Ming-Yang Xu v DesignInc (Sydney) Pty Limited
[2011] FWA 8037
•22 DECEMBER, 2011
Note: An appeal pursuant to s.604 (C2012/2205) was lodged against this decision - refer to Full Bench decision dated 12 April 2012 [[2012] FWAFB 2740] for result of appeal.
[2011] FWA 8037 |
|
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Ming-Yang Xu
v
DesignInc (Sydney) Pty Limited
(U2011/9506)
SENIOR DEPUTY PRESIDENT HAMBERGER | SYDNEY, 22 DECEMBER, 2011 |
Termination of employment; duty of loyalty.
Introduction
[1] Mr Ming-Yang Xu (the applicant) made an application to FWA on 5 July 2011 seeking an unfair dismissal remedy under s. 394 of the Fair Work Act 2009 (the Act) in relation to the termination of his employment by DesignInc Sydney Pty Ltd (DesignInc, the respondent) on 24 June 2011.
[2] Mr Xu’s application was not resolved by conciliation and was referred to me for arbitration. Hearings were conducted in Sydney on 7 and 8 November 2011. Mr Xu represented himself, while the respondent was represented by Ms R Francois, instructed by Ms S Hedger of Colin Biggers & Paisley.
[3] Mr Xu gave evidence on his own behalf. The following witnesses gave evidence on behalf of the respondent:
- Mr S Kumar (Information Technology Manager);
- Mr A Quan (Director);
- Ms C Kilpatrick (Human Resources Manager);
- Mr G Coulon (former Managing Director, and Chairman of DesignInc Ltd Group);
- Mr S Amin (Managing Director).
The Facts
[4] Mr Xu was first employed by the respondent in April 2004, as an architect. He was promoted to an associate director in December 2006. At the time of his dismissal he reported to Mr Coulon. On 24 June 2011 he was given a letter signed by Mr Coulon as the respondent’s Managing Director. The letter included the following:
‘I note that we met with you on 11 May 2011. Caroline Kilpatrick and I attended on the company’s behalf. During the meeting we discussed a number of serious problems arising out of communications that you have had in the past with a former employee, Arif Khadem.
We then had a further meeting on 23 May 2011 and gave you an opportunity to respond to the allegations. You responded in an aggressive and inappropriate manner and maintained your position that you did nothing wrong.
Both of these meetings were file noted and you have been provided with copies of these notes. You advised me in the meeting on 23 May 2011 that it is implied that you gave Mr Khadem a list of all previous retrenched staff in the file note from 11 May 2011. We agreed that we were not implying this and have since changed the file note to reflect you provided Mr Khadem with a list of retrenched staff in February 2011. The only other comments I have received from you regarding the file notes is that they are self-serving and contain a lot of errors. You were asked to provide specific details of the errors but you have declined to do so.
As a result of the investigations we have conducted and the dialogue that we have engaged in with you, we have concluded that the relationship between you and this company cannot be salvaged. We consider that you have been grossly disloyal to this company in the following way.
- You deliberately gave confidential information to Mr Khadem, which you previously denied, particularly in circumstances where he was conducting an unfair dismissal action against the company.
- You corresponded with him during this same time in matters concerning company operations, which you previously denied.
- You denied to us that you were aware of Mr Khadem’s unfair dismissal case against the company.
- You did not at any time tell us you were meeting or communicating with him.
- You initially only admitted to having lunch with Mr Khadem and advised that you have had very little contact with him and ignored most of his correspondence. However we later found out you have been in contact with him via electronic means since December 2010.
What has been most disappointing however is that after all these years of service and learning, you have failed to appreciate that you have done anything wrong. Given your senior position in the company, your mature years, and your learning, I would have thought that you would have had the insight to see your actions for what they have been. This observation is not meant gratuitously but rather as an expression of our great disappointment in you. You have shown no contrition or remorse for what you have done in withholding the truth of these matters.
Accordingly we have decided to terminate your employment for cause. This will take effect immediately.
In light of the circumstances we will pay you 5 weeks’ notice in lieu of working. In addition you will be paid all accrued statutory entitlements.
