Qingzi Ji v Frankie 119 Pty Ltd t/a John Batman Group

[2020] FWC 6785

[2020] FWC 6785

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Qingzi Ji
v
Frankie 119 Pty Ltd t/a John Batman Group
(U2020/13438)

DEPUTY PRESIDENT COLMAN MELBOURNE, 16 DECEMBER 2020

Application for an unfair dismissal remedy – summary dismissal – applicant’s business competing with employer – compliance with Code – application dismissed

[1] This decision concerns an application made by Ms Qingzi (Cherry) Ji under s 394 of the Fair Work Act 2009 (Cth) (Act) for an unfair dismissal remedy. From 27 May 2019 until her dismissal on 24 September 2020, Ms Ji was employed as a business strategy manager and accounts officer by Frankie 119 Pty Ltd, which trades as John Batman Group (JBG). Ms Ji was summarily dismissed for running her own business in competition with JBG by selling, among other things, face masks and sanitiser. Ms Ji contends that Mr Jarrod La Canna, the company’s general manager and her former fiancé, was aware of her business, and that he dismissed her after she raised various complaints about him. She seeks compensation.

[2] JBG objects to the application on the jurisdictional basis that it complied with the Small Business Fair Dismissal Code (Code), and that the dismissal cannot therefore have been unfair (s 385). It contends that in any event, the company had a valid reason to dismiss Ms Ji, and that the termination of her employment in the circumstances was not unfair.

[3] Section 396 of the Act requires that I decide four matters before considering the merits of Ms Ji’s application. First, Ms Ji’s application was made within the 21-day period required by s 394(2) of the Act. Secondly, Ms Ji was a person protected from unfair dismissal, as she earned less than the high income threshold and had served the minimum employment period (s 382). Thirdly, Ms Ji’s dismissal was not a case of genuine redundancy. Fourthly, as I explain below, I have concluded that the dismissal was consistent with the Code, and that Ms Ji’s unfair dismissal application must therefore be dismissed.

[4] The proceeding on 15 December 2020 followed the general format of a hearing but was in substance a recorded conference. Ms Ji and Mr La Canna gave evidence.

[5] Ms Ji’s evidence was that on 24 September 2020 she received a letter from Mr La Canna advising her that she was dismissed with immediate effect. The letter stated that JBG had discovered that Ms Ji had been operating a company under the business name of ‘Cherry Bush’ which had been trading in competition with JBG by selling its core products, and that she had used confidential and other information belonging to JBG to promote her business. The letter stated that JBG believed that she had altered records to obtain a pecuniary advantage in relation to her leave entitlements, and that her actions were contrary to her obligation of good faith to the company, and in contravention of sections 182 to 184 of the Corporations Act 2001 (Cth).

[6] Ms Ji did not deny that she had a business that sold the same products as JBG but said that Mr La Canna had been aware of this. Ms Ji said that she established her business, C&J International Trading Pty Ltd (C&J), in February 2019, and that Mr La Canna had known about her business since at least April 2020 when she told him that she had obtained some 20,000 face masks, which she later sold to JBG. Ms Ji produced a financial statement issued to JBG in the name of her company, referring to an invoice from 22 April 2020 for $20,690.45 in respect of ‘3P masks’, against which JBG had made two payments totalling $3,127.27. The statement noted an outstanding balance of $16,191.53. Ms Ji said that Mr La Canna had encouraged her to run her own business, because during their relationship he had wanted to keep his assets separate from hers. She said that Mr La Canna had asked her to be JBG’s ‘supplier’ because of her knowledge of Chinese, and that he sent her to China in January 2020 for this purpose. Ms Ji said that she set up her company website some time ago, but that she had left it unfinished because she had been working so hard as an employee of JBG. Ms Ji denied using the company’s confidential or other information for the purpose of her own business and denied altering company records to accrue a financial advantage.

[7] Ms Ji said that she believed the real reason for her dismissal was connected to recent complaints that she had made about Mr La Canna. She said that in March and July 2020 she asked Mr La Canna to stop calling employees ‘stupid’ and to stop denying her access to the company’s bank accounts, which she needed to do her job, and that she had complained to him about the company trading while insolvent. Ms Ji said that on 11 September 2020, she lodged an anti-bullying application in the Commission, in which she claimed, among other things, that Mr La Canna had denied her work achievements, that he had required her to keep working despite her mental health condition that had required her hospitalisation, that he had spoken disrespectfully about employees and engaged in unethical business practices. Ms Ji said that on 13 September 2020 she filed a Work Cover claim contending that she had sustained a psychological injury in the workplace.

