Bradford Pedley v Ipms Pty Ltd T/A peckvonhartel

[2013] FWC 4282

[2013] FWC 4282

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Bradford Pedley
v
IPMS Pty Ltd T/A peckvonhartel
(U2013/104)

COMMISSIONER DEEGAN CANBERRA, 2 JULY 2013

Application for unfair dismissal remedy - social media - LinkedIn - private work in competition with employer - behaviour inconsistent with continuation of employment - serious misconduct - dismissal not unfair - application dismissed.

[1] On 16 January 2013 Bradford Pedley (the applicant) lodged an application pursuant to s.394 of the Fair Work Act 2009 (the Act) alleging that he had been unfairly dismissed from his employment with IPMS Pty Ltd trading as peckvonhartel (the respondent or PVH).

[2] The application was unsuccessfully conciliated and Directions were issued requiring the applicant and respondent to file an outline of submissions, witness statements and any documentary evidence in preparation for the hearing listed on 6 May 2013.

[3] At the hearing, the applicant gave evidence about the termination of his employment and evidence by Marcelo Solar, a director of the respondent, was given for the respondent.

Background

[4] The relevant facts in this matter were not in dispute.

[5] The applicant was employed by the respondent as a senior interior designer from 23 March 2011 until 15 January 2013.

[6] On 14 January 2013, the applicant sent a group email via LinkedIn in the following terms to a number of named recipients:

Aspirations of 2013

Date: January 14, 2013

Hello Clients, Colleagues and Friends,

As you may be aware, I have been running a part time design service called Reveal ID for the past 5 years. During this time we have enjoyed several small successes in the commercial interior design market. 2012 recent projects including the Access Capital Advisers minor works and Supersmiles Orthodontic fitout are just a part [of] our growing presence in Canberra.

With a decade of experience in commercial fitout design, experience taken from roles in three large Architectural practices in the ACT, and senior positions in design projects of up to $15m and Australia wide, I am now seeking to expand Reveal ID to a full time design practice over 2013.

As with all start-ups, it takes a bit of finesse to get up going, especially in today’s fluctuating economy. If you have a moment please take a look at our website, our social media pages, previous projects, awards etc. I hope that in moving forward when opportunities arise you will keep Reveal ID in mind. One of the many benefits of working with a new company are that you get the operators prior big business experience at small business rates! I would be happy to discuss any opportunities, no project too big or small, and look forward to the possibility of working with you in the near future.

Kind regards

Bradford Pedley

[7] On the morning of 15 January 2013 the applicant missed a call on his phone from Marcelo Solar. He returned the call and was informed by Mr Solar that his employment had been terminated. Mr Solar advised that the termination was a result of the email the applicant had sent the previous evening.

The Applicant’s Evidence

[8] It was the applicant’s evidence that the respondent had been aware that he carried out private work on his own behalf in addition to the work he performed for the respondent. According to the applicant, the respondent was aware of this prior to the signing of his employment contract. He claimed to have carried out some private work in 2012 and that he did not undertake work in competition with the respondent, as the work was not of such a size that it would be of interest to the respondent.

[9] The applicant also claimed that the matter of his private work had been raised with him at his performance review in February 2012 when Mr Solar had requested that he make arrangements so as to avoid incoming phone calls at the respondent’s office that were related to his private work.

[10] So far as the email of 14 January 2013 was concerned, the applicant stated that it was sent to industry professionals with whom he had worked prior to his employment with the respondent. In his witness statement he claimed that, to the best of his knowledge, the recipients of the email “were not clients of the respondent”  1.

[11] It was the applicant’s evidence that during the phone call on the morning of 15 January, Mr Solar had informed him that his termination was the result of the email he had sent the night before, which had been brought to the attention of the respondent by a “concerned client” 2. The applicant then phoned another director of the respondent, Rachel Peck, who had informed him that “the damage has been done and the decision has been made”3. Later that day the applicant received an email from Ms Peck which outlined the clause of his employment agreement (clause 2.8) that he had allegedly breached.

[12] The applicant also produced evidence of his attempts to meet with the directors of the respondent to discuss his future with PVH. On 31 October 2012 he sent an email 4 to Ms Peck noting his concerns about his workload and remuneration and requested an opportunity to speak with her. While Ms Peck agreed to meet with him no such meeting occurred. According to the applicant, during the required three weeks leave over the 2012 Christmas holiday, he realised that Ms Peck’s lack of response to the several attempts he had made to meet with her meant that she had ‘no interest in allowing me to progress my career’5 and therefore upon his return from leave ‘motivated me to take action by putting my “aspiration” in writing’6.

