Clinton Bergin v Workforce Solutions (Qld) Pty Ltd T/A Workforce Solutions
[2011] FWA 7496
•7 NOVEMBER 2011
[2011] FWA 7496 |
|
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Clinton Bergin
v
Workforce Solutions (Qld) Pty Ltd T/A Workforce Solutions
(U2011/9487)
Peter Bennett
vWorkforce Solutions (Qld) Pty Ltd T/A Workforce Solutions
(U2011/9488)
COMMISSIONER BISSETT | MELBOURNE, 7 NOVEMBER 2011 |
Application for unfair dismissal remedy.
[1] Mr Peter Bennett and Mr Clinton Bergin have each made application under s.394 of the Fair Work Act 2009 for relief from termination of employment. Both Mr Bennett and Mr Bergin claim the termination of their employment was harsh, unjust or unreasonable.
[2] Mr Bennett and Mr Bergin worked for Workforce Solutions Pty Ltd (WFS), a labour hire and placement firm in Brisbane. Mr Bennett commenced employment on 29 March 2005 and Mr Bergin commenced employment on 31 July 2006.
[3] Both Mr Bennett and Mr Bergin had their employment terminated without notice for serious misconduct on 1 July 2011. The circumstances leading up to and the reasons for the termination of each man are essentially the same. It was therefore agreed by the parties that the applications would be heard together.
[4] Mr Bennett and Mr Bergin were witnesses on their own behalf. Ms Julie Snell and Mr Mathew Micallef gave evidence for WFS.
[5] Mr Micallef was Mr Bennett’s and Mr Bergin’s ‘trainer’. The term appears to be used to indicate what might otherwise be known as a manager or supervisor. Employees of WFS are described as ‘independent business owners’ even though they are, without dispute, employees of WFS.
Legislation
[6] In deciding if either of Mr Bennett or Mr Bergin has been unfairly dismissed I must determine if the termination of employment was harsh, unjust or unreasonable. The criteria to be considered in determining this matter are set out in the legislation.
[7] Section 387 of the Act provides:
387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA must take into account:
(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); and
(b) whether the person was notified of that reason; and
(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
(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; and
(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and
(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; and
(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; and
(h) any other matters that FWA considers relevant.
[8] As each of Mr Bennett and Mr Bergin were terminated for misconduct, it is necessary that I determine if that misconduct actually occurred. The standard of proof in such cases is that I must be satisfied, on the balance of probabilities, that the conduct complained of occurred.
[9] Should I find that the conduct did occur I must still determine if that conduct was a valid reason for the termination of employment of Mr Bennett and/or Mr Bergin and whether the terminations were harsh, unjust or unreasonable.
Submissions and evidence
[10] Mr Bennett and Mr Bergin were each given a letter of termination of employment in identical terms. The letters read in part:
As you will be aware from our recent discussion, we are disappointed to have discovered the establishment of your company in March this year, Inside Labour Hire Pty Ltd, a company which has been and continues to carry on business in direct competition with Workforce Solutions.
Your employment with Workforce Solutions has been terminated.
This letter is a formal demand for you to return all company property including and in particular, the laptop which is the property of the company and any other hardware or software that may be in your possession, which is the property of the company.
We are also concerned that you have downloaded and transferred or that you are using information which is the property of the company...
In that regard, we require you to return to us or to destroy any copies you may have taken or which may now exist of information which is the property of Workforce Solutions... 1
[11] From the letters given to each of Mr Bennett and Mr Bergin it appears that the employment was terminated because they set up a company which was at that time and continues to carry on business in direct competition with WFS.
[12] Mr Bennett and Mr Bergin admit that they did register a company called Inside Labour Hire Pty Ltd. They say they registered the company as a security measure as they were unsure of the financial viability of WFS and they were also concerned about what would happen post the Queensland floods in early 2011. Further, each had a high reliance on business with Queensland Rail Corp (QR). They thought the business with QR was under threat as QR sought to cut costs.
[13] WFS claims that Mr Bennett and Mr Bergin committed serious misconduct within the meaning of the Fair Work Regulations 2009 2 in that they engaged in wilful or deliberate behaviour that is inconsistent with the continuation of the contract of employment. In particular WFS say that Mr Bennett and/or Mr Bergin individually or collectively:
1. had an obligation under the contract of employment to inform the employer of the establishment of the website;
2. engaged in conduct to assist competitors to WFS to compete with WFS by placing material on the web;
3. engaged in conduct designed to assist clients of WFS in dealing with WFS to the detriment of WFS;
4. failed to advise WFS of information or ideas they had that might benefit WFS;
5. failed to notify their employer in writing that each was engaged in a business;
6. failed in their obligation to be truthful and frank in dealing with their employer.
[14] Mr Swan for WFS submitted that it was permissible for an employer to rely on facts established after the termination of employment as a valid reason for the termination, as long as those facts were related to the initial reason for the termination of employment. Mr Swan referred me to the decision of a Full Bench of the Australian Industrial Relations Commission in Metricon Homes Pty Ltd v S Bradley. 3In that decision the Full Bench referred to the decision of Von Doussa J in Lane and Others v Arrowcrest Group Pty Limited (t/as ROH Alloy Wheels)4where hisHonour found:
In my opinion it is still open to an employer to justify a dismissal by reference to facts not known to the employer at the time of the dismissal, but discovered subsequently, so long as those facts concern circumstances in existence when the decision was made. Whether the decision can be so justified will depend on all the circumstances. A circumstance, likely to favour the decision to dismiss, would be that fraud or dishonesty of the employee had caused or contributed to the employer’s state of ignorance. A circumstance likely to weigh against the decision would be that the employer had failed to make reasonable inquiries which would have brought existing facts to its knowledge before the dismissal occurred. 5
[15] On this basis Mr Swan submits that I can and should take account of activities related to the website which soon after its establishment became This website was established, maintained and run by Mr Bennett but its existence and the material on it, Mr Swan submits, only came to light after the termination of Mr Bennett’s and Mr Bergin’s employment.