You will be paid all outstanding monies as per the payment plan attached to this letter at the same rate of your current fortnightly salary. We understand a payment plan as opposed to a payment in full is not an ideal way to pay out your entitlements. However, we are going through a period of financial hardship in which you are aware we do not have the means to pay you in full at this time. As our financial hardship eases we will endeavour to pay you sooner at which time you will be notified. All payments will be paid directly into your nominated bank account unless you advise us otherwise.’ 1
[5] The ‘Mr Khadem’ referred to in this letter had been employed as the respondent’s finance manager. In this position Mr Khadem was required to manage and oversee the respondent’s finances. According to Ms Kilpatrick’s unchallenged evidence, an audit was conducted into the respondent’s finances in mid-2010. The audit discovered several serious accounting errors and a report was provided to Mr Khadem by the auditor. Mr Khadem failed to notify the respondent of the accounting errors and did not provide a copy of the audit report to the respondent. Mr Khadem allegedly attempted to conceal the accounting errors which were subsequently discovered by a member of the finance team while Mr Khadem was on leave. Mr Khadem was dismissed on 5 January 2011 and subsequently lodged an unfair dismissal case against the respondent. 2
[6] On 6 January 2011, Mr Coulon informed staff by email that Mr Khadem’s employment had been terminated the day before. This email indicated that ‘serious accounting errors were discovered whilst he was away, in addition to some other previous transgressions in the past, which he had been counselled about.’ 3
[7] In his written statement Mr Coulon says:
‘I recall a management group meeting which took place in late 2010. During that meeting some of the issues relating to Mr Khadem’s performance were communicated to the associate directors. I am unsure whether Mr Xu attended that meeting, however, I believe he would have been aware of the circumstances surrounding Mr Khadem’s dismissal given the “open communication policy” the Respondent maintains with associate directors.’ 4
[8] The applicant was on leave at the time of Mr Khadem’s dismissal and returned to work on 11 January 2011. In his statement, the applicant said that ‘the details and true nature of the dismissal was never revealed to us.’ 5 During his cross-examination, the applicant said that he did not read Mr Coulon’s e-mail until after he returned to work, about 10 or 11 January 2011.6 He also said that he did not know why Mr Khadem was dismissed, and indeed did not know that he had been dismissed until he had read Mr Coulon’s email7.
[9] On 11 January 2011, the applicant sent a short email to Mr Khadem, after reading Mr Coulon’s email advising the staff of Mr Khadem’s dismissal 8. The email simply said ‘Hi Arif. Are you OK?’
[10] The applicant said during his cross examination that he had sent this email ‘out of concern’, especially as he and Mr Khadem had formed a ‘very brief acquaintance and friendship’ before Mr Khadem had been terminated. 9
[11] On 13 January 2011, Mr Khadem wrote a rather bitter and lengthy email to all the staff in the respondent’s office about his dismissal. He did not discuss in any detail the specific allegations against him, but complained that his contribution to DesignInc had not been recognised. He was generally critical of the way the organisation was managed. He expressed particular concern that he had been terminated while he was on annual leave and had been unable to discuss the matter with his employer before his termination. 10
[12] Mr Khadem later that day sent an email to the applicant which included the following: ‘Thank you very much for your frequent communications with me. I really appreciate all this. How did you go with that email? I have been receiving a lot of positive feedback as almost everyone on the floor loved it.’ The applicant responded that he had not received the email Mr Khadem was referring to as he had been on site the whole day and had not been into the office. He suggested that when Mr Khadem was back in Sydney they could arrange to have lunch. On 14 January the applicant sent a further email to Mr Khadem. In it the applicant wrote:
‘I finally got to be able to read your email. It’s consistent with what you’d said in the past. I feel sorry for what has happened. You have been a man of integrity. I look forward to your call when you return.’ 11
[13] During his cross examination, Mr Xu denied that he had had frequent communications with Mr Khadem, who he said was being ‘overenthusiastic...Mr Khadem tends to be rather one-sided on his view of our friendship.’ 12 The ‘frequent communications’ were merely a brief email interchange in December 2010 in which Mr Xu wished Mr Khadem a good holiday and said he looked forward to hearing his news.13 ‘I actually did not know Mr Khadem very well at all apart from business dealings were work-related. Personal relationship or friendship, the beginning of it would have started from roughly that time, and we had lunch and we- that’s when he was an employee. No problem with that, and he send me some links about his writing in Sydney Morning Herald because he’s a - and he also done some community work, and he send something to me and say “Have a look at what I wrote” which I actually didn’t get the time to do, and he say, “I’m going overseas.” So I say “Goodbye”, because I’m away. That’s perfectly normal. It’s permissible as a friend.’14
[14] Mr Xu was asked by Ms Francois about his email of 14 January 2011 to Mr Khadem. He referred to his comment ‘it’s consistent with what you’d said in the past’.
