Newton v Hilton’s Stores Pty Ltd
[1996] IRCA 318
•18 July 1996
DECISION NO: 318/96
C A T C H W O R D S
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - VALID REASON - MISCONDUCT - disclosure of confidential information to staff member - AFTER ACQUIRED KNOWLEDGE - further disclosure of confidential information to other staff members made known to respondent after termination - Breach of Duty of Good Faith - disparaging remarks to staff members about respondent’s managing director
Industrial Relations Act 1988 ss.170DB, 170DC, 170DE(1), 170DE(2), 170EA
Income Tax Assessment Act 1936
CASES: Selvachandran v Peteron Plastics Pty Ltd (1995-1996) 62 IR 371
Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66
Hayden v Golden Bowl Sports Centre Pty Ltd (unreported, Millane JR,
No. VI 0453 of 1994, 8 May 1995)
Gibson v Bosmac Pty Ltd 130 ALR 245
Nicolson v Heaven & Earth Gallery Pty Limited 1 IRCR 199
DIANE NEWTON - v - HILTON’S STORES PTY LTD
No. VI 5776 of 1995
Before: Judicial Registrar Millane
Place: Melbourne
Date: 18 July 1996
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 5776 of 1995
B E T W E E N :
DIANE NEWTON
Applicant
AND
HILTON’S STORES PTY LTD
Respondent
MINUTES OF ORDERS
Judicial Registrar Millane 18 July 1996
THE COURT DECLARES THAT:
The termination of the employment of the applicant by the respondent on 13 November 1995 contravened section 170DC of the Industrial Relations Act 1988.
AND THE COURT ORDERS THAT:
Within 21 days of the date of this order the respondent pay to the applicant compensation in the sum of $3,140.32 less any amount payable to the Commissioner of Taxation pursuant to the Income Tax Assessment Act 1936 and actually paid.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 5776 of 1995
B E T W E E N :
DIANE NEWTON
Applicant
AND
HILTON’S STORES PTY LTD
Respondent
Before: Judicial Registrar Millane
Place: Melbourne
Date: 18 July 1996
REASONS FOR JUDGMENT
The applicant is a 52 year old former national supervisor of the respondent’s retail fashion stores. She was employed for ten years from 1985 to 13 November 1995 when the respondent dismissed her. Such dismissal, it is alleged, contravened Division III Part VIA of the Industrial Relations Act 1988 (the Act).
The reason proffered at termination was that the applicant had breached confidentiality in disclosing to the manageress of an Adelaide store, confidential information gained by her at company board meetings during the previous month or so. The information disclosed, and this disclosure and the fact that it was confidential was not denied, related to the respondent’s intention to promote an employee to the position of area supervisor of its West Australian stores. Such promotion would, in effect, raise this person above another well regarded employee, the manageress of one of the respondent’s flagship stores in Hay Street, Perth. It was the respondent’s intention, and this intention was discussed at board level, to speak to the employees in person to avoid both disruption to the Hay Street store operation and the potential loss of the employee who might be aggrieved by the other employee’s promotion. As it turned out the respondent’s intentions were not thwarted by the applicant’s indiscretion on the occasion known to it at termination. This outcome was relied on by the applicant at least insofar as it represents a mitigating factor the respondent should have considered on termination if the respondent had been minded to give the applicant the opportunity to put to it exculpatory facts.
Apart from the disclosure of the board decision to the Elizabeth store manageress, Sandra Christine Warren (Warren), on or about 7 November 1995, it emerged during the hearing that the same disclosure was made at about the same time to two other staff in stores in Adelaide; namely the Rundall Mall store manageress, Sandy Nowak (Nowak) and the sales manager for the respondent’s Marion store in Adelaide, Madeleine Roby (Roby).
