Mr Alexander Klibschon v Tessa Advisory Group Pty Ltd

[2016] FWC 6393

[2016] FWC 6393

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Mr Alexander Klibschon
v
Tessa Advisory Group Pty Ltd
(U2016/2808)

COMMISSIONER BOOTH BRISBANE, 16 SEPTEMBER 2016

Application for relief from unfair dismissal – misconduct

[1] Mr Alexander Klibschon (the Applicant) applied under s.394 of the Fair Work Act 2009 (the Act) for relief from what he asserts was his unfair dismissal from employment with Tessa Advisory Group Pty Ltd (the Respondent). The Respondent alleged the Applicant was dismissed for “serious misconduct”.

[2] The Applicant was represented by Mr William Ash of Hall Payne Solicitors and the Respondent was represented by Ms Theresa Moltoni of IRIQ.

[3] The Applicant was employed by the Respondent as an Investment Sales Executive on a full time basis from about 9 June 2015.

[4] The reason for the Applicant’s dismissal was for clearing out his desk and taking home confidential files and other documents that belong to the Respondent. This conduct took place during negotiations over his ongoing employment. The Respondent asserts that after his dismissal he used the information to contact prospective clients in his own business.

[5] The Applicant admits he took home some manila folders of work-related material but asserts this did not amount to misconduct: it was his normal and regular practice to take work home and it was expected of him. He submits that the Respondent decided to use the alleged incident as an excuse to terminate his employment in the context of his attempting to negotiate terms of his contract of employment.

[6] In deciding on an application such as the one brought by the Applicant, the task of the Fair Work Commission (the Commission) is to determine if the termination was unfair under the Act, and specifically if it was harsh, unjust or unreasonable.

[7] The Act states matters that must be taken into account in making that determination is in s.387:

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

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

(b) whether the person was notified of that reason; and

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

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

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

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

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

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

Applicant’s case

[8] In early May 2016, the Applicant was invited to sign a new Contract of Employment. He had concerns with the Contract and was reluctant to sign it. His evidence was that he had several meetings with Mr Tutt, Managing Director and Mr Coulter, Director of Marketing and Sales for the Respondent, and expressed his intention to continue working for them and conveyed a willingness to negotiate terms.

[9] On 31 May 2016 he advised Mr Tutt he had sought legal advice given his discomfort with the proposed terms. Mr Tutt, he says, responded: “You’re in or out; if you don’t sign you can leave” 1 and later by email “As discussed I meant what I said you’re a great bloke with a great future. Can you please let me know tomorrow what you want to do”.2

[10] Negotiations did not progress. 3

[11] On Sunday 5 June 2016 the Applicant emailed Mr Tutt as follows:

As advised I will not be signing the agreement in its current form. It is my full intention to continue employment with the group and to work with yourself, Andrew and Dan to formulate an agreement that we are all comfortable with. I am happy to meet tomorrow at any time. 4

[12] A few minutes later, Mr Tutt, withdrew the Respondent’s offer by email. 5

[13] After work the next day, Monday, the Applicant took home some work files in manila folders to work on. Under cross examination he denied he took other material home that evening.

[14] The Applicant submits that he took work home on a regular basis, and it was his understanding that this was both expected of him and known to Mr Tutt. 6 His evidence was that he had never been directed not to take work home and that other employees also worked from home. Further, he says the files he took home were files of his own making that he took to meetings.7 The material he took home “was some clients’ expressions of interests, records of [his] sales and basic information concerning clients”.8

[15] At around 8:11pm that evening the Applicant received an email from Mr Tutt which stated that he must return the files by 9:00am the following morning. He says he had never received such an email before. He placed the files on his desk in the normal way at about 8.15am on 7 June and advised Mr Tutt by email accordingly before 9.00am. 9

[16] Also on Monday evening, the Applicant authorised his lawyers to send correspondence, “in an attempt to negotiate a variation of the contract of employment.”¹⁰ This correspondence was forwarded to the Respondent on the morning of 7 June. The letter re-affirmed the Applicant’s rejection of the offer; stated his understanding of his entitlements, including under the Real Estate Industry Award 2010 and the safety net under the Act, and for outstanding commissions; a demand for production of certain records and a statement that failure to produce them might result in a penalty up to $54,000; and a statement that the Applicant was exercising workplace rights and the implications of that for adverse action against him. The letter also stated:

Tessa Group has proposed either new contract of employment or variation of our clients existing contract of employment and requiring it be agreed to by 6 PM today. We are instructed that our client has not agreed to the new contract variation of his contract.

[17] The letter made no mention of negotiating different mutually acceptable terms.

