Editors --- "Newstart allowance: eight week non-payment period due to unemployment on the basis of misconduct" [2009] SocSecRpr 46; (2009) 11(4) Social Security Reporter, Article 9

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Newstart allowance: eight week non-payment period due to unemployment on the basis of misconduct

PRIEM and SECRETARY TO THE DEEWR

(2009/737)

Decided: 25th September 2009 by N. Bell

Background

Centrelink made a decision to apply an eight week non-payment period on Priem’s newstart allowance on the basis that she had been dismissed for misconduct.

Priem had been employed for five years as an insurance officer with the Insurance Department with the New South Wales Teachers’ Credit Union. On 6 June 2008 Priem asked another Credit Union staff member to purchase compulsory Third-Party Insurance (a CTP green slip) so she could register her motor vehicle. This request accorded with the Credit Union policy which required all personal business to be conducted through another staff member. On that day the collecting officers who process claims for payment of green slips were not in the office and payment for Priem’s CTP green slip was not processed.

On the same date 6 June 2008, Priem gave her daughter cash to register her vehicle which she did online and paid for it using her credit card. On 10 June 2008 after the Queen’s Birthday long weekend, Priem considered that she had insufficient funds in her Credit Union account to cover the cost of the CTP green slip and asked the same officer who had issued the green slip to cancel it. This was done, however the registration of her motor vehicle was not cancelled. On 18 June 2008, Priem purchased another CTP green slip for her vehicle.

On 1 July 2008, Priem was dismissed from her employment with the Credit Union and her employment separation certificate stated that she was dismissed due to misconduct and breach of company policy and procedure.

On the basis of this, Centrelink decided that Priem had been dismissed from her employment due to misconduct and that an eight week non-payment period should apply. Following this decision, Priem made a claim for unfair dismissal which was settled on 26 September 2008, by deed of settlement between Priem and the Credit Union and provided that Priem could resign from her employment with effect from 1 July 2008 and that she received two weeks pay.

Priem contended that she was not dismissed because of misconduct, but rather, in accordance with the deed of release, she resigned. Centrelink argued that despite the terms of the deed of release, in substance Priem was unemployed due to her misconduct.

Issues and the law

According to s.629(1) of the Social Security Act 1991 (the Act), newstart allowance is not payable to a person for a period of eight weeks if the person is unemployed due either directly or indirectly to a voluntary act of the person or due to their misconduct as a worker. However, s.629(4) of the Act provides that s.629(1)(b) does not apply if the Secretary is satisfied that the person‘s voluntary act was reasonable.

The issue under consideration by the Tribunal was whether Priem was unemployed due to misconduct as a worker; and if not, whether she was unemployed due, either directly or indirectly, to a voluntary act and if so whether the voluntary act was reasonable.

Discussion

Priem maintained that she committed no misconduct, everything she did was aboveboard, there was no intention to deceive and further that everything she did was in accordance with policy. She said she asked another staff member to purchase a CTP green slip for her – in accordance with policy – and she asked the same person to cancel the policy for her. Priem said the officer never asked her for proof of a CTP green slip from another insurer. Priem said the concern was simply to avoid having a cheque bounce and her Credit Union account being overdrawn.

Priem was critical of the Credit Union’s treatment of her and insisted that she had never been given any instruction on the cancellation of insurance in those circumstances. She considered that she had made an error and she should have been given counselling or guidance, but she did not deserve to be dismissed.

Priem said she understood that a car could not be registered without a CTP green slip but considered that even after she had cancelled her CTP greenslip, her car was still registered. Her evidence was that she had driven her car on a few occasions before she finally purchased another CTP green slip. She said she didn’t think she could cancel the registration of a car. She said she knew that without a CTP green slip she was uninsured and that if she had an accident she could be personally liable.

In relation to the deed of release signed by her, Priem said her hands were tied and she had no option but to sign. She was critical of her solicitor who had led her to believe she would be able to “take the credit union to the cleaners”.

Centrelink referred to the Motor Accidents Compensation Act 1999 which states it is an offence to drive a motor vehicle that is not insured ss.8 and that a motor vehicle must not be registered unless a certificate of insurance is produced (s.12).

The Tribunal was also referred to the Personnel Policy of the Credit Union which included the responsibilities to maintain and implement policy in relation to the Credit Union’s moral and legislative requirements, not to do anything or engage in any conduct that may bring the Credit Union into disrepute, to comply with the Credit Union’s policies and operating instructions and to keep their accounts in order. A breach was considered, in the Policy, to amount to misconduct.

The Tribunal was also referred to the Guide to Social Security Law, which states, at Chapter 1.1.U.40 Unemployed due to misconduct (NSA,YA):

Definition

For the purposes of NSA and YA, unemployment due to misconduct refers to a situation in which a person contributes to their own unemployment through their own action or inaction at work. A job seeker who has been dismissed for misconduct can incur an 8-week non-payment period from the date of unemployment.

A person is regarded as becoming unemployed through misconduct if they have been dismissed or given the option of resigning, as a result of an action such as:

▪ deliberate failure to produce/deliver a reasonable amount of work,

▪ unauthorised absences from duty without good reason,

▪ improper behaviour or practices, such as theft, assault or harassment of other employees or customers,

▪ actions that cause serious risk to the health or safety of other employees or customers, OR

▪ actions that threaten the reputation, viability or profitability of the business.

The Tribunal considered that at best, Priem made a gravely serious error – and a very surprising one, given her admitted understanding of the significance of CTP green slips. At worst the Tribunal considered that she obtained the advantage of having her car registered at a time when she did not possess the funds to pay for the mandatory CTP green slip and so should not by law have been able to register her car. Whatever her state of mind, she was in breach of the law and of her obligation to her employer to not act unlawfully or engage in conduct to bring the Credit Union into disrepute.

The Tribunal further noted that Priem was also in default on her Credit Union account and her credit card, amounting to a failure to keep her accounts in order. The Tribunal noted the letter from the Credit Union’s solicitors to Priem’s solicitors, that this failure (an instance of misconduct according to the Personnel Policy) formed part of the background against which she was dismissed.

In Secretary, Department of Employment and Workplace Relations and Payne [2007] AATA 1745 a case concerning the operation of section 629 of the Act, Deputy President Forgie said at paragraph 61:

The transgression must be such that, in light of the contract, the nature of the work and any other relevant fact, the conduct is improper conduct. If the contract of employment or relationship between employer and employee leads to the conclusion that it is very important, or perhaps vital, that the employee meet certain standards of behaviour or exhibit certain qualities, those standards and qualities will be relevant in deciding whether a failure to show them amounts to misconduct.

The Tribunal considered that the Personnel Policy was explicit in the expectation that employees will not engage in conduct that will bring the Credit Union into disrepute. It was clear that do so was considered by the Credit Union to amount to misconduct. That was explicitly stated in the Policy and that is what was stated on her separation certificate. The Tribunal considered it was an implied and essential term of any employment contract that an employee will not engage in conduct in their employment that is unlawful. That is what Priem did and the Tribunal therefore found that her conduct amounted to misconduct.

The Tribunal was not persuaded by Priem’s argument that the effect of the deed of release was to negate that fact for the purposes of the operation of ss.629 (1)(c) of the Act. The Tribunal considered the relevant words in the subsection ‘unemployed due to the person’s misconduct as a worker’. There was misconduct at work, regardless of the terms of the deed of release and that misconduct resulted in her dismissal. The Tribunal found that Priem became unemployed due to her misconduct as a worker and therefore an eight week non-payment period should be applied.

Formal decision

The Tribunal affirmed the decision under review.

[S.P.]