[2022] FWC 640
The attached document replaces the document previously issued with the above code on 23 March 2022 to amend paragraph numbering.
Associate to Deputy President Lake
Dated 24 March 2022.
| [2022] FWC 640 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Carla Sofia Martins Moniz
v
E I M Training Pty Ltd
(U2021/10191)
DEPUTY PRESIDENT LAKE |
BRISBANE, 23 MARCH 2022 |
Application for an unfair dismissal remedy – conflict of interest – duty of fidelity and loyalty – valid reason of dismissal – application dismissed
[1] Carla Sofia Martins Moniz (the Applicant) contends she was unfairly dismissed by E I M Training Pty Ltd (the Respondent), for whom she had worked for since 10 November 2014. She seeks an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (the Act). In short, the Applicant was terminated from her position in the Respondent for “serious misconduct” by failing to declare a conflict of interest.
[2] As the matter could not be resolved by conciliation, directions were issued for the filing of material and a hearing was listed for 10 March 2022. The Applicant appeared on her own behalf, with her husband, Mr Joao Costa as a witness, while Nick Bottrall, the Respondent’s director, appeared for the Respondent with his wife, Melissa White, as a witness.
[3] Section 396 of the Act requires that I am satisfied of four matters before considering the merits of the application. Neither party disputed and I am satisfied that the Applicant made her application within the 21-day period required by s.394(2) of the Act, that she was a person protected from unfair dismissal (as she earned less than the high-income threshold), that her dismissal was not a case of genuine redundancy and that the Respondent is not a small business to whom the Small Business Dismissal Code applies.
[4] The Applicant was first engaged by the Respondent on 10 November 2014. There is no evidence of whether the Applicant had signed an employment contract at this time, other than a fixed term contract signed on 12 May 2014. The Respondent did provide a copy of her employment contract dated 13 October 2020 (the 2020 Employment Contract) with the commencement date being 10 November 2014.
[5] Clause 15 of the 2020 Employment Contract required the Applicant to immediately disclose any “potential, perceived or actual conflict of interest”, whether direct or indirect, that may give rise to a conflict with the performance of her employment obligations to the Respondent. However, it is noted that whilst the contract was addressed to the Applicant, only the Respondent’s Group General Manager signed it. Whether a copy of this contract was provided to the Applicant, and whether she had accepted the terms of the contract, is unclear. The Applicant, however, denies being given or accepting the contract and asserts it to be an invalid contract.
[6] On 22 October 2021, the Applicant was stood down from her employment. She was issued a stand down of employment and show cause letter, which is extracted below:
“Dear Sofia,
STAND DOWN OF EMPLOYMENT AND SHOW CAUSE LETTER
I refer to your employment as an Electrotechnology Instrumentation Trainer and Assessor with EIM Training Pty Ltd (the “Company”) and information I have received about Meo Training Pty ltd, a Registered Training Organisation (RTO) that you are listed as CEO for under the national register for training on the Australian Government Training website.
I wish to advise that the Company has decided to suspend you from duty. Effective today 22 October 2021, you will be stood aside with pay until you attend a show cause meeting.
Your suspension will remain in place until the company has had the opportunity to review the necessary facts and determine appropriate action, or unless otherwise determined.
We are issuing you with the following lawful directions. Should you fail to follow these lawful directions, you may be liable for disciplinary action that may lead to dismissal.
Attendance at any EIM Training campus
As a consequence of this suspension you are not to present yourself at any EIM Training campus, without prior permission from Nick Bottrall to be contacted via telephone …
Confidentiality
You are directed to keep the details of this matter confidential as far as possible. You may however dismiss the matter with your support person, union, legal representative or employee assistance provider. If you need to discuss this matter with any staff member, you should make this request through Nick Bottrall in the first instance.
Availability
During the period of your suspension, you are required to remain ready and able to be present for a meeting to discuss this matter further at the Employer’s request.
Your engage with MEO Training is in direct competition with EIM Training and is a breach of the company’s Code of Conduct and your employment contract dated 13/10/2020.
Based on the findings so far, your actions warrant dismissal. I would like to allow you the opportunity to show cause in writing and provide reasons in mitigation as to why your employment should not be terminated. Specifically:
• Confirmation that you are the CEO of Meo Training Pty Ltd;
• Confirmation that Meo Training Pty Ltd was registered on 28 July 2021;
• Confirmation that Meo Training is a Registered Training Organisation (RTO) that provides identical services and course as EIM Training;
• Confirmation that EIM Training’s Code of Conduct, which you acknowledged on 26/06/2019, and your employment contract dated 13/10/2020 have a conflict of interest clause which requires you to immediately disclose any potential, perceived or actual conflict of interest (whether direct or indirect) that may give rise to a conflict with the performance of your employment obligations to the Employer, or the Employer’s business or reputational interests.
Additionally;
• You are required to provide proof that training materials used by Meo Training are in no way similar to the materials of EIM Training.
• You are required to provide proof that Meo Training has not used or copied any of EIM Training’s training materials or physical resources.
• You are required to provide proof that Meo Training’s method for obtaining clients does not conflict with EIM Training.
• Your are required to provide proof that Meo Training has not performed any services from the EIM Training facility at the Construction Training Centre (CTC) in Salisbury.
A Show Cause meeting will be scheduled to discuss your future employment with EIM Training at 10.00am on 25 October 2021 via a Zoom meeting.
In the circumstances, EIM Training considers that your actions are sufficient to warrant the termination of your employment. However, before proceeding to make any decision in this regard, I am prepared to give you an opportunity to respond to the contents of this letter. I ask that you attend the Show Cause meeting on the time and date nominated above.
