James Mark Mansfield v Amplified AI Pty Limited - [2021] FWC 6702

[2021] FWC 6702

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

James Mark Mansfield
v
Amplified AI Pty Limited
(U2021/8163)

DEPUTY PRESIDENT MASSON

MELBOURNE, 30 DECEMBER 2021

Application for an unfair dismissal remedy – found that small business fair dismissal code applies – dismissal found to be consistent with small business fair dismissal code – application dismissed.

[1] On 8 September 2021, Mr James Mansfield (the Applicant) lodged an application pursuant to s.394 of the Fair Work Act 2009 (the Act) in which he asserts that the termination of his employment with Amplified AI Pty Limited (the Respondent) on 25 August 2021 was unfair. The Applicant seeks an order for compensation.

[2] On 28 September 2021, the Respondent filed its Form F3 response to the unfair dismissal application in which it raised a jurisdictional objection to the application, that being the Respondent was a small business, and that the dismissal was consistent with the Small Business Fair Dismissal Code (the Code).

[3] Conciliation of the matter before the Commission failed to achieve a resolution and consequently the matter was listed for hearing/conference before me on 9 December 2021. After hearing from the parties, I determined to conduct a conference pursuant to s.398 of the Act.

[4] The Applicant, who sought and was granted permission to be legally represented by Mr J Francis of Hicks Oakley Chessell Williams pursuant to s596(2) of the Act, gave evidence in the conference. The Respondent was represented by Mr S Davis who is the Chief Executive Officer (CEO) and co-founder of the Respondent. Mr Davis also gave evidence along with Mr C Grainger who is also a co-founder of the Respondent.

Background and evidence

[5] The Respondent is a technology company that develops and sells products that include the use of artificial intelligence (AI) for conducting patent searches. According to Mr Grainger the Respondent’s business is engaged in producing products that help innovators innovate faster.

[6] The Applicant commenced employment with the Respondent on 24 February 2020 as Head of Design and at the time of his dismissal was employed on a salary of $145,000.00 (plus superannuation). He was the first Head of Design employed by the Respondent, the Respondent’s specific objective in hiring the Applicant being to improve its design system. The Applicant was judged by the Respondent to have the necessary skills in applying the ‘Atomic Design’ methodology used by the Respondent 1. The Respondent employed four staff at the time of the Applicant’s dismissal.

[7] On 20 February 2020, the Applicant signed a Confidential Information and Invention Assignment Agreement 2 (the CIIAA) and on 21 February 2020 executed an Employment Agreement3. In signing the CIIAA and Employment Agreement the Applicant agreed to protect the Respondent’s intellectual property, including its trade secrets, confidential and proprietary information and not to disseminate the Respondent’s intellectual property without the Respondent’s express written consent.

[8] Confidential information is defined at clause 3(b) of the CIIAA to include;

“………..without limitation: (i) Company Inventions (as defined below); and (ii) technical data, trade secrets, know-how, research, product or service ideas or plans, software codes and designs, algorithms, developments, inventions, patent applications, laboratory notebooks, processes, formulas, techniques, biological materials, mask works, engineering designs and drawings, hardware configuration information,…..” 4

[9] Inventions is defined at clause 4(c) of the CIIAA in the following terms;

““Inventions” means discoveries, developments, concepts, designs, ideas, know how, modifications, improvements, derivative works, inventions, trade secrets and/or original works of authorship, whether or not patentable, copyrightable or otherwise legally protectable. I understand this includes, but is not limited to, any new product, machine, article of manufacture, biological material, method, procedure, process, technique, use, equipment, device, apparatus, system, compound, formulation, composition of matter, design or configuration of any kind, or any improvement thereon. I understand that “Company Inventions” means any and all Inventions that I may solely or jointly author, discover, develop, conceive, or reduce to practice during the course of providing services under the Relationship or otherwise in connection with the Relationship, except as otherwise provided in Section4(g) below.” 5

[10] Clause 4(a) of the CIIAA made provision for the Applicant to identify and retain ownership of prior inventions created or owned by him or on his behalf. Any prior inventions claimed by the Applicant were to be detailed in Exhibit A of the CIIAA. None were identified. The Applicant’s Employment Agreement also included detailed provisions dealing with Confidentiality 6, Copyright7 and Design Rights and Inventions8.

[11] According to Mr Davis, the Applicant’s duties as Head of Design included “working with the Respondent to improve and expand the Respondent’s visual language and to lead the development of the design system including components, wireframes and prototypes” in collaboration with Mr Davis and other employees 9.

[12] The Applicant states that he created a design system for Amplified (AmplifiedDS) which took visual inspiration from the Respondent’s brand guidelines which he states he also created 10. He further states that he created the brand guidelines, writing style guide, and personas for the Respondent to help them understand their customers and how to design for and communicate with them. The Applicant also gave evidence that he worked on many design systems before commencing employment with the Respondent and that he developed AmplifiedDS, brand guidelines and writing style guide from his wealth of experience in designing software for other companies11.

[13] The Respondent’s early designs were created and stored in Figma which is a software tool for building design systems and includes all the software codes needed to implement the desired visual styles, buttons, interactions and layouts. The use of Figma for setting up the design system was, according to Mr Davis, one of the reasons for bringing design in-house and hiring the Applicant as Head of Design. According to Mr Davis, the Applicant “kicked off” the Figma design system project in March 2020 12. The Applicant in using the Respondent’s Figma account was able to access the Respondent’s trade secrets, confidential and proprietary information and was given access to the Respondent’s Figma page which was limited to the Respondent’s employees only13.

[14] On 18 August 2021 Mr Davis saw a LinkedIn post 14 by the Applicant announcing an “open source (free) design system starter kit” known as AcmeDS15. The post by the Applicant included a pre-recorded video of a “prototype that will update automatically – ready for you to customise”16 which according to Mr Davis came pre-programmed with the same kind of “componentised logic that Amplified’s design system utilises in Figma.” Mr Davis further states that as he watched the video, he was surprised to see the screens displayed were nearly identical to those in the Amplified product and design system17. Mr Davis recorded his initial reaction while reviewing the AcmeDS starter kit on 18 August 202118.

[15] Mr Davis further states that having worked closely with the Applicant on designs he was immediately able to identify a high degree of similarity between the content in the AcmeDS and Amplified products 19. This led him to download the AcmeDS Figma file and explore in more detail. He concluded that the similarities between the two design systems were ‘far reaching’ and covered everything from “boilerplate text and minor style choices to entire screen layouts.” He also states that some of “Amplified’s wireframes and prototypes are reproduced with only minor changes”20.

[16] Mr Davis also states that in reviewing the AcmeDS system some of the components looked like unmodified ‘Tailwind UI’ components in Amplified’s design system Figma files. As the Respondent had purchased a license to Tailwind UI, Mr Davis was aware that a Tailwind UI license prohibits the creation of Figma design system starter kits 21.

