Narelle Baird v June Austen T/A Revitalise Face & Body Therapies

[2017] FWC 4256

[2017] FWC 4256

The attached document replaces the document previously issued with the above code on 28 August 2017 to amend an incorrect name reference in paragraph [3].

Associate to Commissioner Saunders

Dated 28 August 2017

[2017] FWC 4256

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Narelle Baird
v
June Austen T/A Revitalise Face & Body Therapies; Lift Skin Body Beauty (U2017/2186)

COMMISSIONER SAUNDERS NEWCASTLE, 28 AUGUST 2017

Application for relief from unfair dismissal – small business employer – compliance with Small Business Fair Dismissal Code – application dismissed

[1] This decision relates to an unfair dismissal application made by Ms Narelle Baird pursuant to s.394 of the Fair Work Act 2009 (Cth) (Act) against her former employer, Ms June Austen T/A Revitalise Face & Body Therapies; Lift Skin Body Beauty.

[2] Revitalise Face & Body Therapies and Lift Skin Body Beauty are business names used by Ms June Austen, who is a sole trader operating a beauty treatment business in Morisset, New South Wales. Morisset is a commercial centre located on the western side of Lake Macquarie. Since 12 April 2016, both Revitalise Face & Body Therapies and Lift Skin Body Beauty have operated from the same premises in Morisset.

[3] Ms Baird commenced permanent part-time employment in Ms Austen’s business in the position of Intense Pulsed Light (IPL), Medispa Technician/Salon Manager on 10 August 2015 pursuant to a written contract of employment signed by the parties and dated 10 August 2015 (Employment Contract). Prior to the commencement of her employment with Ms Austen, Ms Baird undertook a 7 week work trial in Ms Austen’s business facilitated by the Department of Veteran Affairs (DVA). The work Ms Baird undertook during her employment in Ms Austen’s business included general beauty work such as facials, waxing, nails, and tanning.

[4] Ms Baird was summarily dismissed as an employee by Ms Austen on 17 February 2017 after Ms Austen became aware of Facebook posts made by Ms Baird in which she promoted beauty related services under her business name, Esteem Skin & Beauty.

The Determinative Conference

[5] After taking into account the views of the parties, I decided to deal with the matter by way of a determinative conference.

[6] The determinative conference took place on 31 July 2017. Ms Baird gave evidence on her own behalf and Ms Austen gave evidence on her own behalf.

Initial matters to be considered

[7] Section 396 of the Act sets out four matters which I am required to decide before I consider the merits of Ms Baird’s application.

[8] There is no dispute between the parties and I am satisfied on the evidence that:

(a) Ms Baird’s application was made within the period required by s.394(2) of the Act;

(b) Ms Baird was a person protected from unfair dismissal;

(c) Ms Austen was a “small business employer” as defined in s.23 of the Act at the relevant time, employing two casual employees and Ms Baird. 1 I am therefore required to decide as an initial matter whether the dismissal was consistent with the Small Business Fair Dismissal Code (Code), which I will consider below; and

(d) Ms Baird’s dismissal was not a case of genuine redundancy.

Small Business Fair Dismissal Code

[9] Section 388 of the Act provides:

“388 The Small Business Fair Dismissal Code

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

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

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

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

[10] The Code declared by the Minister pursuant to s.388(1) of the Act is in the following terms:

“Summary dismissal

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

Other dismissal

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

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

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

Procedural matters

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

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

[11] In Pinawin v Domingo 2, the Full Bench considered whether, in the context of a summary dismissal under the Code, the Commission had to be satisfied that the serious misconduct which was the basis for the dismissal actually occurred:

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

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

…

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

[12] In Ryman v Thrash Pty Ltd 3a Full Bench of the Commission examined the summary dismissal part of the Code in detail and concluded as follows:

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

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

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

[13] Serious misconduct is defined for the purposes of the Act in the Fair Work Regulations 2009(Regulations)as follows:

“1.07 Meaning of serious misconduct

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

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

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

(b) conduct that causes serious and imminent risk to:

(i) the health or safety of a person; or

(ii) the reputation, viability or profitability of the employer’s business.

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

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

(i) theft; or

(ii) fraud; or

(iii) assault;

(b) the employee being intoxicated at work;

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

(4) Subregulation (3) does not apply if the employee is able to show that, in the circumstances, the conduct engaged in by the employee was not conduct that made employment in the period of notice unreasonable.”

Compliance with the Code

Was Ms Baird’s dismissal a summary dismissal under the Code?