[13] It was the applicant’s evidence that the email of 14 January was ‘working in the interest of the respondent’ 7 as he was ‘actively soliciting new business on their behalf’ and ‘only where appropriate, for myself’8. He claimed that it could not be said that he was ‘trying to act deceitfully’9 as all the recipients of the email knew that he worked for the respondent, he was actively working with some recipients on behalf of the respondent, and he included an employee of the respondent on the list of recipients. Additionally the applicant noted that both Ms Peck and Mr Solar were his connections and had full access to his “LinkedIn” profile including access to his list of connections and current updates.

[14] When cross-examined the applicant agreed that he was a senior interior designer in an important area of the respondent’s business in Canberra 10 and that, in respect of the projects he led, he was the ‘face’ of the respondent’s business.11 The applicant also agreed that his contract of employment prevented him from undertaking work or providing advice or services to anybody that resulted in him competing with PVH.12

[15] The applicant was taken to the terms of his employment contract, specifically clause 2.11, and acknowledged that he was contractually bound at all times to act in a manner consistent with his employment 13 and that post-employment he was prohibited from soliciting customers, clients or suppliers with whom he had had dealings during the course of the employment or, at least, in the 12 months preceding the termination14. He also agreed that, pursuant to clause 30.1.3, he was not able to undertake work for a client, their business or subcontractors for whom he had specifically worked during his employment.15

[16] It was the applicant’s evidence that, given these prohibitions on his actions post-employment, it would be unorthodox if he were permitted to do those things whist employed.

[17] The applicant was questioned about a number of the persons who were recipients of the email of 14 January 2013. He agreed that Mr Moore and the organisation he was employed by were important clients of PVH. Further, while he agreed that a number of the recipients of the email worked for organisations who were important customers of PVH he claimed that the email was sent to those persons as individuals not to the companies for whom they worked. 16

[18] Under cross-examination the applicant also agreed that he had worked, on PVH’s behalf, with one of the recipients of the email on twelve, small to medium, fitouts and had provided design work for another. He conceded that his email drew attention to his ‘specialty and expertise’ in ‘commercial fitout’ and that that was the principal specialty for which he was employed by the respondent. 17 Further he agreed that an organisation, UGL, was a client of the respondent and that another recipient of the email, Mr Mangaruca, was an employee of UGL.18

[19] When it was put to the applicant that while on his holiday in early 2013 he had decided to ramp up the business of Reveal ID, he claimed that he had actually made that decision after he had been back at work for a day. He stated that when he realised that Rachel Peck had no intention of meeting with him it was ‘time for me to... make a mission statement of my own, decide where I wanted to go with my career’ 19.

[20] When questioned about his ability to work both full-time for PVH and operate a full-time design practice the applicant responded that he had not intended to do so.

[21] When cross-examined further about the intention behind his email the applicant claimed that he could not possibly ‘do the same scale of work as what peckvonhartel would be interested in’ 20 and would therefore not be in a position to compete with the respondent. It was also his evidence that he did not alert the directors of PVH to the contents of his email before it was sent as he was not ‘given the opportunity’21.

[22] The applicant was also questioned about statements in the email which suggested that he was canvassing work for himself and his company Reveal ID. It was put to him that the request that the recipients ‘look at our website, our social media pages, previous projects, awards’ was not directing people to PVH but Reveal ID. 22 In response the applicant claimed that his LinkedIn page referred first to PVH.23 He was also questioned about the intent of sentences contained in the email such as ‘when opportunities arise you will keep Reveal ID in mind’ and ‘(o)ne of the many benefits of working with a new company are that you get the operators prior big business experience at small business rates!’ and ‘no project too big or small’.

[23] In response to these questions the applicant stated that he would have taken to the respondent any work that was too large for him to carry out. 24

The Respondent’s Evidence

[24] In support of the respondent’s case a witness statement 25 was filed by Mr Marcelo Solar.