[18] At 9.30am on 7 June the Applicant was required to attend a meeting with Mr Coulter and a representative of the Respondent’s paid agents in these proceedings, Mr Patrick Hill. The Applicant submits this meeting was in regard to taking files home without permission. The Applicant deposed the meeting was to the following effect: 11

PH: “A decision on this will not be made today?
PH: Did you take home confidential information?
AK: I took home my manila folders and I didn’t realise that the information was confidential. The folders contain very limited information such as EOI forms and Group Profiles.
PH: Why did you take it home?
AK: I took it home for work purposes as I regularly work from home.
PH: Did you have permission?
AK: I thought working from home was an expected part of my job.
PH: Have you ever taken confidential information home before?
AK: I have taken the same sort of documents home before. It is nothing abnormal.
PH: Have you ever had permission to take home confidential information?
AK: I thought it was expected that we work long hours and working from home was normal procedure.
PH: Can you show cause why your employment with Tessa should not be terminated?
AK: There is nothing sinister about working from home and I have nothing to gain. That information is available on the computers. I am working my absolute hardest to get the most number of sales possible.”

[19] The Applicant submits 30 minutes after that meeting he was summarily dismissed. 12

[20] The Applicant claims that during his employment he had never received any direction not to work from home nor had he received any warnings for misconduct or performance issues. Further, he was expected to work from home.

[21] The Applicant states since his termination he sought alternative employment but fairly quickly decided to set up his own business. He notes that Mr Tutt emailed third parties in the following terms: 13

As discussed with Daniel Hillier, Alex Klibschon was fired from Tessa Advisory for misconduct and we are about to commence legal action against him. Dan a director of Tessa Advisory will look after you now.

and

… you sent Alex Klibschon an email below regarding some presentations. I am not sure if you are aware yet but Alex Klibschon’s employment was terminated by Tessat for gross misconduct and is now the subject of a legal matter …

[22] The Applicant submits that:

• the information in the folders is only confidential to the extent it was information expressing interest from potential clients and group profiles and relevant to his role.



• he was one of the highest performing investment sales executives with his employer.

[23] As to the suggestion by the Respondent that he used confidential information after the termination, the Applicant refers to the undertaking dated 15 June 2016, 14 in the following terms:

• he does not retain, or have in his possession any confidential information of Tessa; and



• he will not utilise any confidential information, which has the necessary quality of confidence, of the Tessa Group contrary to his implied contractual obligation at common law.

[24] He reiterates that there was no express written covenant in his contract of employment restraining him in any way in respect of his employment after leaving the Respondent. As a result the only information capable of protection is that which is implied by the common law and can be classed as a trade secret or a material so highly confidential as to require the same protection, citing Faccenda Chicken v Fowler. 15

[25] During cross-examination the Applicant admitted to contacting at least one client post-termination.

You contacted the respondent's clients post termination, didn't you?---Yes.

You contacted XXXXX , for example?---Yes.

You attempted to solicit work from them, didn't you?---We had a discussion.

You advised them not to go ahead and purchase the property from Tessa but to buy it from you, didn't you?---That's absolutely untrue. 16

[26] In final submissions Mr Ash asserted that the Applicant has none of the Respondent’s documents and in any case, information loses its protection and its status as confidential once it is learned. He submits:

But those client contact details are either things that he knows or remembers or learnt during the employment or are on his personal mobile phone through the normal, every day course of employment 17.

[27] The Applicant submits that even if the Respondent had not agreed to all or any of his proposed changes to employment, he would have accepted the offer in order to remain in the Respondent’s employment. Mr Ash submitted that under cross-examination Mr Tutt was not able to explain what it meant to withdraw the offer. After the termination, the Applicant says he actively sought suitable employment but shortly after (23 June 2016) decided to enter business under his own company in real estate.

[28] After the dismissal, the Respondent caused its advisors and lawyers to write to the Applicant about post-employment of information gained from working with the Respondent. On 15 June 2016 the Applicant gave the undertaking set out above.

Respondent

[29] The Respondent submits the termination was concerned solely with the misuse of confidential information, and was not a response to the issues around the variations to the contract of employment 18.

[30] Mr Tutt’s evidence was that on Monday 6 June he noticed that the Applicant had taken home certain confidential information belonging to the Respondent and that he had emailed the Applicant requesting confirmation that the confidential information would be returned immediately and the Applicant indicated he would do so.