[14] The first issue to be determined is whether the “Summary dismissal” section of the Code applies to Ms Baird’s dismissal. The “Summary dismissal” section of the Code will apply if the small business employer has dismissed the employee without notice – that is, with immediate effect – on the ground that the employee has committed serious misconduct that falls within the definition in reg.1.07 of the Regulations. It is not necessary for the Commission to be satisfied that the serious misconduct which is the basis for the dismissal actually occurred in order for the dismissal to be consistent with the Code and therefore not unfair. 4

[15] Ms Baird was notified of her dismissal by email on 17 February 2017. 5 The termination letter dated 16 February 2017 attached to the email sent on 17 February 2017 was in the following terms:

“Please accept this notice as termination of your employment at Lift Skin Body Beauty, effective immediately today 16/2/2017

Termination of your employment comes as we have evidence that you have breached your employment contract. These breaches relate to the following clauses set out in your employment contract;

i) Conflicts of interest

ii) Non-Compete

iii) Non Solicitation

Any leave balances will be paid to you accordingly.” 6

[16] Clauses 22-27 of the Employment Contract provide as follows:

“Conflict of Interest

22. During the term of the Employee's active employment with the Employer, it is understood and agreed that any business opportunity relating to or similar to the Employer's actual or reasonably anticipated business opportunities (with the exception of personal investments in less than 5% of the equity of a business, investments in established family businesses, real estate, or investments ill stocks and bonds traded on public stock exchanges) coming to the attention of the Employee, is an opportunity belonging to the Employer. Therefore, the Employee will advise the Employer of the opportunity and cannot pursue the opportunity, directly or indirectly, without the written consent of the Employer, which consent will not be unreasonably withheld.

23. During the term of the Employee's active employment with the Employer, the Employee will not, directly or indirectly, engage or participate in any other business activities that the Employer, in its reasonable discretion, determines to be in conflict with the best interests of the Employer without the written consent of the Employer, which consent will not be unreasonably withheld.

Non-Competition

24. The Employee agrees that during the Employee's term of active employment with the Employer and for a period of two (2) years after the end of that term, the Employee will not, directly or indirectly, as employee, owner, sole proprietor, partner, director, member, consultant, agent, founder, co-venturer or otherwise, solely or jointly with others engage in any business that is in competition with the business of the Employer within any geographic area in which the Employer conducts its business, or give advice or lend credit, money or the Employee's reputation to any natural person or business entity engaged in a competing business in any geographic area in which the Employer conducts its business.

Non-Solicitation

25. The Employee understands and agrees that any attempt on the part of the Employee to induce other employees or contractors to leave the Employer's employ, or any effort by the Employee to interfere with the Employer's relationship with its other employees and contractors would be harmful and damaging to the Employer. The Employee agrees that during the Employee's term of employment with the Employer and for a period of two (2) years after the end of that term, the Employee will not in any way, directly or indirectly:

a. Induce or attempt to induce any employee or contractor of the Employer to quit employment or retainer with the Employer;

b. Otherwise interfere with or disrupt the Employer's relationship with its employees and contractors;

c. Discuss employment opportunities or provide information about competitive employment to any of the Employer's employees or contractors; or

d. Solicit, entice, or hire away any employee or contractor of the Employer for the purpose of an employment opportunity that is in competition with the Employer.

26. This non-solicitation obligation as described in this section will be limited to employees or contractors who were employees or contractors of the Employer during the period that the Employee was employed by the Employer.

27. During the term of the Employee's active employment with the Employer, and for two (2) years thereafter, the Employee will not divert or attempt to divert from the Employer any business the Employer had enjoyed, solicited, or attempted to solicit, from its customers, prior to termination or expiration, as the case may be, of the Employee's employment with the Employer.” 7

[17] Although the termination letter is dated 16 February 2017 and states that Ms Baird was dismissed “effective immediately today 16/2/2017”, a dismissal does not take effect unless and until it is communicated to the employee who is being dismissed. 8 Accordingly, Ms Baird’s dismissal did not take effect until the letter of dismissal was emailed to her on 17 February 2017.

[18] I am satisfied that on 17 February 2017 Ms Austen dismissed Ms Baird without notice – that is, with immediate effect – on the grounds that Ms Baird had engaged in serious misconduct. I will address below the issue of whether the misconduct alleged against Ms Baird falls within the definition of “serious misconduct” in regulation 1.07 of the Regulations.

[19] Because I have found that the “Summary dismissal” section of the Code applies to Ms Baird’s dismissal, the “Other dismissal” part of the Code is not relevant to Ms Baird’s unfair dismissal application.