[16] The question is whether this information would have otherwise come to light prior to the termination of Mr Bennett’s and/or Mr Bergin’s employment if reasonable inquiries had been made by the employer prior to the decision to terminate employment. No submissions were put to me on this question. Given this circumstance, I find that the conduct of Mr Bennett and, to the extent it is relevant, the conduct of Mr Bergin, with respect to the establishment of the is conduct that can be considered for the purposes of this mater.
[17] I turn now to consider each of the matters raised by WFS with respect to Mr Bennett’s and Mr Bergin’s conduct.
Mr Bennett and Mr Bergin each had an obligation under the contract of employment to inform their employer of the establishment of the The allegation of WFS is that Mr Bennett failed to advise WFS of the establishment of the website (also referred to as a blog). This, it submits, is in breach of the requirements of clause 11.5 of his contract of employment and constitutes serious misconduct.
[19] With respect to Mr Bergin WFS submits that, even though he was not responsible for the establishment of the website, his failure to advise the employer of his knowledge of the website constitutes a breach of clause 11.5 of his contract of employment, which is essentially in the same terms as the contract of Mr Bennett.
[20] Clause 11.5 of each contract of employment states that:
During the employment, the Sales Representative must not, without the consent in writing of Workforce Solutions, publish technical articles, lecture or participate in technical discussions (other than within Workforce Solutions) where they relate to the business of Workforce Solutions. Workforce Solutions and the Sales Representative agree and acknowledge that the Sales Representative may be required to use or disclose certain confidential information of or relating to Workforce Solutions in the course of conducting lectures and workshops as part of the Sales Rep’s duties as an employee of Workforce Solutions. 6
[21] In October 2008 Mr Bennett suffered a stroke at work. He was absent from work until May 2009. Mr Bennett says he found his return to work tiring. He sought to build his work base through a website called but found that this was not a permissible way of developing an Amway modelled business. 7 He therefore ceased that blog and concentrated on (including its predecessor) which he had already established. Through Mr Bennett wrote articles on the labour hire industry and distributed an e-book he had written on labour hire. Mr Bennett’s evidence is that he asked Mr Micallef for assistance with editing the e-book which Mr Micallef provided and that he advised Mr Micallef that the e-book would be placed on The target audience for was anyone who needed education on using labour hire. The website did not contain reference to any organisation or company. No material was posted on after 16 November 2010. 9
[23] Mr Bennett’s evidence is that he told anyone and everyone of the existence of the website, including Mr Micallef and other people he worked with. Mr Micallef says he had no knowledge of the existence of the website and that Mr Bennett had not informed him of its existence. Mr Micallef’s evidence is that he was aware, from information given to him by Mr Bradtke, that Mr Bennett had a blog called but had no knowledge of Mr Micallef was Mr Bennett’s ‘trainer’ (supervisor). Mr Bennett says that during the period he was not working full time following his stroke he was in ‘constant communication [with Mr Micallef]...During the time when [Mr Bennett] was up on the Sunshine Coast if [he] wasn’t working [he] was to let Mr Micallef know exactly what it was [he] was doing.’ 10 When he was too exhausted to work he would advise Mr Micallef that he was going to work on his blog. Mr Micallef says he was in constant contact with Mr Bennett, particularly when Mr Bennett was working reduced hours in the office in Brisbane. Mr Micallef gave evidence that Mr Bennett rang him nearly every day as he was concerned that he arrived home safely (to the Sunshine Coast). Despite all of this contact Mr Micallef says he was not aware of Mr Bennett’s website Mr Bergin’s evidence is that Mr Bennett told his work colleagues, and made no secret, of the existence of The evidence of each of Mr Bennett, Mr Bergin and Mr Micallef was given with extraordinarily precision but the evidence of Mr Micallef contradicted the evidence of Mr Bennett and Mr Bergin. Ultimately, I must decide which evidence I prefer. Mr Bergin’s evidence supports that of Mr Bennett. Whilst I accept that Mr Bennett and Mr Bergin are co-directors of a company and each has been dismissed, this is no reason to doubt the evidence each has given in these proceedings.
[27] On the other hand Mr Micallef failed to provide any evidence beyond mere assertions with respect to matters associated with the reasons for termination provided for in the termination letter, including that Mr Bennett and Mr Bergin were operating a company, that they had downloaded client information from the company database and that they had approached clients of WFS.
[28] For these reasons I prefer the evidence of Mr Bennett that he told anyone and everyone including his work colleagues of the existence of the website That Mr Micallef did nothing with the information is not something Mr Bennett can be held responsible for.
[29] I therefore find that Mr Bennett is not guilty of the misconduct as alleged on this matter.
[30] Whilst Mr Bergin may have known of Mr Bennett’s project, I am not convinced he should be held responsible for any alleged failure of Mr Bennett to tell his supervisor/trainer of the existence of the site. Nor am I convinced Mr Bergin is responsible for advising his employer of the existence of the site. There is nothing in the contract of employment that suggests he should be responsible. Whilst it might be (and it is) argued that his general duty to his employer requires that he advise of such matters, I do not find the failure of Mr Bergin to advise his employer as misconduct. Even if it can be categorised as such, it is of a very minor nature. I am not satisfied that this complaint is made out with respect to the conduct of Mr Bergin.