[25] Mr Solar stated that, upon his return from holidays in January 2013, the applicant had presented him with 12 annual leave forms requesting one Monday off for each of the next twelve months. When he asked the applicant about the leave he was informed that it was a ‘professional development matter’ 26. Although he was not entirely happy about it Mr Solar had approved the leave as it was a ‘reasonable request’ and ‘people are entitled to annual leave’.27

[26] Under cross-examination, the witness agreed that no restriction had been placed on the applicant doing private work outside his employment. When asked whether the applicant’s actions in sending the email of 14 January had caused the respondent’s brand any reputational harm Mr Solar replied ‘No, because we dealt with it’ 28. It was his opinion that the perception of a number of PVH’s clients upon receiving the email was that the applicant had resigned his employment with PVH.

[27] The witness agreed that on the evening of 14 January the only knowledge he had was of the contact from Mr Bilston, who had asked whether the applicant was still employed by PVH. When it was put that that information, of itself, could not adversely affect the business the witness disagreed.

[28] Mr Solar agreed that the directors had had a lengthy telephone discussion on the evening of 14 January and determined that the applicant’s employment should come to an end and his email access terminated immediately.

[29] The witness was taken to the following words of clause 2.8 of the applicant’s employment agreement;

2.8 You must not undertake any appointment or position (including directorship) or work or advise or provide services to, or be engaged, or associated with any business or activity that:

2.8.1 results in the business or activity competing with Us;

2.8.2 adversely affects us or our reputation; or

2.8.3 hinders the performance of your duties.

[30] When asked whether the business operated by the applicant was competing with the respondent, the witness replied that it was not at that time.

[31] It was put to Mr Solar that on the evening of 14 January the directors of the respondent had panicked about the possible ramifications when contacted by a client about the applicant’s employment status. The witness denied the assertion and stated that the directors had reviewed the situation, assessed the risk to the company and made a decision based on that assessment.

[32] The witness agreed that the letter to the applicant had advised that his employment was terminated as he had breached clause 2.8 of his employment agreement. When asked what harm could have been caused if the directors had met with the applicant prior to terminating his employment, Mr Solar stated that the directors saw the applicant’s email as a serious breach and as this was very clear there was no value in elaborating upon what was put in Ms Peck’s email to the applicant.

The Applicant’s Case

[33] It was put for the applicant that when he accepted that he was not going to be given any increase in salary he decided that he would need to do additional work outside of hours and on weekends. His intent was to pick up small jobs and refer any work to the respondent that was too big for him.

[34] In order to seek additional work the applicant had sent out a two paragraph message on a professional social network indicating that he was looking for a change. He did not say that he would no longer be working for his employer, could not work with his employer or that he was dissatisfied with his employer. There was nothing in the email that pointed to a significant breakdown or breach of contract which warranted summary dismissal.

[35] It was submitted that the applicant was not hindered in the performance of his duties as a consequence of either his email or his previous work practices. There was no conduct on the part of the applicant that could underpin a valid reason. During his employment there had been only one conversation about his attendance. He was not notified of the reasons being considered by the respondent prior to the termination of his employment, nor was he given the opportunity to respond to the capacity or conduct that he was alleged to be engaged in before the decision was made to terminate his employment.

[36] It was noted that the respondent had condoned the applicant working on small private jobs outside work and in his own time. It was put that while the applicant’s employment agreement contained a clause that prevented him from soliciting the respondent’s clients post-employment, if that same clause was operative during his employment, then the respondent had waived the requirement by permitting the applicant to continue his private work during his employment.

The Respondent’s Case

[37] It was the respondent’s case that clause 2.8 of the applicant’s employment contract proscribed the employee undertaking any position with a business or being associated with any activity that resulted in the applicant competing with the respondent, or hindered the applicant in the performance of his duties.

[38] Additionally, it was submitted that clause 2.11 of the employment contract required the applicant to ‘at all times act honestly and in a manner consistent with your employment’. The applicant’s employment was full-time employment at a relatively senior level in the area of commercial interior design, a significant part of the respondent's business. The evidence was that the applicant had significant contact with persons with whom the respondent conducted its business.

[39] It was argued that it would be inimical to the applicant’s duty to his employer to solicit business from clients of his employer during the course of his employment. It was put that no reasonable person could construe the email of 14 January as other than a direct attempt to solicit business from a group of persons who were predominantly clients, existing clients or very recent clients of his employer.