Did Ms Austen believe that Ms Baird had engaged in conduct sufficiently serious to justify immediate dismissal?

[20] The second issue to be determined is whether at the time of the dismissal the small business employer held the subjective belief that (i) the conduct was by the employee; (ii) the conduct was serious; and (iii) the conduct justified immediate dismissal. 9 The determination is a question of fact10 to be based on the knowledge available to the employer at the time of the dismissal.11 Therefore when considering the “Summary dismissal” section of the Code it is not necessary to consider any matters that may have come to Ms Austen’s attention in relation to Ms Baird after 17 February 2017.

[21] Ms Austen is a sole trader; she clearly had authority to decide whether an employee, such as Ms Baird, should be dismissed.

[22] Ms Baird contends that she was dismissed because she had raised issues regarding her employment with Ms Austen including with respect to unpaid overtime, superannuation and her work capacity following the exacerbation of a pre-existing injury. 12 Ms Baird further contends that her dismissal was connected to the fact that her employer’s benefits from the DVA employer incentive program were winding down and her employer was not willing to implement beauty treatments referred to in an agreement with DVA and in respect of which incentives had been paid. It is further contended by Ms Baird that she was dismissed when she was on sick leave, having provided Ms Austen with a medical certificate on 15 February 2017 in respect of the period from 16 to 21 February 2017. Ms Austen denies that any of those matters had any connection to her decision to dismiss Ms Baird.

[23] I accept Ms Austen’s evidence that the reason for Ms Baird’s dismissal was that she believed Ms Baird had established a competing beauty treatment business, Esteem Skin & Beauty, based in her home in Wangi Wangi, New South Wales. 13 Wangi Wangi is a suburb approximately 13 kilometres from Ms Austen’s business in Morisset. Ms Austen gave evidence, which I accept, that she formed the view that Ms Baird’s conduct demonstrated deliberate disregard of her duties and obligations under the Employment Contract and constituted both serious and wilful misconduct and a serious threat to her business.14 The letter of termination is consistent with that evidence.

[24] In addition, there was a short period of time between Ms Austen becoming aware of Ms Baird’s conduct on 13 February 2017 and Ms Baird’s dismissal on 17 February 2017. This is consistent with Ms Austen’s evidence that the reason for Ms Baird’s dismissal was on the basis of that conduct, and not for any other reason. In contrast, a number of the other matters Ms Baird contends formed part of the reasons for her dismissal had arisen some time before her dismissal on 17 February 2017. I accept Ms Austen’s denials and find that the issues raised by Ms Baird and referred to in paragraph [22] above did not form part of the reasons for her dismissal.

[25] For the reasons set out above, I am satisfied that Ms Austen genuinely believed that Ms Baird’s conduct was sufficiently serious to justify her immediate dismissal.

Was Ms Austen’s belief based on reasonable grounds?

[26] The third issue to be determined is whether the small business employer objectively had “reasonable grounds” for the relevant belief. 15 It is not necessary to determine whether the employer was correct in the belief that it held.16

Serious misconduct

[27] A relevant consideration to the question of whether the employer’s belief was based on reasonable grounds is whether the alleged conduct on which the employer relied to dismiss the employee meets the definition of serious misconduct in reg.1.07 of the Regulations.

[28] Ms Austen relied on Ms Baird’s alleged conduct in setting up a business in competition with Ms Austen’s business while she was still employed by Ms Austen in making her decision to immediately dismiss Ms Baird. I am satisfied that such conduct falls within the definition of serious misconduct in reg.1.07(2)(a) and (b)(ii) of the Regulations, in that it:

(a) is wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment. In particular, such conduct is inconsistent with the employee’s implied duty of fidelity and good faith, 17 as well as clauses 22, 23, 24 and 27 of the Employment Contract; and

(b) causes serious and imminent risk to the viability and/or profitability of the employer's business. It is important to note that it is the risk to the viability and/or profitability which must be considered, not whether the viability and/or profitability of the employer’s business was in fact damaged. In my view, conduct by an employee setting up a business that competes with their employer’s business would give rise to a serious and imminent risk that clients of the employer would move to the employee’s business which would potentially impact the viability and profitability of the employer’s business. This risk is increased in circumstances where, as in this case, the employer is a small business employer and the employee had substantial interactions with the clients to whom she provided beauty services on behalf of the employer.

[29] There are a number of findings which are relevant to my conclusion in the previous paragraph. I set out those findings and the reasons for them in paragraphs [30] to [40] below.