Mr Bennett and Mr Bergin each engaged in conduct to assist competitors to WFS to compete with WFS by placing material on The submission of Mr Swan is that the information published on including the e-book and YouTube clips, provided competitors to WFS with information that would enable them to compete with WFS.
[32] The basis of this submission appears to be that the websites and/or the e-book and/or a number of documents posted onto the web by Mr Bennett provided information that competitors of WFS might not otherwise know or have access to and that these may provide some insight into WFS such that they might compete more effectively with WFS. WFS submits that the conduct is in conflict with the contract of employment.
[33] Mr Bennett does not dispute that he posted a range of self-authored articles on his website. The titles of a number of articles posted on were exhibited in these proceedings (although the site is currently in ‘maintenance’ mode). 11 Material was posted on the website between May 2008 and November 2010.
[34] The detail of the articles posted on the website was not produced in full although the first few lines of each article were attached to the statement of Mr Micallef. 12 Mr Bennett maintained that the information was of a general nature, did not mention any company and was designed to educate potential users of labour hire on good practice in a labour hire company.
[35] An examination of the opening sentences of each of the articles posted does not indicate that it presents any great secret or insight into the operations of WFS such that anyone would gain some advantage from reading the articles.
[36] Mr Swan submits that if Mr Bennett was just not thinking in placing material on then his behaviour is negligent. He submits, however, that the decision to place the material on the website was a deliberate act and therefore constitutes serious misconduct. With respect to Mr Bergin, Mr Swan submits that his misconduct involved not telling the employer about the information on the websites.
[37] I have found above that I prefer the evidence of Mr Bennett in that he did advise Mr Micallef (and anyone else who would listen) about the establishment of the website. It was no secret and neither was the material posted to it. To this extent Mr Micallef could have found the information on the website any time after 2008 and requested Mr Bennett to take it off the web if it did provide competitors with the advantage submitted by Mr Swan.
[38] Further, no evidence was given as to how the websites or articles on the website could or did give any competitor to WFS any competitive advantage over WFS.
[39] With respect to Mr Bennett I do not find that he engaged in conduct to assist competitors to WFS to compete with WFS by placing material on Both and were websites set up and maintained by Mr Bennett. Mr Bergin agrees he was aware of them but he had no responsibility for them.
[41] With respect to Mr Bergin it is true that he did not advise his employer of the information on the website. The link between Mr Bergin and the complaint that he engaged in conduct to assist competitors to WFS to compete with WFS is tenuous at best. Whilst he might not have advised his employer of what he knew to be on the website this does not amount to serious misconduct and is unlikely, on the evidence, to amount to misconduct. Mr Bergin did not control in any way the websites or the information posted on them. The allegations with respect to Mr Bergin’s conduct are not made out.
Mr Bennett and Mr Bergin engaged in conduct designed to assist clients of WFS in dealing with WFS to the detriment of WFS
[42] This matter closely follows that outlined above except that it goes to the potential benefit to a client of WFS having knowledge of the operation of the labour hire industry such that they may gain something in their dealings with WFS to the detriment of WFS. Further to the limited material outlined above, Mr Bennett also posted a number of videos on YouTube based on the articles posted on the website. One of these videos was shown during proceedings and the transcript of that video was admitted into evidence. 13 The title of the YouTube clip is ‘Do users have to screen workers?’
[43] I do not see, and it was not put to me in submissions, how the material on the YouTube site would assist a client of WFS to the detriment of WFS.
[44] Again the evidence does not show the misconduct alleged to have occurred.
[45] For the reason outlined above I do not find that Mr Bennettengaged in conduct designed to assist customers of WFS in dealing with WFS to the detriment of WFS. The information he provided may well have assisted customers of WFS in their dealings with WFS and I consider it is likely to have done so. Whether this was to the detriment of WFS was not demonstrated.
[46] With respect to Mr Bergin again I find the link between his conduct in not advising the employer of the existence of the information and the misconduct he is claimed to be guilty of to be tenuous at best. He is not guilty of the misconduct alleged.
Mr Bennett and Mr Bergin failed to advise WFS of information or ideas they had that might benefit WFS
[47] This matter again relates to information posted on the websites established and maintained by Mr Bennett. Mr Swan for WFS submits that both Mr Bennett and Mr Bergin are equally blameworthy on this matter.
[48] Mr Swan claims that Mr Bennett’s website is full of ideas and articles that could benefit WFS and that both Mr Bennett and Mr Bergin were under an obligation in their contracts of employment to pass this information onto WFS management.
[49] Again, for the reasons outlined above, I find that Mr Bennett did inform Mr Micallef of the existence of the website. In this respect he did not withhold any information or ideas he might have had that might benefit WFS from WFS. Mr Bennett gave Mr Micallef his e-book. Mr Micallef, on his own admission, gave scant regard to it.
[50] On the basis that Mr Bennett did broadly share the existence of his websites, I find that he did not withhold the ideas and information as claimed. He is not guilty of the alleged misconduct.
[51] With respect to Mr Bergin there is no evidence that the information on the website was based on his ideas. Mr Swan’s submission suggests that Mr Bergin should have taken Mr Bennett’s ideas and information from his websites and passed that on to WFS. This is part of a pattern of claims of misconduct against Mr Bergin that are based purely on his association with Mr Bennett in establishing the company Inside Labour Hire Pty Ltd. There is no other basis on which to impugn Mr Bergin’s conduct. There is no evidence and I do not find that Mr Bergin withheld from WFS information or ideas that might benefit WFS.
Mr Bennett and Mr Bergin each failed to notify their employer in writing that each had engaged in business
[52] Clauses 11.10, 11.11 and 11.12 of the contracts of employment of Mr Bennett and Mr Bergin state:
11.10 Subject to Clause 11.11 and 11.12 below, a Sales Representative shall, as long as his or her employment with Workforce Solutions is not affected in any manner, be entitled to carry on and conduct such other work or business.