[40] Insofar as the applicant suggested that the email was merely ‘aspirational’ and directed at a time in the future, the respondent noted that part of the email stated ‘and [I] look forward to the possibility of working with you in the near future’. It was put for the respondent that no reasonable person reading the email would be ‘merely’ apprehensive that the employee ‘might’ act in a manner incompatible with the due and faithful performance of his duty.

[41] The respondent submitted that the applicant’s conduct in sending the email to clients of PVH was incompatible with his duty to his employer and conduct liable to summary dismissal. Authority for this proposition was to be found in the High Court decision in Concut Pty Ltd v Worrell 29which in turn followed the decision in Blyth Chemicals Ltd v Bushnell30. It was put that conduct which impedes the faithful performance of his obligations or is destructive of the necessary confidence between employer and employee is a ground for dismissal.

[42] Finally, it was argued for the respondent that the conduct of the employee, in sending out the email without prior reference to his employer, was destructive of the necessary confidence between the applicant and his employer, amounted to conduct that impeded the faithful performance of his obligations and was a conflict between the applicant’s interests and his duty to his employer. The email disclosed the applicant’s interest in making Reveal ID a full-time operation for which no project was too big or too small. The email requested the recipients to discuss opportunities with the applicant’s company and noted that he looked forward to the possibility of working with them in the ‘near future’. It was the respondent’s submission that an employer faced with such evidence of an employee's conduct was entitled on orthodox principles to terminate the employment summarily.

Consideration

[43] There has been no suggestion that the applicant in this matter is not a person protected from unfair dismissal at the time of the termination of his employment. The respondent does not claim to be a small business and the termination was not for reason of genuine redundancy. The question is then whether the dismissal was unfair.

[44] In determining this matter I have had regard to the factors set out in s.387 of the Act.

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees)

[45] The sole reason relied upon by the respondent for the termination of the applicant’s employment was the applicant’s conduct in sending an email to numerous recipients, including persons who were clients of the respondent, indicating that he was looking to expand his interior design company into a full-time operation and was seeking their support in doing so. Further, he advised that he would take on jobs of any size, at a lesser cost than a large organisation, and was hoping to work with them in the near future.

[46] I find that by sending an email in those terms the applicant breached his fundamental employment obligations to his employer. The email did not suggest that the applicant was seeking to perform small jobs outside his working hours. It clearly stated that he wished to build to a full-time operation and that his interest was not confined to small jobs that his employer would not take on. The applicant was clearly intending to set up a business that could be in opposition to his employer, albeit in a small way. He was soliciting work from current clients of his employer in clear breach of his obligation to put the interests of his employer before his own interests.

[47] I do not accept the submission that the respondent had waived any right to object to the applicant soliciting private work given they had permitted him to do so during his employment. I accept Mr Solar’s evidence that the respondent did not object to the applicant performing small private jobs outside his work hours in circumstances which did not conflict with his obligations to the respondent. The applicant’s email went beyond what the respondent had permitted. It is incorrect to suggest that the respondent, by permitting the employee a limited right to perform private work, 31 had waived its right to object to the applicant, whilst employed by it, soliciting its clients to move their business from the respondent to the applicant’s business.

(b) whether the person was notified of that reason

[48] The applicant was clearly notified that the reason for the termination of his employment was the email of 14 January, the sending of which the respondent considered a fundamental breach of the applicant’s obligations under his employment agreement. Mr Solar informed him of the reason for the termination during the phone call on the morning of 15 January and this was confirmed later that day by Ms Peck’s email.

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person

[49] The applicant was not given much of an opportunity to respond to his employer’s concerns. I take into account however that the applicant did not deny sending the email and that the terms of the email were clear. It is apparent that the directors of the respondent believed that nothing the applicant could say would change their minds. Mr Solar’s evidence was that the directors’ main concern was to limit any damage to the company and they took the view that the most effective way to do this was to terminate the applicant’s employment with immediate effect.

[50] Having heard the applicant’s evidence concerning his motives for sending the email, I find that any explanation he may have given to the directors for his actions is unlikely to have had an impact on their decision. I do not give any credibility to the claims made by the applicant in his evidence that he did not believe he had sent the email to current clients of the respondent, that the email represented solicitation for only small jobs or that by sending the email he was actively seeking work for the respondent. The evidence does not support these claims.

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal

[51] The respondent did not refuse to allow the applicant the support of another person in the discussions relating to his dismissal. All discussions with the applicant, limited as they were, were conducted by phone. It was available to the applicant to have with him whomever he wished.