[8] Ms Ji said that she received the termination letter by email on 24 September 2020 and that she had no opportunity to explain her position or respond to the allegations against her. She said that the reasons given for her dismissal were not substantiated and that she believed the manner in which her employment was terminated was unfair.

[9] Ms La Canna gave evidence that on 22 July 2020 Ms Ji sent him an email raising allegations about his behaviour, including that he had been aggressive towards her and had prevented her from doing her work. Mr La Canna said that later the same day, Ms Ji sent a copy of the company’s confidential profit and loss document to all employees, without permission and for no apparent reason, and that it had been amended by Ms Ji to indicate that the company was currently profitable, which was false. Mr La Canna said that around this time, he had several disciplinary concerns about Ms Ji. One related to a conflict between Ms Ji and a co-worker employee, Ms Franks. Another concerned disparaging remarks that Ms Ji had made about Mr La Canna to the company’s largest client. Mr La Canna decided that, given his past relationship with Ms Ji, he would ask another employee, Ms Traa, to investigate all of these matters. On 1 September 2020, Mr La Canna wrote to Ms Ji, raising his concerns about her conduct, and confirming that Ms Traa would look into the disciplinary matters, and also Ms Ji’s concerns about him. The letter required Ms Ji to meet with Ms Traa the next day. For various reasons, the meeting did not take place, and after Ms Ji lodged her Workcover application, the disciplinary process was put on hold.

[10] Mr La Canna said that while preparing his response to Ms Ji’s anti-bullying claim, he came across a website operated by Ms Ji in the name of C&J, and that he was astonished to see that it was promoting and selling products in competition to JBG. Mr La Canna said that the website contained a testimonial from Anglicare, a client of JBG, and that the website had copied or adapted materials from the JBG website. The website showed that some of the products had sold out, suggesting that the site had been active for some time.

[11] Mr La Canna acknowledged that he had known that Ms Ji had a company called C&J but said that Ms Ji had told him that she was planning to use it to start an export business selling health food products into China, which would not compete with JBG. Mr La Canna said that in April 2020, when JBG experienced a delay in receiving a shipment of masks from China, Ms Ji told him that she had obtained some 20,000 masks of her own. Mr La Canna said that he was upset by this and considered it inappropriate for an employee to acquire large volumes of the same product as the company. However, he accepted Ms Ji’s explanation that she intended to use some masks for herself and to donate others to worthy causes, and that she did not intend to sell them to other people. Mr La Canna said that JBG later bought a small quantity of masks from Ms Ji to cover a shortfall in JBG’s own stock, but he denied ordering 20,000 masks and said that he did not recognise Ms Ji’s claim for payment of $16,191.53. Mr La Canna denied that he told Ms Ji that he wanted her to be JBG’s supplier. He said that Ms Ji had gone to China earlier in the year on behalf of JBG to deal with JBG’s suppliers in that country.

[12] Mr La Canna said that he considered Ms Ji’s actions in competing with JBG to be misconduct and decided to terminate her employment immediately. He denied that his decision to dismiss Ms Ji was connected with the claims that she had made about him, which claims he also denied.

The Small Business Fair Dismissal Code

[13] A person’s dismissal is consistent with the Code if, immediately before the time of the dismissal, the person’s employer was a small business employer, and the employer complied with the Code in relation to the dismissal (s 388(2)). There is no dispute that the company was a small business employer as defined in s 23 of the Act at the relevant time, as it employed fewer than 15 people, counting Ms Ji, and had no associated entities.

[14] The Code has two streams. The first concerns summary dismissal. It provides that 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’.

[15] Mr La Canna dismissed Ms Ji without notice or warning. He did so because he believed that her conduct was very serious and justified immediate dismissal. In my opinion, he had reasonable grounds for this belief, namely that Ms Ji was running a business in competition with JBG, which was incompatible with the duty of fidelity owed by Ms Ji to the company as its employee. Of course, if Mr La Canna had known earlier that Ms Ji was competing with JBG and had allowed her to do so, Ms Ji’s dismissal for that reason would not have been immediate, nor would Mr La Canna have had a reasonable ground, in September 2020, for believing that immediate dismissal was warranted. However, I accept Mr La Canna’s evidence that it was not until 23 September 2020 that he learnt that Ms Ji was promoting and selling product in competition with JBG, and that he was shocked when he discovered Ms Ji’s website. I accept Mr La Canna’s evidence that when he asked Ms Ji in April 2020 why she had a large supply of face masks, she told him, and he accepted, that she intended to use the masks for personal use and to donate to worthy causes.

