Butterfly Systems Pty Limited v Eduard Sergeev [2021] FWCFB

23 Apr Butterfly Systems Pty Limited v Eduard Sergeev [2021] FWCFB

The case of Butterfly Systems Pty Limited v Eduard Sergeev [2021] FWCFB considers whether non-compliance with a lawful and reasonable direction is a sufficient cause for summary dismissal. Section 385 of the Fair Work Act 2009 (Cth) provides that a termination must not be harsh, unjust, or unreasonable.

Mr. Sergeev, a software developer for Butterfly Systems Pty Limited (“the Company”), was dismissed without notice by the Company’s CEO, Ms. Luo, for his non-compliance with a direction to perform work on 24 March 2020.

At all relevant times, the Company was a small business and claimed that the dismissal was consistent with the Small Business Fair Dismissal Code (“the Code”). Relying on the Code Checklist, Ms. Luo argued that Mr. Sergeev was dismissed for serious misconduct being abandonment of employment and refusal to follow a lawful and reasonable direction.

The Full Bench of the Fair Work Commission held (at [18]) that to justify a summary dismissal the employer:

1. Must genuinely believe the conduct was sufficiently serious to justify termination; and
2. The belief must be on reasonable grounds.

It was held that there is “little doubt” that the Company held the requisite belief (at [19]) but the belief was not on reasonable grounds because:

1. The decision was made abruptly, within two hours; and
2. There was no investigation conducted by Ms. Luo.

The Full Bench held that a refusal by an employee to comply with a lawful and reasonable direction  will almost always provide a valid reason for dismissal. Mr. Sergeev’s failure to comply with a reasonable and lawful direction was misconduct, but not serious misconduct that justified summary dismissal – dismissal on notice would have been appropriate (at [45]).

The notification of dismissal by text message with immediate effect, moreover, was unfair as Mr. Sergeev had no opportunity to respond.

Ultimately, the Full Bench found that Mr. Sergeev’s dismissal was harsh under section 387 of the Fair Work Act. Notwithstanding this, they held that, when assessing the appropriate remedy, the dismissal would have been justified given the failure to comply with a lawful and reasonable direction and that his employment could have been reasonably terminated by giving two weeks’ notice. This would give sufficient time to notify Mr. Sergeev of the reason for his dismissal and provide time for him to respond.

The Full Bench held that Mr. Sergeev’s employment could have continued for a further four weeks, including the two weeks’ notice period. In these four weeks, Mr. Sergeev would have earned $9,230.77. After a deduction of 20% to account for the misconduct, Mr. Sergeev was awarded $7,384.62 as compensation for the unlawful dismissal.