[17] Mr Davis states that Figma files include software code which you can inspect and that on comparing the code in the AcmeDS and Amplified design system the Respondent found identical code and concluded that Acme DS must have been created by copying Amplified’s Figma files and then making some modifications 22. The Respondent reviewed the designs and codes and determined that the AcmeDS system infringed Amplified’s copyright, is an unauthorised disclosure of its protected trade secrets and violated its intellectual property (IP) rights23. Mr Davis did not regard it as possible that Acme DS was created from scratch due to the overwhelming similarities of that product with Amplified’s system. It was concluded that the Applicant copied Amplified files and modified them for Acme DS24.

[18] While reviewing the AcmeDS product the Respondent also discovered a link to ‘Dribble’ which is a platform that helps designers find full-time as well as freelance work. The link took Mr Davis to a page which referred to the Applicant, displayed a photo of him and stated that he was “Available for New Projects” and included a “Hire Me” link which potential clients could use to commission the Applicant to perform freelance work 25. The page showed screenshots of Amplified’s products, design system and an unreleased feature for project ‘Teams & Sharing’26. With respect to the latter unreleased product, the Applicant had previously been referred to a release timeline27 by Mr Davis in response to a question from the Applicant on 10 June 202128.

[19] Mr Davis was cross-examined at length regarding the similarities and differences between Amplified’s system/product, the AcmeDS system and other systems put into evidence. The following summarises that evidence;

• In comparing the AcmeDS and Amplified systems he reaffirmed his view that AcmeDS involved minor customisation of the Amplified system and was derivative work;

• In reviewing the Factory 29 design layout, he did not concede that AcmeDS was similar and that there were a number of elements that were different;

• In relation to the REA 30 design, he agreed that it looked similar to Amplified’s system which concerned him that Amplified’s product may be a derivative work of the REA design, the implications of which were of concern to the Respondent;

• He reaffirmed the correctness of his statement made in an email to Hall and Willcox on 24 August 2021 31 that the conduct of the Applicant in making Amplified’s design system public, allowed “all of the CSS needed to generate pixel perfect identical designs” to that of Amplified;

• In comparing the code used for the AcmeDS system he stated it was almost identical to that used in the Amplified system and it was not possible to produce identical code by chance; and

• He did not accept that the Facebook notifications panel was similar to Amplified’s notifications panel and went on to highlight several points of similarity between AcmeDS and Amplified’s notification panel.

[20] The Applicant rejects that AcmeDS was created through use of Amplified’s IP. He states that during a Covid lockdown period in March 2021 he created a file called AcmeDS starter kit, an open source file which he created to help other designers create their own design systems. According to the Applicant, AcmeDS was created for altruistic purposes to help the wider community with no personal financial gain to himself 32. He further states it is only one file and contains amongst other things, advice and guidance for other designers on how to create an effective design system. He says the starter kit contains a lot of knowledge he has acquired over many years in working for different companies prior to his employment with the Respondent33.

[21] The Applicant states that the AcmeDS starter kit is separate, unique and quite different to AmplifiedDS. He says it contains elements that any design system would have, that of buttons, sliders, text boxes and other form elements, and is visually different to AmplifiedDS. He says that AcmeDS contains nothing specifically related to the Respondent’s patent searching product. Nor he says, does it contain any software or code belonging to the Respondent 34. The Applicant claims that that he did not hide the AcmeDS product from the Respondent and nor did he believe it was anything that had to be specifically disclosed by him to the Respondent.

[22] The Applicant states that the Respondent did not immediately raise their concerns with him when they came across the AcmeDS starter kit on 18 August 2021 and in fact waited a week before raising it with him. He further states that it is significant that in the intervening week between 18 and 25 August 2021 he was finalising a major strategic project for Amplified and that it was only once he had finished that project that they raised the matter with him on 25 August 2021 35. Under cross-examination the Applicant corrected evidence provided in his witness statement and conceded that the project had not been completed by 25 August 2021 but had pushed back to at least 27 August 2021. He states that the deadline was not met for a range of reasons.

[23] In relation to the central allegation that the AcmeDS was a derivative or a copy of the AmplifiedDS, the Applicant gave the following evidence;

• His 25 years of experience had led him to design screens in a certain way as he was used to organising information in a certain way to achieve a ‘nice visual’.

• He conceded that he had limited experience (6-12 months) with Figma before joining the Respondent, which he conceded in a message to staff 36. He also agreed that he worked closely with Mr Davis on Figma during his employment with the Respondent and also used his work computer to develop Acme DS.

• There are a range of standards applied in designing websites including online pixels which increase in multiples of 8, leading to similar sizes across design systems.

• He referred to the REA website 37 which he had designed and states that there are similarities between it and the AcmeDS product.

• In relation to codes that were common between the Acme DS and AmplifiedDS, he attributed this to similar shapes and font sizes on webpages for example, requiring similar code. He also states that he did not believe that buttons, fields and interface elements used in a design system were protected by copyright.

• While conceding that the code included in the Figma files was largely the same in Acme DS and AmplifiedDS, he did not believe the Figma code in AmplifiedDS was IP protected. He conceded that screens taken from a Figma file were “somewhat confidential” but stated that screen shots, rather than working files, were not confidential in his opinion.

• He emphasised that colours and corners used on AcmeDS were different to AmplifiedDS and that none of Amplified’s patent searching screens were used in AcmeDS.

• While conceding the volume of material in AcmeDS was similar to AmplifiedDS, he says much of AmplifiedDS’ system volume of material was directed at patent searching, which was not present in the AcmeDS product. He said that AcmeDS had an array of unique features not present in AmplifiedDS.

• In developing Acme DS, he stated that he used icons downloaded from ‘Heroicons’ whereas AmplifiedDS used icons drawn from ‘Streamlined’. The Applicant concedes that he had not checked to confirm whether he could use ‘Heroicons’ icons without breaching their copyright and accepted that icons were copyrightable 38.

• In respect of the Tailwind UI, he variously states that; he took inspiration from that product and credited that in in his AcmeDS starter kit 39, was aware of the Tailwind UI license having purchased one himself although he had not read it (the license) and was unclear whether he had breached the Tailwind UI license in developing AcmeDS. He also could not recall accessing the Tailwind UI Figma kit as revealed by his access logs40 although was unable to dispute the log report which showed that he had accessed the product.

• In relation to the Figma community guidelines 41, he states that that he was aware of the community guidelines in respect of respecting the IP of others but did not believe he had breached those guidelines in posting AcmeDS on the Figma community site.

• He acknowledged that he created AcmeDS under a Creative Commons 4.0 license 42 but was not aware of the license details at the time he created and posted the AcmeDS product on Dribble. He did however accept that by creating AcmeDS under Creative Commons 4.0 license, AcmeDS was copyrightable. He further states that he was unconcerned by others using the AcmeDS product without attribution or acknowledgement despite it being licensed and copyrightable, that being due to his desire to put it out for public use.

• In launching AcmeDS on Dribble, the Applicant says that he was aware of copyright and IP requirements as posted by Dribble to its users 43 but did not check IP and licensing implications when he launched AcmeDS.