[31] Mr Tutt annexed to his statement a schedule he said was a list of the items taken by the Applicant on the night of 6 June. 19 A very large box of documents was produced to the Commission, said to be those taken home by the Applicant on that evening and in the list. The Applicant inspected the contents of that box at the Commission. The list runs to four pages, and includes:

• client folders including property details and agent group profiles



• weekly sales meetings agendas from February to May 2016, numbering 17



• other meeting agendas



• stock lists



• valuations



• timetables



• stocklists



• spreadsheets targets for the Applicant



• completed sales forecast advices for May 2016



• blank house and land submission forms and other blank forms of like nature



• specified email printouts



• various brochure doors and booklets on possible developments



• June schedule of events



• printout of presentations.

[32] The Applicant was directed by Monday night’s email to attend a meeting the next morning. The email stated “can you please confirm you will be returning all office files from your desk that have been removed this evening without permission”.

[33] The email concludes: “please speak to Andrew and Dan if you don’t intend to return property of the Tessa Advisory Pty Ltd.”

[34] The meeting occurred the next morning with Mr Coulter and the Respondent’s external advisor Mr Hill.

• At the beginning of that meeting Mr Hill outlined the purpose of the meeting which was to put to the Applicant serious concerns which had arisen due to the Applicant’s conduct (specifically that the Applicant had taken home confidential information without permission) and that this meeting was to provide the Applicant with an opportunity to respond to those allegations.



• Mr Hill asked the Applicant whether he would like a support person. The Applicant declined. Mr Hill then specifically outlined the role of the support person, again asking the Applicant if he would like one. Again the Applicant declined.



• Mr Hill then proceeded to ask the Applicant a series of questions relating to his conduct on or about 6 June 2016.



• Mr Hill asked the Applicant if he had taken the confidential information home. The Applicant responded that he had (though he questioned whether the information was in fact confidential). The Applicant also stated that he had done this before on many previous occasions. The Applicant stated that the confidential information was located on the Respondent’s hub.



• Mr Hill asked the Applicant why he had taken the confidential information home. The Applicant replied that the purpose of taking the documents home was so that he could continue working on them and that this was part of his role, making sales.



• Mr Hill asked the Applicant if he had permission to do so. The Applicant stated that it was “sort of implied” that his role took many hours of work and that work could be done from home.



• Mr Hill asked the Applicant whether there was anything preventing him from working in the office. For example, did the hub shut down or was he unable to access the office after hours? The Applicant replied there was nothing preventing him from working in the office.



• Mr Hill asked whether there was any reason the Applicant had taken information home previously. The Applicant stated that it was part of his role to work many hours. The Applicant said that he did take work home “from time to time when needed”. The Applicant stated again that there was no express permission to do this. He further noted that at times he had been working from home “nearly every day”.



• Mr Hill asked the Applicant if there was anything further he would like to add about taking confidential information home. The Applicant said no.



• Mr Hill asked whether the Applicant could show cause as to why his employment should not be terminated. The Applicant stated that he did not see anything sinister about his actions, he had nothing to gain, and that the information was on computers.



• The Respondent considered the Applicant’s conduct to be serious misconduct, which posed a significant risk to the Respondent’s business.



• The misconduct is serious in that it was deliberate and inconsistent with the continuation of the employment contract. Further it is conduct that causes serious and imminent risk to the reputation viability or profitability of the employer’s business.

[35] The Respondent submits that the information had been wrongfully removed by the Applicant and had the necessary quality of confidence.

[36] The Respondent submitted that it treated the information as confidential in that it was limited to certain trusted employees of the Respondent and was not located on the company hub. The obligation of confidence, the Respondent submits, does not require a detriment to the Respondent.

[37] The Respondent further submits that the Applicant misused the confidential information and became aware since the Applicant’s termination that the Applicant has attempted to solicit clients he had dealt with as an employee. It is submitted that facts justifying dismissal, which existed at the time of the dismissal, should be considered, even if the Respondent was unaware of those facts and did not rely on them at the time of dismissal.

[38] In this regard, the Respondent submits the information taken by the Applicant was misused after termination. It submits as follows:

“Contrary to paragraph 15 of the Applicant’s outline of submissions, the Respondent does contend that the Applicant misused the confidential information. In so far as is necessary the respondent adopts paragraph 39 of the Applicant’s outline of submissions wherein the Applicant makes reference to “his potential clients”. Such clients being clients of the respondent, remain the property of the respondent for the purposes of this application.”

[39] It is submitted, these facts existed at the time of the dismissal, but came to light after the dismissal and may justify the dismissal when it would otherwise be harsh, unjust or unreasonable.

Consideration

[40] I now turn to the factors in s 387 in deciding whether a dismissal was harsh, unjust or unreasonable.

Was there a valid reason for the dismissal related to the Applicant’s conduct?