[30] I am satisfied that the business established by Ms Baird in January and February 2017 was “in competition with the business of the Employer within any geographic area in which the Employer conducts its business”, 18 for the following reasons:

(a) first, both the business being promoted by Ms Baird on Facebook and Ms Austen’s business in Morisset are beauty businesses. As well as competing in the provision of general beauty services, I accept Ms Austen’s evidence that in February 2017 her business (through a contractor) offered services in cosmetic tattooing, skin/dermal needling, and nano infusion, but not in acrylic nails;

(b) secondly, although I accept Ms Baird’s evidence that at the time of her dismissal she had not carried out any cosmetic services from her home other than practising her skills on models, which was required to complete her cosmetic tattooing course, given that Ms Baird was promoting her business on Facebook in February 2017 as being “open” and she was “now able to offer” various services, I am satisfied that Ms Baird’s business was open and operating at the time Ms Austen dismissed Ms Baird; and

(c) thirdly, Ms Baird’s business was promoted as being located at Wangi Wangi, which is only about 13km from Ms Austen’s business in Morisset. Ms Austen had clients who attended her business in Morisset and who lived in Wangi Wangi. It follows, in my view, that Ms Baird’s business was being conducted in a geographic area in which Ms Austen conducted her business.

[31] I do not accept any of the following arguments made by Ms Baird:

(a) first, Ms Austen consented to her providing dermal needling and cosmetic tattooing services at home or elsewhere;

(b) secondly, there was an agreement between Ms Austen and Ms Baird that she would rent a room at Ms Austen’s business premises to perform the dermal needling and cosmetic tattooing services and Ms Baird was generating interest for when that arrangement commenced; and

(c) thirdly, Ms Austen’s actions waived her right to enforce her rights under the Employment Contract.

[32] As to Ms Baird’s first argument, she contends that on 27 October 2016 Ms Austen advised her that if she did not want to provide dermal needling and cosmetic tattooing services from Ms Austen’s business as an employee and receive an equipment rental fee she could provide those services from home or elsewhere. 19 Ms Austen denies that contention.20

[33] Although Ms Baird was already qualified in dermal needling prior to the commencement of her employment with Ms Austen, Ms Baird completed advanced training in dermal needling Collagen Induction Therapy (CIT) with Derma Aesthetics Australia Pty Limited on 14 September 2016. 21 Ms Baird commenced training in cosmetic tattooing with Chi Para-Medical Aesthetics on 7 October 2016.22 Both training courses were funded by the DVA.

[34] On 27 October 2016, there was a discussion between Ms Austen and Ms Baird regarding Ms Baird providing dermal needling and cosmetic tattooing services at Ms Austen’s business. Ms Austen prepared a written document that was provided to Ms Baird during this discussion. That written document was in the following terms:

“Regarding Narelle Baird's proposal to provide skin needling and cosmetic tattooing services to Lift Skin Body Beauty Morisset

I have been advised by The Fairwork Ombudsman as well as my Solicitor, David Predny, and my Accountant, Ross Yates, that it would be unadvisable for my business to hire Narelle as both an employee and as a contractor.

Below I have set out the items that will need to be discussed and noted by myself and Narelle before a decision can be made on how to proceed;

• List the actual treatments/services that are being discussed



• List the prices that will be advertised for the treatments/services



• List the time frame that each treatment/service will be allocated



• List the cost of Insurances required



• Provide copies all forms that will be used before and after each procedure



• Provide copies of all Policies and Procedures that will be used to ensure the safety of clients, the therapist and the business



• Provide relevant Certificates for the treatments/services that are being discussed



• Provide proof of actual work experience hours that the therapist has acquired



• Discuss profit margin



• Discuss how to arrive at a suitable hourly rate that Lift would pay Narelle for hire of the equipment that Narelle would be using in the treatments/services



• Discuss how this work may impact on Narelle's physical capabilities/disabilities and how it will be managed



• My proposal is that Narelle would continue to work in her current role, at her current hourly rate and when Narelle has a client who requires the new treatments/services, Lift would pay her a rental of equipment fee. Lift would be responsible for Insurances to cover the new treatments/services. Narelle would be responsible for the maintenance of the equipment and the disposables required to use with the equipment



• To safeguard the future of my business my Solicitor David Predny will draw up a Legal Contract when all of the above details have been discussed and an agreement has been decided upon by both parties and before any new treatments/services can be advertised or put into progress

June Austen

27/10/16” 23

[35] There is no dispute between the parties and I am satisfied on the evidence that Ms Austen’s proposal set out in the second last dot point in the written document dated 27 October 2016 was not accepted by Ms Baird as she believed it was unfair and unreasonable. 24

