Nicole Suckling v Adidem Pty Ltd T/A the Body Shop

[2014] FWCFB 3611

[2014] FWC 743 [Note: An appeal pursuant to s.604 (C2014/3142) was lodged against this decision - refer to Full Bench decision dated 30 June 2014 [[2014] FWCFB 3611] for result of appeal.]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Nicole Suckling
v
Adidem Pty Ltd T/A The Body Shop
(U2013/9753)

DEPUTY PRESIDENT GOOLEY MELBOURNE, 31 JANUARY 2014

Application for relief from unfair dismissal - no valid reason - compensation ordered.

[1] Nicole Suckling was employed by Adidem Pty Ltd trading as the Body Shop (the Body Shop) until her employment was summarily terminated for serious misconduct on 30 April 2013 because of an alleged conflict of interest.

[2] The Body Shop is a major retailer selling cosmetic products, beauty products and body products. Relevantly, for this proceeding, it also sells candles and like products. The Body Shop has a division called ‘Body Shop at Home’. Customers are able to arrange for a consultant from the Body Shop to demonstrate Body Shop products at a party hosted by the customer held at the customer’s home.

[3] Ms Suckling was a level one employee who spent 90 per cent of her time answering telephone inquiries from consultants and potential party hosts. She also answered telephone inquiries from individuals who wished to become consultants. She did not handle financial inquiries or recruit consultants. She did not determine which consultant would host a party as this was organised on a regional basis. She simply passed on the name of any person making inquiries about hosting a party to the relevant consultant. More complex inquires are handled by a level 2 employee.

[4] In October 2012, Ms Suckling entered into a consultancy agreement with Party Lite. Party Lite sells scented and unscented candles and related products. Party Lite consultants also demonstrate Party Lite products at a party hosted by customers held at the customer’s home. Consultants can also sell Party Lite products at other events.

[5] Ms Suckling’s contract of employment provided that Ms Suckling was not, while working for the Body Shop, able to work for any other enterprise which the Body Shop “considers a market place competitor.”

[6] When the Body Shop found out about Ms Suckling’s consultancy with Party Lite she was provided with an opportunity to resign that consultancy and when she did not her employment was terminated.

[7] This case is primarily about whether there was a valid reason for the termination. There were no submissions that Ms Suckling was denied procedural fairness. Ms Suckling did contend that even if I found that there was a valid reason, the termination was a disproportionate response to her conduct.

[8] In deciding whether there was a valid reason for the termination of Ms Suckling’s employment, it is necessary to decide if, in fact, Ms Suckling had a conflict of interest.

Was there a conflict of interest?

[9] Mr Darryl Lavey, the People and Performance Manager for the Body Shop, gave evidence that the Body Shop’s concerns about Ms Suckling working for a competitor were twofold:

(a) She had access to confidential and market sensitive information; and

(b) Party Lite was a competitor with the Body Shop in the party plan industry. 1

[10] Mr Lavey gave evidence that it is not relevant that Party Lite and the Body Shop do not sell the same product range. In effect, it was his evidence that there was a party plan market. In other words, the market is comprised of individuals who wish to have a consultant attend a party at their home to demonstrate goods. 2 It was his evidence that the “actual product range is relatively unimportant to whether another business is in competition.”3 Even Tupperware which has no product overlap with Body Shop is a competitor because it is in the party plan business.

[11] Mr Lavey accepted in cross examination that his expertise was in human resources and he was not an economist and that he had no expertise in analysing markets. He further had no empirical evidence that an increase in Party Lite sales would result in a decrease in Body Shop sales.

[12] Mr Lavey gave evidence that there is competitive market in attracting and retaining consultants. A central part of the party plan business involves consultants recruiting other consultants. 4 It was his evidence that Ms Suckling had regular contact with consultants and was aware of their “personal needs, interests, networks, etc.”5

[13] Further he said that she had access to confidential information such as up-coming promotions and discounts as well as previous consultant’s details, customer and host information, career plans for consultants, payment structures and details of current promotions and incentives. 6 Mr Lavey said that Ms Suckling could “potentially influence consultants to work for a competitor.”7 He accepted that there was no evidence that Ms Suckling ever disclosed confidential information.

