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Home | Member Updates | Federal Court refuses judicial review of cannabis smoker termination 

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Federal Court refuses judicial review of cannabis smoker termination

7 March 2024

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Summary: The Federal Court of Australia declined an application for judicial review of a Fair Work Commission (FWC) decision regarding the unfair dismissal of an employee who was terminated for violating the employer's drug and alcohol policy.

The employee, dismissed for cannabis use, raised mitigating factors, including stress relief and mental health concerns. Both the Full Bench of the FWC and the Federal Court upheld the dismissal, emphasizing the importance of assessing such cases thoroughly.

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The Federal Court of Australia has refused an application for judicial review or a decision of the Fair Work Commission in respect of an unfair dismissal matter. In considering the application, of particular importance was whether the original FWC decision, or the appeal decision, or both, were amenable to review in circumstances where the Full Bench had not granted leave to appeal.

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Key takeaway points

The major importance of this case is its thorough consideration of a highly technical issue in relation to which decision is amenable to judicial review in circumstances where a Full Bench of the FWC has refused an appeal from an original decision. From a practical perspective, it is a reminder that if you have been involved in a matter that has been the subject of a Full Bench decision, either party may make application for judicial review, and it is prudent to consider both the original and appeal decisions as to the likelihood of success.

Another key reminder arising from the factual matrix of the case – ie that there had been serious misconduct found, but significant mitigation was pleaded – is the importance of assessing the likely way in which the factors in s 387 will be weighed in any particular case of unfair dismissal that your university is involved in, which will inform your strategy for risk management. 

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Termination for breach of drug and alcohol policy

The Applicant was dismissed for serious and wilful misconduct for breach of the employer’s drug and alcohol policy. On his return from annual leave, he was subject to a random drug test and was stood down while confirmatory testing was conducted and returned a positive result for cannabis. Following a show cause meeting, his employment was terminated. It was not in issue that he was aware of the company’s zero tolerance policy, or that he had clearly breached it.

At first instance before the FWC, the Applicant raised mitigating factors including the context in which he smoked cannabis (to alleviate stress due to both work and personal issues), his employment history, and the impact of termination on his mental health and financial circumstances. These factors, as well as the Applicant’s remorse and apology, were taken into account by the Commissioner when exercising her statutory requirement to consider ‘’any other factors that the Commission considers relevant’’ pursuant to s 387(h) of the Fair Work Act 2009.

The Commissioner cited the following passage from the Full Bench decision in Parmalat Food Products Pty Ltd v Wililo:

“… [h]aving found a valid reason for termination amounting to serious misconduct and compliance with the statutory requirements for procedural fairness it would only be if significant mitigating factors are present that a conclusion of harshness is open” 

 and went on to find that: 

“The Respondent, having complied with the statutory requirements for procedural fairness, it is then, consistent with Full Bench authority, only if significant mitigating factors are present, that a conclusion of harshness is reasonably open”’. 

The Commissioner went on to find that weighing all the relevant factors, they did not support a finding that the dismissal was harsh, unjust or unreasonable. 

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Full Bench refuses leave to appeal

The Applicant appealed to a Full Bench of FWC, arguing that Parmalat imposed a decision rule that if an employer submits that an employee has committed serious misconduct and the Commission finds that the employee has been afforded procedural fairness, a conclusion of harshness is only open if significant mitigating factors are present. The Full Bench disagreed, and held:

“In the Parmalat Case and since, the Full Bench has made clear that a finding of serious misconduct must be made [sic] to the Commission and not merely an assertion made by the employer. In this matter the Commissioner satisfied herself that the conduct engaged in by Mr Hancock occurred and that it was appropriate to characterise the conduct as serious misconduct.

We are satisfied that no jurisdictional error on the part of the Commissioner has been demonstrated … she weighed up all of the considerations set out in s 387 including any findings in relation to mitigating circumstances before concluding that Mr Hancock’s dismissal was not unfair”.

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Application for judicial review

The Applicant made application for judicial review of the FWC decisions pursuant to s 562 of the FW Act and s 39B of the Judiciary Act 1903 (Cth) seeking writs to quash the orders of the FWC and direct it to determine the original application in accordance with law.

A key consideration was which of the FWC’s decisions was amenable to judicial review, as being the ‘’substantive and operational decision’’, given that the Full Bench had not granted permission to appeal. After consideration of the authorities, Meagher J concluded that they do not operate to prevent a Court from issuing relief against a primary decision where the Full Bench refuses permission to appeal. The decision at first instance was therefore conclusive and operative, however Meagher J was not of the view that the Full Bench decision should be effectively ignored, with the reasoning being:

“… this is a matter of discretion to be informed by the circumstances of the case. In this instance, I am not satisfied that it is in the interests of the administration of justice to circumvent the appeal process without first considering the Full Bench Decision. Accordingly, I do not consider that relief should be issued pursuant to s 39B of the Judiciary Act unless the Full Bench Decision is affected by jurisdictional error, or there are compelling reasons to effectively ignore the Full Bench decision’’.

In respect of jurisdictional error, the Applicant submitted that the Full Bench had erroneously thought that his case was premised on Parmalat applying where an employee commits serious misconduct, and had failed to deal with the central argument as to why it was in the public interest that permission to appeal be granted in relation to the status of the principle derived from Parmalat.

Meagher J rejected this, finding that the Full Bench had first determined that Parmalat does not impose a decision rule that if an employee submits that serious misconduct occurred which

resulted in termination, and if procedural fairness was afforded to the applicant, a finding of harshness is only open where significant mitigating factors are present, and had gone on to reiterate that Parmalat and previous Full Bench decisions have established that a Commissioner must be satisfied that serious misconduct had occurred, and in this matter the Commissioner had been so satisfied.

Ultimately, Meagher J dismissed the application for judicial review because:

  • Even if the Commissioner had reflected Parmalat in an overly restrictive manner, she did not ultimately apply, or have regard to, the relevant principle from the case, but had undertaken a balancing exercise of the considerations set out in s 387 of the FW Act and so appropriately exercised her discretion.

  • Therefore, if in fact the Full Bench had failed to consider the Applicant’s argument, no appealable error occurred on the basis of the Commissioner’s consideration of Parmalat.

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