[24] Regarding the alleged disclosure of an unreleased product, the Applicant states that he wanted to portray the company as solving interesting problems and doing good design work in order to help both with recruitment of staff and more generally promote the company. In this context he posted information on LinkedIn, Medium and Dribble. He states that the unreleased ‘Teams & Sharing’ product had already been announced publicly as evidenced by it being referred to on the Respondent’s website 44. Further, the Respondent had briefed customers during meetings about the new product, which included a meeting with Breville to which the Applicant attended. While he initially denied disclosing information that was not already in the public domain⁴⁵, he subsequently conceded during cross-examination that the screen shots and animation he released on Dribble were not in the public domain.

[25] The Applicant agreed with the proposition put to him in cross-examination that the release of company information on social media postings was ‘generally’ discussed before posting. However, in the case of the ‘Teams and Sharing’ product, he did not raise the post with the co-owners before he published it because he did not believe he needed to. The Applicant also justified this action, in part, on the basis that the Respondent was a small start-up and people were busy and he was anxious to promote the company.

[26] As regards the “hire me” icon on his Dribble page, the Applicant says he was surprised that icon had been enabled, he had not initiated that himself and was subsequently advised by Dribble that the “hire me” button on his profile would only appear if he had set his profile to “available for work” 46.

[27] Mr Davis did not contest that the Respondent had announced that the ‘Teams & Sharing’ product was coming soon at or before the time the Applicant disclosed features of the product on Dribble. He also agreed that features of the product were discussed in private meetings with customers. The concern of the Respondent was that the disclosure on Dribble by the Applicant went far beyond the Respondent’s announcement that a new product was coming soon. The Applicant’s disclosure included multiple screenshots of the design system and an animation which was confidential at the time the Applicant disclosed it on Dribble. As regards discussion of the product with customers, they were private meetings and clause 20.1 of the Applicant’s Employment Agreement dealt with the Applicant’s obligations in respect of confidentiality relating to customers.

[28] The Applicant questioned the timing and rationale for the decision to dismiss him and pointed to a reduction in staff from 17 to 8 in the time that he worked for the Respondent. He also referred to an unsuccessful $5m capital raising ‘pitch’ earlier in 2021. He also understood that sales were slow at the time of his dismissal and that the Respondent was downsizing to save money, 47 although he conceded this was just his perception.

[29] On 20, 23 and 24 August 2021 the Respondent sought and received advice from two legal firms in relation to the Applicant’s conduct to assist their consideration of termination of his employment.

[30] At 1.03pm on 24 August 2021 the Applicant sent an email to Mr Davis in the following terms;

“Hey Sam

Just following up on my message last week.

I’m pretty unhappy at Amplified at the moment for a number of reasons but broadly it’s the culture as well as a lack of feeling like I’m getting much out of the relationship.

Just wanted to put it on your radar for now with a view to have a decent chat about it soon’

…….” 48

[31] The Applicant was required to attend a Zoom meeting at 9am on 25 August 2021. The meeting was recorded 49. The Applicant states that he was not notified in advance of the purpose of the meeting and found out during the meeting that the three founders of the Respondent were in attendance50 . During the meeting Mr Davis told the Applicant that he had seen the AcmeDS system website, the AcmeDS Figma file and the Applicant’s uploads to Dribble. The similarity between the Acme DS and AmplifiedDS systems was highlighted and that the AcmeDS system had been made available under a Creative Commons license and had been duplicated many times already. Mr Davis also put to the Applicant that he had uploaded content about ‘Teams & Sharing’ which was an unreleased Amplified product. The Applicant’s obligations under his Employment Agreement and CIIAA in respect of confidentiality and protection of the Respondent’s IP were referenced51.

[32] When confronted by Mr Davis in the Zoom meeting, the Applicant said that the matters raised had come unexpectedly and that he would need to take some time to think about it and talk to some people. Mr Davis responded that based on what had been discovered, the Respondent regarded the conduct as constituting serious misconduct and in breach of his Employment Agreement and the CIIAA. The Applicant was advised that depending on his response the Respondent may need to arrange a further meeting to discuss his employment, in response to which the Applicant requested that the allegations be put in writing. When asked if he had anything further to say, the Applicant responded “Nope” 52. The Applicant’s access to Amplified systems was immediately disabled. The Applicant when cross-examined on the disciplinary process stated that he was shocked and disappointed at the way the allegations were raised. He says he asked for written communication as it would have allowed him to prepare a more considered and thoughtful response

[33] Following the 9am Zoom meeting and after considering the Applicant’s response in the 9am meeting Mr Davis sent a series of emails requiring the Applicant to attend a further meeting 53. A meeting was subsequently arranged for 2pm on 25 August 2021 to which the Applicant agreed to attend based on him being accompanied by his solicitor. This request was agreed on the basis that the solicitor was there in the capacity of a support person54.

[34] Mr Davis states that the Applicant’s demeanour at the 2pm meeting did not change. He was unapologetic, evasive in his responses and refused to take the AcmeDS material down. The Applicant was specifically asked about the; ‘hire me’ link, whether he created Acme DS from Amplified’s Figma files and why he had not asked any of the Respondent’s managers about the matters. To the first question the Applicant responded, “it’s a platform.” To the second question he replied, “I don’t recall” and to the third question he responded with words to the effect that “if I’m mowing my lawn, why do I need to bring it up with you” 55.

[35] In response to a question from the Applicant the Respondent confirmed that it believed the AcmeDS system contained Amplified’s property and that the resemblance went well beyond inspiration 56. According to Mr Davis the Applicant refused to remove the AcmeDS starter kit from public access, was unwilling to sign any undertakings and cut the meeting short. The Respondent subsequently considered and determined to summarily dismiss the Applicant.

[36] A letter confirming the Applicants dismissal 57 (the Termination Letter) was sent to the Applicant on 25 August 2021, relevantly in the following terms;

“…………..

As you are aware, Amplified AI Pty Limited (Amplified) discovered on 18 August 2021 that its design system has been shared publicly without permission. Since that time, Amplified has been investigating your conduct and assessing next steps.

Specifically, Amplified’s design system and unreleased product plans are currently shared publicly on websites as follows:

1. That page states, ‘created and updated by James

Mansfield – buy me a coffee’. The design system advertised on this page is Amplified’s design system with colour changes and a different logo.

2. That page lists you as a creator, displays a photo of you, and again provides users with the option to ‘buy me a coffee’. That page makes Amplified’s design system available under creative commons open source license - for free. We understand it has since been duplicated over 450 times.

3. That page refers to you, displays a photo of you, states that you are ‘available for new projects’ and provides users with the option to hire you. The page uploads screenshots not only of Amplified’s design system, but also of unreleased Amplified project sharing and collaboration features.

As discussed, Amplified’s design system forms part of Amplified’s confidential information, copyright work and design, and Inventions under the employment contract that you signed on 21 February 2020 (Employment Contract).

It also constitutes a Company Invention under the Confidential Information and Invention Assignment Agreement that you signed on 20 February 2020 (CIIAA).

In recognition of the importance of Amplified’s design system, Amplified directed you (verbally and in writing) on multiple occasions to keep its design system, wireframes, and prototypes secure using private Figma links so that only authorized Amplified users could view them. Those directions were lawful and reasonable directions.