Given the seriousness of this matter, you are entitled to have a support person at the meeting. Please note the role of the support person is to provide emotional and moral support – they are not to act as an advocate nor are they entitled to speak on your behalf.
Please advise by 5.00pm today 22 October 2021 if you are unable to attend the Show Cause meeting at the time and date nominated above so that the meeting can be rescheduled. Should you choose not to attend the Show Cause Meeting, EIM Training will make a determination based on the information before us.
Sincerely,
Nick Bottrall
Director”
[7] The Applicant provided a written response to the Respondent, dated 25 October 2021, which stipulates as follows:
“Dear Nick,
Although I don’t think there is any need to defend myself, I will briefly reply to your letter.
- I am effectively the CEO of MEO Training. When the application was made to ASQA I was on maternity leave and I was not even aware if I would ever return to my position at EIM Training. Soon after MEO Training received its license to operate I contracted EIM management to clarify my contractual obligations. Once I understood I could be in breach of the code of conduct I told MEO Training management to appoint a new CEO and that was in the process to happen soon. I have never signed the employment contract dated 13/10/2020 and thus it is not a valid document.
- During my employment at EIM I have never received any remuneration or conducted any work for MEO Training.
- Having the CEO position at MEO Training never affected my performance at EIM or made EIM lose clients or income.
- If you have any concerns about similarity of training materials, physical resources, client acquisition or where MEO Training platforms it’s working activity please contact MEO Training Manager Director, Miguel (…) as he is in a better position to clarify any concerns you might have.
Kind regards,
(Sofia Moniz)”
[8] The Applicant was dismissed on 25 October 2021. This was confirmed in writing in a letter which read:
“Dear Sofia,
Re: Show Cause Outcome
This letter is to confirm the outcome of a Show Cause Meeting held with Nick Bottrall, Director EIM Training Pty Ltd and Kashaan Stoker, HR Business Partner on Monday 25th October, 2021.
Specifically, the meeting was for you to provide a response to the discovery of your registration as CEO of a Registered Training Organisation (RTO) called MEO Training Pty Ltd, which provides identical services and courses as EIM Training Pty Ltd. Additionally, this company advertises that it operates out of the same training facility as EIM Training, which is at the Construction Training Centre (CTC) in Salisbury.
In your Show Cause response dated 25th October, 2021, you acknowledged that you are the registered CEO of MEO Training Pty Ltd.
As an Employee of EIM Training Pty Ltd, this is in breach of the Company’s Code of Conduct, which you acknowledged on 26/06/2019 and your employment contract dated 13/10/2020. Specific clauses as follows:
◦ Clause 8. Duties and Responsibilities, which prohibits you from competing, directly or indirectly, with the Employer. Additionally, it requires that you not engage in any employment or provide any services to any person or entity other than the Employer during your employment without the Employer’s prior written consent;
◦ Clause 15. Conflicts of Interest, which requires you to immediately disclose any potential, perceived or actual conflict of interest (whether direct or indirect) that may give rise to a conflict with the performance of your employment obligations to the Employer, or the Employer’s business or reputational interests; and
◦ Clause 19. Restricted Activities, which prohibits you from engaging in any of the below activities whilst you are employed by the Company, without obtaining prior written approval:
Other than in the proper performance of your employment for the benefit of the Employer or with the Employer’s written approval, you expressly agree that you will not (directly or indirectly) in any capacity whatsoever including without limitation as a consultant, contractor, principal, agent, employee, director, shareholder, beneficiary or trustee, anywhere within the Restraint Area for the duration of the Restraint Period;
(a) carry on, advise, provide services to or be engaged, concerned or interested in or associated with any Prohibited Business. However, you will not be prevented from holding an investment by way of shares of other securities of not more than 5% of the total issued share capital of any public or private company;
(b) induce, canvass, solicit, engage with, approach or accept any approach from any person or entity that was a client, customer, supplier, employee, director, contractor or agent of the Employer during the last 12 months of your employment with a view to establishing a relationship with or obtaining the custom of that person for a Prohibited Business; or
(c) interfere or seek to interfere with the relationship between the Employer and person or entity that was in the last 12 months of your employment a client, supplier, employee, contractor, director or agent of the Employer.
The Company considers your conduct in failing to declare a conflict of interest in line with your obligations to the Company’s business wilful and deliberate, a risk to the profitability of the Company and incompatible with your duties as an employee.
As a result, your employment with EIM Training Pty Ltd (“the Company”) is terminated effective 25th October, 2021 due to serious misconduct by you.
For the avoidance of doubt, your final day of employment is 25th October, 2021.
Any accrued leave entitlements will be paid into your bank account.
I wish to remind you that you were employed by EIM Training pursuant to an employment contract (the “Contract”) dated 13/10/2020, which includes post employment obligations. I encourage you to revise these obligations and in particular, the following clauses:
◦ Clause 14. Confidential Information;
◦ Clause 15. Intellectual Property; and
◦ Clause 19. Restricted Activities.
The Company may consider legal proceedings as a consequence of any breach of your ongoing contractual obligations.
Sincerely
Nick Bottrall
Director
EIM Training Pty Ltd”
[9] Whilst the Applicant concedes that she was the CEO of Meo Training at the time of her dismissal (and remains in that position), she asserts that her dismissal was harsh, unjust or unreasonable. This is based on her view that the employment contract relied upon by the Respondent is incorrect and invalid given it was never accepted, signed or followed in any form by the Applicant. The Applicant submits that the Respondent is relying on a contract that it has tried to unilaterally impose. The only valid contract, according to the Applicant, is the contract dated 12 May 2014 which was signed and/or agreed by both parties. The Applicant further denies ever being presented with the 2020 Employment Contract, but states it looks very similar to the one she refused to sign in 2019.