[41] A valid reason must be defensible or justifiable on an objective analysis of the relevant facts. It is not sufficient for the employer to simply show that it acted in the belief that the termination was for a valid reason. 20

Serious misconduct?

[42] The Respondent suggested the alleged misconduct should be characterised as “serious misconduct”. This assumed importance as it was Mr Hill’s advice that such a characterisation would justify dismissal without notice or payment. 21

[43] The task of the Commission is to ascertain if the alleged conduct happened, and if it did, was it misconduct that formed a valid reason for the dismissal. The Full Bench in Sharp v BCS Infrastructure Support Pty Ltd:

It may be accepted that an assessment of the degree of seriousness of misconduct which has been found to constitute a valid reason for dismissal for the purposes of s.387(a) is a relevant matter to be taken into account under s.387(h). In that context, a conclusion that the misconduct was of such a nature as to have justified summary dismissal may also be relevant. Even so, it is unclear that this requires a consideration of whether an employee’s conduct met a postulated standard of “serious misconduct”. In Rankin v Marine Power International Pty Ltd Gillard J stated that “There is no rule of law that defines the degree of misconduct which would justify dismissal without notice” and identified the touchstone as being whether the conduct was of such a grave nature as to be repugnant to the employment relationship. 22

[44] The Applicant submits there was no valid reason for his termination, and that the Respondent had conveniently decided to use the alleged incident as an excuse to terminate the Applicant because of his desire to negotiate terms of employment. He was never told he could not take work home; there were no policies of the company drawn to his attention; it was his ongoing practice and a practice of others to take files home; and it was known to Mr Tutt that he and others took files home in the past.

[45] On the question of serious misconduct the Applicant relies on authorities that require the Commission first to establish that the conduct occurred and secondly that are justified termination. 23 It was submitted that the principles in Briginshaw applied given the seriousness of the matter.24

Confidential information

[46] The Applicant submitted the only confidential material could be the expressions of interest and group profiles.

[47] The Respondent submits that the Applicant admitted he took home information and maintains he took the material detailed by Mr Tutt. The allegation of post-termination soliciting was said to be relevant even though the Respondent was not, obviously, aware of them at the time of termination.

[48] It was submitted for the Respondent that an obligation of confidence exists and that the material was confidential. 25

[49] As a result of these factors the Respondent says it was exposed to a potential risk to, or loss of, business.

[50] I am prepared to proceed here on the basis that the material taken from the office by the Applicant (whether it was the manila folders only or the folders and some or all of the material listed by Mr Tutt) included information that was confidential to the business of the Respondent.

Policies

[51] In B, C and D v Australia Post it was said in the context of published policies prohibiting pornographic material in the workplace:

[36] A failure to comply with a lawful and reasonable policy is a breach of the fundamental term of the contract of employment that obliges employees to comply with the lawful and reasonable directions of the employer. In this way, a substantial and wilful breach of a policy will often, if not usually, constitute a “valid reason” for dismissal. 26

[52] The Respondent does not assert that it had an explicit and published policy against employees working from home and taking files out of the office for that purpose. Nor did it assert there was an express direction given to that effect directly to the Applicant or generally before the Monday in question. Indeed there was no evidence that such a policy or direction has since been issued.

[53] However, the Respondent submits that there was an “obligation of confidence” and that the Applicant should have realised such.

The alleged misconduct

[54] I turn first to whether the conduct allegedly engaged in by the Applicant actually occurred.

[55] The Applicant admitted to taking home a limited number of folders. He explicitly denied that he took more material than that, and consistently asserted that it was his usual practice to take work home in order to do his job well and that Mr Tutt and others well knew of his practice and at least tolerated it.

[56] Mr Tutt, both in his statement and oral evidence, asserted that a significantly greater amount of material was taken home on that evening, producing a large box of materials said to be the ones taken. The Respondent asserted that taking any materials out of the office required permission and that all employees have full time access to the office and there is no need for anyone to take confidential materials away. 27

[57] The evidence before the Commission effectively pits the word of one witness against the other. In my view there is not sufficient, credible evidence to conclude that all of the material listed by Mr Tutt was taken home that evening. Mr Tutt offered no explanation of how the list of materials was generated. The fact that a large box of the listed materials was produced to the Commission only substantiates the existence of the material, not that it was on the Applicant’s desk on Monday, removed by him and returned the next day. Further there was no evidence about either how the Applicant gathered, removed and returned such a huge amount of material, apparently unobserved by others; or that the material was not relevant to the Applicant’s legitimate work pursuits, including calculation of what he claims are outstanding payments owed to him, now the subject of other legal proceedings.