Amplified met with you this morning to raise its concerns with your conduct (that being, that you are responsible for the unauthorised public sharing of Amplified’s design system), point out your various obligations under the Employment Contract and the CIIAA and how you have breached those obligations by your conduct, and asked you to show cause as to why you shouldn’t be dismissed without notice for engaging in serious misconduct.

Amplified confirms that, in the meeting this morning, you said that you were not in a position to provide a response to Amplified’s concerns. You subsequently refused to meet with Amplified on two occasions, before meeting later today at 2pm. In the meeting at 2pm, you responded to the 2 allegations and offered your resignation. However, you were not prepared to sign any undertakings during the meeting.

Amplified has considered your response and has subsequently formed the view that your conduct constitutes serious misconduct. You publicly disclosed commercially sensitive information including Amplified’s intellectual property (in part for your own personal benefit) in direct contravention of a wide range of fundamental obligations that you owe to Amplified under the Employment Contract and the CIIAA.

On that basis, Amplified:

1. has decided to terminate your employment under clause 17 of the Employment Contract, with the effect that your last day of employment is today; and

2. demands that you:

a. sign and return the enclosed undertakings and Termination Certification as a matter of urgency or, at the very latest, by 4.00 pm tomorrow; and

b. comply with the undertakings and the Termination Certification.

Amplified will not make any payment to you in lieu of notice, but will pay you any outstanding salary and accrued but untaken annual leave in the next pay cycle.

………………….”

[37] Mr Grainger and Mr Davis were cross-examined at length in respect of the disciplinary process followed by the Respondent and in particular the delay between Mr Davis discovering the AcmeDS information on 18 August 2021 and the initiation of disciplinary action by the Respondent on 25 August 2021. Both Mr Grainger and Mr Davis were consistent in their evidence that they did not wish to initiate disciplinary action until they had thoroughly investigated their concerns and sought appropriate advice regarding their intended disciplinary action and the process they should follow. They resisted the proposition put to them that the disciplinary action taken against the Applicant was delayed to allow him to complete work he was “deeply involved’ in, that being the release of the ‘Teams and Sharing’ product which was due to be launched at the end of August 2021

[38] Mr Grainger and Mr Davis also referred to the steps taken by them to obtain legal advice, firstly from Herbert Smith Freehills on 20 August 2021 58 and then from Hall and Willcox59 on 23 & 24 August 2021. Both Mr Grainger and Mr Davis were pressed during cross examination as to why they did not immediately cut of the Applicant’s access to their systems on 18 August 2021 in circumstances where they regarded him as an “active threat” to their business. They both stated that they were concerned at the Applicant’s ability to do further damage to the Respondent’s business and destroy evidence of his misconduct.

[39] Mr Grainger and Mr Davis both conceded that the Respondent had not put the allegations of the Applicant’s misconduct in writing to him despite his request that they do so. They both rejected the proposition put to them that they had denied the Applicant an opportunity to respond. They contend he was afforded an opportunity to respond to the allegations at both the 9.00am and 2.00pm meetings on 25 August 2021 and this had been clearly outlined to him in the 9.00am Zoom meeting.

[40] Mr Grainger and Mr Davis were also questioned as to whether they had obtained written advice regarding whether the Applicant had breached the IP and confidentiality provisions of his Employment Agreement and CIIAA. They confirmed they had not but had discussed the matter with their US Counsel in satisfying themselves that their concern regarding the Applicant’s conduct was well founded. Mr Davis also conceded that he was not a forensic IT expert and the Respondent had not sought advice of a forensic IT expert before concluding the Applicant had breached his confidentiality and IP obligations under the CIIAA and Employment Agreement.

[41] Since the dismissal, the Applicant has declined to return a termination certificate as required under clause 6 of the CIIAA. He also ‘wiped’ his company laptop ‘clean’ before returning it and in doing so returned it to factory settings despite instructions from the Respondent to not touch the files on it. The Respondent also filed a complaint with Figma resulting in the removal of AcmeDS content from Figma in accordance with its copyright and intellectual property policy 60, although according to Mr Davis the Applicant has since uploaded AcmeDS to a new location in Figma’s community site in contravention of their community guidelines61.

[42] Mr Davis states that the Applicant’s conduct has damaged and continues to damage the reputation of the Respondent and the trust placed in it by its customers. Moreover, the actions of the Applicant have caused irreparable harm to the Respondent’s business 62.

Has the Applicant been dismissed?

[43] A threshold issue to determine is whether the Applicant has been dismissed from his employment. Section 386(1) of the Act provides that the Applicant has been dismissed if:

(a) the Applicant’s employment with the Respondent has been terminated on the Respondent’s initiative; or

(b) the Applicant has resigned from their employment but was forced to do so because of conduct, or a course of conduct, engaged in by the Respondent.

[44] Section 386(2) of the Act sets out circumstances where an employee has not been dismissed, none of which are presently relevant. There was no dispute and I find that the Applicant’s employment with the Respondent terminated at the initiative of the Respondent.

Initial matters

[45] Under section 396 of the Act, the Commission is obliged to decide the following matters before considering the merits of the application:

(a) whether the application was made within the period required in subsection 3 94(2);

(b) whether the person was protected from unfair dismissal;

(d) whether the dismissal was a case of genuine redundancy.

Was the application made within the period required?

[46] Section 394(2) requires an application to be made within 21 days after the dismissal took effect. It is not contested that the Applicant was dismissed on 25 August 2021 following which he filed an application for an unfair dismissal remedy on 8 September 2021. I am therefore satisfied that the application was made within the period required under subsection 394(2) of the Act.

Was the Applicant protected from unfair dismissal at the time of dismissal?

[47] Section 382 of the Act provides that a person is protected from unfair dismissal if, at the time of being dismissed:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

Minimum employment period

[48] It was not in dispute, and I find that, at the time of the Applicant’s dismissal, the Respondent employed 4 staff and was consequently a small business employer. The Applicant commenced his employment with the Respondent on 24 February 2020 and was dismissed on 25 August 2021, that being a period of employment of approximately 18 months. I am therefore satisfied that, at the time of dismissal, the Applicant was an employee who had completed a period of employment with the Respondent of at least the minimum employment period of twelve months.

Modern award or enterprise coverage, annual rate of earnings

[49] It was not in dispute, and I find that, at the time of dismissal, the Applicant was in receipt of annual remuneration of $145,000.00. It follows that the Applicant’s annual rate of earnings was less than the high income threshold. I am therefore satisfied that, at the time of dismissal, the Applicant was a person protected from unfair dismissal.

Did the Respondent comply with the Small Business Fair Dismissal Code in relation to the dismissal?

[50] I now turn to consider whether the Respondent complied with the Small Business Fair Dismissal Code (the Code). Section 388 of the Act provides the following in respect of the Code:

“388 The Small Business Fair Dismissal Code

(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.

(2) A person’s dismissal was consistent with the Small Business Fair Dismissal Code if:

(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and

(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.”

[51] Section 23 of the Act provides a definition of a “small business employer” for the purpose of the Act. Relevantly, s 23(1) of the Act provides that a “national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time”.

Was the dismissal consistent with the Small Business Fair Dismissal Code – Summary Dismissal?