The disclosure of the information to Roby and Nowak did not come to the respondent’s attention until shortly prior to the hearing date. Notwithstanding this the conduct is also relied on by the respondent in this proceeding. In defending the proceeding the respondent further relied on evidence that the applicant, particularly in the months prior to termination, made disparaging and anti-semitic remarks to staff concerning Leigh Julian Goldbloom (Goldbloom) who is the respondent’s managing director overseeing the operation of twenty six stores Australia-wide, employing some 160 staff with an annual turnover fluctuating between $23 and $25 million.
The evidence of the further disclosures and the alleged disloyalty in making disparaging remarks about Goldbloom was relied on by the respondent, not as justification for the termination, but as after acquired evidence relevant to the remedy and, in particular, the determination of the amount of compensation payable, if any, in the event that the Court finds that the termination contravened Division III Part VIA of the Act.
As can be seen from the circumstances preceding the termination described in some detail below, there were other contemporaneous matters concerning the applicant’s conduct and performance in October 1995 giving rise to a variation to the territory covered by her as national supervisor. These matters, it was argued, also provide circumstances for consideration in the calculation of any compensation but of themselves are not reasons for or justification for the termination which occurred.
WITNESSES
Apart from Goldbloom, Roby, Warren and Nowak the respondent called three other witnesses; namely, Okie Curtis (Curtis) the manageress of the respondent’s Woden store in the Australian Capital Territory, Ewa Skoczek (Skoczek) the assistant manager of the respondent’s Tuggeranong store in the ACT, and Franca Greatorex (Greatorex) the respondent’s visual merchandiser based in Melbourne. The applicant gave evidence on her own behalf.
All the respondent’s staff witnesses were longstanding employees, some for many years with lengthy working relationships with the applicant; although because they were located in various states direct contact between them and the applicant might only occur every few weeks or so when, as a national supervisor, she attended their respective stores to check the store’s activities and displays and give any necessary instructions. No doubt it caused the applicant some distress to attend Court over a period of two days and hear a succession of witnesses; including those in whom she confided from time to time, tell the Court that they and their staff feared her, found her behaviour intimidating and erratic, questioned her skill and judgment in store management matters and did not trust her. In noting that not one of these women complained to the applicant or Goldbloom about her conduct prior to October 1995 it must also be kept in mind that they were subordinates to the applicant who enjoyed a long association with the company and Goldbloom. I do not accept their general criticism of the applicant’s methods and manner as proof of fault on her part in all those areas, save to observe that such widely held and shared criticism of her conduct as a national supervisor is at least an indication of the problem confronting the respondent in managing its national operation and maintaining good staff morale and relationships in the long term.
It emerged from the evidence of Nowak that in the week of the hearing she together with Roby and Warren met with Goldbloom and the respondent’s solicitor during which meeting they generally discussed their statements. Whilst such discussions might ordinarily effect the weight given to the witnesses’ evidence, in this case the evidence of the three women concerning the extent and content of their separate discussions held with the applicant in early November 1995 in Adelaide was not seriously challenged by the applicant. Her argument was primarily directed towards establishing the context in which the information was disclosed and any deprecatory remarks were made about Goldbloom, because she was then upset and fearful of losing her job.
There was a consistency and plausibility in the evidence given by the six staff witnesses particularly with regard to their separate dealings with the applicant in October and November 1995. For instance, Greatorex told the Court that during a particular conversation with the applicant when the applicant recounted to her that she had had an argument with Goldbloom, the applicant told Greatorex she was “... sick and tired of doing his dirty work for him and she called him an arsehole I think, something like that”. The applicant denied calling Goldbloom an arsehole on that occasion, however, the evidence of the other witnesses in Adelaide shows that in the same period she told Roby that Goldbloom was tight-fisted and mean and that she had then seen her lawyer “and was going to take him (Goldbloom) all the way”. This was a reference to a recent argument with Goldbloom concerning her conduct as national supervisor in the Australian Capital Territory during which argument he suggested that she resign. Nowak gave the following evidence, “she was always saying he was very tight, he was mean and difficult to work for. He was always cutting back and he was - she said - brought up: you could tell he was Jewish because he would never - always tight with his money. On a couple of occasions, on one occasion when she was - because she was always very bitter, very angry with Mr Leigh, she actually did refer to him as a Jewish bastard because he was always cutting back and always to the bare by (sic) where you just could not operate and run a store.”