[36] I am not satisfied on the balance of probabilities that Ms Austen informed Ms Baird that if she did not want to accept the proposal she could provide dermal needling and cosmetic tattooing services from her home or elsewhere.  25 I accept Ms Austen’s denial on the basis that it is consistent with the written document provided to Ms Baird on 27 October 2016, which identifies in the last bullet point that Ms Austen had concerns with safeguarding her business and Ms Austen wanted any agreement reached drawn up by her solicitor. No such contract was negotiated or drafted. Further, given that Ms Austen’s business (through a contractor) offered services in cosmetic tattooing and skin/dermal needling, I consider it most unlikely that Ms Austen would provide her oral consent for Ms Baird to provide “dermal needling and cosmetic tattooing services from her home or elsewhere”, which could potentially include premises very close to the location of Ms Austen’s business in Morisset.

[37] As to Ms Baird’s second argument that she promoted dermal needling and cosmetic tattooing services on the Facebook page of Esteem Skin & Beauty between 29 January 2017 and 17 February 2017 on the basis that there was an agreement between Ms Austen and herself that she would rent a room at Ms Austen’s business premises to perform those services and she was generating interest for when that arrangement commenced, 26 I am satisfied on the evidence that no such agreement was made.

[38] On 12 December 2016, Ms Austen sent a message to Ms Baird in the following terms:

“Hi there, I am sorry but I am going to have to chicken out, I have to present an award tonight at the high school and tomorrow night I have an AGM to attend. I just don’t want to have puffy lips or anything! Is it today or next Monday? And is it at the salon or at your place? Also, I have thought of an idea, room rental, same as what Robert does and Kylie does. That may work better for both of us.” 27

[39] Ms Baird responded to this message on 12 December 2016 in the following terms:

“It’s next Monday

I’m doing the training at the salon as initially we had agreed I would do the services there once we worked out an agreement.

Will talk to you tomorrow about it all.

I have going (sic) over a few of your suggestions and have some of my own that may work for both of us.” 28

[40] I accept Ms Austen’s evidence that she did not agree on any price or pricing mechanism with Ms Baird for the rent of a room in Ms Austen’s business. Ms Baird proposed a price of 25% of the fees she received as the rental rate for the room. I accept Ms Austen’s evidence that she did not accept this proposal, because the 25% rate was much lower than that paid by another contractor who provides services from Ms Austen’s business premises and no written contract had been agreed upon or even drafted for such an arrangement. Further, Ms Baird agreed in her oral evidence that that a number of terms and conditions needed to be finalised before there could be any binding agreement between Ms Baird and Ms Austen in relation to the services Ms Baird wanted to provide. Ms Baird also gave evidence, which I accept, that she had a discussion with Ms Austen in early-January 2017 during which Ms Baird suggested that the parties find time to try and put something in place upon her return from annual leave. 29 There is no evidence to suggest that such an arrangement was discussed or agreed on after Ms Baird’s return from annual leave.

[41] As to Ms Baird’s third argument that Ms Austen’s actions waived her right to enforce her rights under the Employment Contract, I am not satisfied that any actions on the part of Ms Austen constituted such a waiver, nor am I satisfied that any agreement was reached to vary the terms of the Employment Contract. To the extent that Ms Baird relies on Ms Austen’s communication of a proposal that the parties enter into an agreement whereby Ms Baird could rent a room from Ms Austen, for the reasons set out above I am satisfied that no such agreement was made, nor did the proposal of a room rental by Ms Austen somehow constitute a waiver of her rights under the Employment Contract. To the extent that Ms Baird relies on agreements reached between Ms Austen and other employees or contractors for them to provide certain services outside the scope of Ms Austen’s business, I accept Ms Austen’s evidence that such agreements are recorded in writing and depend on the particular services and circumstances in question. That Ms Austen has permitted others to engage in such activities does not constitute a waiver of Ms Austen’s rights under the Employment Contract, nor does it otherwise justify Ms Baird establishing her competing business without the consent or knowledge of Ms Austen.

Reasonable investigation

[42] A further relevant consideration to the question of whether the employer’s belief was based on reasonable grounds is whether the employer carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. 30 When considering whether a reasonable investigation has been carried out, it is also relevant to consider the experience and resources of the small business employer.31

[43] Ms Austen is a sole trader who at the time of Ms Baird’s dismissal only employed one permanent employee in her business. I accept that Ms Austen does not have human resource expertise.