[52] The Code applies to small business employers with less than 15 employees. A person is not unfairly dismissed if the dismissal is consistent with the Code and immediately before dismissal or at the time notice of the dismissal is given, whichever is earlier, the employer is a small business employer. I have already found that the Respondent was a small business employer at the relevant time of 25 August 2021.

[53] The Code declared by the Minister pursuant to s 388(1) of the Act relevantly provides as follows:

“Summary dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Procedural matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.”

[54] In Pinawin v Domingo 63, the Full Bench considered whether, in the context of a summary dismissal under the Code, the Commission had to be satisfied that the serious misconduct which was the basis for the dismissal actually occurred:

“[29] … There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.

[30] Acting reasonably does not require a single course of action. Different employers may approach the matter differently and form different conclusions, perhaps giving more benefit of any doubt, but still be acting reasonably. The legislation requires a consideration of whether the particular employer, in determining its course of action in relation to the employee at the time of dismissal, carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. The circumstances include the experience and resources of the small business employer concerned.

…

[38] Normally in order to hold a belief on reasonable grounds it will be necessary to have a discussion with the employee about the perceived serious misconduct and pay regard to the explanations and views given by the employee. We are concerned in this case that no discussions took place about the implications of Mr Domingo’s conduct for his future employment. However this is a very unusual case. The employer was very small. The owners knew Mr Domingo well …”

[55] Another Full Bench of the Commission examined the summary dismissal section of the Code in detail in Ryman v Thrash Pty Ltd 64and concluded as follows:

“[41] In summary, drawing on the conclusions stated above and the ratio in Pinawin, we consider that the “Summary dismissal” section of the Code operates the following way:

If a small business employer has dismissed an employee without notice – that is, with immediate effect – on the ground that the employee has committed serious misconduct that falls within the definition in reg.1.07, then it is necessary for the Commission to consider whether the dismissal was consistent with the “Summary dismissal” section of the Code. All other types of dismissals by small business employers are to be considered under the “Other dismissal” section of the Code.

In assessing whether the “Summary dismissal” section of the Code was complied with, it is necessary to determine first whether the employer genuinely held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal, and second whether the employer’s belief was, objectivity speaking, based on reasonable grounds. Whether the employer has carried out a reasonable investigation into the matter will be relevant to the second element.”

[56] While there is no rule of law that defines the degree of misconduct which would justify dismissal without notice, the identified “touchstone” is that of whether the conduct was of such a grave nature as to be repugnant to the employment relationship 65. The Full Bench in Cole v Roy Hill Station Pty Limited relevantly summarised the principles as follows;

“[95] Serious misconduct as understood in the Code, takes its meaning from Regulation 1.07 and in doing so includes wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the employment contract. The notion of wilful or deliberate behaviour amounting to serious misconduct is conduct which strikes at the heart of the employment relationship. That notion has been considered in several well-known authorities, which were well traversed in the decision of Emma Horan v Tren Trading Pty Ltd t/a Dubbo Early Learning Centre. I do not intend to repeat the authorities at length, but rely simply on the precepts that to justify summary dismissal a single act must be such as to show that the employee was repudiating the contract of service or one of its essential conditions, and such misconduct must at least have the quality that it is ‘wilful’: it connotes a deliberate flouting of the essential contractual conditions.” 66 (citations omitted)

[57] It follows from the above that there are a number of a matters that I must consider in determining whether the Applicant’s dismissal was consistent with the Code. Those matters are;

(1) Was the Applicant’s dismissal a summary dismissal under the Code?

(2) Did the Respondent believe at the time of the Applicant’s dismissal that the Applicant’s conduct was sufficiently serious to justify immediate dismissal?

(3) Was the Respondent’s belief based on reasonable grounds?

Was the Applicant’s dismissal a summary dismissal under the Code?

[58] As set out above at [36], the Respondent confirmed in the Termination Letter dated 25 August 2021 that it had considered the Applicant’s conduct and determined that it constituted serious misconduct. It also determined that the Applicant would be dismissed immediately without notice or payment in lieu of notice. The Respondent relevantly stated in the Termination Letter that;

“Amplified has considered your response and has subsequently formed the view that your conduct constitutes serious misconduct. You publicly disclosed commercially sensitive information including Amplified’s intellectual property (in part for your own personal benefit) in direct contravention of a wide range of fundamental obligations that you owe to Amplified under the Employment Contract and the CIIAA.”

[59] I am satisfied based on the Termination Letter that the Respondent dismissed the Applicant on 25 August with immediate effect on the grounds that he had engaged in serious misconduct. It follows that the “Summary dismissal” section of the Code is applicable, and the “Other dismissal” section of the Code is not relevant to my consideration of the Applicant’s dismissal.

Did the Respondent believe at the time of the Applicant’s dismissal that the Applicant’s conduct was sufficiently serious to justify immediate dismissal?

[60] Mr Davis for the Respondent gave evidence as to his having discovered the on-line posting by the Applicant of the AcmeDS starter kit and details of the Respondent’s unreleased “Teams and Sharing” product on 18 August 2021. He also gave evidence as to the steps subsequently taken by the Respondent to investigate the conduct and to obtain advice both from IP counsel and employment lawyers between 20-24 August 2021. The co-owners of the Respondent reviewed the AcmeDS material, concluded that it was a copy or a derivative of the AmplifiedDS system and also concluded that the Applicant had publicly disclosed unreleased details of the ‘Teams and Sharing’ product. This led them to determine that the Respondents IP had been disclosed publicly without its approval, that being in breach of both the Applicant’s Employment Agreement and CIIAA.

[61] The Applicant contends that the delay between when AcmeDS was discovered by the Respondent on the 18 August and 25 August 2021 when the Applicant was confronted with the alleged misconduct demonstrates that the conduct could not have been viewed as sufficiently serious to justify immediate dismissal. He further submits that if the conduct was so serious as to warrant immediate dismissal, the Respondent ought to have acted more urgently to address the claimed threat posed to its business by the Applicant. The Applicant contends that had the Respondent regarded the Applicant’s conduct as such a serious threat to its business it could have suspended him immediately, cut off his access to the Respondent’s IT systems and undertaken a proper investigation without placing the Respondent’s business at further risk. The Applicant also submits that the Respondent delayed the disciplinary process while the Applicant was finalising an important project for the Respondent, that delay in action again speaking to the overstatement of the seriousness of the conduct claimed by the Respondent.

[62] The Respondent explained the delay as being due to the time required to carry out the investigation and obtain appropriate advice. The Respondent also submits that it was concerned that merely suspending the Applicant may have risked further damage to the business but in any case, the Respondent could not reverse the damage already done by the online posting of the AcmeDS starter kit. As to the allegation that the Respondent deliberately delayed acting on the discovery of the on-line posting of the AcmeDS starter kit, the Respondent rejects that submission and notes that the product launch on which the Applicant was working on during August 2021 was in any case delayed to beyond the date of the Applicant’s dismissal and in these circumstances could not have been a factor in the timing of the Applicant’s dismissal. The Respondent also highlighted that the cost of obtaining external legal advice was greater than the notice period payment that may have been otherwise paid if they had judged the conduct less serious.

