Fair Work Australia issued a ruling on Tuesday that favours a dismissed employee, who was reportedly fired for alleged gossiping against fellow workers and staff.

Childcare centre operator Hippity Hop Childcare sacked Tara Davies in June 2010 for allegedly violating the company's policy against backbiting, which was being enforced by the childcare firm to "prevent staff gossiping about each other maliciously."

The firm said that the policy has been existent during Davies' tenure with the centre and the rule was explicit on its provision that "any staff member caught back-biting may result in immediate dismissal."

Records showed that the case stemmed from accusations that Davis was spreading unsavoury words about her colleagues and she was summoned by the centre's principal, Michelle Smith, to discuss the matter but the former walked out from that meeting.

Davis never returned to work following the incident and her formal separation from the company raised employment concerns that were cited by the Fair Work ruling.

According to Fair Work commissioner John Ryan, Davis was only officially sacked after words already came out that she has been fired.

Also, Ryan said that as a small business operation, the childcare centre could only enjoy limited protection from the Unfair Dismissal Code, which excludes backbiting as part of serious misconducts that are grounds for summary dismissal.

Ryan stressed in his ruling that the negative comments that came from Davis do not constitute sufficient reasons for dismissal as he added that the company policy itself is a very blunt instrument, which means that "that mere breach of the policy cannot constitute a valid reason for dismissal and the nature and intent and effect of the 'back-biting' need to be considered."

For her trouble, Fair Work Australia has awarded Davis with $9,480 as compensation.