‘...in my previous lunches with him he’d mentioned about behaviour of some of the directors in the company, namely Sandeep and Tony Quan. What he said is what I observed, so I’m simply agreeing. I certainly do not agree because I do not have all the facts of what his allegations are in the long email, but I - generally speaking I agree he is a man of integrity and what - some of the things he said is consistent what he said to me in the past, and consistent with what I observed myself as a senior manager...’ 15
[15] Mr Xu said during his cross examination that he had observed quite a number of instances where the company had terminated employees in an unethical and underhanded manner. 16 In relation to Mr Khadem he thought it was wrong for an employee who seemed to be working very hard to be then suddenly dismissed whilst on holidays. ‘The company should give him the chance to explain himself, present evidence...’17
[16] On 11 March 2011 the respondent made a number of architects redundant. The proposed redundancies had been discussed with the management team (including the applicant) during the previous week. It is the applicant’s uncontested evidence that he kept these redundancies confidential prior to their announcement. 18
[17] Ms Kilpatrick, in response to a number of questions from the Bench, explained what occurred when the redundancies were announced. In particular she described how she called the relevant employees into a meeting with herself and Mr Coulon. ‘They were told that due to a financial crisis that we’re in at the moment unfortunately we had to let them go.’ 19 The employees were asked to work their notice period, however it was suggested that they go home for the rest of the day.20 Later that day, Mr Coulon called a meeting with the rest of the staff to tell them about the redundancies. While no names were mentioned, it would have been easy to work out who had been made redundant.21 The reason given for the redundancies was financial. Ms Kilpatrick conceded that the accounting irregularities for which Mr Khadem had been held responsible ‘could have been mentioned.’22 The staff were not told that they should not tell anyone outside the business about the redundancies.23
[18] On 15 March 2011, Mr Khadem sent an email to the applicant which included the following:
‘As discussed the other day, can you please forward me with the list of emails of retrenched employees.’
[19] The applicant responded that he did not have the staff’s personal emails, but he gave Mr Khadem the names of those who had been made redundant. He invited Mr Khadem to meet him for lunch the following week. 24
[20] During his cross examination, the applicant said he had spoken to Mr Khadem on the phone before he received the email of 15 March 2011. Mr Khadem had already been aware of the names of some of those employees who had been made redundant. 25 Mr Khadem had been feeling aggrieved because he felt he had been blamed for the redundancies. He wanted to contact them to explain that he was not responsible.26
[21] When the applicant met Mr Khadem for lunch, the latter asked him to be his referee. However, Mr Xu felt unable to assist him in this regard, and never provided a reference for Mr Khadem, written or verbal. 27
[22] On 20 March 2011 the directors and Ms Kilpatrick received an anonymous email criticising the respondent’s management. Ms Kilpatrick suspected that the email may have come from Mr Khadem. 28 She was concerned that a member of staff may have been providing information to Mr Khadem, and suspected that this may have been the applicant.29
[23] On 29 March 2011 Mr Khadem wrote another e-mail to the applicant. In this e-mail Mr Khadem said that ‘the good thing is that all the lawyers believe that I should win this case easily.’ The applicant said during his cross-examination that this was the first time that Mr Khadem had told him that he had been consulting lawyers or was involved in any legal proceedings. 30
[24] On 2 May 2011, during a lunch meeting with Mr Xu, Mr Coulon mentioned to him that someone had seen him having lunch with Mr Khadem. The applicant confirmed that he had had lunch with Mr Khadem. He told Mr Coulon that he had declined to give Mr Khadem a reference. He asked if the issue between Mr Khadem and the respondent had been resolved and Mr Coulon advised that it had been. 31 Mr Coulon told the applicant that Mr Amin and Mr Quan had questioned the value of his salary.32 He also referred to the anonymous email sent to the directors and said they suspected he may have written it, as he may have felt aggrieved at being refused a directorship.33 The applicant denied involvement with the email.34
[25] A day or two after, the applicant met with Mr Quan and Mr Amin and reiterated he was not the author of the anonymous email. Mr Quan questioned him about why he had had lunch with Mr Khadem. 35 The applicant told Mr Quan that Mr Khadem had asked him for a reference but that he had declined to provide him with one.36
[26] Mr Kumar said during his cross-examination that he had been asked by one of the directors to find out who in the company had been having email contact with Mr Khadem. He had found out that Mr Xu and one other person had been in contact with Mr Khadem. He was then asked to ‘keep an eye’ on the applicant. 37 It appears from his evidence38 that Mr Kumar was looking for an opportunity to access the applicant’s private email account. On or around 9 May 2011, Mr Kumar saw that the applicant’s private email account was open on Mr Xu’s computer desktop. He accessed the applicant’s computer and printed out a number of emails between Mr Khadem and the applicant.39 He gave these to Mr Amin.40
[27] On 11 May 2011, Mr Coulon and Ms Kilpatrick called the applicant into a meeting and put a number of allegations to him. These were focussed on the email correspondence between the applicant and Mr Khadem that had been obtained by Mr Kumar. Mr Coulon accused the applicant of providing ‘confidential business related information’ to Mr Khadem. 41 Mr Coulon asked the applicant to give the respondent a copy of his email exchanges with Mr Khadem. The applicant was then told by Ms Kilpatrick words to the effect of:
‘As a result of the communication you have had with Arif and the fact that we are unsure of any other information you may have provided to him we have made the decision to suspend you with full pay pending an investigation.’ 42
[28] On 16 May 2011 the applicant wrote an email to Ms Kilpatrick. This included the following:
‘I was shocked and surprised by our meeting on Wednesday.