[63] I am satisfied on the evidence of the co-owners of the Respondent, Mr Davis and Mr Grainger, that at the time of the Applicant’s dismissal the Respondent held a subjective belief that the conduct of the Applicant was serious and that it justified immediate dismissal. I have reached this conclusion for the reasons set out below.

[64] Firstly, I found Mr Davis and Mr Grainger to both be credible in their evidence as to the seriousness with which they viewed the conduct and their desire to thoroughly investigate the conduct and obtain external advice before raising the matter with the Applicant. They were consistent and open in their responses and made appropriate concessions during cross examination. I also note that the period in question included only 4 clear working days between the discovery of AcmeDS by Mr Davis on the evening of Saturday 18 August 2021 and the Applicant being requested to attend the Zoom meeting on the morning of the 25 August 2021.

[65] Secondly, I am not persuaded by the Applicant’s submission that the dismissal was delayed by the Respondent simply to allow the Applicant to complete an important project. Significantly, the Applicant himself conceded in his evidence that the project had been delayed for a number of reasons and while close to completion, was not finalised at the time of his dismissal. In these circumstances I am not persuaded that the delay from 18 to 25 August 2021 was attributable to the Respondent seeking to benefit from the Applicant’s work before dismissing him.

[66] Thirdly, I accept that the desire of the Respondent to gather relevant information and advice before confronting the Applicant was reasonable in circumstances where the Respondent was a small business and by its own admission was unsophisticated and lacking knowledge in employment law. I am satisfied that the delay between the discovery of the alleged misconduct and action taken to address it was not an inordinate delay that would otherwise call into question whether the Respondent genuinely believed the conduct was sufficiently serious to justify immediate dismissal.

[67] Finally, it was uncontested that the Respondent was a small ‘start-up’ company and did not have significant financial reserves. The Applicant himself perceived that the Respondent had been struggling financially. In these circumstances I accept it would have been ill-advised for the Respondent to spend scarce financial resources on obtaining external legal advice if they did not regard the conduct as sufficiently serious to justify immediate dismissal. The fact the Respondent sought external legal advice serves to reinforce in my view, the genuine belief it held regarding the seriousness of the Applicant’s conduct.

Was the Respondent’s belief based on reasonable grounds?

[68] There are two key elements to the Respondent’s belief that the Applicant’s conduct was sufficiently serious as to justify immediate dismissal. Firstly, that the Applicant released Acme DS on-line, which in the Respondent’s view was a copy or a derivative of AmplifiedDS and as such disclosed confidential design system information and IP of the Respondent. Secondly, that the Applicant disclosed confidential features of the unreleased ‘Teams and Sharing’ product. Both actions were, according to the Respondent, in breach of the Applicant’s obligations under his Employment Agreement and the CIIAA.

[69] Turning to the second element first. The Applicant sought to downplay the significance of the unauthorised disclosure of the ‘Teams and Sharing’ product features and placed weight on the Respondent’s prior promotion of the ‘Teams and Sharing’ product in marketing information which was in the public domain 67. That reliance is with respect, misconceived. The marketing information only states that the product is ‘coming soon’ and contains no details of the features of the new product. The Applicant’s evidence that the product was also discussed with customers in advance of his public disclosure of product features also takes his submission no further. The Applicant was bound by clause 3(b) of his CIIAA which includes the obligation of maintaining the confidentiality of customer communication.

[70] The Applicant was aware that the ‘Teams and Sharing’ product was subject to a particular development and release timetable. He specifically asked Mr Davis about that timetable on 10 June 2021 in response to which he was directed to the ’Amplified board’ where he could locate the schedule. The schedule indicated the planned release of the new product in late August 2021. The Applicant conceded during his evidence that the screen shots and animation he released were not in the public domain at the time of posting and further, that release of company information on social media postings was ‘generally’ discussed before posting. His explanation that he believed he did not have to seek approval prior to disclosing details of the unreleased ‘Teams and Sharing’ product was unsatisfactory in circumstances where he was specifically aware of the timetable of the release of the product.

[71] While I accept that the Applicant in his role may have been interested in promoting the Respondent, he was nonetheless obliged to respect his obligations under the Employment Agreement and the CIIAA not to disclose confidential information without express approval of the Respondent. The release was in specific breach of clause 3(a) of the CIAA.

[72] Turning now to the release of the AcmeDS starter kit by the Applicant, the Respondent submits that any reasonable person would see a striking similarity between AcmeDS and AmplifiedDS in terms of buttons, layouts and screens and that even minor details were the same. The Respondent further contends that AmplifiedDS was proprietary information and copyrightable, that AcmeDS was a derivative and that the Applicant never sought approval or disclosed to the Respondent the development and publication of the AcmeDS product. The Respondent submits that by the Applicant’s public release of AcmeDS which included the Respondent’s IP, he had put the Respondent’s business at risk and was likely to erode customers’ confidence in the Respondent’s preservation of confidential information.

[73] At the core of the Respondent’s concern is that of the similarities between the AcmeDS and AmplifiedDS and what appears to the Respondent to be a copy (with some modifications). The Applicant rejects the charge that AcmeDS is either a copy or a derivative of AmplifiedDS. He contends that buttons, colours, style of boxes and fonts are not copyrightable and are standard across website designs. He also contends that he has developed a particular approach to creating a visual design and layout of screens over many years. The Applicant submits that significantly, he did not disclose Respondent’s IP in patent searching which is the core of their business.

[74] A comparison of AcmeDS and AmplifiedDS reveals great similarities which in my view are not easily explained as mere chance. See for example the visual similarities between the two design systems 68. The ‘progress’ (page 1) bars are identical, the ‘Alert’ colours (page 2) are identical, and the ‘Tooltip’ (page 2) are also remarkably similar. Only minor labelling differences can be seen in comparing the menu bar (page 3). The visual similarities continue to be seen in the comparison of components and layouts69 even though different colours are used. There is in my view an overwhelming visual similarity of the two design systems.

[75] Further, the software code used in AcmeDS and AmplifiedDS appears the same 70. The Applicant attributes this to standard shapes and font sizes and that Apple IOS requires particular code to be used for that system. Why the code was almost identical was not satisfactorily explained by the Applicant in circumstances where shadow opacity and radius are all design elements that could have been different according to the Respondent, a point not rebutted by the Applicant.

[76] I am also satisfied that the similarities between the two design systems go beyond the visual elements as can be seen in the comparison of prototypes and screens 71 between the AcmeDS and AmplifiedDS. A comparison reveals for example use of the term ‘active’ and ‘archived’ on the ‘Projects’ screen of both the AmplifiedDS and AcmeDS systems as well as having a great visual similarity. Similarly, the ‘Invite’ button appears the same in both systems. I also accept the Respondent’s submission that the design systems use the “exact same boilerplate text.”

[77] The Applicant resisted the proposition that AcmeDS was a copy or derivative of the Respondent’s design system, which he had developed. I found that denial unconvincing in circumstances where he agreed that he had developed AcmeDS on his work laptop, acknowledged that he had access to the Respondent’s Figma files within which the AmplifiedDS development resided, acknowledged he had limited Figma experience before joining the Respondent and agreed that he had worked closely with Mr Davis on Figma during his employment with the Respondent. These circumstances reinforce the likelihood that the Applicant developed his Figma knowledge and skills during his employment with the Respondent which he made use of in developing AcmeDS. It also supports a conclusion that AcmeDS was a copy or a derivative of AmplifiedDS.