11.11 The Sales Representative covenants and undertakes with Workforce Solution that it he or she carries on or conducts other work or business as entitled in terms of Clause 11.10 above, such entitlement is on the condition that the Sales Representative will not at any time in respect of such other work or business approach, canvass, or solicit any clients, customers or employees of Workforce Solutions as well as any Field Team members whose name appears in the Workforce Solutions Field Team Member data base.
11.12 The Sales Representative covenants and undertakes with Workforce Solutions that if he or she carries on or conducts other work or business as entitled in terms of Clause 11.11 above, that she or he will immediately notify the Office Manager in writing of such business. 14
[53] Mr Swan submits that Mr Bennett and Mr Bergin breached clause 11.12 of the contract in that they failed to notify their employer that they were engaging in business (that is Inside Labour Hire Pty Ltd).
[54] Clause 11.12 cannot be read in isolation away from clauses 11.10-11.11. Clause 11.10 says you may operate a business as long as it does not affect employment with WFS. Clause 11.12 says you must tell WFS about the business and clause 11.11 says you cannot solicit clients or staff of WFS for your business. The business required to be notified under clause 11.12 is the business an employee may be carrying on or conducting in accordance with clause 11.10.
[55] The evidence of the establishment of the business is clear. Mr Bennett and Mr Bergin established Inside Labour Hire Pty Ltd. They caused, through their accountant, to have the company registered. They do not deny this. The evidence, however, that they were carrying on or conducting a business as is required to be notified under clause 11.12 is not clear.
[56] There is no evidence before me that Mr Bennett or Mr Bergin were carrying on or conducting a business. They registered a company, no more.
[57] The principal place of business for Inside Labour Hire Pty Ltd is Unit 8, 10-12 India Street Capalaba Queensland. 15 This is also the business address of a company called Quality Building Management Pty Ltd (QBM), which is a business operated by a Mr Pitt.16 Mr Pitt’s daughter, Ms Kellie Pitt is a director of QBM17 and she works for QBM. Ms Pitt is also the partner of Mr Bergin and holds shares in Inside Labour Hire Pty Ltd.18
[58] It is suggested by Mr Swan that I should infer from the evidence with respect to the principal place of business of Inside Labour Hire Pty Ltd and Ms Kellie Pitt’s interest in Inside Labour Hire Pty Ltd and her place of work, that Inside Labour Hire Pty Ltd was an active business or that it was operational such that Mr Bennett and Mr Bergin could be said to be conducting a business.
[59] Such a conclusion is, in my opinion, not open to me on the facts. No evidence was given as to any activity of Inside Labour Hire Pty Ltd. That it had a principal place of business does not mean that it was operational. This much was conceded by Mr Swan in submissions. 19
[60] On the evidence I do not find that Mr Bennett and Mr Bergin were carrying on or conducting a business such that they would be required to notify their employer in accordance with clause 11.12. I therefore find that neither of them was in breach of clause 11.12 of their respective contracts of employment.
Mr Bennett and Mr Bergin each failed in their obligation to be truthful and frank in dealing with their employer
[61] This matter relates to a staff meeting on 1 July 2011 which resulted in the termination of employment of Mr Bennett and Mr Bergin. This meeting was held at about midday and was attended by Mr Bradtke (the business owner), his wife and WFS staff members including administrative and operational staff. It was, according to Mr Bennett’s statement, a weekly scheduled sales meeting. 20
[62] Mr Bennett’s evidence is that:
Mr Bradtke commenced the meeting by asking Mr Bergin and [Mr Bennett] about a company called Inside Labour Hire. Mr Bradtke asked does it exist.
[Mr Bennett] answered “no”, given that the company was not active in any way. Mr Bradtke asked again and again [Mr Bennett] said no.
Mr Bradtke pulled out a Veda report...that showed that the company existed and asked “would you care to explain?” [Mr Bennett] said Inside Labour Hire was a company that was registered as a precaution, it was not a functional company, it was a name only, and it was a fall back if anything were to happen. 21
[63] Mr Bergin’s evidence is that when he and Mr Bennett arrived
Mr Bradtke began by immediately asking Mr Bennett what he knew about a company called Inside Labour Hire Pty Ltd and did it exist. Mr Bennett said “no.”
Mr Bradtke asked Mr Bennett the same question again to which Mr Bennett replied no. Mr Bradtke pulled out a Veda Report and handed it to Mr Bennett and [Mr Bergin]. Mr Bradtke asked Mr Bennett if he would care to explain.
Mr Bennett said that he registered the ABN as a precaution or fallback should anything ever happen, and explained that Inside Labour Hire was not a functional company, it existed only in name. 22
[64] Ms Snell’s evidence is that:
Jeff [Bradtke] was there and so was his wife Kelly. Everybody else came in and had a seat and Jeff then turned to Peter [Bennett] and asked him if he had started a company called Inside Labour Hire. Peter said no, he hadn’t. Jeff said, “Well, I don’t believe you,” and gave him a set of paperwork which was later handed around and it turned out to be a Veda report with the registration of a business. It went back and forward on the same question for a few minutes and then Jeff asked Peter if he’d been calling on our clients and Peter said he hadn’t and Jeff said that he didn’t believe him, turned to Clinton [Bergin] and asked him if he could explain any of it, which Clinton couldn’t and Jeff then terminated them and asked them to gather their belongings and leave the premises. 23
[65] The submission of Mr Swan is that Mr Bennett was twice given the opportunity to answer a simple question asked of him by Mr Bradtke and that both times he was untruthful in answering no to the question. Mr Bergin was also untruthful in that he did not correct Mr Bennett when he knew he had given an untruthful answer.