[58] However it seems unlikely Mr Tutt would have noticed missing only the small number of folders the Applicant admitted he took home, sufficiently for him to send the strongly worded email on Monday evening demanding return of materials. While I cannot conclude, on the evidence, precisely what the Applicant took from the office on the evening of 6 June, it was likely more than just the manila folders. There is insufficient evidence that he “cleaned out his desk”, but enough material must have been taken home such that Mr Tutt noticed that things were missing when he visited the floor that evening.

[59] Even if it is assumed that Mr Tutt’s list is accurate to the last sheet of paper, in the absence of explicit policy or direction, what does its removal and return mean, with or without Mr Tutt’s email directing the return?

[60] That obligation of confidence would at least ensure it be kept confidential and properly returned to the workplace. There is no evidence that the material was not kept confidential or that material was removed and not returned or that the Applicant intended not to return it. The Respondent does not assert that the Applicant failed to keep confidences before termination 28 or that he failed to return any document he admitted or was alleged to have taken.

[61] In the absence of a policy or direction, the Respondent relies on an “obligation of confidence”, apparently including not to remove documents without permission to do so.

[62] The Applicant’s evidence was that his habit of taking work home was known and tolerated (or even approved of) by Mr Tutt. Mr Tutt denies any such knowledge. 29

[63] On this matter I prefer the evidence of the Applicant. It is inherently unlikely that real estate sales executives would not, from time to time, work on files out-of-hours, and sometimes choose to do so in the comfort of their homes rather than being in the office at odd hours. I do not doubt that the Respondent discourages removing files from the office, at least now. However the Applicant’s evidence of his practice having been observed and at least tolerated (if not encouraged) is coherent with the balance of his evidence as to his work practices. His evidence that Mr Tutt referred to his “little files” is consistent with his evidence about how he made and used the files.

[64] I find it unlikely that employees only remove files with permission, otherwise accessing the office out of hours, especially in the absence of explicit policies and directions to that effect. I also find it unlikely that the large box of documents produced, in the absence of any evidence at all about how it was collected, removed and returned, in fact represented the materials taken that day.

[65] The Applicant admitted he removed at least his “own” files from the office, and I have assumed the material removed contained confidential information. However, I find that it was not misconduct as alleged, but the Applicant acting in the course of his duties, taking the files home for proper work-related purposes, even in the context of high stakes negotiations over his remuneration and other conditions.

[66] The conduct was not therefore misconduct as alleged, even if it was undesirable to the Respondent. This conduct did not establish a valid reason for the dismissal on that basis.

Facts acquired after dismissal

[67] The Respondent also says that facts gathered after the dismissal should be taken into consideration as to establishing misuse of the information. In particular, the Respondent referred to in the Applicant’s own reference to “his clients”. The Respondent submits: “such clients, being clients of the Respondent, remain the property of the Respondent for the purposes of this application.” 30 Mr Tutt also deposes to a conversation with the Applicant said to give rise to other legal action against him:

23. On 10 June 2015, I spoke with the Applicant at the Tessa offices, about whether or not he had been contacting Tessa’s clients. The Applicant stated “Yes. No comment”.

[68] The test of whether a respondent can rely on information gathered after termination is described in Shepherd v Felt & Textiles of Australia Ltd as follows

The fact that the appellant’s misconduct was unknown to the respondent at the time of the termination of the agreement is quite immaterial. If there were in fact any circumstances in existence at the time of the termination of the agreement which could have justified the respondent in so terminating it, then it may justify the termination by subsequent proof of those circumstances.  31

[69] That is, the reason for the termination need not be the one given by the employer at the time of dismissal. It can be any reason underpinned by the evidence provided to the Commission, including after-acquired facts if those facts existed at the time of the dismissal. 32

[70] However by seeking to rely on a reason other than that given at the time of dismissal the Respondent will have to contend with the consequences of not giving the Applicant an opportunity to respond to such a reason. 33

[71] The reason given by the Respondent is that the Applicant used confidential information obtained on 7 June at a later date. In particular that, the Applicant admitted to contacting at least one client post-termination since he has established his own business. He admitted to a ‘discussion’ but denying seeking to take business away from his former employer.

[72] For the Respondent to rely on the Applicant’s use of confidential information it must establish:

1. That there are circumstances in existence at the time of termination; and
2. those circumstances justify dismissal.

[73] That is, the circumstances relied on by the Respondent was contacting clients post termination, and these circumstances were in existence at the time of termination. But were they?

