[2007] AIRC 679

PR977958
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AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

Workplace Relations Act 1996
s.643 application for relief in respect of termination of employment

Carlie Streeter

and

Telstra Corporation Limited
(U2007/3324)

 
   

SENIOR DEPUTY PRESIDENT HAMBERGER

SYDNEY, 10 AUGUST 2007

Termination of employment – out of hours conduct – sexual harassment

DECISION

[1] Ms Carlie Streeter (the applicant) has lodged an application under section 643 (1) (a) of the Workplace Relations Act 1996 (the Act) seeking relief in respect of the termination of her employment by Telstra Corporation Limited (the respondent) on the basis that the termination was harsh, unjust or unreasonable.

[2] Ms Streeter was summarily dismissed on 13 March 2007 following an investigation into her conduct (and that of others) on the night of 24 February 2007 and the morning of 25 February 2007.

[3] The reasons given by the respondent to Ms Streeter for the termination of her employment were that she:

[4] The applicant contends that Telstra did not have a valid reason to terminate her employment for the alleged serious misconduct as there is no nexus to her employment. Moreover even if such a nexus were to be found there was no sexual harassment. The applicant accepts that she lied during the investigation but denies that this of itself warrants dismissal in the light of the good service she has given Telstra for over four years.

[5] The applicant commenced employment on 7 November 2002 as a casual retail sales officer at the Telstra retail outlet located at Westfield Shopping Town, Miranda. At the time of her termination the applicant was employed on a full time basis.

[6] The matter was heard in Sydney on 4, 5, 6 and 28 June 2007. Mr K Durant appeared by leave for the applicant. Mr S Wood of Counsel appeared by leave for the respondent.

[7] The applicant gave evidence on her own behalf and Ms Kim Taylor, a Telstra employee, also gave evidence for the applicant. The following witnesses gave evidence for the respondent:

The evidence

[8] While many of the relevant facts in the case are not disputed, on some points there was a significant divergence between the evidence given by the applicant and that given by the respondent’s witnesses. I generally (though not invariably) prefer the evidence of the respondent’s witnesses to those of the applicant. Counsel for the respondent submitted that I should find that the applicant was a persistent liar. The applicant concedes that she lied in her interview with the investigators. I deal with this issue in more detail below but these lies must be seen in the context of the nature of the events that occurred on the night of 24 February 2007. It is also likely that some of the applicant’s recollections of those events are genuinely hazy. Many of them took place late at night or early in the morning, after the applicant had consumed a significant amount of alcohol.

[9] Ms Hyett gave evidence (exhibit T6) that the staff at the Miranda Telstra Shop were going to have a Christmas Party in December 2006 but the staff at the store could not arrive at a date when everyone was available. It was decided instead to have the party in mid January to early February. Then Steve Hatzistergos, the Miranda Store Manager was promoted in the New Year and it was decided that the party would be in February and would double as his farewell from the store.

[10] Ms Hyett gave evidence that Telstra contributed $25 per head on the company credit card towards the party. Her cousin was the head chef at the Naked Grape restaurant in Cronulla. It was decided to hold the party there because it was a central location for the staff and her cousin would give them a ‘good deal’.

[11] The party was organised by Ms Hyett for the night of 24 February 2007. Ms Hyett told everyone at work about it, and prepared a list of attendees. Prior to the night she organised for everyone to meet at Northies pub in Cronulla. Ms Hyett made a flyer and put it in the tearoom. She included details in the flyer about both the Naked Grape and Northies.

[12] Mr Aakash Sharma, another retail sales officer at the Miranda Telstra Shop, booked a room at Rydges Hotel in Cronulla, and Ms Hyett gave him her credit card to pay. According to Ms Hyett, Rydges was chosen because it was close to Northies and the Naked Grape. She stated that the intention was that Ms Andrews, Ms Barrett, Mr Sharma and herself would stay overnight at Rydges. She mentioned it to others in case they wanted to drop by before going to Northies and have a drink with them, or to get changed. Ms Hyett asked for Telstra corporate rates at the hotel but was told by the receptionist that those rates were not applicable on Saturday nights.

[13] Mr Forner gave evidence (exhibit T8) that he did not attend the pre-dinner drinks at Northies. He went to the Naked Grape with his wife.