The thrust of the applicant’s case was that she generally did not deny the many allegations made against her but sought to justify her conduct in context. This is not to say that she did not deny calling Goldbloom an arsehole and making anti-semitic references about him. What I understood her to be saying to the Court, however, was that she was upset and worried about her job when she made any comments, whatever they may have been, about Goldbloom to the staff. Nevertheless the comments on any interpretation of them were designed to undermine his standing in the eyes of the staff as well give expression to her frustration in working with him.
She conceded that the information disclosed concerning sensitive staff changes was information she understood to be confidential, however, her view was that it was “confidential, yes, but not confidential in like it was the top secret”. She elaborated on this observation by pointing out that Perth was not part of her territory, Hazel Fisher being the national supervisor for that area. In the applicant’s view, “... It was more for her (Fisher) to keep it confidential and certainly not let anything out.” She also demonstrated to the Court that she understood that there was a company policy regarding the confidentiality of matters discussed at board level.
After hearing the applicant’s evidence and observing her demeanour in the witness box, I was left wondering how information might be confidential but be more or less confidential than other confidential information. To my mind her explanation was an attempt to rationalise her conduct and amounted to an artificial and unsustainable distinction, if it was ever to be made.
The applicant impressed me as a woman who has a long and apparently successful career in the retail fashion industry. Had it not been for her apparent antagonism towards Goldbloom, it might have been argued that she held a genuine if somewhat mistaken belief that it did not matter if she disclosed the information obtained in the board meetings in circumstances where it was unlikely to reach the Perth staff, even though there was occasional communication between the stores concerned; for instance, about stock and store needs. Notwithstanding any matters which might suggest that the probability of the disclosure reaching Perth was low, it must always be kept in mind that an employment relationship carries with it mutual responsibilities and obligations. The applicant’s inability to accept that she had a responsibility to avoid the disclosure of information she well understood to be sensitive and confidential made her evidence less cogent. By comparison, Goldbloom was a witness who impressed me as being direct and honest in giving evidence and certainly willing to acknowledge his words and deeds even when they did not advance the respondent’s case.
BACKGROUND INFORMATION
Curtis was the first witness called. She referred to a long and close working association with the applicant (some seven and a half years) until October 1995 when, Curtis told the Court, she discovered that the applicant had been, in her words, taking information between stores and causing trouble between the staff.
It was generally conceded that in the period prior to October 1995 the applicant established a close friendship with a person for whom she also obtained casual employment in the respondent’s Canberra stores. That friendship led to the applicant staying with that staff member during her business visits to the ACT. At the relevant time the respondent had no policy in place precluding its staff from staying in private accommodation or, for that matter, staying with other staff when travelling on business. According to Curtis the applicant’s relationship with the staff member caused problems in the stores, the suggestion being that it created some power imbalance with other staff and some embarrassment in their dealings with the applicant’s friend.
The respondent gave evidence about the friend’s extensive purchases on its staff accounts. I am not satisfied that this evidence can be relied on to prove that the applicant had any involvement in or responsibility for the other woman’s purchases, if they were made at all, and, if they exceeded the privileges afforded staff members in purchasing goods directly from the respondent. However, I am satisfied on the evidence that the relationship between the applicant and the other staff member was a cause of some difficulty in the ACT stores and this and her belief that there was troublesome gossip between the stores led Curtis to confront the applicant on her visit to Canberra in late October 1995. In the course of the conversation between them, Curtis claimed to have told the applicant that she had caused a lot of problems in the Canberra stores and Curtis had, as a result, lost her respect for the applicant. It was Curtis’ understanding that the applicant at the conclusion of that conversation agreed to raise this matter at the respondent’s next board meeting; informing Curtis that she would give up the Canberra stores’ territory if the staff felt the way Curtis suggested they felt about her.