[74] There is no evidence that the Applicant’s conduct prior to termination justifies termination. He has since contacted his former clients, after he incorporated his company and established his business. That conduct happened after termination and was unknown to the Respondent and was not a fact substantiating dismissal because it did not exist at the time of termination. The Respondent’s submission that it should be taken into account as a reason for dismissal must rely on drawing inferences about the Applicant’s motives on the Monday night. But there was neither evidence nor submissions to support adequately a proposition that the Applicant took home the materials intending to use the confidential information of his employer other than in performance of his duties. It is not open to the Commission to speculate about other motives.

[75] At the time of termination it has been established that the Applicant, on the evening of 7 June took home confidential information, a matter he freely admitted. 34 No more can be concluded on the evidence than that.

[76] In the circumstances, contact with former clients after dismissal is a matter that can be properly considered in the context of its impact on in any compensation payable.

[77] For those reasons neither taking home of the confidential information (without a specific direction prohibiting it) nor the after-acquired facts are a valid reason to dismiss.

[78] I conclude there was no valid reason to dismiss.

Was the Applicant notified of the reason for the termination of his employment and given an opportunity to respond?

[79] The reason for the termination was said to be the removal of the confidential information although the Respondent seeks to also rely on after termination behaviour.

[80] The evidence is that the Respondent gave the Applicant notice of that reason, being his removing documents, and gave an opportunity to respond during the meeting. I accept the Applicant’s evidence that he asked for the opportunity to take advice and was told by Mr Hill that he could give his termination letter to his advisors. This provided a limited opportunity to respond. To balance this, he was apprised the night before by the emails that his taking the files was to be the subject of the meeting. That is, he received a form of notice beforehand.

[81] For obvious reasons he could not have been given notice and an opportunity to respond about the alleged approaching of clients, discussed above.

[82] On balance the notification may be acceptable but opportunity to respond was inadequate.

Unreasonable refusal of a support person

[83] I accept the Respondent’s evidence that the Applicant was offered the opportunity to use a support person and that the role of such a person was explained to him.

Did the termination relate to unsatisfactory performance?

[84] The issue was about conduct not performance. The Applicant’s assertion that he was a top performer was disputed by the Respondent but it was acknowledged his performance was in line with expectations.

To what degree did the size of the employer’s business impact on the procedures followed in effecting termination?

[85] No submissions were made in relation to this matter. Mr Tutt noted that the Respondent is a significant and diverse business. It appears the Respondent employs over 100 staff. 35

To what degree did the absence of dedicated human resource specialists or expertise impact on the procedures followed in effecting the termination?

[86] The Respondent used the services of an employee relations consultant. This factor is neutral.

Are there any other matters that the Commission considers relevant

[87] The Respondent urges a consideration of the relatively short length of employment of the Applicant being just over 12 months. In my view this matter is neutral in the circumstances.

[88] The Applicant has not had employment since his termination, although he has established a business that at the time of hearing was yet to generate revenue. It seems therefore that he is making active choices about his future and it cannot be said that the dismissal was harsh because of its financial impact because of those choices.

[89] The Applicant was summarily dismissed, the Respondent having been advised explicitly by Mr Hill that in those circumstances no notice or payment was required. 36 In my view that was disproportionate to the alleged misconduct in the circumstances described above.37 In the absence of a policy or direction and given the past course of conduct and the heightened state of contractual negotiations, summary dismissal was disproportionate and harsh.

Conclusion on harshness etc

[90] I have concluded on the evidence there was no valid reason to dismiss the Applicant, and that summary dismissal was disproportionate to the alleged conduct. There was no relevant policy or direction and the Applicant genuinely believed he was required or permitted to work from home and to use his files to do so.

[91] The post termination behaviour, on the material before the Commission, does not have the requisite character to establish misuse of confidential information, and to the extent the relevant facts came into existence only after the dismissal, not relevant to this question. None-the-less it is conduct the Respondent considers unacceptable. But alleged misuse had not been put to the Applicant prior to termination, only the taking away of the files.

[92] In these circumstances the termination was harsh, unjust and unreasonable in the way stated in the seminal case of Byrne v Australian Airlines:

…the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted. 38

Should there be a remedy?

[93] The Applicant no longer seeks reinstatement 39 and the Respondent likewise resists reinstatement as it has lost trust and confidence in him because of the alleged conduct before and after the dismissal and his apparent lack of contrition. Reinstatement is therefore not an appropriate remedy.

[94] In the circumstances I consider an award of compensation is appropriate given the unfair dismissal has caused him financial loss.

[95] The Applicant submits he would have continued in employment with the Respondent for another five years. The Respondent submitted any order for compensation should be reduced for misconduct citing Kenley v JB Hi Fi Camberwell Pty Ltd 40 and on account of his relatively short period of employment.

