

Lessons for Employers

There are a number of lessons for employers arising out of this decision.  One relates to the fact that although there was a significant safety breach in this instance, and a valid reason for dismissal found, the mitigating factors still meant that the dismissal was unfair.  It is important for employers to take into account all relevant factors, including an employee’s length of service and performance history.

In addition, employers must also ensure disciplinary measures are applied consistently, as this appeared to be a particular sticking point for the employer in this case.

It was also significant that the Full Bench overturned DP Gooley’s order for compensation, noting that the serious breach of safety procedures meant that the employee should not be entitled to compensation in addition to reinstatement.