The applicant agreed that there was such a conversation but that at the conclusion of the conversation, which incidentally the applicant says came about because Goldbloom had asked Curtis if she wanted the applicant removed, Curtis in effect told her she did not want the applicant to go. This was allegedly in spite of the offer from the applicant to raise the matter at the next board meeting and leave the territory. I have accepted Curtis’ evidence as the most probable scenario because it was clear that by late October there were concerns which caused Curtis to confront the applicant. It was not until Goldbloom attended Canberra after the next board meeting and was asked by Curtis whether the applicant had raised her complaint at the board meeting, that Goldbloom became aware of the problems in that state. Because of this, I do not accept any suggestion that Goldbloom was responsible for the initial confrontation between Curtis and the applicant or that at that stage he had any intention of altering the applicant’s territory.
Effectively, the applicant acknowledged the problem in her conversation with Curtis and offered to raise the matter with the company at the next board meeting as well as offering to move out of the territory; presumably in an effort to solve the problem. She then reneged on this offer and by doing so further damaged the trust between her and Curtis; not to mention Goldbloom.
As a result of Curtis’ complaint to him and discussion with other Canberra staff, Goldbloom told the Court that he determined to raise the matter with the applicant, which he did on his return to Melbourne in late October 1995. It was agreed that before this meeting commenced Goldbloom asked the applicant if she wanted representation. However, the meeting proceeded with Goldbloom raising with her the correctness of her behaviour in staying with a staff member in Canberra, and the belief that her friend had abused the privilege staff had of purchasing garments up to a level permissible by the company; this being conduct he claimed the applicant was responsible for overseeing as national supervisor for that state. He also raised the question of the loss of confidence the staff in Canberra had in the applicant because they believed the applicant had compromised herself in her relationship with the other staff member.
It is apparent from this meeting that the applicant had an opportunity to answer the allegation and did so claiming that she did not believe it was inappropriate to stay with the staff member whilst in Canberra. She also queried her ability to oversee the staff member’s purchases if in fact there had been any abuse of the privileges afforded to staff members. From Goldbloom’s point of view, the managers and other staff in the Canberra shops were placed in a difficult position because they felt they could not raise the additional purchases with the national supervisor as a result of her close relationship to the staff member concerned. Goldbloom informed the applicant that he would be removing her from the supervision of the ACT stores and giving that supervision to the other national supervisor, Hazel Fisher. Exhibit R1 is a memorandum dated 31 October 1995 notifying all stores of this change of territory.
The applicant was not happy with the outcome of the discussion with Goldbloom and when she expressed this he said to her, “... if you’re not happy why don’t you resign?”. She refused to do this and the restructuring of her responsibilities was the upshot of that meeting. It would be fair to say that at the conclusion of that October meeting the applicant viewed the action taken by the respondent as disciplinary action; not in any way justified by the events that had occurred.
Goldbloom was candid in acknowledging that at the meeting in late October he wanted the applicant to resign and it was his wish to terminate her employment from that time onwards.
The October exchange was the forerunner to the subsequent clash between them in mid November. Both Goldbloom and the applicant sought legal advice on their respective positions. It appears that work continued with the applicant going to Adelaide in the first week of November at a time when she claimed to have been still very upset by what transpired with Goldbloom, leaving her concerned about the security of her job.
The applicant, Goldbloom, Fisher and Maureen Allison held board meetings to discuss company business and management matters from time to time. It was common ground that there had been discussion prior to the end of October and, in particular, on 16 October 1995, the minutes of which meeting were tendered to the Court (Exhibit R2), about the elevation of a Perth staff member to area manager for West Australia as well as the need to consult beforehand with another staff member in Perth to avoid any difficulties for or loss to the company.