[96] In deciding whether compensation is payable s.392 of the Act requires consideration of all of the circumstances of the case including the following criteria:

“392 Remedy—compensation

Compensation

(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

Criteria for deciding amounts

(2) In determining an amount for the purposes of an order under subsection (1), the FWC 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 the FWC considers relevant.

Misconduct reduces amount

(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.”

[97] I turn now to these criteria.

The viability of the employer’s business

[98] There was no evidence led that any order would affect the Respondent’s viability.

The length of service

[99] The Applicant worked for approximately twelve months for the Respondent. This is not a lengthy period but should not preclude or reduce compensation.

The remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed

[100] Mr Ash submits that if the Applicant had not been dismissed his employment would have continued for five years. His oral and written evidence was that he wanted to negotiate terms and would have accepted an offer from the employer, even on the terms he had rejected. On 5 June when the Applicant rejected the offer by email, within minutes the Respondent withdrew the offer. Under cross-examination Mr Tutt was unable to say what withdrawal meant.

[101] While Mr Ash acknowledged that it was open to both sides to negotiate a variation to the existing contract of employment 41, he says that the withdrawal of offer should be seen as part of the dismissal42.

[102] The Applicant submits that while he did instruct his solicitors to reject the offer in the letter dated 7 June, his clear intention was to negotiate. That letter from the solicitors does not support this submission. It was different in tone and fact to earlier correspondence. Its deals with monies said to be owing to the Applicant as at that date. The letter foreshadowed litigation rather than on-going employment and did not mention his desire to continue negotiations.

[103] Significantly, the letter makes clear he rejected the Respondent’s proposed terms and gave no indication of a way to agreement.

[104] A claim for outstanding entitlements would not always be inconsistent with long-term employment, but combined with a refusal to accept the new contract, it is improbable that the Applicant would have continued with the Respondent for any significant length of time.

[105] In these circumstances the employment relationship would not have continued for five years. This is because by 7 June both the Respondent and the Applicant had written to each other in terms inconsistent with further negotiations.

[106] If the Applicant had not been dismissed he would have had been unlikely to remain in employment for more than a couple of months. The dispute over unpaid commission would have escalated; the unresolved terms of employment would be an impediment to staying.

[107] Having regard to those matters and the submissions of the parties, I consider the Applicant would have stayed employed for a further period not more than 2 months or 8 weeks.

[108] I calculate the value of the 2 months’ pay (to include commission 43) based on gross pay earned and paid during the period of employment from June 2015 – June 2016. This average monthly amount is $11,37544. (This does not include the disputed amount not paid.45) For 2 months the amount is $22,750.

[109] An additional week is allowed for notice.

Mitigation efforts

[110] I consider the Applicant has made appropriate efforts to mitigate his loss by seeking alternative employment and ultimately establishing a business, but return to this under Other Matters below.

Remuneration earned

[111] The Applicant deposes he has not earned any remuneration between termination and the hearing. Therefore there should be no discount for the amount earned. It is often the case that when establishing a business, early investment in time and energy will be rewarded in future. I have not deducted any amount and likewise deal with it under ‘Other matters’ below.

Other matters considered relevant

[112] As indicated above I have not deducted any amount from the compensation on the basis of the Applicant’s choice to begin a business rather than seek employment. However it is a relevant factor and while a valid choice for a former employee it should not be ignored in terms of the potential opportunities to obtain remunerative work that have been forgone for the opportunity to establish the business. The Respondent should not be burdened by the particular choice made to start a business. However, given the limited amount of time the Applicant would have stayed in the employ of the Respondent, I have deducted 3 weeks’ pay as a reasonable deduction which takes into account both his diligence in establishing a potential source of income and the fact that employer should be allowed some deduction for the employee’s choice to be self-employed.

Misconduct reduces the amount of compensation

[113] While I found it is likely the Applicant took home more material than he claimed, in my view that does not amount to misconduct that should reduce compensation. The nature of the evidence, which is not strong on either side, and the context of unsettled contractual negotiations, provide the context in which the conduct must be seen.

[114] The evidence about post-employment solicitation of clients consists of the corridor conversation reported in Mr Tutt’s statement and the Applicant’s freely given admission under cross-examination that he had spoken with personnel of the Respondent’s clients. There is no evidence that the Respondent had exclusive agency arrangements with those named clients and no evidence as the character of what was said to be solicitation.

[115] It is clearly possible that conduct as alleged could be contrary to obligations on the former employee. The Respondent drew the Commission’s attention to authorities said to support an obligation of confidence absent contractual obligation. 46 It also cited the case of Potter in support of the proposition that “The removal and use of the confidential information by the applicant had the capacity to damage the respondent's business”.47 That case concerned improper disclosure of information and the paragraph cited concerned the proportionality of penalty noting summary dismissal may be disproportionate even if there is a valid reason.