[10] The Applicant advises that in 2019 she was presented with a contract which she refused to sign without amendments. The Applicant’s suggested amendments were refused by the Respondent, which led to a series of disagreements during her last weeks of work before she took leave due to being “bullied by the Respondent’s management” for refusing to sign the contract until she commenced her maternity leave. The Applicant notes that upon her return from maternity leave, neither the new contract nor the 2020 Employment Contract, was ever discussed or presented to the Applicant. She denies Mr Bottrall’s evidence that when she returned from maternity leave she requested flexible work arrangements and the Respondent accepted this provided she accept the new contract. She says this conversation never occurred. Rather, in December 2021, she requested amendments to her work hours and was given a document reflecting this change, which both parties signed.
[11] The Applicant says she also complained to ASQA regarding the Respondent employing trainers without proper qualifications. The Applicant provides evidence that the audit report showed that the Respondent had not complied with a number of clauses. The document states “the organisation has not demonstrated that the below listed individual working under the supervision of a trainer process credentials which meet the requirements of clause 1.18(a)…” The Applicant further mentions that the audit reveals the organisation had not demonstrated that it has given sufficient consideration to the necessity of any conditions and/or restrictions regarding the supervisory arrangements for individuals who are not trainers or assessors. Specifically, the organisation was unable to provide documentation regarding supervisory arrangements or monitoring procedures.
[12] The Applicant explains that the complaint resulted in Mr Costa’s unfair dismissal (U2019/10069). During her maternity leave, and before she accepted the CEO position at Meo Training, Mr Bottrall had declared that he could not possibly have her back as an employee. This was said during the Respondent’s outline of arguments during Mr Costa’s unfair dismissal where it was said:
“The Entire EIM team are upset and disgusted with what Sofia and Joao have done and the unfair dismissal claim they have submitted against EIM and the CEO.
They have all worked so diligently to bring EIM back to a robust state it had enjoyed for some 12 years before 2016 and to see these people sabotage the great work they have done had deeply distressed them. The CEO could not possibly have either of them back as employees as he has a duty of care for them and his current employees.”
[13] During this matter, Mr Bottrall further made several allegations against the Applicant, including that the Applicant went to Australia Zoo whilst on sick leave, a conclusion taken from a picture she had posted on Facebook from her kids at a school fete amongst others. The Applicant says she believed that she would be fired when she returned from maternity leave, particularly since Mr Costa had been fired for something she had done, she testified against the Respondent in Mr Costa’s dismissal process, and the Respondent’s sole owner and Director clearly expressed his intentions to not have her back. For these reasons, the Applicant states she accepted the position of CEO of Meo Training without a complete check of all employment documentation from the Respondent. The Applicant explains she never received remuneration from Meo Training, and she accepted the position for RTO approval, which is a lengthy process that while running did not require any work from her.
[14] The Applicant further notes that the Respondent relies on the Applicant’s acknowledgement of the Code of Conduct. She explains that the document is part of a long list of policies which she was “strongly” asked to sign in 2019. As the document did not have contractual obligations, the Applicant says she reluctantly signed it so that no further disagreements would happen between her and the Respondent. She explains that the list includes at least 20 documents, and she has never received any training or additional information on any of those documents. Hence, the Applicant advises she forgotten its existence and content.
[15] The Applicant submits that the Code of Conduct cannot be considered a legally binding document, as although it was signed by the Applicant, it clearly stipulates that:
“The terms and conditions of employment that are intended to be contractual are set out an employee’s written employment contract… The Company may unilaterally introduce, vary, remove or replace this policy at any time”.
[16] The Applicant submits that contracts are intended to give certainty to parties. This is eroded if one party is allowed to unilaterally change the contract. Therefore, she argues that the Code of Conduct can only be read as a guide of expected behaviour from the Respondent and never as a contractual obligation.
[17] In August 2021, the Applicant says she asked for a copy of her Employment Contract as she could not find it. It was after this email that she realised that she was in breach of the Code of Conduct, and then decided to resign from her position as the CEO of Meo Training. Although she is of the view that she did not breach any contractual obligation, it was clear that the situation was perceived as incompatible by the Respondent and as the working relationship had been great since her return from maternity leave, she did not want to jeopardise it by disputing her lawful right to work for another company. She further concedes that she could have disclosed the conflict of interest earlier, but she was afraid of the Director’s reaction and that she would been dismissed. The Applicant says she was dismissed while Meo Training was in the process of finding a new CEO.
[18] During her employment with the Respondent, the Applicant asserts that her performance was never questioned and was often praised with positive feedback from students, colleagues and management. She explains that her responsibility mostly consisted of marking student’s work and occasionally delivering tasks. The Applicant submits that the responsibilities and tasks she performed for the Respondent and Meo Training were totally different and any incompatibility is hard to find. She states that her conduct did not cause any serious and imminent risk to the health and safety of a person or to the reputation, viability or profitability of the Respondent’s business. She denies that she conducted any training or assessment for Meo Training and finds that Mr Bottrall’s argument that she could do it in the future to be pointless and not a valid reason for dismissal.