I have already noted that the applicant conceded the confidential nature of the information. However, she also conceded that by early November “... my loyalty to Mr Goldbloom at that stage had gone out the window as to the way I had been treated by him”. It would be a fair summary of her evidence to say that the applicant did not accept that the staff in Canberra had lost respect for her and, further, she did not accept that this was the true reason for Goldbloom rearranging her territory. In other words, she could not accept the employer’s concern about the staff morale and the possibility of some loss of confidence in her by the staff. In accepting Curtis’ evidence, as I have, it follows that I also accept Goldbloom’s evidence that the reason he acted as he did in late October was because he believed there was a problem with staff morale as a consequence of the applicant’s behaviour, both in her relationship with another staff member and her failure to honour the commitment she made to Curtis vis-a-vis the complaint.
When the applicant went to Adelaide she had coffee or lunch with several store managers, Nowak, Roby and Warren, all of whom she told about the staff change proposed in West Australia, as part of a general discourse concerning her loss of the Canberra territory.
Nowak has worked for the respondent for some eight years with regular contact with the applicant. She made it clear that she found the applicant unapproachable and untrustworthy. She claimed that she was placed in a position where she listened to the applicant’s outpourings concerning Goldbloom and what she described as the warnings given to the applicant by Goldbloom at the end of October because the applicant was her supervisor. The applicant also revealed to Nowak that she was going to “... take him (Goldbloom) all the way. He’s not getting away with it. I’ll leave when I’m ready and on my own terms.” Part of the conversation included the applicant telling Nowak that other employers were interested in her. She also made comments about taking some of the respondent’s staff with her. When she revealed the information concerning the impending staff change in West Australia, the applicant told Nowak it was confidential information because it was part of board discussions. In the applicant’s view, the changes were probably part of a plot to cut back and phase out her position because the West Australian territory was currently held by Hazel Fisher. With the elevation of the staff member in West Australia, Fisher would no longer cover that territory, having been appointed to cover some of the applicant’s old territory in the ACT.
It is apparent from the evidence of both Nowak and the applicant that the applicant believed Nowak was someone she could confide in; understanding at the same time by reason of her numerous references to the confidentiality of the information and one reference to not being disloyal because she had told Nowak these things outside the store premises, that her conduct was inappropriate. Indeed, she agreed with the proposition that because she believed she could rely on Nowak maintaining the confidences she revealed to her, she felt able to make the disclosures made. Otherwise she accepted that it would be totally unacceptable and inappropriate for her to impart a decision taken at board room level to any other employees with whom she did not share the same relationship of confidence.
Having adopted the abovementioned proposition, the applicant really found herself in a difficult position because by her own admission Warren was not a close associate of the applicant’s. Yet the information was readily imparted to Warren without the benefit of her being told that the information was confidential and should not be passed on. Roby did have a longstanding relationship with the applicant but also expressed the same concerns about the applicant’s behaviour generally. She too received a rather lengthy tirade on the events to do with Canberra, the staff changes and Goldbloom’s character defects.
When Goldbloom attended some days later not one of the women from the different stores breached the applicant’s confidence where she had made it clear that it was confidential information. He directly questioned Nowak about whether the applicant had mentioned anything to her about the Canberra situation. She answered her employer truthfully but did not go further and refer to the Perth changes because those matters were not raised with her, only recalling this information for Goldbloom a week or so before the hearing, once its significance was brought to her attention. Goldbloom also asked Roby during that same visit to Adelaide whether anything had come up about Canberra during the applicant’s recent visit. Like Nowak, Roby did not reveal all to Goldbloom until a week before the hearing and in that sense both women generally maintained the confidence reposed in them without fully appreciating the impact of the information to do with the West Australian staff change.
Of the three women to whom the information was disclosed Warren had the least connection with the applicant having only been manager of the Elizabeth store for some eighteen months. The information was conveyed to her in response to a question as to why the application had, “given away Canberra?”. The information did not come with the background material concerning the argument with Goldbloom and was not accompanied by an exhortation to keep it confidential. In these circumstances whatever belief the applicant held about being able to share confidences with Nowak and Roby because of her longstanding association with them obviously did not extend to Warren.