[44] Ms Austen gave evidence that on 14 February 2017 a client informed her that Ms Baird had established a beauty treatment business based in her home in Wangi Wangi. Ms Austen then undertook searches in the Australian Securities and Investment Commission database and discovered that Ms Baird had registered the business name Esteem Skin & Beauty on 28 January 2017. The ASIC extract relied on by Ms Austen shows the date the record was extracted was 13 February 2017 at 11:18am. 32 On the balance of probabilities, I find that Ms Austen was mistaken in her evidence and the date she became aware that Ms Baird had established a beauty treatment business was 13 February 2017, not 14 February 2017.

[45] I accept Ms Austen’s evidence that on 15 February 2017 she looked up the Facebook page for Esteem Skin & Beauty and observed that: 33

• the Facebook page showed the address of Esteem Skin & Beauty as the home address of Ms Baird, 34 and described the business of Esteem Skin & Beauty as “Spa, Beauty & Personal Care in Wangi Wangi, New South Wales, Australia”.



• the Facebook page showed the contact number of Esteem Skin & Beauty as Ms Baird’s mobile number. 35



• the Facebook page showed the hours of Esteem Skin & Beauty as “09:00 – 17:00 Open now”. 36



• the Facebook page showed the story of Esteem Skin & Beauty as follows:

“After 16 years in the industry and many extensive training courses, I am now able to offer the latest in what our industry has to offer. Dermal needling, and cosmetic tattooing are now available and soon to follow will be electrolysis. Other media [sic] spa treatments will also follow towards the end of the year. I offer a family friendly environment, and little ones are welcome during most services.” 37

• the Facebook page showed the services of Esteem Skin & Beauty as including:

“Nano facial serum infusion

Uses Nano disc needle technology to infuse all se… 120

Micro Pigmentation

Don’t want to have to worry about your Brows or lil… From 350

CIT (dermal Needling)

A two step medi spa facial treatment that stimulat… 400” 38

• on 29 January 2017, Ms Baird posted an image and a message as follows:

“4 good reasons to have a CIT Dermal Needling treatment. Want to improve your skin?? Esteem Skin and Beauty CIT treatments have a unique follow up treatment, giving you even better results. Pricing is all inclusive.” 39

• on 2 February 2017, Ms Baird posted an image and a message as follows:

“THIS IS WHY I TEST PATCH!

I know some of my enquiries have questioned my hard stance on test patching. Want to come in have a set of lips or brows done straight away – that day… This is what your therapist should say .... When enquiring at the salons I work out of PLEASE allow the extra time for your test patch so you’re not disappointed…” 40

• on 8 February 2017, Ms Baird posted an image and a message as follows:

“It’s Competition Time!!!! WIN A FEATHER TOUCH BROW OR DERMAL NEEDLING CIT TREATMENT by helping my [sic] grow my business.

Now….. follow the instructions….LIKE MY PAGE and this Post. Then SHARE both my page and this post…. And you will have the chance to WIN.” 41

• on 15 February 2017, Ms Baird posted an image and a message as follows:

“12 hours later! Took 3 days. Hi-brows ... Inbox me for enquiries as to locations you may have this treatment.” 42

[46] I accept Ms Austen’s evidence that after reviewing the Facebook page of Esteem Skin & Beauty she contacted her solicitor, Mr David Predny, and received advice from Mr Predny that Ms Baird’s conduct was grounds for immediate dismissal. 43

[47] Ms Austen gave evidence that she also contacted Ms Belinda Vermeer of the DVA after finding out that Ms Baird had established what Ms Austen believed to be a competing business and was advised by Ms Vermeer that Ms Baird should be treated the same as any employee and it sounded as though Ms Baird’s employment could be terminated given she had agreed not to set up a business in competition. 44

[48] Ms Baird denies that Ms Austen contacted Ms Vermeer as alleged by her. In this regard, Ms Baird relies on an email Ms Vermeer sent to Ms Baird on 27 April 2017 in which she stated, inter alia, that “… I have not been approached for any information about you from any third party and if the department was approached your signed approval would be needed”. 45 Ms Vermeer sent that email in response to the following question from Ms Baird:

“My question is that I am assuming any of my information relating to my financial arrangement with you into my payments, my injuries etc are confidential and between myself and DVA. That if anybody was to source information for purposes other than to my benefit or welfare in a positive light I would be informed or at least even asked for permissions [sic] to release such information from my files?”