[14] Mr Forner gave evidence that he went to Northies pub after leaving the Naked Grape. There was a small group from the Miranda shop there. His wife, who was pregnant, also came along. Whilst they were in the pokies area at Northies the applicant came over and grabbed him on the behind. His wife said “what do you think you are doing?” and Ms Streeter replied “I can’t help myself”.

[15] Under cross examination Mr Forner was asked how he felt when Ms Streeter grabbed him on the behind. He responded: “I wasn’t all that impressed” (PN2223)

[16] He denied that he was “humiliated” by the incident but said that he was “offended”. He agreed that in his record of interview he had said that “worse things can happen”. (PN2224-2226)

[17] Ms Streeter’s written statement (exhibit S1) did not refer to this incident, though she said that:

[18] Under cross examination Ms Streeter agreed she had a drink with Mr Forner at Northies, but denied that the incident described by Mr Forner occurred. Indeed she said she was sure that it did not happen. (PN157)

[19] Mr Forner’s wife was not called as a witness. However I do not draw any inference from this. Mr Forner had no reason to make up the incident and I am satisfied that it did occur, despite Ms Streeter’s denials.

[20] Ms Andrews gave evidence (exhibit T9) that she and Ms Hyett went to bed in the Rydges hotel room at about 11:30 pm to midnight. No one else was present in the room at that stage.

[21] At about 12:30 am or 1:00 am Ms Barrett came to the room. Ms Andrews asked her if she wanted to sleep “top to tail’ in her bed, but she said no and “set herself up on the floor”. The three of them then went to sleep.

[22] Shortly after, according to Ms Andrews’s evidence, Mr Hatzistergos, Mr Sharma and Nicole Hanlin (a former employee at the Miranda Shop who had been at the dinner) came in. At some stage the three of them went and had a swim. They then returned at about 2 or 2:30 am and got in the bath together. The noise kept Ms Andrews, Ms Hyett and Ms. Barrett awake. Eventually they got out of the bathroom and went out on to the balcony.

[23] Ms Streeter arrived a short time later, and joined the others on the balcony. According to Ms Andrews: “She appeared very drunk and was walking funny. She was slurring her words.”

[24] After a while Mr Hatzistergos came back into the room, lay down next to Ms Barrett and made comments about her breasts. He then threw up in the basin in the room. Ms Hanlin then left.

[25] According to Ms Andrews, Ms Streeter came into the room and tried to sit down on her whilst she was lying in bed. She told her to stop it and said that she had to work the next day. Ms Streeter then started laughing at her and mocking her, which led her to feel “very disrespected”.

[26] Under cross examination, Ms Streeter said she could not recall this incident (PN317). I am satisfied that it occurred in the manner recalled by Ms Andrews.

[27] After a while things quietened down. Ms Barrett got into bed, ‘top to toe’ with Ms Hyett. Ms Andrews then fell asleep.

[28] Ms Andrews woke a short time later. She looked up because she heard “noises”. According to her statement she could see Ms Streeter and Mr Sharma having sexual intercourse.

[29] Ms Andrews was very distressed.

[30] According to Ms Andrews, after about ten minutes, Mr Sharma and Ms Streeter went to the bathroom for some time. She could hear the shower running and thought she could hear them having sex again. When they came out of the bathroom she closed her eyes. A short time later she heard Ms Streeter vomiting in the bathroom and Mr Sharma helping her.

[31] When Ms Andrews woke up in the morning, Mr Hatzistergos was walking out to leave and Mr Sharma and Ms Streeter were sleeping on the floor next to the bed that Ms Hyett and Ms Barrett were sleeping in.

[32] Ms Hyett’s evidence (exhibit T6) is broadly consistent with that of Ms Andrews. Ms Hyett describes how she was in and out of dozing throughout the night. At one point she woke up and needed to go to the toilet. She walked to the bathroom and found the door was locked. She knocked on the door and Ms Streeter asked who it was. On being told that Ms Hyett wanted to go to the toilet, Ms Streeter opened the door. She had a towel wrapped round her. Mr Hatzistergos and Mr Sharma were in the bath. Ms Streeter closed the door, remaining inside the bathroom, while Ms Hyett urinated. Mr Hatzistergos said to Ms Streeter “come and get in back in the bath so I can lick your pussy”. Ms Streeter giggled, said “fuck it”, dropped her towel on the floor and got back in the bath. Ms Hyett finished on the toilet, washed her hands and went back to the bedroom.