[19] She further denies that she was using the Respondent’s training facility for Meo Training, and that he has taken this information from the Meo Training website and Facebook page. She says that Meo Training never stated it would, or had, use or used any training facility owned or leased by the Respondent. It never said it had any relation or affiliation with the Respondent. Meo Training, at the time, decided to operate from weekly hired training rooms and the Construction Training Centre (CTC) offers that service. The CTC has more than 20 permanent RTO’s with permanent premises (including the Respondent), plus 8 rooms for daily hire. The Respondent does not own CTC or have any affiliation to the CTC other than being a common tenant.
[20] Further, she denies that she was conducting business for Meo training whilst on site at the Brisbane facilities and that the laptop she was using proves it as asserted by Mr Bottrall and Ms White. The Applicant says that Mr Bottrall makes this conclusion based on the fact that a few Meo documents were found on her computer, and he “forgets” to take into account that:
• most weeks, the Applicant works 3.5 hours from home, spread across 2 days;
• she would bring the laptop with her, meaning any work she could eventually have done was more likely to be outside her work hours;
• the fact that just because the files are on her laptop does not mean she has created or worked on them;
• her performance at the Respondent was never questioned and she always met, or exceeded, all targets, so unless she is a “superworker”, the Applicant says she cannot see how she could have time to work for Meo Training during her 20 work hours per week for the Respondent; and
• the Applicant further states that no evidence was provided that she has created the files, or that this happened during her work hours. She claims this to be another false and unfounded accusations.
[21] The Applicant makes the following statement in relation to the Meo Training files that were found on her laptop:
• the Applicant cannot understand how the Respondent concluded that the files were created by her, when they were created or if they were created on that laptop.
• the Applicant cannot understand how the Respondent concluded that because the files are there (i.e. government extracts of training packages) she was creating courses during that time.
• in relation to the documents of a fit and proper person declaration and form used to appoint a CEO to an RTO, were required to appoint the new CEO of Meo Training to replace her. The Applicant explains that the application for the registration of Meo Training was done on 6 October 2020 when she was on maternity leave, with her name as CEO. Again, the Respondent concludes that she was working on setting up Meo Training during her work time and also appointing herself as the CEO of Meo, which lack any fundament and are undoubtedly false.
• in relation to the sample vehicle logbooks, where the Respondent claims dishonesty exists, the Applicant explains that this is a sample logbook containing past and future dates. She says it is presumptuous to take conclusions out of this document without knowing its intent or if it was or will ever be used. She does not see the relevance of this in this process.
[22] The Applicant further denies Mr Bortall’s statement that she has directed the Respondent’s current students to Meo Training. She says this is another false accusation, lacking any evidence or fundament. The Applicant says that Mr Bottrall’s multiple reference to her “entrepreneurial business spirit” indicates his confusion between herself and Mr Costa. Mr Costa opened an RTO and the Applicant was appointed CEO because he could not be the CEO, Managing Director and Trainer. The Applicant says that it seems Mr Bottrall’s hate towards Mr Costa goes behind all reasoning and she believes she was fired not because anything she has done but because Mr Costa opened an RTO.
[23] The Applicant submits that the dismissal was harsh because even if the reason for dismissal existed, which the Applicant does not agree to, summary dismissal was a disproportionate response. She believes she should have been given the option to terminate her position with Meo Training in order to continue working for the Respondent. Although she replied to the allegations against her and explained how she was fixing the problem, the Applicant believes the outcome of the meeting had been predetermined.
[24] The Applicant maintains that she did not breach any contractual obligation with the Respondent. She however asserts that she unintentionally breached the Code of Conduct, which she describes as an unenforceable document, and that she was taking all the necessary steps to follow the Code of Conduct.
[25] Since the dismissal, the Applicant says she applied for several jobs in the areas Training, Structural, Engineer, Trainer, and Assessor.
[26] Mr Costa provided evidence for the Applicant, particularly that:
• the Applicant never received remuneration for the position of CEO of Meo Training;
• Meo Training does not have funds to pay the Applicant a salary;
• during her employment with the Respondent;
◦ the only work the Applicant performed for Meo Training was reviewing some documents;
◦ the Applicant had never passed any IP or confidential information to Meo Training;
◦ the Applicant had never given Meo Training any list of current or prospective students from the Respondent’s enterprise; and
◦ the Applicant had never used equipment or training facilities leased or owned by the Respondent to perform any business for Meo Training;
• in October 2021, the Applicant informed Mr Costa that she could not continue her position at Meo Training as she was breaching the Code of Conduct. As she needed an income, she wanted to continue working for the Respondent as a trainer and assessor; and
• Mr Costa asked the Applicant to wait a couple of weeks while he looked for an appropriate person to replace her as the CEO of Meo Training.
[27] The Respondent refutes that the dismissal was unfair, stating that the Applicant was dismissed as a result of her serious misconduct for failing to declare a conflict of interest in line with her obligations to the Respondent. The conflict of interest being that the Applicant is the CEO of Meo Training Pty Ltd, which is an RTO that provides identical services and courses as the Respondent. Additionally, the Respondent states that Meo Training advertises that it operates out of the same training facility as the Respondent, which is at the CTC in Salisbury.
[28] The Respondent asserts that not only was the Applicant’s conduct a breach of the Code of Conduct, which she acknowledged via the Employment Hero platform on 26 June 2019, it was also a breach of the Applicant’s employment contract dated 13 October 2020, specifically clauses 8, 15 and 19.
[29] The Respondent submits that it had a valid reason for terminating the Applicant. Her failure to notify the company of the conflict was found to be wilful, deliberate and incompatible with her duties as an employee. The Respondent asserts that such conduct posed a risk to the profitability of the Respondent. Whether she received any remuneration from Meo Training or was looking to appoint a different CEO at the time of her termination is irrelevant and did not minimise the seriousness of the situation. The Respondent argues that it had reason to believe that it could no longer trust the Applicant to comply with her employment obligations as she had acted against its interests. The Respondent could not envisage her continuing even for a short time because she presented too great a risk if she had continued access to the Respondent’s database and resources. In short, the Respondent submits the continuation of her employment was unfeasible.