I found the process confusing and unfair. You accused me of doing things and told me you had proof, but would not tell me what the allegations against me were. I am also very concerned that the company has accessed my personal e-mail from my Gmail account. I wish to complain about that conduct - which I believe is breach of my privacy and based on what I have found on the Internet, I think is illegal under the Workplace Surveillance Act.
Nonetheless, I feel that I have been told that I am going to lose my job unless I give you all my e-mails with Arif - so I have attached them to this e-mail.
All I have done is to offer compassion to Arif at what was a very difficult time for him when he approached me, as he had also approached others. Although I did not know him particularly well, I considered him a friend and was not going to abandon him in his time of distress. I exchanged e-mails with him and met with him for lunch. I have never sought to hide anything. I had lunch with him at a food court and told Ghis about meeting him when the issue was raised.
During these limited contact with him, he asked me who else had left the company and I gave him some names. I did not see this information as confidential as it was widely known these people had left the company. I also did not see it as assistance with an unfair dismissal claim. It was just a fact that these people had left the company. He mentioned Fair Work Australia and speaking with lawyers, but I did not understand what was occurring until the meeting with you.
Arif also asked me for a reference letter. When I told I could not do that, he asked me if I could act as a telephone referee. When I said I didn’t really know about his job, he sent me documents setting out what he did. I did not give him a written reference and I have not given a telephone reference.
Finally, I have had nothing to do with the anonymous e-mails.
I have been employed by the company over 7 years and feel I have always been a loyal and hard-working employee. I enjoy my projects with the company and hope that I can continue, when there are still a number of projects to complete and more projects to come.’ 43
[29] Ms Kilpatrick responded with an e-mail later that day. This included the following:
‘Thank you for your sending the correspondence you had with Arif to us as requested.
I’m unsure what you found to be confusing and unfair as we had come across information you had provided to Arif which was in breach of confidentiality and we asked you questions regarding this. During the conversation I advised you what information was found, specifically that you had e-mailed Arif with the list of people we had made redundant which was the breach in confidentiality. We have sought legal advice regarding the information in your private e-mail account in which we have been advised that as you used company property to access this information it is not illegal.
The basis for the suspension with pay was to give you time to provide us with copies of all the correspondence you had with Arif. In light of the correspondence we already had we felt it would be in the best interests of DesignInc to wait till we finalised this matter before you resumed work.
I noticed that you cleared your desk out which you were not instructed to do and at no time during the meeting did Ghis or I advise you that you were terminated or would be terminated if you did not provide us with copies of the correspondence you had with Arif. You were however instructed to provide Danae with a brief of any outstanding tasks required to be completed on the projects you are currently working on which you neglected to do.
As also mentioned in the meeting we have no issues with staff remaining friends after they have left DesignInc but we do have issue with staff providing ex-employees with confidential information that may have assisted them in a legal case against DesignInc.’ 44
[30] The applicant wrote back to Ms Kilpatrick on 18 May 2011 indicating that he had briefed Danae with regards to urgent work that was under way at the time and was available on the phone should she need further assistance 45.
[31] On 20 May, Ms Kilpatrick sent a further e-mail to the applicant. This outlined the allegations that the respondent had against the applicant.
‘These are the allegations that we raise with you:
1. We have reason to suspect you were involved in, were a party to, or were aware of a number of anonymous e-mails sent to the partners of DesignInc. The content of these e-mails was focused toward undermining and criticising our partners’ leadership and also contain a number of personal comments regarding Caroline Kilpatrick. If you had no involvement please tell us so.