[33] In her statement Ms Hyett said she felt very embarrassed, and

[34] “…had stage fright because there were three people in the toilet watching me. I felt uncomfortable”.

[35] Ms Hyett said she did not tell Mr Sharma, Mr Hatzistergos and Ms Streeter to get out of the bathroom because she did not want to see them naked.

[36] Under cross examination, Ms Hyett explained that she did not use a toilet elsewhere in the hotel

[37] Ms Hyett indicated that she did not feel sexually harassed by Ms Streeter.

[38] Ms Barrett’s evidence (exhibit T7) about what occurred in the hotel room was generally consistent with that given by Ms Andrews and Ms Hyett.

[39] Before she saw Ms Streeter have sexual intercourse with Mr Sharma, she said she also saw her have intercourse with Mr Hatzistergos.

[40] While Ms Streeter conceded in her written statement (exhibit S1) that she had intercourse with Mr Sharma, she denied under cross examination that she had sex with Mr Hatzistergos (PN547). In her supplementary statement (exhibit S2) she said that:

[41] On reviewing the evidence, I note that there are some discrepancies in the evidence of the respondent’s witnesses, in relation to the positions of those involved and their state of dress. Ms Andrews, whose evidence I find the most straightforward and compelling of all the witnesses, did not report Ms Streeter as having sex with Mr Hatzistergos. Of course she may have simply been asleep at the time. While Ms Barrett says that when Ms Streeter and Mr Hatzistergos were having intercourse she could see both their faces, she also says that Mr Sharma was watching them. Yet she also says she did not know what Mr Sharma was wearing as she could not see him. While Ms Hyett’s statement indicated that she saw Ms Streeter have intercourse with Mr Hatzistergos, it is clear from what she said under cross examination (PN1818-1827) that she was in fact not sure at the time who was involved, and only became so when she was told by Ms Barrett the next morning. Accordingly, I decline to make a finding as to whether Ms Streeter had sexual intercourse with Mr Hatzistergos, especially as this issue has little bearing on the key matters that need to be determined in this case.

[42] According to the applicant’s own evidence (exhibit S1) she and Mr Sharma woke at around 8:00 or 8:30 am.. Ms Hyett asked the applicant for $60 for the room. The applicant paid her $20 and said that she would pay the balance on Monday at work as $20 was all she had. No one said anything to her about anyone being sexually harassed.

[43] According to Ms Hyett’s evidence she said to Ms Streeter:

[44] Ms Hyett took Ms Andrews to work. They arrived ten minutes late. Ms Hyett then spoke to the floor manager and another employee.

[45] According to Ms Andrews she then started to get very upset and went to the public toilet and cried. She composed herself and went back in to work. However she started to cry again and her floor manager agreed she could go home.

[46] Ms Kalamaras and Ms Coinoglou conducted an investigation into the events of 24 and 25 February 2007.

[47] On 28 February the applicant was interviewed. She answered “no” when asked if she engaged in any sexual activity and commented “maybe” when asked if she thought she was affected by alcohol to the point that she could not remember anything. She was directly asked “It’s been alleged that sexual activity was occurring between the beds whilst others were sleeping? What are your comments about that?” There was a long pause before she responded “I don’t really remember anything”.

[48] A number of persons who were present during the events in question were then interviewed and Ms Streeter was then interviewed again on 14 March 2007.

[49] Ms Streeter was asked how she ended up in the bathroom with Mr Sharma and Mr Hatzistergos at the hotel. She responded “no comment.”

[50] She was then asked a series of questions about what she recalled happening in the bathroom, including Ms Hyett “coming into the bathroom when the three of you were in there and making her pee in front of the three of you.” She denied recalling any of the events put to her, and specifically denied engaging in sexual activity while in the bathroom.

[51] She denied having sex with Mr Hatzistergos. In response to a question whether she had sex with Mr Sharma on the floor between the beds she responded:

[52] The following was then said to her

[53] Ms Streeter responded “no comment”.