[116] In this matter, the Applicant admitted to contact with two of the Respondent’s clients but there was limited evidence about that contact other than a ‘discussion’ with one of them, and the Commission has no place in speculating. 48 That is not to say that poaching post dismissal would not, if demonstrated by the evidence and in relevant circumstances, reduce compensation: it may well. But here the evidence cannot support a positive conclusion that the Applicant’s admitted contact was contrary to his obligations or the law or damaging to the Respondent’s business.

[117] In these particular circumstances, the evidence does not support the claim that misconduct should reduce the amount of compensation.

Other matters

[118] I do not consider there are any other further deductions for contingencies.

[119] Having regard to all circumstances of the case, I consider the amount of compensation equivalent to 6 weeks gross pay being $17,062 less tax is an appropriate amount of compensation.

[120] An Order will issue accordingly.

COMMISSIONER

Appearances:

Mr W Ash from Hall and Payne for the Applicant.

Ms T Moltoni from IRIQ for the Respondent.

Hearing details:

2016.

Brisbane:

9 September.

 1   a version of this statement was different between the statement and the submission with the submission not including if you don’t sign you can leave.

 2   Exhibit AK-5 to Statement of the Applicant

 3   eg email from Mr Tutt to the Applicant dated 3 June 2016 “Our position will not change”.

 4   Exhibit AK-6 to Statement of the Applicant

 5   Exhibit AK-6

 6   Statement of the Applicant [8]; Applicant’s Submisisons [5]

 7   Statement of the Applicant [7]

 8   Statement of the Applicant [13]

 9   Statement of the Applicant [14]

10 Supplementary Statement of the Applicant [6]

 11   Statement of the Applicant [15]

 12   Statement of the Applicant [16]

 13   Exhibit AK-8 to Statement of the Applicant

 14   Statement of Andrew Coulter dated 15 August 2016 Attachment AC3

 15 [1987] Ch117 at 137

 16   PN184

 17   PN963

 18   Mr Tutt in cross-examination

 19   Statement of Mr Tutt dated 2 September 2016 attaching a document headed “Items taken by Alex Klibschon and then returned”

 20   Rode v Burwood M itsubishi Print R4471 [19]

 21   Statement of Mr Hill [30]-[31]; Statement of Mr Coulter [30]-[31]

 22   Sharp v BCS Infrastructure Support Pty Ltd[2015] FWCFB 1033 [34] footnotes omitted. See also O'Connell v Wesfarmers Kleenheat Gas Pty Ltd[2015] FWCFB 8205 [23]; Titan Plant Hire Pty Ltd v van Malsen[2016] FWCFB 5520 [27]

 23   eg King v Freshmore (Vic) Pty Ltd Print S4213 [23]; Edwards v Giudice [1999] FCA 1836

 24   Briginshaw v Briginshaw (1938) 60 CLR 336

 25   Respondent’s Outline of Submissions [32]-[39] citing a large range of authorities in support

 26   [2013] FWCFB 6191 [36]

 27   Statement of Mr Coulter [44]

 28   but say he did after termination: Respondent’s Outline of Submissions [26]-[27]

 29   Statement of Mr Tutt [12]

 30   Respondent’s Outline of Submissions [26]

 31   Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 373

 32   see eg Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; Downer EDI Ltd v Gillies [2012] NSWCA 333 [132]

 33   APS Group (Placements)Pty Ltd v O’Loughlin (2011) 209 IR 351 [51]

 34   even if he disputed what was and was not confidential

 35     Statement of Mr Hill [30]-[31]; Statement of Mr Coulter [30]-[31]

 37   see Sharp at [34]

 38 (1995) 185 CLR 410, 465 Mchugh and Gymmow JJ

 39   Amendment Unfair Dismissal Application filed 25 July 2016

 40   S3304 (Full Bench)

 41   PN 1024

 42   PN 1022

 43   Candido v Hi Fi Supermarket Pty Ltd PR935654 [32]

 44   Statement of the Applicant 7 September 2016 attachment AK 10

 45   this amount of $44,694

 46   Great Southern E-vents Pty Ltd v Peskops [2007] NSWSC 382, an interlocutory injunctive relief case about a contract with a confidentiality clause but no non-solicitation clause. The injunction restraining contact with clients was granted in part: [21]-[23]

 47   PN1130; T Potter and WorkCover Corporation re Appeal - re Termination of employment - PR948009

 48   Mt Arthur Coal Pty Ltd v Association of Professional Engineers, Scientists and Managers, Australia[2016] FWCFB 3452 [13]

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