[49] Ms Vermeer also provided a letter to Ms Baird dated 9 June 2017 in which she stated, inter alia, that “… All written communication with both you and Ms Austin has always remained consistent in stating that your employment with Ms Austin is a matter between you as the employee and Ms Austen as the employer. DVA has no involvement in this matter since your Rehabilitation plan closed in September 2015. I did not made [sic] any statements or advise Ms Austen about your employment or dismissal.” 46 Ms Vermeer was not called as a witness to give evidence by either party and therefore was not able to be cross-examined in relation to the contents of her email and letter, or her alleged conversation with Ms Austen.

[50] Ms Austen’s evidence that Ms Vermeer told her that Ms Baird should be treated the same as any employee is consistent with Ms Vermeer’s letter dated 9 June 2017 in which she stated that Ms Baird’s “employment with Ms Austin is a matter between you as the employee and Ms Austen as the employer”. For that reason, coupled with my acceptance that for the most part Ms Austen was a reliable and credible witness, I am satisfied on the balance of probabilities that Ms Austen’s evidence to the effect that she spoke to Ms Vermeer in mid-February 2017, at which time Ms Vermeer told her that Ms Baird should be treated the same as any employee, should be accepted.

[51] However, I am not satisfied on the balance of probabilities that Ms Vermeer told Ms Austen that “it sounded as though Ms Baird’s employment could be terminated given she had agreed not to set up a business in competition”. A statement to that effect would be inconsistent with Ms Vermeer’s letter dated 9 June 2017. In addition, it is unlikely, in my view, that a person such as Ms Vermeer, who is a delegate of the Military Rehabilitation and Compensation Commission, would make such comments in relation to the employment of an injured person such as Ms Baird.

[52] Normally in order to hold a belief on reasonable grounds it will be necessary to have a discussion with the employee about the perceived serious misconduct and pay regard to the explanations and views given by the employee. 47 However, while it may be prudent for an employer to seek an employee’s explanation for their conduct, there is no explicit requirement under the Code to hold a discussion with an employee who is at risk of dismissal.48

[53] Ms Austen did not hold a discussion with Ms Baird, or otherwise communicate with her in relation to what she discovered in February 2017, before making her decision to summarily dismiss Ms Baird. However, this is an unusual case. For the following reasons, I am satisfied that Ms Austen undertook a reasonable investigation and reached a reasonable conclusion in the circumstances:

(a) After being informed by a client that Ms Baird had established a beauty treatment business, Ms Austen undertook ASIC searches, viewed and read the information on the Facebook page established by Ms Baird for Esteem Skin & Beauty, obtained advice from her solicitor in relation to the information she had found out concerning Ms Baird and her new business, spoke to Ms Vermeer from the DVA and considered the impact on Ms Austen’s beauty business of Ms Baird setting up a beauty business 13km away;

(b) Detailed evidence was given by Ms Baird in these proceedings. Having heard and considered that evidence, I am satisfied that even if Ms Austen had raised her concerns with Ms Baird before deciding whether to dismiss her and Ms Baird had told Ms Austen everything she said in these proceedings, Ms Austen would have proceeded to terminate Ms Baird’s employment with immediate effect. By way of example, I do not accept and am satisfied that Ms Austen would not have accepted, if told by Ms Baird prior to 17 February 2017, that Ms Baird was promoting her “skills and services on Facebook in preparation for commencing a contractual position at Lift at a future date. This was carried out in the spirit of commencing my services at Lift, upon finalisation of agreed dates”. 49 If this were true, I am satisfied there would have been some reference to Ms Austen’s business on the Facebook page established by Ms Baird for Esteem Skin & Beauty. There was not. Further, it was not merely a matter of finalising “agreed dates” for Ms Baird to commence providing her services as part of, or in connection with, Ms Austen’s business. Ms Baird accepted in her oral evidence that a number of terms and conditions needed to be finalised before there could be any binding agreement between Ms Baird and Ms Austen in relation to the services Ms Baird wanted to provide. It was clear from the earlier correspondence from Ms Austen dated 27 October 2016 that she required a “legal contract” drawn up by her solicitor when “all … details have been discussed and an agreement has been decided upon by both parties … before any new treatments/services can be advertised or put into progress.” No such contract was negotiated or drafted at the time Ms Baird promoted her Esteem Skin & Beauty business as being “open” and operating from a location in Wangi Wangi;

(c) Ms Austen had worked closely with Ms Baird in her business for some time prior to Ms Baird’s dismissal. In circumstances where Ms Austen and Ms Baird had discussed different options concerning the work Ms Baird wanted to undertake but they had not reached any agreement in that regard, Ms Austen, understandably, felt that all trust and confidence in the relationship was lost once she discovered that Ms Baird was promoting her competing business on Facebook without any prior notice to Ms Austen, nor any mention on the Facebook page of Ms Austen or her business; and

(d) Ms Austen’s business has suffered in the past as a consequence of an employee leaving to establish a competing business. Ms Austen was keen to do what she could to legitimately protect her business once she viewed the information on the Facebook page established by Ms Baird for Esteem Skin & Beauty.