[30] On 19 August 2021, the Applicant contacted Ms Michelle Bottrall (nee White), CEO, requesting a copy of her employment contract and addressed about the possibility of working for another RTO. The email chain between the Applicant and Ms Bottrall is extracted below:
“Hi Michelle,
Thank you for taking the time to look into the contract situation. I have a copy of the contract of 20/05/2014 and I know there was another contract signed in November 2014, and that is the one that I cannot find a copy of. I just wanted to check what the contract says regarding working for another company. My previous contract has only something about intellectual property, and of course that would be something I would be very conscious about and it would not be a problem. If you could please let me know the conditions for working part time/casual for another RTO that would be much appreciated.
Hope you are going well and that the move went smoothly.
…
Hi Sofia
No issues. To confirm you question, yes Restricted Activities are a part of your current contract.
Alison has been included into this email feel free to communicate with her directly also.
…
Hi Michelle,
I am sorry for the late reply but I was busy with a student and couldn’t get the time to sit and write yesterday.
I totally understand your position but my main question was regarding the restricted activities: are they part of my contract or not? As I mentioned in one of the first emails I sent you, there are no restrictions on the contract I have a copy of, and I think they weren’t part of the other contract either. I think that is the main question at the moment and the one we should focus on.
Regarding your questions, unfortunately I cannot answer them at the moment as I am myself trying to figure out what my options are and what I should do next.
Thank you for understanding”.
[31] In Ms Bottrall’s response back to the Applicant:
“Thank you for your honesty Sofia.
This decision would not be one I make on my own, it would be a Management one. They will ask me more information, such as
◦ Who is the RTO/Company and their linked companies
◦ Is there any other EX/EIM staff there
◦ What topics
◦ What days
You get the idea. Restricted Activities is there for a reason, but lets say you were looking at photography that might be different and easier to appreciate.
I hope this makes sense.”
[32] The Applicant replied as follows:
“As I mentioned in one of our previous emails, an opportunity arose for me to work with another RTO. It is an exciting opportunity, but it doesn’t have the stability that I have at EIM, and at the moment it would be just a few hours a week, that I could easily do without influencing my work here. I thought about diving head first and taking that job, but I have been struggling with my shoulder and there is a high chance that I have to have surgery, in which case I wouldn’t be able to work for 8 to 12 weeks (it’s my right shoulder….
As you know I have a lot of sick leave accumulated, so it doesn’t make sense for me to leave now if there is a very high chance that I will be needing to use sick leave soon, so if I need to reject that job opportunity I will, but I would really like to take it.
I really hope you don’t take this email the wrong way – it is not that I don’t like to work at EIM, in fact Isaac is great and last week I had Phil here as well and we get along very well, Melissa, has always be 5* and as you know I also like to train PLC and I don’t mind marking. I just feel that my CV is becoming ‘empty’ and I feel that in a few years I might regret it.
Please let me know what your thoughts are about this and I hope you understand my position”
[33] Ms Bottrall replied as follows:
“Hi Sofia,
Thank you for your email.
Please understand that EIM’s stance remains that your current employment contract, which I recently sent through a copy, is a binding agreement.
In addition to the ‘Restricted Activities’ and ‘Duties and Responsibilities’ clause, which both provide regulation of secondary employment in your existing employment contract. EIM’s Code of Conduct, which you acknowledged on 26/06/2019, provides standards expected of an employee and this also includes guidelines regarding secondary employment.
In response to your enquiry regarding secondary employment; I have spoken our Employment Team and they have provided me with a form for you to complete so that we can consider this position at the next Management Meeting, which I can add to the Agenda today if completed before 11.30am, otherwise it will be tabled until next month’s meeting.
Lastly Sofia, you have mentioned that you want to expand your hours and knowledge with another RTO, I would like again to see if there is anything EIM might be able to provide here?”
[34] The Respondent clarifies that Ms Bottrall provided the Applicant with a Secondary Employment Form to complete so that the Respondent could make an informed decision on the Applicant’s request. However, the Applicant never completed this form and replied with:
“Thank you for your email and I am sorry for the delayed answer. I have decided not to pursue the employment opportunity we discussed, due to my family commitments and current health problems. I would like to thank you for your effort to accommodate my needs and for the offer for extra hours, but at the moment I am happy to keep with the 20h per week.”
[35] The Respondent advises that Ms Bottrall also reminded the Applicant of the clauses in her employment contract that provide regulation of secondary employment. Additionally, of the Code of Conduct, which also includes guidelines regarding secondary employment and standards expected of her as an employee of the Respondent. The Respondent notes that the Applicant acknowledged the Code of Conduct via the Employment Hero platform on 26 June 2019.
[36] The Respondent further submits that the Applicant was notified of the issues when she was provided with the “Stand Down of Employment and Show Cause Letter” on 22 October 2021. She was notified of the issue a second time during the Show Cause meeting held on 25 October 2021. Later that day, the Applicant was notified of the reasons for her termination in the “Show Cause Outcome Meeting”. The Respondent asserts that the Applicant was provided the opportunity to respond in the show cause meeting held on 25 October 2021 and was also offered the opportunity to have a support person attend with her during the show cause meeting, however elected not to have one.