[14] Ms Suckling accepted that she had access to confidential information but said that her access was limited. She could look up consultant’s details and career plans. She had access to the consultant payment structures and current and upcoming promotions. She said she did not disclose this information to Party Lite. She also gave evidence that the consultant payment structures are not confidential as they are freely given to all consultants and potential consultants. 8

[15] It was also her evidence that she did not take any step to entice or recommend to any Body Shop consultant that she or he become a Party Lite consultant and she did not recommend that any person who made inquires about hosting a Body Shop party have a Party Lite party. 9

[16] Ms Suckling gave evidence of the different product range marketed by Party Lite compared to Body Shop. 10

[17] It was her evidence that her involvement with Party Lite is limited. She has a stall once a month from which she sells products. She had also sold Party Lite products directly to people she knows including to some workmates 11 and promotes Party Lite on her facebook page.12 Ms Suckling accepted that she had a Facebook page from which she sought to engage people to host Party Lite parties.

[18] It was submitted that Ms Suckling’s involvement with Party Lite was more like a hobby as the income she received was less than the cost of the product she bought. 13

Is the market the party plan business?

[19] I do not accept the Body Shop’s contentions about the market. Mr Lavey’s expertise is in human resources not market analysis. No evidence was called to support Mr Lavey’s conclusions. I am not prepared without more to conclude that a person who wants to host a Body Shop party at which ethically sourced beauty and other products are demonstrated and available for sale will readily substitute a party at which kitchen goods or candles are demonstrated and available for sale.

[20] Mr Millar, for the Body Shop, submitted that I could take “judicial note” of the proposition that a person who goes to a Tupperware party and spends up big is unlikely to go to a Body Shop party or Party Lite party the next night. 14

[21] While I accept that proposition, that there is a limit to the discretionary spending available to individuals, I am not convinced, in light of the lack of evidence, that someone who hosts or attends a Body Shop party would readily exchange that activity for a Tupperware party or a Party Lite party.

[22] Mr Millar submitted that there was an overlap between the products sold by Body Shop and Party Lite namely candles and associated products. 15 Again there is no evidence to support the proposition that someone who hosts or attends a Body Shop party would readily exchange that activity for a Party Lite party.

[23] Mr Millar submitted that given Ms Suckling’s attempt to recruit people to host parties, via her facebook page, when she received inquiries as part of her job from people who wished to host Body Shop parties that the Body Shop had every reason for unease. 16

[24] Mr Millar submitted that if someone is buying a present for someone then there is substitution between Body Shop products and Party Lite products. Again there was no evidence to support this submission. Further while Mr Millar describes this as going too far, if Mr Millar is correct, involvement in selling any discretionary products for another business would justify the termination of a Body Shop employee.

Is there a secondary market for consultants?

[25] In addition to competition for hosts it was submitted that there was competition for consultants and because Ms Suckling had contact with Body Shop consultants there was a conflict of interest. Body Shop relied upon a conversation between Ms Suckling and a Body Shop consultant to support this contention. That conversation involved Ms Suckling in a phone call to a consultant saying “my business is going slowly but we can discuss this at another time.” 17 Ms Suckling said that she was answering a question from the consultant and she was making it clear that she did not want to talk about non work matters during work time and she did not speak to the consultant about it later.18 Mr Millar submitted that this was an example of serious misconduct evidencing actual repugnance between her role at the Body Shop and her own business. I disagree. There was no evidence that Ms Suckling was doing anything other than deflecting a non work related question from a colleague who was also a friend.