2. You have had discussions with and supplied documentation to Mr Khadem regarding DesignInc’s history of retrenched workers. Not only is this information confidential and sensitive to our business; you have potentially assisted Mr Khadem with his unfair dismissal claim against DesignInc whilst it was a live matter.
3. During the meeting, you initially denied providing a list of retrenched workers to Mr Khadem but then claimed you did not know the information was confidential. We are concerned that this was a deliberate attempt to conceal your correspondence with Mr Khadem regarding confidential DesignInc information.
4. After Mr Khadem’s termination and commencement of an unfair dismissal claim, you agreed to provide him with an oral employment reference for him. We are concerned that you may have also provided a written reference for him stating the reason why he is no longer employed with DesignInc is due to a company restructure the did not take place.
If so, this provides an incorrect and misleading statement regarding our business. Any request made by Mr Khadem to provide a reference based on this information should have been reported to DesignInc straight away.
5. During the meeting, you told Ghislain Coulon and Caroline Kilpatrick that you did not know of the unfair dismissal claim by Mr Khadem and that you thought the situation between DesignInc and Mr Khadem had been resolved when his employment was terminated. This is despite the fact you yourself were a part of the meeting in which Mr Khadem’s termination grounds were discussed. We also have e-mail records to indicate Mr Khadem had informed you of aspects of his claim against DesignInc.
6. During the meeting, you are instructed that you would be suspended with pay and that you are required to brief Danae of any outstanding tasks required to be completed on the projects you were working on. You failed to provide this brief to Danae and instead cleared out your desk which you were not at any stage instructed to do.
We note that you have asserted the review of personal e-mails accessed from a work computer is against the NSW Workplace Surveillance Act. This is not the case. We refer you to DesignInc’s ‘Information Technology Email & Internet Protocols’ policy (“the Policy”). Clause 4 of the Policy provides that your personal e-mail should not be accessed from your work computer unless you are authorised to do so by a director of DesignInc and your access of it adheres to all requirements as set out in the Policy.
The Policy also authorises us to monitor all staff email usage.
Ming-Yang, it is fair to say that the partners are grievously disappointed in you. How could you have thought that privately and covertly dealing with a former employee who took legal action against this firm was an appropriate thing to do? You not only gave him assistance it seems, but you then failed to tell us about it and then tried to deny it.
The position is further exacerbated given our high regard for you. You have, we concede, been a loyal and trusted employee. You sought partnership and were seriously considered for it-the door was not closed on you as you know.
Anyone is capable of an error in judgement, but here our concern is that there has been a systematic course of action that caused the firm detriment. It appears to be a series of acts of gross disloyalty.
We request that you provide a response to the allegations and issues raised in this email at a further meeting at our office on Monday (23 May 2011) at 2pm. This will allow us to complete the investigation regarding the various allegations and then reach a final decision as to what further steps should be taken. If you choose to bring representation to the meeting please inform me beforehand.’ 46
[32] On 23 May 2011 there was a meeting attended by the applicant, Ms Kilpatrick and Mr Coulon. Mr Coulon accused the applicant of a breach of trust. He emphasised that:
‘This is to do with business related information being provided to ex employees, particularly employees who left the firm on bad terms.’ 47
[33] Mr Xu denied that any information he had given to Mr Khadem was confidential. Ms Kilpatrick’s evidence is that he said:
‘The confidential information which I do not classify as confidential.’ 48 At the end of the meeting, Ms Kilpatrick and Mr Coulon informed the applicant that he would be contacted by the following Wednesday (presumably 25 May 2011) with their final decision.49
In fact, the applicant took leave until 20 June 2011. He was dismissed by way of the letter from Mr Coulon of 24 June 2011 referred to earlier in these reasons for decision.
Submissions
[34] The applicant submitted that he was not disloyal to the respondent. All he did was offer compassion to Mr Khadem, when he was in distress after being dismissed. The grounds for termination set out in Mr Coulon’s letter of 24 June 2011 were based on unsubstantiated allegations. The respondent wrongly suspected him of assisting Mr Khadem with his unfair dismissal application by passing him internal documents. The respondent never specified what these documents were.
[35] The applicant submitted that he was not the author of any anonymous emails nor had he passed on any documents to Mr Khadem. He never denied providing names of the employees who had been made redundant on 15 March 2011 but did not believe that this information was confidential. He was unaware of any of Mr Khadem’s legal proceedings at this time; his first reference to consulting lawyers was on 29 March 2011. In any case he did not see how knowing the names of the retrenched employees could be used by Mr Khadem in his legal proceedings.