[16] In her oral evidence, Ms Ji said that she had previously told Mr La Canna that she did intend to sell the masks to the public. Mr La Canna denied this and maintained that Ms Ji had said precisely the opposite. I prefer Mr La Canna’s evidence. I find it improbable that Mr La Canna would have allowed Ms Ji to compete directly with his business. Further, if Ms Ji had told Mr La Canna that she intended to sell the product to the public and compete with JBG, one would expect her to have emphasised this important point in her written materials. It may be that Ms Ji had had in mind to sell some of the masks to JBG, and that this is what she recalls discussing with Mr La Canna. In any event, I accept Mr La Canna’s evidence that Ms Ji told him that she did not intend to sell the masks to the public.

[17] I also accept Mr La Canna’s evidence that he did not ask Ms Ji to be JBG’s supplier of materials, and that Ms Ji went to China on company business earlier in 2020 to meet with JBG’s suppliers. Ms Ji may have thought of herself as something of a ‘supplier’ by facilitating the supply of products to the company, or at the point when she sold a quantity of masks to JBG. I find also that the company agreed to buy a small quantity of masks. An order for twenty thousand dollars’ worth of masks would have been a substantial order for a small business, likely to have been reflected in a purchase order from JBG, but none was produced. I note that, even if Ms Ji had been authorised to act as a supplier of goods to the company, this would not have authorised her to compete with JBG in the sale of products. There is a big difference between supplying products to one’s employer and competing with it. And even if, as Ms Ji said, the website had been inactive, it was still promoting products and offering them for sale through her company, in competition to the business of her employer.

[18] I conclude that the dismissal of Ms Ji was consistent with the first limb of the Code. A dismissal of an employee that is consistent with the Code cannot be unfair (see s 385). It is not necessary for me address the company’s other grounds for believing that immediate dismissal was warranted, namely that Ms Ji had misused confidential information and altered records to gain a pecuniary advantage.

Dismissal not unfair (s 387)

[19] Had I reached a different conclusion in relation to the dismissal’s consistency with the Code, I would nevertheless have found that the dismissal was not unfair, taking into account the considerations in s 387.

[20] In my opinion, the company had a valid reason to dismiss Ms Ji because she was conducting business in competition with JBG (s 387(a)). This was contrary to her duty of fidelity to her employer, which required her to act in the best interests of the company. Competing with the company for the sale of goods was plainly contrary to the interests of her employer. Ms Ji was notified of the valid reason for her dismissal by the letter of 21 September 2020 (s 387(b)). She was not given an opportunity to respond to the reason (s 387(c)), but I consider that the gravity of the conduct outweighed this consideration, and that the absence of an opportunity to respond to the allegations would not have rendered the dismissal unfair. There was no refusal of a request for a support person to attend meetings (s 387(d)). And the dismissal related to conduct, not performance, therefore the consideration in s 387(e) is not relevant. The company is a small enterprise and did not have human resources specialists, however I do not consider these matters would have affected the procedures that were adopted in respect of the dismissal (ss 387(f) and (g)).

[21] As to other matters that may be relevant to the consideration of whether the dismissal is harsh, unjust or unreasonable, I take account of the fact that Ms Ji remains unemployed and is in poor mental health. I note that she claims to be owed an amount of annual leave in respect of additional time she spent working for the company, however this is disputed, and I am not in a position to make a finding about this matter. I also consider that summary dismissal was proportionate to the conduct, which amounted to misconduct.

[22] Considering all of the circumstances, including the effect of the dismissal on Ms Ji, I would not have considered the dismissal to have been harsh, unjust or unreasonable. The dismissal occurred for a good and substantiated reason.

Conclusion

[23] Ms Ji was dismissed in conformity with the Code. The dismissal was therefore not unfair. I would in any event have found that her dismissal was not unfair with reference to s 387.

[24] Ms Ji’s application for an unfair dismissal remedy is dismissed.

DEPUTY PRESIDENT

Appearances:

Q. Ji for herself
C. Broadbent for Frankie 119 Pty Ltd

Hearing details:

2020
Melbourne
15 December

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