[26] There was no evidence that a person who wished to be a Body Shop consultant would wish, as an alternative, to be a Party Lite Consultant. But even if I accepted that there was competition for consultants, Ms Suckling did not recruit consultants for either Body Shop or Party Lite. She did not handle calls from consultants who were recruiting consultants to work for them. Her contact with consultants was responding to their enquiries. She took calls from people enquiring about being consultants but she simply passed on the details to other staff.

Was there a valid reason for the termination of Ms Suckling’s employment?

[27] There is a common law obligation on all employees to avoid conflicts of interest between their personal interests and those of their employer.

[28] The Full Bench in Farquharson v Qantas Airways Limited 19 summarised the common law approach to out of hours conduct by employees.20 Relevantly as formulated by His Honour Spender AJ in Cementaid (NSW) Pty Ltd v Chambers:21

“The touchstone for determination of cases such as the present one is to be found in the passage I have quoted from the judgment of Dixon J (as he then was) and McTiernan J in Blyth. It may be put in questions: 1. Is the second activity incompatible with the fulfilment of the employee’s duty to his other employer? 2. Does it involve an opposition or conflict between his interest and his duty to his employer? 3. Does it impede the faithful performance of his obligations to his other employer? 4. Is it destructive of the necessary confidence between employer and employee? In all cases an actual repugnance between the employee’s acts and his relationship with his employer must be found.”

[29] I do not accept that there was any real conflict of interest between Ms Suckling’s employment at the Body Shop and her role as a Party Lite consultant. I accept the submissions of Ms Suckling that to be in conflict with the Body Shop’s business she would need to be selling a similar product range to that sold by the Body Shop at its parties. I do not accept that the fact that the Body Shop sells some candles supports the finding that there is actual repugnance between her role as a Party Lite consultant and her role as an administrative assistant for the Body Shop. I accept Ms Suckling’s submissions about the nature of the market. There is insufficient evidence for me to conclude that there is a market for party plan hosts and consultants. But even if I were to accept that there was such a market Ms Suckling did not recruit consultants or party hosts for the Body Shop.

[30] It was submitted, and I accept, that Ms Suckling had access to confidential information. There was no evidence that Ms Suckling had ever breached her obligations to keep information confidential. I accept Mr Champion’s submission that it is not enough that there be uneasiness as to future conduct.

[31] Mr Millar submitted that while this was not a breach of contract case, Ms Suckling had freely signed a contract which contained a restraint which prevented her from working for anyone the Body Shop considered to be a competitor. Upon advice that the Body Shop considered Party Lite a competitor, she was given the opportunity to resign her consultancy and she chose not to. Mr Millar submitted that all the factors taken together meant that the Body Shop had a valid reason to terminate her employment.

[32] I do not accept Mr Millar’s submissions. I have found that the there was no conflict of interest. It is clear that Ms Suckling did not consider her conduct to be a breach of her contract. She made no attempt to hide her work with Party Lite. She sold some products to work colleagues and she posted information about it on her facebook pages and accepted as friends on her facebook page work colleagues. She saw no reason to discuss it with her managers because she did not see it as a conflict.

[33] I accept the submissions of Mr Champion that the term of the contract must be interpreted “by what a reasonable person would have understood them to mean.” The Body Shop’s assertion that Party Lite is a competitor must be based on reasonable grounds. Body Shop has not satisfied me that Ms Suckling’s conduct is in breach of her contract. 22

[34] In any event termination for engaging in conduct prohibited by a contract of employment cannot by itself be the basis for concluding that there was a valid reason for the termination of an employee’s employment. A term of a contract cannot override the statute.

[35] I therefore conclude that there was not a valid reason for the termination of Ms Suckling’s employment.

Other matters

[36] There is no dispute that Ms Suckling was aware of the reasons for the termination and was warned that her failure to resign her Party Lite consultancy would result in the termination of her employment. 23 There is no dispute that she was provided with an opportunity to respond prior to the decision being made.24 The Body Shop did not deny Ms Suckling the right to representation and she was represented by her solicitor.25 There was no suggestion that there was any deficiency in the procedures adopted by the Body Shop.