[66] Mr Bennett’s evidence is that he answered no to the question asked of him because the company was not operational.
During that period of time when we were brought in a meeting, the actual words used might be fractionally jumbled but I totally understood - what I understood the question to be was, “Are you operating Inside Labour Hire?” My answer to that is definitely no. 24
[67] Mr Bennett’s evidence is that he was put under pressure and that he answered the question the best way he could. 25
[68] Mr Bennett’s evidence in cross examination is that:
Having incorrectly answered “No” to his very simple question twice, can you explain to the commission why Mr Bradtke should have believed anything else you told him after that?---Mr Bradtke was very much into personal development in the way we acted. One of the key things we used to always carefully consider was one of seven habits of highly effective people, which was to first seek to understand before being understood. He did not practice that. I was put under pressure. I answered the question as best I could in the way I had interpreted it. The next thing I know he’s calling me a liar in front of all these people and I was in shock. Would I have appreciated a moment to be able to sit down and explain? Absolutely would have, because in my mind this would have been cleared in a matter of minutes.
Mr Bennett, before you can seek to understand you need to know what it is you’re trying to understand, don’t you?---Yes, and seeking to understand is not asking one ambiguous question, it’s about asking a whole lot more than just one.
You need to establish some basic facts before you know what you need to understand and the most basic fact about this company was its existence. Isn’t that correct?---By name it existed.
The most basic issue of fact about this company was whether it existed?---The basic factors he asked I answered. He asked a number of questions, whether I’d spoken to clients, I said no, he asked if I’d done this, I said, “No, that is categorically not correct.” He chose not to believe me and it was done. 26
[69] Mr Bradtke was not called to give evidence in these proceedings. On this basis I accept the evidence of Mr Bennett with respect to how he expected Mr Bradtke would have approached the issue.
[70] There is no doubt that when Mr Bradtke asked Mr Bennett a direct question about whether a company called Inside Labour Hire Pty Ltd existed Mr Bennett did not tell the truth. It is also without doubt that Mr Bergin did not correct the information provided by Mr Bennett. This is so regardless of how Mr Bennett expected Mr Bradtke to approach the issue.
[71] The circumstances in which Mr Bennett and Mr Bergin were confronted with the question, however, leave a lot to be desired. They thought they were attending a weekly sales meeting only to find themselves being questioned immediately by Mr Bradtke. This does not excuse the incorrect answer to the question. Mr Bennett’s evidence is, however, that it was not the behaviour or approach he expected from Mr Bradtke. Mr Bennett did correct the information given to the extent that he agreed he had registered a company by that name.
[72] These circumstances militate against a finding of serious misconduct. Certainly Mr Bennett should have answered differently in the first instance. That he did not leads me to conclude he was guilty of misconduct. He was however ambushed and not given any opportunity to explain the circumstances of the establishment of the company.
[73] The evidence is that when Mr Bergin was asked a direct question he answered truthfully. 27 It is submitted that Mr Bergin be found guilty of misconduct because of what Mr Bennett said and that Mr Bergin did not correct Mr Bennett’s answer. In the circumstances in which this occurred I do not find that a reasonable approach to take in determining if Mr Bergin is guilty of misconduct. I find Mr Bergin not guilty of misconduct as alleged by WFS.
Downloading company information
[74] Whilst Mr Swan did not make submissions that Mr Bennett and Mr Bergin were guilty of misconduct in that they downloaded information from the company database with respect to customers of WFS and that they approached clients of WFS presumably to come across to Inside Labour Hire Pty Ltd, these are matters relevant to my findings below so it is appropriate that I deal with them here.
[75] Mr Micallef’s evidence is that he had found that Mr Bennett and Mr Bergin had downloaded and printed a large amount of client information from the company database. These records, he said, were in excess of the number of clients Mr Bennett and Mr Bergin looked after. 28 He also gave evidence that ‘[a]fter the events on 1 July we had an investigator seize the computers and found that they had found a way to download the documents and had some mass printouts.’29
[76] The following exchange took place with Mr Micallef with respect to this matter under cross examination:
Your evidence was that you got an investigator in?---I didn’t personally, I was away, but Jeff Bradtke did, yes.
Okay, got an investigator in and they found this out?---Yes.
Have you brought that investigator’s report along today?---I don’t have that, no.
Have you seen this report?---I have.
Do you know where it is?---It would be in our office. The investigator’s report, and it was the IT department that could access and see that there was a large download and printed of our database.
Could you explain for the Commissioner how the investigator knows that it specifically relates to Mr Bergin and Mr Bennett?---Because they only checked those computers that were operated by Mr Bergin and Mr Bennett.
Didn’t – thought you’d check on other computers at the same time?---No, there was no need.
Perhaps others were going in for business for themselves as well?---Perhaps.
Wouldn’t you have thought it would have been prudent to perhaps check?---No, there was no need to at this time.
Okay, but that report is not here today and it’s at your office?---The - that’s correct. 30
[77] Both Mr Bennett and Mr Bergin deny downloading data or approaching clients of WFS to bring them to Inside Labour Hire Pty Ltd.
[78] Mr Micallef also gave evidence that he had no evidence that Mr Bennett and/or Mr Bergin were approaching clients of WFS.
[79] I find, for the record, that there is no evidence that Mr Bennett or Mr Bergin have approached clients of WFS for the purpose of taking those clients to another company or that they downloaded any data from the WFS database. To suggest that an investigation shows that Mr Bennett and Mr Bergin downloaded data but then not produce the report arising from the investigation because it is in the office raises questions of credibility of the evidence of Mr Micallef. Mr Bennett and Mr Bergin had their employment terminated in part because they downloaded WFS client information. To claim that he had evidence of this but not produce that evidence raises legitimate questions as to the integrity of the approach of WFS to this matter.