Witness Statement of Melissa White
[37] Ms White provided evidence on behalf of the Respondent, in which she states:
• the Applicant was provided with the opportunity, and was encouraged to, seek legal advice regarding the 2019 contract. She was also provided with the Respondent’s HR Representative’s number should she have any question. All staff had this opportunity;
• the Respondent did not receive any non-compliance regarding trainers’ qualifications or their training status during the ASQA audit in December 2019. It was the opposite, as both auditors praised the Respondent for giving new trainers the opportunity to start somewhere as a lot of RTO’s will only hire trainers who have years of RTO experience;
• Mr Botrall never stated that he could never have the Applicant back as an employee;
• during Mr Costa’s unfair dismissal case, he and the Applicant were two different people and were to be treated as such. The Applicant returned to work after her maternity leave and management treated her with the same professionalism as any other employee. The Applicant did not bring this up with management at any of the meetings either;
• as per the email correspondence from HR and Ms Bottrall to the Applicant, the current contract is binding, as she did not query it upon her return to work from maternity leave, applied for and was granted an amendment to contract regarding her working hours and also provided the services to the students and the team that was required to her by her contract. The Applicant showed up to work every day and did what was required of her;
• on 22 October 2021, Mr Bottrall and Ms White went to the Brisbane Campus to provide the Applicant with her show cause letter. Ms White says she provided the Applicant with the letter as Mr Bottrall asked her to pack her belongings and leave the premises for the day. The Applicant was asked to leave the company laptop open but she slammed it shut. As all the passwords were created by the Respondent’s NAS team, it should not have mattered that the Applicant shut the laptop down, as Ms White says she should still be able to get into the laptop and her “Mydesk” using her passwords which are stored with their NAS team. However, this was not the case and Ms White was not able to get into the laptop. This was the second occasion in which the Applicant’s laptop password has been changed by her, even after all staff had been notified about not changing their password unless there had been a breach which EIM management would have to be notified about. EIM management was never notified of any breach nor were they notified about passwords being changed. Ms White clarifies that when she refers to “the Applicant’s laptop”, she means the laptop provided to, and used by, the Applicant but which was property of the Respondent;
• the Applicant’s laptop was taken to the Respondent’s NAS team to perform a forensic backup of the computer; and
• NAS found that the Applicant had been completing Meo Training work during the work time.
Witness Statement of Mr Nick Bottrall
[38] Mr Bottrall admits that during the course of Mr Costa’s unfair dismissal proceedings he had expressed the view that he could not possibly have the Applicant back as an employee. However, he says that this position had been expressed in the heat of the moment and that he did in fact have her back. It was arranged such that she would report to someone else and so he personally had very little to do with her after she returned from maternity leave.
[39] Mr Bottrall advises that whilst the Respondent dealt with a separate incident involving Mr Costa in 2020, the Respondent has always maintained that the Applicant and Mr Costa are two separate individuals and have treated them as such. The Respondent welcomed the Applicant back from maternity leave and approved her request for flexible working arrangements out of good will. Therefore, it is Mr Bottrall’s view that any mention of Mr Costa is completely irrelevant to this case.
[40] He further says that the fact of whether the Applicant received any remuneration from Meo Training or whether the Applicant was looking to appoint a different CEO is irrelevant and did not minimise the seriousness of the situation. Mr Bottrall says he had reasonable belief that he could no longer trust the Applicant to comply with her employment obligations and continue her contract even for a short time as it presented an increased risk by allowing her to keep accessing the Respondent’s database resources and acting against its best interest. This made the continuation of her employment unfeasible.
[41] Furthermore, the Applicant had the perfect opportunity to disclose the conflict of interest to the Respondent when she spoke to Ms Bottrall on 19 August 2021 about the possibility of working for another RTO. This was when Ms Bottrall reminded the Applicant of her duties and obligations that she owes to the Respondent and that she would be in breach of the multiple clauses in her employment contract and the Code of Conduct if she were to work for an RTO that was in competition with the Respondent. Even then, the Applicant neglected to disclose the conflict.
[42] Mr Bottrall is of the view that given the Applicant is a fully qualified instrumentation and control trainer working in her family business with the title of CEO, it would be fanciful to believe that her tasks in the family business would not involve training and assessing.
[43] Mr Bottrall further states that the Applicant’s conduct certainly caused serious and imminent risk to the reputation, viability and profitability of the Respondent’s business. Especially if she was using the Respondent’s training facility for her own business purposes, which is what was stated on the Meo Training website and Facebook page. Furthermore, the Applicant was conducting business for Meo Training whilst on site at the Respondent’s Brisbane campus during her paid work hours, which is verified by the Applicant’s work computer. Meo Training would not have had the correct insurance policy / policies and procedures to be conducting business on premises leased by the Respondent without the Respondent’s knowledge or permission. Mr Bottroll alleges that this breaches many legal and ethical behaviours.
[44] As an employee of the Respondent, Mr Bottrall says that part of everyone’s position is to report business opportunities so everyone can keep their jobs and the business flourishes. Any potential students wanting to complete their certification in instrumentation and control really should have been directed to the Respondent’s sales department. However, Mr Bottrall says that “obviously the entrepreneur that clearly exists in” the Applicant would “certainly direct any potential new customer to Meo Training simply because they own it and they would profit from it”. Mr Bottrall is also “positive” that the Applicant would have directed the Respondent’s current students she had built a rapport with towards Meo Training. Mr Bottrall says that “it would have been extremely difficult not to with an entrepreneurial business spirit”.