Conclusion

[37] There was no a valid reason for the termination of Ms Suckling’s employment. While the procedure adopted by the Body Shop was fair, the dismissal was unjust because she was not guilty of the alleged misconduct and hence she was unfairly dismissed.

Remedy

[38] Ms Suckling is not seeking reinstatement as she has another job.

[39] In assessing any amount in lieu of reinstatement, the Fair Work Commission is required to have regard to the following:

The effect of the order on the viability of the employer’s enterprise: s.392(a)

[40] No submissions were made that any order would affect the viability of the Body Shop’s enterprise.

The length of Ms Suckling’s service with the employer: s.392(b)

[41] Ms Suckling had been employed for just less than 12 months.

The remuneration that Ms Suckling would have received, or would have been likely to receive, if she had not been dismissed: s.392(c)

[42] It was submitted by Ms Suckling that had she not been dismissed, she would have remained in employment for six months. No contrary submissions were made. Ms Suckling’s remuneration was $47,472.77 gross including superannuation.

The efforts of Ms Suckling (if any) to mitigate the loss suffered because of the dismissal: 392(d)

[43] Ms Suckling applied for jobs and was successful in obtaining a position of comparable salary after 1 October 2013. Mr Millar submitted that for part of the time Ms Suckling was unemployed she undertook a course of study and that the Body Shop shouldn’t have to bear the costs of the lost remuneration for that period. I do not agree. The course took three weeks 26 and was undertaken because Ms Suckling had been unsuccessful in obtaining other work.27 There was no evidence that Ms Suckling stopped looking for work whilst doing the course. Further, Ms Suckling undertook the course to assist her mitigate her loss.

The amount of any remuneration earned by Ms Suckling from employment or other work during the period between the dismissal and the making of the order for compensation: s.392(e)

[44] From 1 October 2013 Ms Suckling earned the same amount she would have earned had she remained in employment.

The amount of any income reasonably likely to be so earned by Ms Suckling during the period between the making of the order for compensation and the actual compensation: s.392(f)

[45] This not relevant.

Any other matter that FWA considers relevant: s.392(g)

Mr Millar submitted that there should be a reduction for misconduct. As I have found that Ms Suckling’s conduct was not misconduct, I will not make any deduction. There is no reason to deduct any amount for other contingencies.

Conclusion

[46] Having regard to the matters set out above, I order that Body Shop pay Ms Suckling five months pay being $20,084.68 less applicable taxation within 21 days of the date of this order.

DEPUTY PRESIDENT

Appearances:

Mr M. Champion for Ms Suckling

Mr R. Millar for the Body Shop

Hearing details:

2013.

Melbourne;

15 November.

 1   Exhibit R2 at [1],[12]-[14].

 2 Ibid at [15].

 3 Ibid at [16].

 4   Ibid at [14] and [17]-[18].

 5 Ibid at [19].

 6   Ibid at [20]-[21].

 7 Ibid at [29].

 8   Exhibit A1 at [14]-[15].

 9 Ibid at [16].

 10   Ibid at [24]-[25].

 11   Exhibit A5.

 12   Exhibit R1.

 13 Exhibit A6 at [20].

 14   Transcript at PN 860-862.

 15   Ibid at PN 860

 16   Ibid at PN 904

 17 Exhibit R3 at [12].

 18   Ibid at PN 262.

 19   PR971685

 20   Ibid at [18]-[22].

 21   Unreported decision - Supreme Court of New South Wales 12295 of 1994.

 22   Exhibit A7 at [13]-[15]

 23 S.387(b) of the Fair Work Act 2009.

 24   S.387(c) of the Act.

 25   S.387(d) of the Act.

 26   Transcript at PN 426 - 427.

 27   Ibid at PN 425.

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