[80] I do note that Mr Swan concedes in submissions that there is no evidence that Mr Bennett or Mr Bergin engaged in such conduct. 31
Harsh, unjust or unreasonable?
[81] In determining if the dismissal of each of Mr Bennett and Mr Bergin was harsh, unjust or unreasonable it is necessary that I consider each of the matters under s.387 of the Act. I have considered each of these in reaching my conclusion. Much of the evidence relevant to my consideration is outlined above and I do not repeat it.
[82] Mr Bradtke is the company owner and he is the person who decided to terminate the employment of Mr Bennett and Mr Bergin. Mr Bradtke is the person who confronted Mr Bennett and Mr Bergin about the existence or otherwise of Inside Labour Hire Pty Ltd.
[83] The evidence of Ms Snell is that Mr Bradtke called her on 30 June 2011 and told her he was going to terminate the employment of Mr Bennett and Mr Bergin. On 1 July Mr Bradtke emailed her the termination letter, asked her to put it on a letterhead and have it ready when he arrived at the office. 32
[84] Mr Micallef’s evidence is that he spoke to Mr Bradtke on 29 June 2011. Mr Micallef told Mr Bradtke that if Mr Bradtke decided to do so he would be happy if Mr Bradtke terminated Mr Bennett and Mr Bergin. 33 Mr Micallef said that if Mr Bradtke had made a decision he was most likely to tell Mr Micallef.34
(a) Valid reason
[85] For a reason to be valid it must be sound, defensible or well founded. Each of Mr Bennett and Mr Bergin had their employment terminated because they had established a company, Inside Labour Hire Pty Ltd, which, it is alleged, has been and continues to carry on business in direct competition with WFS.
[86] There was no evidence put before me to indicate that Mr Bennett and Mr Bergin did more than establish a company. This is, in my opinion, a long way from operating a business.
[87] The mere registration of the company does not provide a valid reason for the termination of their employment. The decision to terminate each of their employment was indefensible in the circumstances. Had they been operating the company in direct competition with WFS this would have been a valid reason but there is no evidence that they were. Why Mr Bradtke came to this conclusion is not known except that he apparently received two anonymous emails that suggested they were. He did not give evidence in these proceedings.
[88] As to the conduct discovered after the termination of the employment of Mr Bennett and Mr Bergin I find that, with respect to that conduct I have found constituted misconduct, it did not, in the circumstances of this case, give rise to a valid reason for the termination of employment. In this matter I find with respect to both employees that there was no sound reason for the termination of employment.
[89] I make this finding with respect to Mr Bennett because I accept his evidence that he did advise those he worked with of the existence of his websites and that he did advise and gave to Mr Micallef a copy of his e-book, which replicated much on his websites. Whilst his response to Mr Bradtke when confronted with the question as to the existence of Inside Labour Hire Pty Ltd was wrong I find that Mr Bradtke had already made up his mind to terminate Mr Bennett’s employment, as the evidence of Ms Snell demonstrates. Whilst Mr Micallef says Mr Bradtke would have told him if he had already made up his mind, little weight can be given to this evidence, particularly in light of the absence of Mr Bradtke.
[90] I make this finding with respect to Mr Bergin primarily because it is evident that Mr Bergin was deemed guilty by association. It is assumed that Mr Bergin is in some way equally culpable for the actions of Mr Bennett due to Mr Bergin’s establishment of Inside Labour Hire Pty Ltd with Mr Bennett. Such an approach is insufficient, particularly in circumstances where on-going employment is at risk.
(b) Notified of the reason
[91] Mr Bennett and Mr Bergin appear to have been told that their employment was terminated because they were approaching WFS clients and Mr Bradtke had proof of this. 35 The letter of termination handed to each of them said that each of their employment was terminated because of ‘the establishment of your company in March this year, Inside Labour Hire Pty Ltd, a company which has been and continues to carry on business in direct competition with Workforce Solutions.’36
(c) An opportunity to respond
[92] Neither Mr Bennett nor Mr Bergin was given an opportunity to respond. Not only had Mr Bradtke made up his mind prior to the meeting of 1 July 2011 but all discussion with Mr Bennett and Mr Bergin was over and done with in the space of 10 minutes at most. Each had been confronted with the allegations, told they were not believed and had their employment terminated.
[93] Mr Swan referred me to a decision of Senior Deputy President Richards in Woodforde v MSB Welding Contractors Australia T/A Arana Steel 37 in which his Honour found that:
The failure to accord procedural fairness...does not, in the egregious circumstances of this application, render the dismissal harsh, unjust or unfair. 38
[94] Whilst that may have been so in the particular circumstances of that case, which were quite different to the circumstances of this matter, it is not binding authority for the proposition that an employee does not need to be given the opportunity to respond.
[95] In Crozier v Palazzo Corporation Pty Limited t/as Noble Park Storage and Transport 39 it was held that:
As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170CG(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. 40
[Emphasis in original]
[96] Mr Bradtke asked Mr Bennett a series of questions and made a number of statements, including that he had proof Mr Bennett had approached WFS clients but did not provide that to Mr Bennett to allow him to respond. Mr Bradtke said that he did not believe Mr Bennett’s response and terminated his employment.
[97] A very similar scenario occurred with Mr Bergin.
