The FWC has reinstated a long-serving Bluescope Steel employee after finding the company's operations manager botched an investigation and left it too late to involve HR.

Commissioner Bernie Riordan identified "significant gaps and errors" in the operations manager's probe at the company's Port Kembla steel mill number 1 coke plant, due to his inexperience "in conducting these types of investigations".

"Questions that should have been asked were not asked, individuals were present at interviews as witnesses when they should have been identified as being conflicted and conclusions were drawn from information that appears to have had no substance", he said.

In weighing up the fairness of the dismissal of the worker after 23 years' service, he also found that the "dedicated and experienced HR department" at Bluescope became involved in the process "too late".

Commissioner Riordan said the company should have asked the dismissed worker's colleagues "numerous and obvious questions" that "were simply not raised".

He noted the longstanding practice at Bluescope and its predecessors "that wages employees are not called as witnesses by the employer against another employee", saying he could see the "pragmatism and benefit" of such an approach.

But if Bluescope intended to continue that practice, then "the Bluescope HR Department need to become involved at an early stage of the disciplinary process".

The company dismissed the heating regulator operator for failing to interrupt his lunch break to respond to an alarm that monitored gas levels.

It found that he breached a "cardinal rule" by ignoring the alarm, and this justified his dismissal.

The company said in its May 3 "show cause" letter that the gas alarm "is a critical alarm covered by a critical procedure that relates to the safety of people present on the plant and must assume a higher priority than finishing lunch".

"The flexibility, time requirement and self managed nature of your work on that day would have allowed you to both respond to the alarm and then continue with your meal break".

It also alleged he had misled the company, lied, and shifted the blame to his colleagues.

Commissioner Riordan said that failure to comply with the company's "critical" safety procedures "cannot and should not be tolerated" and breaches, whether deliberate or not, can provide a valid reason for dismissal.

But he found that even though the operator failed to comply with critical safety procedures, "there were significant mitigating factors".

Commissioner Riordan found the company had been inconsistent in its treatment of the employees in the operator's team.

The other three employees had been "guilty of non-compliance with the relevant procedure yet only [the sacked operator] has been the subject of serious disciplinary action".

He also said that one of the operator's colleagues, who he found was "in charge" while the operator was eating his lunch, "had a habit of fabricating evidence" and "a poor recollection of events and discussions", yet the operations manager relied on his "self-serving" evidence in dismissing the operator despite conflicting accounts from other employees.

Commissioner Riordan found the operator had communicated to other members of the team that he was taking a break, in line with the workplace's standard practice, and that they had acknowledged that this was the case.

Final warnings have special meaning at Bluescope

Commissioner Riordan considered whether to take into account the only warning issued to the operator during his tenure and described the company's approach to discipline as "inconsistent".

"Final warnings can also include shift suspensions of 1, 3, 4 or 5 days and employees have been known to receive multiple final warnings.

"Coincidentally, penalties appear to be handed out in a rather subjective manner with little regard for consistency.

"A final warning in Bluescope does not seem to have the same meaning as the broader industrial community", Commissioner Riordan said.

Mr Michael Duncan v Bluescope Steel Ltd T/A Bluescope Steel [2013] FWC 8142 (4 November 2013)