Conclusions

[54] For the reasons set out above, I am satisfied that:

(a) immediately before the time of Ms Baird’s dismissal, Ms Austen was a small business employer within the meaning of the Act;

(b) on 17 February 2017, Ms Austen dismissed Ms Baird without notice – that is, with immediate effect – on the ground that Ms Baird had committed serious misconduct;

(c) Ms Austen dismissed Ms Baird on the basis of conduct which meets the definition of “serious misconduct” within the meaning of reg.1.07 of the Regulations;

(d) Ms Austen genuinely believed that Ms Baird had engaged in conduct sufficiently serious to justify immediate dismissal;

(e) Ms Austen undertook a reasonable investigation and reached a reasonable conclusion in all the circumstances; and

(f) Ms Austen’s belief that Ms Baird had engaged in conduct sufficiently serious to justify immediate dismissal was based on reasonable grounds.

[55] I am therefore satisfied Ms Baird’s dismissal was consistent with the Code and her unfair dismissal application is dismissed.

[56] In view of my conclusion that Ms Baird’s dismissal was consistent with the Code, I have not addressed Ms Baird’s submissions that there were no prior warnings, counselling or communications regarding her conduct prior to her dismissal and she did not have an opportunity to have a support person present, nor have I considered the criteria set out in s.387 of the Act. Those matters are not relevant to an assessment of whether there has been compliance with the “Summary dismissal” section of the Code.

COMMISSIONER

Appearances:

Ms N Baird on her own behalf

Ms J Austen on her own behalf

Hearing details:

2017.

Newcastle:

July, 31.

<Price code C, PR595368>

 1   Ex A3 at [2]

 2   [2012] FWAFB 1359

 3   [2015] FWCFB 5264

 4   Ryman v Thrash Pty Ltd at [39]

 5   Applicant’s Unfair Dismissal Application at [1.3]; Ex A1 at attachment 14

 6   Ex A1 at attachment 2

 7   Ex R4

 8   Ayub v NSW Trains [2016] FWCFB 5500 at [35], [41] & [48]-[49]

 9   Harley v Rosecrest Asset Pty Ltd T/A Can Do International [2011] FWA 3922 at [8]

 10   Ruman v Thrash at [43]

 11   Pinawin v Domingo at [27]; Narong Khammaneechan v Nanakhon Pty Ltd ATF Nanakhon Trading Trust T/A Banana Tree Cafe[2010] FWA 7891 at [60]

 12   Ex A2 at [8]

 13   Ex R1 at [15]

 14   Ex R1 at [22]

 15   Ryan v Thrash at [40]

 16   Pinawin v Domingo at [29]

 17   Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 at 81-82; Digital Pulse Pty Ltd v Harris (2002) 166 FLR 421 at [20]-[23] (not relevantly reversed on appeal in Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298); Dinte v Hales [2009] QSC 63 at [22]-[26].

 18   Clause 24 of the Employment Contract

 19   Ex A3 at [18]; Ex A4 at [6]

 20   Ex R1 at [10]

 21   Ex A1 at [5]

 22   Ex A1 at [7]

 23   Ex A1 at attachment 10

 24   Ex A3 at [9]; Ex A4 at [6]

 25   Ex A2 at [6a-b]

 26   Ex A4 at [13]; Ex R4 at [6]

 27   Ex A1 at [10]; Ex A5

 28   Ex A5

 29   Ex A3 at [9]

 30   Ryman v Thrash at [41]; Pinawin v Domingo at [30]

 31   Pinawin v Domingo at [30]

 32   Ex R1 at document 2

 33   Ex R1 at [17]

 34   Ex R1 at document 3

 35   Ex R1 at document 3

 36   Ex R1 at document 4

 37   Ex R1 at document 3

 38   Ex R1 at document 3

 39   Ex R1 at document 3

 40   Ex R1 at document 4

 41   Ex R1 at document 5

 42   Ex R1 at document 5

 43   Ex R1 at [20]

 44   Ex R1 at [21]

 45   Ex A16

 46   Ex A15

 47   Ryman v Thrash At [38]

 48   Steven Guthrie v AJ & T Pulbrook Pty Ltd T/A Brook Motors[2016] FWCFB 2859 at [20]

 49   Ex A1 at [12]

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