[36] The applicant submitted that he had not been present at the meeting where the grounds for Mr Khadem’s termination were discussed. He also denied that he had failed to brief his team member on a particular project or that he had cleaned out his desk. The respondent had lied about how it had obtained access to his private emails.
[37] The applicant submitted that Mr Coulon is not “passionate” as described by the respondent’s lawyer. ‘He was aggressive, and a bully. He demonstrated fully in court that he was capable of irrational aggression, and unrestrained in his fury if things do not go his way. He was capable of gross insult. He is explosive in temper. That’s how he normally deals with employers who he perceives disagree with him.’
[38] The applicant submitted that:
‘The respondent attempted to construct a case that I was “great friends” with Mr Khadem when I had consistently stated that we became merely friendly roughly at the end of last year. Mr Khadem was generally over enthusiastic in his emails to me, as he considered me to be a sympathetic character. This was especially so after he was dismissed, very unfairly according to him. And obviously he would value any friendship, and I understand that. I had also consistently stated that I would not abandon him when he was in distress (regardless of rights or wrongs). But of course my friendship was in effect limited to having lunch together, and a few phone conversations when he called me.’
[39] The applicant submitted that he ‘remained loyal to the company to the very end (while completely unaware of the disloyal behaviour of the respondent in the attempt to find evidence).’ He maintained his loyalty to the respondent throughout by continuing to deliver projects and winning projects, and he continued to work together constructively and collaboratively with all the senior management members as well as his team members. He had reservations about the decision made by the respondent to dismiss Mr Khadem. He did not know the true reasons for DesignInc dismissing Mr Khadem except the respondent’s version of “accounting errors”. Mr Khadem had denied such errors. His view of the respondent in that case was that it did not appear to have given Mr Khadem a fair hearing, when it dismissed him when he was on holidays and he was not given a chance to respond to the allegations.
[40] The respondent submitted:
“This is a case where the Applicant (Mr Xu) was dismissed with 5 weeks’ notice due to the (mutual) breakdown in the relationship of trust and confidence. Mr Xu held a senior professional position in the Respondent and had significant responsibilities with the Respondent. Accordingly, the relationship of trust and confidence was critical.
The Respondent submits that the following issues arise for determination.
What was the extent of Mr Xu’s friendship with Mr Khadem?
Did the circumstances of the dismissal of Mr Khadem cause Mr Xu to cease have trust, confidence and loyalty to the Respondent?
Were the names of those employees who were retrenched by the Respondent in March 2011 of a confidential or sensitive nature such that a senior employee, such as Mr Xu, knew or ought to have known that the names should not be shared with a disgruntled former employee, Mr Khadem?
Was Mr Xu dishonest with DesignInc about the extent of his dealings and his friendship with Mr Khadem in the meetings on 2, 3 and 11 May 2011?
If so, does Mr Xu’s dishonesty in those meetings indicate a “consciousness of guilt” about the extent to which he was assisting Mr Khadem and Mr Khadem’s actions against DesignInc (which includes the anonymous correspondence as well as the unfair dismissal case)?
Did Mr Xu continue his deception about the extent of his dealings and his friendship with Mr Khadem during the hearing before this Tribunal?
If so, should the Respondent be required to continue to employ or compensate a senior professional employee who was dishonest and disloyal?
Consideration
[41] The issue before me is whether the applicant’s dismissal by the respondent was harsh, unjust or unreasonable. Section 387 of the Act spells out the criteria for consideration in deciding this issue. These are:
‘(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.’
[42] The reason given by the respondent in its written submissions for its dismissal of the applicant is ‘gross disloyalty occasioned from a breakdown of trust and confidence in the employment relationship due to acts by the applicant.’
[43] Starke and Evatt JJ, in Blyth Chemicals Ltd v Bushnell 50, in the course of considering the position of the respondent, who was the manager of the appellant’s business, said:
‘As manager for the appellant, the respondent was in a confidential position. And it is clear that he might be dismissed without notice or compensation if he acted in a manner incompatible with the due and faithful performance of his duty, or inconsistent with the confidential relation between himself and the appellant.’
[44] In the same case, Dixon and McTiernan JJ said: 51
‘Conduct which in respect of important matters is incompatible with the fulfilment of an employee’s duty, or involves an opposition, or conflict between his interest and his duty to his employer, or impedes the faithful performance of his obligations, or is destructive of the necessary confidence between employer and employee, is a ground of dismissal.’