[78] While the Applicant expressed the belief that buttons, sliders, colours and font sizes were all standard elements of a website design system, I note that in launching AcmeDS he did so under a Creative Common License 4.0, meaning any subsequent use of the AcmeDS system by other users required attribution. Why AcmeDS was licensed and required attribution when used by others, was not reconciled by the Applicant with his belief that AmplifiedDS was not so protected, save for the patent searching IP. I further observe that the Applicant’s knowledge of and/or concern for copyright and IP rights appeared superficial at best, as can be seen by;

• his failure to read the Tailwind UI license despite claiming to have purchased his own license;

• his concession that the Figma code of AcmeDS was largely identical to AmplifiedDS but he did not think it was copyrightable;

• his concession that he had used Heroicons icons despite those icons being protected by copyright;

• his failure to check or consider the Dribble IP and license implications when he launched AcmeDS; and

• his concession that Figma screenshots were ‘somewhat confidential’.

[79] It follows from the above and I am satisfied that the similarities between AcmeDS and AmplifiedDS are such as to enable the Respondent to reasonably conclude that the former was a derivative of the latter. I am further satisfied that the Respondent had a reasonable basis to conclude that AcmeDS was an ‘Invention’ as defined at clause 4(b) of the CIAA and it fell within the following description provided in that definition;

“……..I understand that “Company Inventions” means any and all Inventions that I may solely or jointly author, discover, develop, conceive, or reduce to practice during the course of providing services under the Relationship or otherwise in connection with the Relationship, except as otherwise provided in Section4(g) below.”

Did the Applicant’s conduct constitute serious misconduct?

[80] While the Code refers to matters that serious misconduct includes, those being “theft, fraud, violence and serious breaches of occupational health and safety procedures,” the description is not exhaustive such that other forms of misconduct not described would fall outside of the meaning of the term serious misconduct. Relevantly, regulation 1.07 of the Fair Work Regulations 2009 (FW Regs) defines serious misconduct as follows;

“1.07 Meaning of serious misconduct

(1) For the definition of serious misconduct in section 12 of the Act, serious misconduct has its ordinary meaning.

(2) For subregulation (1), conduct that is serious misconduct includes both of the following:

(a) wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;

(b) 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.

(3) For subregulation (1), conduct that is serious misconduct includes each of the following:

(a) the employee, in the course of the employee’s employment, engaging in:

(i) theft; or

(ii) fraud; or

(iii) assault; or

(iv) sexual harassment.

(b) the employee being intoxicated at work

(c) the employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment.

………………”

[81] I am satisfied that the Applicant’s conduct constituted serious misconduct as that term is defined within regulation 1.07 of the FW Regs for the following reasons.

[82] I am satisfied that the Applicant’s conduct was deliberate and wilful as evidenced by the Applicant’s refusal to remedy the concern raised by the Respondent, by removing the AcmeDS product from public access. I also note he has not complied with a term of his CIAA that required him to sign and return a ‘termination certificate’ stating that he no longer has any of the Respondent’s confidential information or property in his possession. An inadvertent disclosure of the Respondent’s confidential IP could have been reasonably and quickly remedied by the Applicant. The fact that he has declined to do so tells against the conduct being inadvertent but rather, speaks to the conduct being deliberate and wilful.

[83] I also accept the Respondent’s submission that the protection of its IP is critically important given that the value of its business derives from the IP of its software products. Unauthorised disclosure of the Respondents IP and/or confidential information holds the potential to damage the Respondent’s business and the confidence that customers may hold in the Respondent’s protection of confidential information. In these circumstances, I am satisfied that the Applicant’s conduct of on-line posting of AcmeDS as well as the unreleased details of the Respondent’s ‘Teams and Sharing’ product caused ‘serious and imminent risk’ to the Respondent’s business.

Did the Respondent’s carry out a reasonable investigation?

[84] I now turn to consider the investigation undertaken by the Respondent which the Applicant contends was inadequate in the circumstances of what he says is a complex matter.

[85] As set out in the evidence, the Respondent undertook an investigation following Mr Davis discovering the AcmeDS starter kit and the released confidential ‘Teams and Sharing’ product details on 18 August 2021. In conducting its investigation, it undertook a comparison of the AcmeDS and AmplifiedDS systems, sought IP counsel advice and written employment law advice before meeting with the Applicant at 9.00am on 25 August 2021 during which meeting Mr Davis detailed the allegations.

[86] The Applicant submits that the Respondent could not have had reasonable grounds to form a genuine belief as to the conduct justifying immediate dismissal due its failure to conduct a reasonable investigation. The elements of a reasonable explanation said to be missing are firstly, the Respondent ought to have put the allegations in writing to the Applicant, as requested by him, and afforded him an opportunity to respond in a considered way. Secondly, the Respondent failed to obtain a forensic software expert opinion on whether AcmeDS was a copy or derivative of AmplifiedDS thereby breaching the Respondent’s IP rights. Finally, the Applicant says that the Letter of Termination makes no mention of the ‘theft and fraud’ he is now alleged to have engaged in.

[87] In respect of the claimed failure of the Respondent to put the allegations in writing, on any reasonable view of the Zoom meeting conducted at 9.00am on 25 August 2021 which was recorded 72, the allegations and/or concerns were calmly explained to the Applicant by Mr Davis. While the Applicant says he was surprised and shocked at being confronted by Mr Davis, that reaction was not apparent. Rather, the Applicant appeared calm, declined to respond to questions and requested some time to seek some advice. He was then afforded a further opportunity to respond to the concerns at the 2.00pm meeting at which he was accompanied by his legal representative. He again chose not to engage substantively with the allegations according to Mr Davis, which evidence was not rebutted by the Applicant.

[88] There is no statutory requirement that allegations of misconduct must be put in writing to an employee to enable a response to be provided and to render the investigation ‘reasonable’. While putting allegations in writing may be desirable in many circumstances, it is to be borne in mind that the employer in the present case is a small business employer. It is sufficient in my view that the Applicant understood the particulars of the allegations that were put against him and was provided with an opportunity to provide his side of the story. I am satisfied in respect of both those actions having been taken. That the Applicant chose not to fulsomely respond at either the 9.00am or 2.00pm meetings on 25 August 2021 does not render the investigation deficient.

[89] In respect of the second point, Mr Davis conceded in his evidence that the Respondent did not engage the services of a forensic software expert as part of its investigation of AcmeDS. Mr Davis made the point in response to the Applicant’s criticism, that he was the CEO of a software company which gave him a sound understanding of the matters of concern to the Respondent. I am not persuaded that the absence of a forensic software experts’ opinion or report rendered the investigation deficient in circumstances where the company was engaged in software development and the principals of the Respondent have knowledge of the relevant subject matter. I note for the sake of completeness that neither party called evidence in the proceedings before me from either IP specialists or forensic software experts that might have aided their respective cases. It is also regrettably the case that any evidence that might have been otherwise available from the Applicant’s former company laptop was lost when he ‘wiped’ it ‘clean’ before returning it to the Respondent.