[45] Mr Bottrall states he finds it hard to believe how an intelligent person, such as the Applicant, could believe that by not declaring a conflict interest was an unintentional breach of the Code of Conduct. When the Applicant addressed the possibility of working for another RTO with Ms Bottrall, Ms Bottrall reminded the Applicant of her duties and obligations in which she owed to the Respondent and that she could be in breach of multiples clauses in her contract and Code of Conduct if she were to work for an RTO that was in competition with the Respondent. Mr Bottrall says that she had the opportunity to then disclose that she was the CEO of her own RTO company but chose not to.
[46] Mr Bottrall believes that a summary dismissal was absolutely necessary and justified. He says he had reasonable belief that he could no longer trust the Applicant, and by following the correct procedure, the dismissal was not harsh, unjust or unjustified. The Applicant was notified of the reasons, provided with an opportunity to respond and was offered the option to having a support person. The Applicant has done wrong by creating a competitive business while working on salary in the very business that she will compete against.
[47] Mr Bottrall further refutes that the 2020 Employment contract is invalid as asserted by the Applicant. Mr Bottrall explained that as the company was growing and they were still using very basic employment contract templates, they thought it would be in the best interest of the company and its employees to update their contract template. They did so in early 2019, which is when the Applicant was issued with an updated contract to sign via the Employment hero platform. Mr Bottrall says that none of the fundamental terms of the Applicant’s original contract were changed, such as her pay rate, duties, work location, etc. Further, Mr Bottrall says that all of the contract terms in their updated contracts are completely acceptable and reasonable.
[48] Mr Bottrall says that the Applicant first expressed concerns about her updated contract around 24 June 2019. Alison Traecey, the HR Partner provided the Applicant with a written response to each one of her concerns. Ms Traecey assured the Applicant that while her employment contract had been updated, no major workplace changes can occur without her consent. Ms Traecey encouraged the Applicant to seek her own legal advice from the Fair Work if she still had concerns after reading her official response. The Applicant did not reply to Ms Traecey’s email and went on maternity leave shortly after. The Applicant told the Respondent that she needed to take leave early due to stress from the pregnancy.
[49] Approximately 16 months later, Mr Bottrall notes that the Applicant returned from maternity leave on 4 January 2021. Upon her return, the Applicant made a request for flexible work arrangements, which the Respondent willingly approved based on the grounds that she would sign all of her employment documents on the Employment Hero platform. However, the Applicant never signed her employment contract.
[50] Mr Bottrall says that numerous times when the Applicant questioned the validity of her current, unsigned employment contract, the company reminded the Applicant that the employment contract does not need to be signed for it be a binding agreement between the parties, and that by her continuing to carry out work at the specific place (at the Brisbane campus), time (her ordinary work hours), and fulfilling the duties required by the employer in accordance with the contract would be construed as giving implied consent to such terms.
[51] Section 387 of the Act provides that, in consideration whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account:
(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and
(b) whether the person was notified of that reason; and
(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and
(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and
(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(h) any other matters that the FWC considers relevant.
[52] I am required to consider each of these criteria to the extent they are relevant to the factual circumstances before me. 1
(a) whether there was a valid reason for the dismissal
[53] To be a valid reason, the reason for the dismissal should be “sound, defensible or well founded” 2 and should not be “capricious, fanciful, spiteful or prejudiced.”3 Where a dismissal relates to an employee’s conduct, the Commission must be satisfied that the conduct occurred and justified termination.
[54] The evidence from the Respondent, supported by the show cause and termination letter, was that the Applicant had been involved in the development of a competitor business whilst in the employ of the Respondent. The forensic analysis of the company laptop provided to the Applicant identified documents labelled as proprietary material of the emerging competitor and other material that was consistent with the development of course material as an RTO in direct competition with the Respondent’s business. The Applicant was listed as the CEO of a venture called MEO Training and the evidence that was discovered on the Respondent’s laptop, that the Applicant utilised to deliver courses and undertake her work duties, had material that supported the assertion that the Applicant was involved with her husband in the establishment of a competitor business.
[55] The Respondent weighed up the risk to its business in having an employee with access to all of its training material and intellectual property developed over many years now working with her husband, a former employee, on creating a new business which was in direct competition with his own business. The Respondent concluded following an investigation that these concerns were borne out, and after a show cause process the Applicant was terminated.
Employment Contract
[56] There was a dispute over which version of the employment contract was binding on the parties. The Applicant gave evidence that the only employment contract that she had signed and was in force was the contract she signed in 2014 when she changed from a casual employee to a permanent part time employee. However, she was unable to provide a copy and the Respondent claimed that they no longer held a copy of this document. The Respondent asserted that the employment agreement that was in force was one that was first produced and provided to the Applicant in 2019, which she did not sign and provided instead a series of objections to the updated contract of which the HR team provided her with responses. This document remained unsigned and in 2020 the employment agreement was again provided when she made an application for flexible leave following her return from parental leave and she refused to sign it. The Respondent states that by continuing to attend work that the Applicant was effectively accepting the new agreement.
[57] I do not have to resolve this matter as will become clear from the following paragraphs.
Code of Conduct
[58] The Code of Conduct which the parties agreed the Applicant had signed made it clear that conduct that the Applicant undertook, even if there were only copies of the new venture’s training material and no actual work had been conducted on the Respondent’s asset/laptop, would be a breach of the Code.
[59] Further, there were specific requirement that required any potential / actual or perceived conflict of interest should be immediately disclosed and expressly permitted. Occupying the role of CEO in a competitor business, having training material and other documents to assist in the creation of content, and the establishment of a competitor organisation, all amount to a significant breach of the Code of Conduct.