[98] Mr Swan submits that given the serious nature of the conduct there was no practical purpose in giving Mr Bennett or Mr Bergin the opportunity to respond. This submission does no more than affirm my view that Mr Bradtke had made his decision to terminate each of Mr Bennett and Mr Bergin prior to the meeting. Mr Swan also submits that Mr Bradtke was prepared not to terminate the employment of Mr Bennett and Mr Bergin but there is no evidence from Mr Bradtke on which to base this submission..
[99] An opportunity to respond is a fundamental aspect of procedural fairness. This was denied to Mr Bennett and to Mr Bergin. There was no evidence of any prejudice the employer would suffer if it had given them an opportunity to respond to the allegations against them.
[100] I find that neither Mr Bennett nor Mr Bergin was given an opportunity to respond.
(d) Support person
[101] It appears from the evidence that Mr Bradtke’s wife attended the meeting as a ‘support’ person for Mr Bradtke. The evidence of Mr Micallef is that if Mr Bennett’s wife and Mr Bergin’s partner had been more involved in the company they may have also been invited to the meeting. 41 It was not clear if this would have been as a ‘support’ person or in some other capacity.
[102] Whilst neither Mr Bennett nor Mr Bergin were denied the opportunity to have a support person present, they were at no time advised that the weekly sales meeting was actually a meeting to discuss the termination of their employment or that there were issues about their employment the employer wished to discuss with them. By not providing the employees with any forewarning that they may need a support person or may wish to bring a support person to the meeting and by summarily dismissing both of the employees within ten minutes of the meeting starting, the employer has, in effect, denied them the opportunity to have a support person present to assist in any discussions relating to dismissal.
(e) Size of the business
[103] Nothing was put to me that the size of the employer’s enterprise or access to human resource expertise were relevant considerations in this matter.
(f) Any other matters
[104] The circumstances surrounding the dismissal of each of these employees are unusual to say the least. Mr Bennett and Mr Bergin thought they were attending a weekly sales meeting. They were in a room with other employees of WFS - both administrative and operational staff. With no introduction or request for other staff to leave Mr Bradtke questioned each of Mr Bennett and Mr Bergin and then terminated their employment in front of the remaining staff of the organisation. Mr Micallef’s evidence is that Mr Bradtke ‘is all about empowering the employees to grow the business.’ 42 Terminating the employment of anyone in a staff meeting in front of the remaining staff does not seem to me to be the actions of a person who ‘is all about empowering’ his staff.
[105] The whole process lacked procedural fairness and seems to have been done in a way to maximise the embarrassment and humiliation of Mr Bennett and Mr Bergin. This was, without doubt, harsh treatment of the two employees.
Conclusion
[106] In all of the circumstances I find that the termination of Mr Bennett’s employment was harsh, unjust and unreasonable. He was unfairly dismissed. This finding reflects both the reasons for the decision and the means by which the termination was carried out.
[107] In all of the circumstances I find that the termination of Mr Bergin’s employment was harsh, unjust and unreasonable. He was unfairly dismissed. This finding reflects both the reasons for the decision and the means by which the termination was carried out.
[108] Even if my conclusion above was that there was a valid reason for the termination of the employment of Mr Bennett or Mr Bergin, I would still find that the termination was unreasonable on the basis of the circumstances within which the termination occurred and the substantial lack of procedural fairness that attended the termination.
[109] Further, the termination was harsh in that the two employees were summarily dismissed, in circumstances where the material on which the employer based the terminations was wrong or non-existent.
Remedy
[110] Each of the applicants in this matter seeks compensation.
[111] In determining any amount of compensation the Act states:
392 Remedy—compensation
Compensation
(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.
Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1), FWA must take into account all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that FWA considers relevant.
Misconduct reduces amount
(3) If FWA is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, FWA must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.
[112] There are a number of matters that are common to both applications for compensation.
[113] Mr Bennett and Mr Bergin established Inside Labour Hire Pty Ltd as a fallback position in case things did go wrong at WFS. Clearly they were each considering a future outside WFS. Had either one of them decided to leave and activate the company they had jointly established the other would have had to leave WFS as well. It would have been untenable for a director of a competitor to work for WFS.
[114] They were each clearly doing well with WFS and each had a reasonable period of service - Mr Bennett had been employed for just over six years and Mr Bergin for just under five years.
[115] Determining lost earnings is complicated for each Applicant by a number of factors, in particular: the evidence that the QR placements, which formed a major part of the remuneration of each of Mr Bennett and Mr Bergin, was in doubt at least to the extent that it had contributed to their respective remuneration in the past; the Queensland floods in early 2011 and the flow through effect this may have had on the market; and the complex commission structure under which each was employed (the commission structure involved not just direct commissions from work generated by the employee but also a portion of commissions generated by any new staff recruited and ‘trained’ by each Applicant to work for WFS).
[116] Based on the decline in QR business and the failure of Mr Bennett and Mr Bergin to take up the opportunity to develop the mining industry market and that they had established their own company, I estimate that each would have remained at the company for six months beyond the time each was dismissed.
[117] Nothing was put to me to suggest that any order for compensation would adversely affect the viability of WFS.
Compensation - Mr Bennett
[118] Mr Bennett earned $151,754 in 2010-11 and over his period of employment with WFS has earned an average of $138,000 per annum. 43
[119] It was the evidence of Mr Bennett that the QR work (and hence revenue and his resulting commissions) was under threat. Mr Micallef gave evidence that he had encouraged Mr Bennett to look at opportunities in the mining sector but that Mr Bennett had not taken this opportunity up. On this basis I cannot assume the income Mr Bennett would have received had his employment not been terminated would be equivalent to or greater than his salary for 2010-11. It is apparent from his earnings over the period of his employment that Mr Bennett was a reasonably high earner. On the basis of the evidence I have discounted an estimate of Mr Bennett’s future earnings. I estimate that Mr Bennett would have earned $55,000 over the coming 6 months if he had not been dismissed. A major contributing factor to this is that Mr Bennett did not take up the opportunity presented to him to develop opportunities in the mining sector.
