Termination of employment and ‘after acquired knowledge’


An employer may justify the termination of employment of an employee by reference to facts that come to light after the termination occurred, even though they were not a reason at the time of the termination.

For example in the Queensland Industrial Relations Commission decision of Royce v State of Queensland (Department of Justice and Attorney-General) (TD/2016/98), an employee whose employment had been terminated for misconduct sought reinstatement to his former position with the department on the basis that termination was harsh, unjust or unreasonable. The departmental decision maker had found 10 allegations to be substantiated against the employee which supported the decision to terminate his employment. It came to light during the course of the hearing of the application for reinstatement that the employee had claimed a period of 11 days’ sick leave to coincide with another employee’s period of recreation leave to enable the two to travel to Thailand for a holiday. The department brought this matter to the attention of the commissioner. The commissioner commented in his decision that the nature and degree of the employee’s deceit in respect of that matter, served ‘to reinforce the validity of the decision’ to terminate his employment.

Another example of an employer relying on information which came to light after an employee was dismissed is Metricon Homes Pty Ltd v Bradley (2009) 181 IR 115. The employee worked in IT and held administration privileges. The employee abused his administration privileges to gain access to, copy and download private information and some highly confidential information from other employees’ emails accounts. A significant amount of personal and confidential information was discovered on the hard drive of a computer which had been allocated to Mr Bradley for his use. Metricon executives confronted Mr Bradley with the results of their inquiries to that point and being dissatisfied with his explanations proceeded to terminate his employment on the same day.  The commissioner who heard the matter at first instance was critical of Metricon for acting without having all of the relevant information as it had not completed its inquiries at that time. The commissioner found although there was a valid reason for the termination, the summary dismissal as opposed to a dismissal on notice, was harsh and ordered Metricon to pay the former employee the equivalent of four weeks’ notice. Metricon appealed to the full bench of the Australian Industrial Relations Commission arguing that the commissioner did not properly take the results of the post-termination inquiries into account. The full bench found this was an error in the exercise of the commissioner’s discretion. The full bench commented that employees in the information technology field who have access or potential access to private information on the IT systems of their employers are in a position of trust. Conventional standards of honesty are expected of such employees. The full bench pointed out that the full extent of the employee’s misconduct, as revealed by the inquiries after the termination, was very significant and they placed little weight on the fact Metricon terminated the employment before the full extent of the misconduct was known. The misconduct had already occurred.

Two important points to note about this evidentiary issue of ‘after acquired knowledge’ are firstly, that the improper conduct by the employee, which the employer did not know at the time of the termination of employment (and which are subsequently discovered later), must have occurred during the employment and before the actual decision to terminate was made. The second point is that these facts, which existed at the time of termination of employment but which came to light subsequently, might justify the termination of employment when it would otherwise be harsh, unjust or unreasonable. Whether the employer can rely on the ‘after acquired knowledge’ to justify the termination of employment will depend on all the circumstances. For example, a circumstance likely to justify a termination is where fraud or dishonesty of the employee caused or contributed to the employer’s state of ignorance. Whereas a circumstance likely to weigh against reliance on the ‘after acquired knowledge’ would be that the employer had failed to make reasonable inquiries which would have brought existing facts to its knowledge before the termination of employment occurred. See: Lane v Arrowcrest Group P/L (1990) 43 IR 210 at 237-238.

In any event, reasons known to the employer and not relied upon at the time of termination cannot generally be later relied upon to justify the termination. This is because the employer has, in effect, waived its rights to rely upon those reasons to justify termination.

If you have any queries concerning this article or any queries concerning employment law generally, please contact Karen Watson or the leaders of the Workplace Law Team: Samantha Kane, Fiona Black or Lara Hues.