When Warren and Goldbloom had a cup of coffee together on his stay in Adelaide she happened to mention the matters to do with the proposed staff change. His reaction was described by her as one of shock: he “almost leapt over the table when I told him”. Because of Warren’s revelations Goldbloom went to Nowak and Roby and it was then that he questioned them; although he did not specifically ask about the changes in West Australia, confining his questions to whether the applicant had discussed the Canberra matters with them. Obviously by then he was fishing for information but did not get it until much later.
Goldbloom’s visit to Adelaide was in the second week of November; the next board meeting being fixed for 13 November 1995. At this meeting the four people present were asked whether they understood the confidential nature of anything said at board meetings and, particularly, the matters to do with the Perth manageress’ position. There was an affirmative response to this question which was followed by a question as to whether anyone had spoken “about the Perth situation.“ The last question received a negative response.
When the questions were asked at the board meeting the applicant told the Court that she then felt she had not breached any confidence and was therefore able to respond in the way she did. After the board meeting and at 4.30pm Goldbloom convened a meeting with the applicant and Allison. It was agreed that the question of representation came up again with the applicant asserting that her request for representation was ignored by Goldbloom. On the other hand, Goldbloom expressed his belief that he asked the applicant if she wanted representation, however, she, as on the last occasion, proceeded with the meeting. Recalling that on the first occasion Goldbloom asked the applicant if she wanted representation and she did not take the opportunity afforded to her, I am not satisfied that he did not at least adopt the same formality on the second occasion. What is apparent is that both parties proceeded with the meeting in any event.
There was no great departure in the evidence given concerning the meeting between Goldbloom and the applicant. It was agreed that Goldbloom asked the applicant if she had mentioned the Perth changes to any of the Adelaide staff. She conceded this telling him it was part of her explanation to the staff for the changes made by him in Canberra. She also expressed the view that she did not believe it was important to keep this information from the Adelaide people because “it did not matter”. Her response at that meeting is certainly consistent with the direction taken by her in the proceedings generally.
It was common ground that at their last meeting Goldbloom made much of the fact that the information disclosed was confidential and that he believed the applicant breached company policy in her disclosure of that information. He then informed the applicant that he would have to terminate her employment.
In cross-examination Goldbloom informed the Court that when he returned from Adelaide in November he sought legal advice and was advised that he had grounds for terminating the applicant; namely, the dissemination of confidential information, which may have harmed the company’s interests. Goldbloom’s evidence was that what the applicant said in response to his query whether she had breached board room confidences would have made a difference to the decision he made to terminate. However, once she agreed that she had disseminated the information his view was that termination followed this admission.
After he told her she was terminated the applicant informed Goldbloom that she would take the matter further. He agreed that he also told the applicant that if she took action against him it could impact on her ability to find employment elsewhere. No explanation was provided by him as to what was meant by this statement and whether it was indeed a threat rather than a statement of the obvious notoriety proceedings would attract in the retail fashion trade; bringing with it some possible detriment to the applicant’s job prospects. Because of the equivocal nature of the evidence given on this matter I am not in a position to draw any meaningful inferences from the statement itself. There was certainly no evidence called to suggest that the applicant’s attempts to gain employment since the termination have been prejudiced by any action on Goldbloom’s part.
Goldbloom acknowledged that it made no difference to him in deciding to terminate the applicant’s employment that there was no actual harm flowing from the disclosure. In making his decision Goldbloom appears to have taken into account the applicant’s reputation and standing in Canberra, which had already suffered because the staff there did not trust her. The events in Adelaide then convinced him that she could no longer perform her senior functions in the company. I interpret his reaction to be one based on a loss of confidence and trust in the employee.