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal

[52] This criterion has no application to this matter.

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal

[53] The respondent is a relatively large organisation which operates on a national basis. I do not find that the size of the company would have had any significant impact on the procedures adopted in effecting the dismissal.

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal

[54] It is not clear whether the respondent has dedicated human resource management expertise but there was no evidence that advice was taken from any human resources personnel at the time the decision was taken to terminate the applicant’s employment.

[55] Had advice been taken from persons with human resources expertise the dismissal may have been handled differently but it is unlikely that a different outcome would have resulted.

(h) any other matters that the FWC considers relevant.

[56] In determining this matter I have had regard to the fact that the applicant was a relatively senior employee of the respondent with a reasonable degree of autonomy. Clearly he was trusted by the respondent to deal directly with the respondent’s clients and, as such, had a duty to promote the respondent’s interests to those clients not his own.

[57] I accept the respondent’s submission that the applicant’s conduct put him in breach of clauses 2.8 and 2.11 of his employment agreement.

[58] I do not accept the premise that an employee has a higher obligation not to solicit clients of his employer for his own business after he has ceased his employment than during that employment. While the applicant’s employment agreement may have more clearly articulated the applicant’s obligations in this regard post his employment, it is my view that this was because the existence of the obligation during employment “goes without saying”. During employment the applicant owed an obligation to his employer to faithfully promote his employer’s interests. In circumstances where the respondent, with clear justification, lost confidence that the applicant would promote its interests, there was a valid reason to terminate the employment contract.

[59] The directors of the respondent, given the terms of the email sent by the applicant on 14 January, took the view that they had lost the trust and confidence in the applicant that was necessary for the continuation of the employment relationship.This was clear from the evidence of Mr Solar, when asked whether the respondent’s business had been adversely affected by the email, answered that it had not ‘Because we dealt with it at the time’ 32.

[60] It is instructive to note that pursuant to s.123(1)(b) of the Act, an employee whose employment is terminated because of serious misconduct has no entitlement to notice of termination or payment in lieu of notice. Regulation 1.07 of the Fair Work Regulations 2009 defines ‘serious misconduct’ as having its ordinary meaning and can include both ‘wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment’ and ‘conduct that causes serious and imminent risk to (i) the health or safety of a person; or (ii) the reputation, viability or profitability of the employer’s business’.

[61] I have formed the view that the applicant’s conduct in deliberately and actively soliciting clients of the respondent for his own business was behaviour inconsistent with the continuation of his contract of employment and amounted to serious misconduct. In those circumstances, the respondent was within its rights to terminate the applicant’s employment.

Conclusion

[62] Taking into account the above matters, I find that the termination of the applicant’s employment was not harsh, unjust or unreasonable. As the dismissal was not unfair the application is dismissed.

Appearances:

Mr R. Cook, of Counsel, with Mr D. Prail, for the Applicant.

Mr J. Wilson, Solicitor, for the Respondent.

Hearing details:

2013.

Canberra:

May 6.

 1   Exhibit C1, statutory declaration of Bradford Pedley at Paragraph 11.

 2   Ibid, Paragraph 13.

 3   Above n 1, Paragraph 14.

 4   Exhibit C2, further witness statement of Bradford Pedley, Attachment D.

 5   Ibid, Paragraph 13.

 6   Above n 4, Paragraph 13.

 7   Above n 4, Paragraph 16.

 8   Above n 1, Paragraph 16.

 9   Above n 1, Paragraph 16.

 10   Transcript PN 105.

 11   Transcript PN 132.

 12   Transcript PN 147.

 13   Transcript PN 149.

 14   Transcript PN 152.

 15   Transcript PN 174.

 16   Transcript PN 310.

 17   Transcript PN 416.

 18   Transcript PN 513.

 19   Transcript PN 613.

 20   Transcript PN 670.

 21   Transcript PN 674.

 22   Transcript PN 683.

 23   Transcript PN 683.

 24   Transcript PN 714.

 25   Exhibit W1, witness statement of Marcelo Solar.

 26   Transcript PN 834.

 27   Transcript PN 834.

 28   Transcript PN 971.

 29 (2000) 103 IR 160.

 30 (1933) 49 CLR 359.

 31   Clause 31 of the applicant’s employment agreement.

 32  

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