[45] Kirby J, in Concut Pty Ltd v Worrell 52said:
‘The ordinary relationship of employer at common law is one importing implied duties of loyalty, honesty, confidentiality and mutual trust.’
[46] In the case before him, he found that ‘the “confidence” essential to the relationship of employer and employee had been destroyed. Instead of pursuing the interests of the company and its shareholders, the employee had pursued his own private interests’.
[47] In a recent FWA decision 53, Hamilton DP found that the employer in question had ‘the right to expect a degree of loyalty from [the employee who had been dismissed]. [The employee] instead acted to cause serious trouble for him in the business by engaging in a course of conduct which could only have been intended to seriously disrupt his private and workplace relationships. It would be grossly unreasonable to expect an employer to work with, to trust and rely upon, an employee in these circumstances. This constitutes a valid reason for termination of employment.’
[48] Clearly gross disloyalty, as alleged by the respondent can, in certain circumstances, constitute a valid reason for dismissal. However was Mr Xu grossly disloyal?
[49] I had the benefit of seeing the applicant and a number of the key actors for the respondent in the witness box. I found the applicant to be a credible and honest witness. While he is quite reserved in his manner, and English is not his first language, his evidence was clear, calm and consistent. I was less impressed by the respondent’s witnesses, with the partial exception of Ms Kilpatrick. I was particularly unimpressed with Mr Coulon’s conduct in the witness box. He was argumentative and aggressive, and his evidence was often unclear and contradictory. 54 Mr Kumar was one of the least convincing witnesses I have ever seen, blatantly contradicting his own written statement on key points. Where there is a conflict in the evidence of the applicant and that of the respondent’s witnesses I generally prefer the former. The only significant exception is where Ms Kilpatrick was in a better position to know about a matter (such as the circumstances surrounding Mr Khadem’s dismissal).
[50] Based on the evidence presented to me, I have no difficulty in accepting Mr Xu’s characterisation of his relationship with Mr Khadem. He had a not very close friendship, and was sympathetic to him when he was dismissed. He was particularly concerned that Mr Khadem was apparently sacked whilst he was on annual leave and had no opportunity to respond to the allegations against him. Mr Xu was not present at the meeting where the reasons for Mr Khadem’s dismissal were discussed.
[51] The respondent made a number of allegations against the applicant in its email of 20 May 2011. Mr Coulon in his evidence before the tribunal maintained that these allegations were not ‘suspicions’ but ‘well documented facts’ 55 though he later appeared, grudgingly to accept that he did not have any evidence about at least some of them.56 However it is clear based on the evidence that they are largely untrue. In particular, I am satisfied that Mr Xu was not involved in the anonymous emails, he did not provide documentation to assist Mr Khadem with his unfair dismissal claim, he did not provide a reference - misleading or otherwise for Mr Khadem and he did not fail to brief another employee about a project he was working on. Nor do I find that Mr Xu was dishonest about his relationship with Mr Khadem. He was not in a hurry to tell the directors he was in contact with him, but he had no obligation to do so, as long as his dealings with Mr Khadem were proper.
[52] The applicant never denied that he had given Mr Khadem the names of the employees who had been made redundant. However this only occurred after the redundancies had been announced. I can find no basis for asserting that this information was confidential. Moreover I am satisfied that Mr Xu did not provide the names to help Mr Khadem with his unfair dismissal claim - particularly as I am satisfied that he was unaware of Mr Khadem’s unfair dismissal claim at that time. Rather, he provided Mr Khadem with the names so that he could contact them to explain that his actions had not caused them to lose their jobs. This was in circumstances where (I infer from Ms Kilpatrick’s evidence) Mr Khadem had indeed been at least partly blamed for the company’s financial misfortunes that led to the redundancies.
[53] If Mr Xu had indeed covertly provided Mr Khadem with confidential company information to assist the latter take legal action against the applicant’s employer, this may have constituted an act of disloyalty sufficient to form a valid reason for his dismissal. However I find that this is not what occurred. Ms Francois’ submissions could be seen as suggesting that the applicant’s own loss of faith in the respondent led to a breakdown in the employment relationship. While this is relevant to the issue of remedy, I do not see how it could be used to justify the dismissal of the applicant.
[54] I find that the respondent did not have a valid reason to dismiss the applicant.