FINDINGS
I was not fully addressed on what was paid to the applicant on termination, however, on reviewing the documents accompanying the various payments made to her at termination (see Exhibits A3 and A4), it appears to me that the applicant was paid five weeks’ pay in lieu of notice at the rate of $785.08 per week, salary to the date of termination, annual leave entitlements and long service leave entitlements. Further, I was not addressed on the question of the calculation of the compensation payable over the period of notice. Although there was some suggestion that the termination was a summary dismissal, the giving of five weeks’ compensation in lieu of notice accords with the minimum requirements contained in section 170DB of the Act. Therefore, despite Mr Niall’s submissions to the contrary, the termination cannot be properly characterised as a summary dismissal for serious misconduct.
Valid Reason - Section 170DE(2)
A reason for termination is a valid one if there is a logical and causal link between the reason and the termination and it can be said that the reason is sound, defensible or well founded (see Selvachandran v Peteron Plastics Pty Ltd (1995-1996) 62 IR 371).
Relying on the admissions made by the applicant I am satisfied that she understood that the information disclosed was confidential and its disclosure had the potential to destabilise or harm the internal workings of the company.
Her state of mind when she made the disclosures was upset, angry and certainly one where she did not consider herself to owe any further loyalty to Goldbloom. The applicant tried to play down the significance of her actions by suggesting that it did not matter if the disclosures were made in Adelaide because the real concern was not to disrupt the West Australian staff and stores. I found the explanation given by the applicant to be one that ignored the fact that she understood the information should not be imparted to just anyone and that there was potential for harm to the respondent’s interests.
In Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 Dixon & McTiernan JJ said at page 81 of that decision:
“... Conduct which in respect of important matters is incompatible with the fulfilment of an employee’s duty, or involves an opposition, or conflict between his interest and his duty to his employer, or impedes the faithful performance of his obligations, or is destructive of the necessary confidence between employer and employee, is a ground of dismissal (Boston Deep Sea Fishing and Ice Co. v. Ansell (1); English and Australian Copper Co. v. Johnson (1); Shepherd v. Felt and Textiles of Australia Ltd. (2)). But the conduct of the employee must itself involve the incompatibility, conflict, or impediment, or be destructive of confidence. An actual repugnance between his acts and his relationship must be found. It is not enough that ground for uneasiness as to its future conduct arises.”
I am inclined to the view that the applicant’s conduct in this case when viewed in the context of the ill will she then felt towards Goldbloom was misconduct in the sense that she no longer believed she owed the company any loyalty and was prepared to ignore the obligations she understood existed. Her conduct in the ACT and vis-a-vis Curtis’ complaint to her had damaged the trust and confidence her employer had in her and led to disciplinary measures by changing her territory. She must then have well understood that her conduct was under scrutiny before embarking on a rather destructive course of conduct brought about by the belief that she no longer owed any loyalty to the company. There was, therefore, at that time a real repugnance between her acts and her employment relationship.
On the evidence I am satisfied that at the date of termination there was a valid reason for termination and that reason was put squarely to the applicant on that occasion.
The other disclosures which were relied on as after acquired evidence were capable of supporting a similar conclusion that the applicant had knowingly disseminated confidential information from the board meetings. Moreover, she appears to have embarked on a course whereby she intended to harm Goldbloom’s relationship with other staff and this behaviour, had it been known to the employer prior to termination, is behaviour contrary to her obligations to her employer and her duty of good faith. The structure of the Act is such that it is now accepted that the existence of after acquired evidence of misconduct does not provide a contemporaneous reason for termination in the sense required by section 170DE(1) of the Act (for discussion of this issue see my decision in Hayden v Golden Bowl Sports Centre Pty Ltd (unreported, No. VI 0453 of 1994, 8 May 1995). Nevertheless, such evidence is relevant to the remedy provisions in the Act. The amendments to the Act since January 1996, where the Court is directed to consider all the circumstances of the case, lend weight to this conclusion.