[120] Mr Bennett’s evidence is that he applied for about 40 jobs and was unemployed for 10 weeks before securing employment. He now earns $60,000 per annum. There is no reason to assume he will not continue to earn this amount for the foreseeable future. As such Mr Bennett’s lost earnings should be offset by his projected earnings. In determining compensation I have deducted an amount of 20% for contingencies on future earnings. This amount has been determined based on the particular circumstances of Mr Bennett.
[121] I find that Mr Bennett took reasonable action to mitigate his loss.
[122] Mr Bennett’s conduct did contribute in part to the reason for the termination of his employment. He did answer ‘no’ when asked two times as to the existence of the company Inside labour Hire Pty Ltd. This answer was wrong and it was subsequently corrected. I have adjusted the amount of compensation awarded by 10% for the misconduct.
[123] There are no other matters I consider relevant to determining compensation.
[124] Taking all of these matters into account I determine that Mr Bennett is entitled to an amount of $31,480, less tax, in compensation. 44
[125] An order to this effect will issue with this decision.
Compensation - Mr Bergin
[126] Mr Bergin earned $128,797 in 2010-11 and over his period of employment with WFS earned an average of $85,000 per annum. 45 Mr Bergin too had a high dependency on QR commissions. He too gave evidence that this was in jeopardy as QR sought to minimise costs. Mr Bergin appears to have had an outstanding year with respect to his earnings in 2010-11 with a 40% increase in earnings from the 2009-10 year. Given the changes in the market foreshadowed by him and that he, too, did not take up opportunities to develop the mining industry market I estimate that he would have earned $45,000 over the next six months had he not been dismissed.
[127] Mr Bergin’s evidence is that he applied for about 10 jobs prior to securing his current employment. He was unemployed for a period of 10 weeks and is now earning $60,000 per annum. In considering Mr Bergin’s circumstances I have deducted an amount of 10% for contingencies.
[128] I find that Mr Bergin did take appropriate action to mitigate his loss.
[129] I have found that Mr Bergin in particular was treated quite harshly by the employer in this matter. He has, in nearly all matters, been deemed guilty of misconduct by the employer by virtue of his association with Mr Bennett. The one area of misconduct the employer did seek to apportion to him was not proven in the proceedings in any way - that is that he operated a company in competition to WFS. For this reason I have not deducted any amount for misconduct.
[130] There are no other matters I consider relevant to determining compensation.
[131] Taking into account all of these matters I determine that Mr Bergin is entitled to an amount of $24,700, less tax, in compensation. 46
[132] An order to this effect will issue with this decision.
Other matters
[133] I am mindful that the orders issued will amount to a substantial payment to be made by WFS at the same time. With this in mind the orders will require payment of the amounts by WFS to each of the Applicants within 30 days of the date of the order.
COMMISSIONER
Appearances:
Mr Pinchen for the Applicants.
Mr Swan for the Respondent.
Hearing details:
2011.
Brisbane:
October 10, 11.
1 Attached to exhibits A1 and A4.
2 Regulations 1.07.
3 [2009] AIRCFB 374.
4 (1990) 27 FCR 427.
5 (1990) 27 FCR 427, 456.
6 Exhibit A1, attachment A page 8 of 11 and exhibit A4, attachment A page 10 of 14. The Applicants’ contracts of employment are attached to exhibits A1 and A4. Mr Bennett was employed as a Sales representative. Mr Bergin was hired as a Recruitment Co-ordinator and he is referred to in his contract as such. Nothing was put of a distinction between the two positions during the hearing of the matters.
7 Evidence in these proceedings is that the business model of WFS is the ‘Amway’ model.
8 Transcript PN613-4.
9 Exhibit R2.
10 Transcript PN759.
11 Exhibit R2.
12 Exhibit R7, attachment MM4.
13 Exhibit R7, attachment MM7.
14 Exhibit A1, attachment A page 9 of 11 and exhibit A4, attachment A page 11 of 14.
15 Exhibit R7, attachment MM3.
16 Exhibit R1.
17 Exhibit R1.
18 Exhibit R7, attachment MM3.
19 Transcript PN1694-5.
20 Exhibit A4, paragraph 37.
21 Exhibit A4, paragraph 40-2.
22 Exhibit A1, paragraph 18-20.
23 Transcript PN1165.
24 Transcript PN907.
25 Transcript PN1018.
26 Transcript PN1014-7.
27 Exhibit A1, paragraph 22.
28 Exhibit R7, paragraph 12.
29 Transcript PN1193.
30 Transcript PN1279-88.
31 Transcript PN1725-8.
32 Exhibit R5, paragraphs 2-3.
33 Exhibit R7, paragraph 8.
34 Transcript PN1579-81.
35 Exhibit A1, paragraph 22; exhibit A4, paragraphs 48-50.
36 Attached to exhibits A1 and A4.
37 [2010] FWA 8006.
38 [2010] FWA 8006, [99].
39 S5897 (11 May 2000) per Ross VP, Acton SDP, Cribb C.
40 S5897, [73].
41 Transcript PN1556-7.
42 Transcript PN1289.
43 See exhibit R7, paragraph 34.
44 The basis of calculating compensation was considered in Tabro Meat Pty Ltd v Heffernan[2011] FWAFB 1080 (Tabro Meat).
45 See exhibit R6, paragraph 32. I have annualised the salary for 2006-07 as Mr Bergin was only employed for 11 months of the year.
46 See Tabro Meat.
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