[90] I agree with the Applicant’s submission that the terms “theft and fraud” were not used in the termination letter issued to the Applicant on 25 August 2021. While the Respondent may now seek to characterise the conduct with use of that hyperbole, it does not alter the test of which I must be satisfied and that is whether the Respondent had a reasonable basis on which to form a genuine belief at the time of the dismissal that the Applicant’s conduct was sufficiently serious to justify immediate dismissal. That assessment is to be made at the time of the dismissal, not how the Respondent may seek to variously characterise the conduct now. The basis for the dismissal was clearly set out in the Termination Letter and it is those reasons which I must be satisfied were based on reasonable grounds.

[91] It follows from the above and I am satisfied that the Respondent carried out a reasonable investigation before deciding to terminate the Applicant’s employment.

Conclusion on reasonable grounds

[92] The Applicant’s conduct in releasing confidential information and the IP of the Respondent without its prior approval, through the AcmeDS product and details of the unreleased ‘Teams and Sharing’ product, were the basis for his summary dismissal. That conduct was in breach of the Applicant’s obligations under both his Employment Agreement and CIIAA. The Applicant’s conduct was the subject of a reasonable investigation which included the allegations being put to the Applicant for a response prior to his dismissal being affected. The Applicant’s conduct was deliberate, wilful, and caused ‘serious and imminent risk to the Respondent.

Conclusion

[93] For the reasons set out above, I am satisfied that;

(1) at the time of the Applicant’s dismissal, the Respondent was a small business employer within the meaning of s.23(1) of the Act;

(2) on 25 August 2021, the Respondent dismissed the Applicant with immediate effect and without notice, on the ground that the Applicant had engaged in serious misconduct;

(3) the Respondent genuinely believed that the Applicant had engaged in conduct that was sufficiently serious to justify immediate dismissal;

(4) the Respondent carried out a reasonable investigation in the circumstances; and

(5) the Respondent’s belief that that the Applicant’s conduct was sufficiently serious to justify immediate dismissal was based on reasonable grounds.

[94] I am therefore satisfied that the Applicant’s dismissal was consistent with the Code. It follows that his application for an unfair dismissal remedy must be dismissed. An order giving effect to this decision will be separately issued.

DEPUTY PRESIDENT

Appearances:

J Francis for the Applicant.
S Davis, Respondent.

Hearing details:

2021.
Melbourne (By Microsoft Teams):
December 9.

Printed by authority of the Commonwealth Government Printer

1 Exhibit R1, Witness Statement of M S Davis at [1]-[4].

2 Ibid, Annexure 37, Confidential Information and Invention Assignment Agreement, dated 20 February 2020.

3 Exhibit R1, Annexure 36, Employment Agreement, dated 21 February 2020.

4 Exhibit R1, Annexure 37 at clause 3(a).

5 Ibid at clause 4(c).

6 Exhibit R1, Annexure 36 at clause 20.

7 Ibid at clause 21.

8 Ibid at clause 22.

9 Exhibit R1 at [6].

10 Exhibit A1, Witness Statement of Mr James Mansfield at [4].

11 Ibid at [6]-[7].

12 Ibid, Annexure 4, Internal post by Applicant dated 2 March 2020.

13 Exhibit R1 at [7]-[9].

14 Ibid, Annexure 43, LinkedIn post of Applicant advertising open source (free) design system starter kit.

15 Exhibit R1, Annexure 34, Acme DS webpage at acmedesign.systems.

16 Exhibit R1, Annexure 26, Demo video from Acme Design website.

17 Exhibit R1 at [10]-[12].

18 Exhibit R1, Annexure 6, Sam Davis reaction to AcmeDS 18 August 2021.

19 Exhibit R1, Annexure 10, Comparison of components and layouts in Amplified and AcmeDS.

20 Ibid at [13]-[14], Annexure 12, Comparison of prototypes and screens across Amplified design system, customised AcmeDS and default AcmeDS.

21 Exhibit R1 at [16], Annexure 15, Tailwind UI License extract.

22 Exhibit R1 at [17], Annexure 11, Comparison of logic and software code in AcmeDS and Amplified products

23 Exhibit R1 at [18].

24 Ibid at [19].

25 Exhibit R1, Annexure 32, Dribble explanation of “hire me” button.

26 Exhibit R1, Annexure 39.

27 Exhibit R1, Annexure 24, Amplified collaboration release project timeline in Linear ending August 30.

28 Exhibit R1, Annexure 23, Message from Applicant querying release timeframe for sharing feature.

29 Exhibit A11, Factory design.

30 Exhibit A3, REA design.

31 Exhibit R1, Annexure 35 Schedule 1 Notice to produce legal advice correspondence.

32 Exhibit A1 at [14]-[15].

33 Ibid at [17].

34 Ibid at [18].

35 Ibid at [20]-[22].

36 Exhibit R1, Annexure 4.

37 Exhibit A3.

38 Exhibit R1, Annexure 17.

39 Exhibit R1, Annexure 14.

40 Exhibit R1, Annexure 33, Applicant access log.

41 Exhibit R1, Annexure 20, Figma community guidelines.

42 Exhibit R1, Annexure 13, Creative Common 4.0 license.

43 Exhibit R1, Annexure 19, Dribble post on what designers need to know about copyright infringement.

44 Exhibit A10 Screenshot of Amplified website page highlighting ‘Teams & Sharing’ product coming soon.

45 Ibid at [23]-[25].

46 Exhibit A13, Dribble correspondence dated 10 September 2021.

47 Ibid at [26]-[28].

48 Ibid, Annexure 27.

49 Exhibit R1, Annexure 26 Recording of Zoom meeting on 25 August 2021.

50 Exhibit A1 at [30]-[31].

51 Exhibit R1 at [32]-[36].

52 Ibid at [38]-[41]

53 Exhibit R1, Annexure 40, Messages from Sam Davis to Applicant, dated 25 August 2021

54 Ibid at [44]-[45]

55 Ibid at [46]-[48]

56 Ibid at [49]

57 Exhibit R1, Annexure38, Termination letter dated 25 August 2021

58 Exhibit R4, Legal advice from Herbert Smith Freehills dated 20 August 2021.

59 Exhibit A14, Schedule 1of notice to produce - Legal Advice.

60 Exhibit R1, Annexure 21, Figma Copyright & Intellectual Property Policy.

61 Exhibit R1 at [53]-[55], Annexure 29 Figma community guidelines.

62 Ibid at [59]-[60], Exhibit R1, Annexure 18, Dribble community guidelines extract.

63 [2012] FWAFB 1359.

64 [2015] FWCFB 5264.

65 Sharp v BCS Infrastructure Support Pty Limited[2015] FWCFB 1033 at [34].

66 [2019] FWC 5358 at [95].

67 Exhibit A9.

68 Exhibit R1, Annexure 9.

69 Exhibit R1, Annexure 10.

70 Exhibit R1, Annexure 11.

71 Exhibit R1, Annexure 12

72 Exhibit R1, Annexure 25.