Procedural Fairness - Section 170DC
Procedural fairness in the termination process is an important matter. An employee should not only be made aware of the concern about the conduct, as was done in this case, but should be afforded a full opportunity to respond (see Gibson v Bosmac Pty Ltd 130 ALR 245). Goldbloom’s candour in agreeing that he had already decided to terminate the applicant and had that in mind from late October before the incident in Adelaide occurred, supports the applicant’s contention that once she conceded that she had disseminated the board confidence she was terminated without any real opportunity to raise exculpatory matters to defend herself or to put forward reasons why her long and otherwise successful employment with the company should not be terminated. On the question of whether the applicant was denied the opportunity to obtain representation at the final meeting, I am not satisfied that this opportunity was denied her so much as she was prepared to engage with Goldbloom there and then.
Consideration of all the abovementioned matters lead me to the conclusion that there was a want of procedural fairness in the termination process.
Harsh, Unjust or Unreasonable - Section 170DE(2)
There is an overlap between section 170DC and section 170DE(2) of the Act inasmuch as a failure to afford procedural fairness may render an otherwise lawful termination unlawful. The determination of whether a termination is harsh, unjust or unreasonable is made by the Court at the date of hearing. The requirement that the Court have regard to all the circumstances of the case contemplates consideration of all the matters before the Court, including as I have already noted the evidence of the misconduct which came to light after termination.
In considering these matters the Court must have regard to the position and needs of both parties. Undeniably the effects of the termination on this woman are harsh, both because of the impact on her future prospects of employment and the loss of the security of her longstanding employment. There was no evidence of any criticism or complaint concerning the applicant’s employment record before October 1995, although the evidence of the other staff suggests that incidents of disloyalty to Goldbloom inimical to their relationship with their managing director were occurring in some instances before Curtis raised her concerns.
Having decided that there was conduct justifying termination on notice and, further, that the other conduct coming to light after termination may also have justified termination or at the very least disciplinary action had it been known to the employer beforehand, I am not satisfied on balance that the inevitably harsh effects of the termination make what was otherwise a lawful termination unlawful.
REMEDY
The breach of section 170DC in relation to procedural fairness matters and the possibility that if Goldbloom had not closed his mind to all exculpatory factors the applicant may have retained her employment, must be considered against the factual background of this case where this woman no longer enjoyed substantial security of employment because of the loss of confidence in her generally.
This is not a case where either party sought reinstatement as a remedy. Because the unlawfulness arises out of an irregularity in the dismissal process in acting in a procedurally unfair manner, reinstatement is not an appropriate remedy in all the circumstances of this case.
The same matters which preclude reinstatement impact on compensation and, keeping in mind the matters alluded to by Chief Justice Wilcox in his decision in Nicolson v Heaven & Earth Gallery Pty Limited 1 IRCR 199, I am satisfied that the procedural irregularity deprived the applicant of the chance to retain her employment. However, by then the applicant no longer enjoyed substantial security of employment, both because of the events before the termination episode and the conduct which came to light eventually. Because of this I have assessed appropriate compensation at a nominal sum of one month’s remuneration; namely, $3,140.32 gross.
MINUTES OF ORDERS
THE COURT DECLARES THAT:
The termination of the employment of the applicant by the respondent on 13 November 1995 contravened section 170DC of the Industrial Relations Act 1988.
AND THE COURT ORDERS THAT:
Within 21 days of the date of this order the respondent pay to the applicant compensation in the sum of $3,140.32 less any amount payable to the Commissioner of Taxation pursuant to the Income Tax Assessment Act 1936 and actually paid.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
I certify that this and the preceding twenty (20) pages are a true copy of the reasons for judgment of Judicial Registrar Millane.
Associate:
Dated: 18 July 1996
Solicitors for the Applicant: Maurice Blackburn & Co
Counsel for the Applicant: Mr R. Niall
Solicitors for the Respondent: Sackville Wilks & Co
Counsel for the Respondent: Mr M. McDonald
Date of hearing: 17 & 20 May 1996
Date of judgment: 18 July 1996
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