[55] In a case such as this, where the respondent lacked a valid reason for the applicant’s dismissal, the requirements of procedural fairness set out in s.387 (b) to (g) are of no great significance. It would be hard to find that an employee who was dismissed without a valid reason was not dismissed unfairly because he or she had been afforded procedural fairness. Nevertheless, I find that the applicant was notified of the reasons for his dismissal. He was given an opportunity to respond. There was no evidence that he had been unreasonably refused a support person. While the employer is not large, it did have the benefit of specialised human resource management expertise in the form of Ms Kilpatrick.
[56] I find that the dismissal of Mr Xu by DesignInc was harsh, unjust and unreasonable.
[57] I am satisfied that Mr Xu was protected by unfair dismissal and has been unfairly dismissed. I consider that reinstatement is inappropriate. Mr Xu was a senior employee of the respondent and it is clear that his relationship with the directors with whom he would have to work is irreparably damaged. In the circumstances I consider that an order for compensation in lieu of reinstatement is appropriate. Section 392 of the Act sets out the criteria for deciding the appropriate amount of compensation. In particular s.392(2) says:
‘(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.’
[58] While the respondent does appear to have been suffering from some financial difficulties I do not consider any order I might make in this case would adversely affect its viability. The applicant’s service was relatively long, on his evidence he was one of the two longest serving employees in the whole company. 57 His salary was $110,000. The applicant himself submitted that the work of the respondent was drying up and I estimate that he would have continued in employment with the respondent, if he had not been unfairly dismissed, for a further 6 months, making his loss $55,000 before tax.
[59] There was some evidence before me about the applicant’s efforts to mitigate his loss. At the time of the hearing he had not succeeded in obtaining other employment. Mr Amin gave evidence that a number of jobs for which the applicant would have been qualified had been advertised 58. While the applicant submitted from the bar table that he had made enquiries about other employment, I am not satisfied that the applicant has been as active as he could have been in attempting to mitigate his loss. Taking account of all the factors referred to in s.392 I find that the respondent should pay the applicant an amount of $50,000. This is below the compensation cap referred to in s.392 (5). An order [PR518500] to this effect is issued in conjunction with this decision.
SENIOR DEPUTY PRESIDENT
Appearances:
Mr M Xu, the applicant
Ms R Francois, of counsel,for the respondent
Hearing details:
SYDNEY
2011
7, 8 November
Final written submissions:
22 November, 2011
1 Exhibit X1, appendix A
2 Exhibit D4, paragraph 13
3 Exhibit D4, paragraph 16 and annexure 3A
4 Exhibit D5, paragraph 15
5 Exhibit X1, paragraph 2
6 PN167
7 PN184
8 PN227
9 PN232
10 Exhibit X1, appendix B
11 Exhibit X1, appendix C
12 PN239-40
13 PN255-259
14 PN259
15 PN287
16 PN288
17 PN294
18 Exhibit X1 paragraph 5
19 PN1528-9
20 PN1531-3
21 PN1546
22 PN1556-7
23 PN1562, 1564
24 Exhibit X1, appendix C
25 PN316
26 PN334
27 Exhibit X1, paragraph 9, PN413-6
28 Exhibit D4, paragraph 18
29 Exhibit D4, paragraph 83
30 PN397
31 Exhibit X1, paragraphs 10-12.
32 Exhibit X1, paragraph 17
33 Exhibit X1, paragraph 21
34 Exhibit X1, paragraph 26
35 Exhibit X1, paragraph 27
36 Exhibit D2, paragraph 22
37 PN1110-1113
38 Especially PN1259
39 PN 1254-1272
40 Exhibit D1, paragraph 16
41 Exhibit D4, paragraphs 32-34
42 Exhibit D4, paragraph 37
43 Exhibit X1, appendix E
44 Exhibit X1, appendix E
45 Exhibit X1, appendix E
46 Exhibit X1, appendix E
47 Exhibit D4, paragraph 72
48 Exhibit D4, paragraph 72
49 Exhibit D4, annexure 9
50 [1933] HCA 8; (1933) 49 CLR 66
51 [1933] HCA 8; (1933) 49 CLR 66 at 81
52 [2000] HCA 64; 75 ALJR 312 at 51
53 Reedy v Global Cranes Pty Ltd [2011] FWA 3037
54 See, for example, PN2264-2278 and PN 2326-2330
55 PN2264
56 For example, PN2280
57 Exhibit X1, paragraph 80
58 Exhibit D7
Printed by authority of the Commonwealth Government Printer
<Price code {C}, PR517029>
0
3
0