FWC orders reinstatement after flawed investigation

The Fair Work Commission (Commission) has reinforced that employers must carefully distinguish between an employee’s individual conduct and broader systemic failures when responding to serious workplace incidents. In a recent case, the Commission found that although a food safety incident involved multiple procedural failures, the employer unfairly singled out one employee while overlooking the actions of others. The employee, a long-serving team leader, was reinstated with continuity of service and backpay.

Key Facts

Ms Linda McFadden had worked for Mars Australia Pty Ltd (Mars) (and its predecessor) for approximately 23 years without any prior disciplinary issues.

The dismissal arose after a forklift punctured a container holding approximately 485 kgs of peppermints, creating a potential contamination risk. Following discussions between Ms McFadden and a Quality and Food Safety Specialist, it was agreed that approximately half of the product would be discarded and half salvaged. However, the agreed approach was not followed. Instead:

• operators discarded only around 80 kgs of product;
• approximately 400 kgs of product was repackaged;
• inventory and quality assurance systems recorded conflicting information;
• product was released before required approvals had been completed; and
• several stages of Mars’ ‘Nonconformance Incident Process’ were either missed or performed out of sequence.

Following an internal investigation, Mars concluded Ms McFadden had failed to ensure the agreed food safety response was implemented and had failed to appropriately escalate the issue. It characterised this as misconduct, citing a loss of trust and confidence in her leadership, and terminated her employment.

Ms McFadden subsequently lodged an unfair dismissal application.

Key Findings

No valid reason for dismissal

The Commission accepted that the agreed food safety response had not ultimately been carried out. However, the critical question was whether Ms McFadden’s own conduct justified dismissal. After reviewing extensive witness evidence, CCTV footage and company records, the Commission found:

• Ms McFadden did not instruct employees to depart from the agreed plan;
• Ms McFadden reasonably believed the agreed position had been substantially followed;
• multiple employees failed to comply with Mars’ food safety procedures;
• numerous errors occurred within Mars’ inventory and quality assurance systems; and
• responsibility for those failures extended well beyond Ms McFadden.

Importantly, the Commission observed that Mars’ own procedures had been breached by several employees at various stages of the incident. Rather than investigating those broader procedural failures, Mars focused almost exclusively on Ms McFadden’s conduct. The Commission concluded there was no valid reason for dismissal because her conduct did not amount to misconduct warranting termination.

A significant feature of the decision was the Commission’s criticism of Mars’ investigation process. Ms McFadden provided a detailed written response explaining how multiple people had failed to comply with the applicable food safety procedure and identifying inconsistencies in the company’s handling of the incident. Rather than considering whether those broader failures warranted further investigation, Mars viewed her explanation as an attempt to avoid responsibility.

The Commission found this approach fundamentally flawed.

It held that the investigation became improperly focused on establishing Ms McFadden’s culpability instead of objectively examining what had actually occurred across the entire incident. The Commission also considered that offering Ms McFadden the opportunity to resign before the disciplinary process had concluded suggested an element of prejudgment.

Length of service remained highly relevant

The Commission also placed significant weight on Ms McFadden’s employment history. She had been a long-standing employee, serving the company for a total period of 23 years, with no prior disciplinary history or performance concerns and had consistently held leadership positions during her tenure.

These factors weighed heavily against dismissal, particularly where the alleged misconduct arose from a single incident involving widespread procedural failures. The Commission also accepted that dismissal would have significant financial and personal consequences for Ms McFadden and her family, noting that she had moved twice to remain close to her workplace and had structured her life around her job in order to support her two sons, one of whom has special needs.

Mars argued reinstatement was inappropriate because it had lost trust and confidence in Ms McFadden’s leadership. The Commission rejected that submission, arguing that:

“…while Ms McFadden played a role in the events on 14 October and following, she was not responsible for what were multiple breaches of the food safety procedure. Her actions do not provide a sound basis to conclude the relationship of trust and confidence is irreparably damaged or destroyed.”

Accordingly, reinstatement remained the appropriate remedy.

Key Takeaways

Employers investigating serious misconduct should keep the following principles in mind:

• Investigate the entire incident, not just the conduct of one employee;
• Assess whether procedural failures are individual or systemic before determining accountability;
• Avoid reaching conclusions before all relevant evidence has been considered;
• Ensure allegations reflect what the evidence actually establishes, rather than assumptions about leadership responsibility allocated to an employee;
• Length of service and unblemished disciplinary record remains an important mitigating factor when determining whether dismissal is proportionate; and
• Claims that trust and confidence have been lost must be supported by objective evidence rather than disagreement with an employee’s explanation of their failure.

This decision serves as a reminder that even where workplace incidents involve significant operational or safety risks, dismissal will not necessarily be justified if the employee’s conduct is only one part of a broader organisational failure.

Learn More

If you would like advice on any matters raised in this article, please contact NRA Legal on 1800 572 679 for a confidential conversation.

Ms Linda Florence McFadden v Mars Australia Pty Ltd [2026] FWC 2772