Common Law
[60] In spite of the lack of an agreed contract of employment the Applicant had common law duties that were implied into any contract and fundamental to the employment relationship. These duties were outlined by a majority of the Full Bench of the Fair Work Commission (Commission) in Adidem Pty Ltd T/A The Body Shop v Suckling: 4
“[44] In Blyth Chemicals Ltd v Bushnell, Dixon and McTiernan JJ said:
“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 the employer and employee, is a ground of dismissal (Boston Deep Sea Fishing and Ice Co. v. Ansell; English and Australian Copper Co. v. Johnson; Shepherd v. Felt and Textiles of Australia Ltd.). 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.”
[44] In the same case, Starke and Evatt JJ noted:
“The mere apprehension that an employee will act in a manner incompatible with the due and faithful performance of his duty affords no ground for dismissing him; he must be guilty of some conduct in itself incompatible with his duty and the confidential relation between himself and his employer.”
[45] In Hivac Limited v Park Royal Scientific Instruments Limited, Lord Greene MR said:
“It has been said on many occasions that an employee owes a duty of fidelity to his employer. As a general proposition, that is indisputable. The practical difficulty in any given case is to find exactly how far that rather vague duty of fidelity extends. Prima facie it seems to me on considering the authorities and the arguments that it must be a question on the facts of each particular case. I can very well understand that the obligation of fidelity, which is an implied term of the contract, may extend very much further in the case of one class of employee than it does in others. For instance, when you are dealing, as we are dealing here, with mere manual workers whose job is to work five and a half days for their employer at a specific type of work and stop their work when the hour strikes, the obligation of fidelity may be one the operation of which will have a comparatively limited scope. The law would, I think, be jealous of attempting to impose on a manual worker restrictions, the real effect of which would be to prevent him utilizing his spare time. He is paid for five and a half days in the week, the rest of the week is his own, and to impose upon man, in relation to the rest of the week, some kind of obligation which really would unreasonably tie his hands and prevent him adding to his weekly money during that time would, I think, be very undesirable. On the other hand, if one has employees of a different character, one may very well find that the obligation is of a different nature.”
[46] In Cementaid (NSW) Pty Ltd v Chambers, Spender AJ said:
“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 the employer and employee? In all cases an actual repugnance between the employee’s acts and his relationship with his employer must be found.”
[61] The Respondent conducted a forensic review of the laptop provided by the business and discovered material that led to the only conclusion possible, which was the Applicant was indeed the CEO of a registered RTO which was a direct competitor. It mattered not that the business was an emerging one that had not allegedly had a student through the doors nor had generated any income. The development of a competitor business whilst employed is fundamentally at odds with the employee relationship and common law requirements of trust and fidelity. The Code of Conduct made it clear what the requirements were for any potential conflict of interest required and the Applicant did not undertake the appropriate actions.
[62] The Applicant’s conduct was incompatible and destructive to the employment relationship. Her actions were a breach of the Applicant’s duty of fidelity and loyalty and was clearly destructive of the confidence required in an employment relationship.
[63] The Respondent, after reviewing the evidence whilst the Applicant was stood down/suspended, conducted an appropriate investigation and identified correctly that her conduct warranted termination and summary termination to protect his business. The conduct undertaken by the Applicant breached her duty of trust and fidelity and was of a magnitude that the Respondent could dismiss summarily. There was in my view a valid reason for the termination of the Applicants employment and weighs in favour that the dismissal was not unfair.
(b) and (c) whether the person was notified of that reason and had an opportunity to respond
[64] Based on the evidence provided and the submissions made, I am satisfied that the Applicant was made aware before her termination of the concerns the Respondent had regarding her conduct. She was stood down on pay awaiting the outcome of the investigation. A show cause process was undertaken, and the Applicant responded to the show cause in writing.
(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal
[65] In the Show Cause letter provided to the Applicant on 22 October 2021, it clearly states to the Applicant that a Show Cause meeting was to occur on 25 October 2021, and that she was invited to bring a support person with her to the meeting. I am therefore satisfied that there was no unreasonable refusal by the employer to allow the Applicant to bring a support person to assist at any discussions relating to the dismissal.
(e) if the dismissal related to unsatisfactory performance by the person – whether the person had been warned about that unsatisfactory performance before the dismissal
[66] This is not a factor to be considered in this matter as the termination was over allegations of misconduct and not performance related.
(f) and (g) the degree to which the size of the employer’s enterprise and the absence of dedicated human resource management expertise would be likely to impact on the procedures followed
[67] The Respondent’s business has under 100 employees and has HR advise available; the procedures followed in the process leading to the termination were reasonable.
(h) any other matters that the FWC considers relevant
[68] The Applicant pointed to the fact that the competitor business was not up and running, that it was her husband’s business, that she did work whilst on maternity leave to assist in the development of the MEO Business and that she did not undertake any work for the competitor whilst on the Respondent’s time. None of these arguments outweigh her actions in becoming involved in the competitor business whilst employed by the Respondent.
[69] The actions of the Applicant, in being involved with her husband in a start-up competitor business whilst being employed by the Respondent, is fundamentally incompatible with her duties of fidelity and loyalty as an employee, that her summary dismissal was justified. There was a valid reason for her termination and the other factors I must consider under s.386 are not weighted against a finding of unfairness.
[70] I therefore order that the matter be dismissed.
DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
<PR739608>
1 Sayer v Melsteel Pty Ltd [2011] FWAFB 7498 at [14]; Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002) at [69].
2 Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371, 373.
3 Ibid.
4 [2014] FWCFB 3611 (reference omitted and my emphasis added).