[54] After an opportunity to provide any further comments or information and a short break, Ms Streeter was advised that she was being dismissed summarily.

Applicant’s Submissions

[55] The applicant submitted that the alleged sexual misconduct did not occur at a work related function.

[56] According to Mr Durant, the party at the Naked Grape restaurant was more in the nature of a party organised by a junior Telstra employee (Ms Hyett) for a group of other Telstra employees than a Telstra work related function. He gave a number of reasons for characterising the dinner in this way, including that it was organised by Ms Hyett through her cousin, who was the chef at the restaurant, there was no evidence that it was authorised by the appropriate Telstra manager, and the respondent’s own guidelines for end of year celebrations were not followed.

[57] The applicant submitted that the alleged conduct giving rise to termination of employment occurred at the Rydges Hotel. Consequently, even if the Commission were to find that the Naked Grape dinner was a Telstra work related function, the Commission would also need to be satisfied that events at the Rydges Hotel were part of a Telstra work related function.

[58] Mr Durant noted that the room had been booked on Ms Hyett’s credit card and in her name, had only been booked for Ms Hyett, Ms Andrews, Ms Barrett and Mr Sharma, and was paid for by the occupants of the room. There was no evidence that senior management was even aware of the booking having been made. In sum, it was submitted that the room at Rydges was a private booking with no connection to Telstra at all.

[59] The applicant submitted that even if the Commission were to find that both the Naked Grape and Rydges were work related functions, the Commission would, further, also need to be satisfied that “the conduct complained of must be of such gravity or importance as to indicate a rejection or repudiation of the employment contract by the employee” 1

[60] Mr Durant submitted that the central issue in this case is whether, in the circumstances, the respondent had a valid reason to dismiss the applicant for conduct which occurred out of hours and off work premises. He added that it was clear from Rose v Telstra that where there is a breach of an employee’s implied duty of “fidelity and good faith” an employer may have a valid reason to terminate employment for out of hours conduct.

[61] The applicant also drew attention to Tichy v Department of Justice 2 which it was submitted had strong parallels to the situation in the current matter.

[62] In relation to the specific instances of alleged misconduct, Mr Durant submitted that the evidence failed to show that Ms Hyett felt sexually harassed or “disrespected” by the applicant’s alleged behaviour in the bathroom.

[63] Mr Durant submitted that the evidence did not show that the applicant had sexual intercourse with Mr Hatzistergos as well as Mr Sharma. In any event, the real issue for consideration is whether the applicant’s actions constituted sexual harassment pursuant to the s.28A of the Sex Discrimination Act 1984.

[64] Mr Durant submitted that the applicant’s conduct in having sexual intercourse with Mr Sharma was not directed towards any of the other persons in the room. No one in the room told the applicant her conduct was unwelcome, indeed the lights were off and she thought everyone else in the room was asleep at the time.

[65] In relation to the allegation that the applicant grabbed Mr Forner’s backside at the Northies pub, Mr Durant submitted that the applicant’s denial should be accepted. A Jones v Dunkel 3 inference should be drawn from the failure to call the one person who could corroborate Mr Forner’s evidence, his wife.

[66] The applicant submitted that if the Commission were to find that the alleged misconduct did amount to sexual harassment then such harassment was not serious enough to constitute a valid reason for termination of employment.

[67] Mr Durant specifically rejected the notion that the applicant’s conduct amounted to an act of indecency pursuant to s.61N of the Crimes Act 1900. The actions of the applicant were contrasted with the elements of an act of indecency as outlined in the Court of Criminal Appeal decision in Regina v Gillard. 4 Particular attention was drawn to the lack of evidence in relation to “intent” that would be necessary to find criminal conduct.

[68] The applicant admitted lying in her first interview about having intercourse with Mr Sharma and opening the bathroom door for Ms Hyett. She continued to deny grabbing Mr Forner’s backside and having sexual intercourse with Mr Hatzistergos. While she answered “no” to many of the questions put to her in the second interview, this was in the context of having made a decision not to answer any of the questions unless they were put to her in writing. She did not wish to answer because she felt uncomfortable with a lot of the questions being asked and was concerned not to answer questions requiring her recollection of events where that recollection was hazy.

[69] Mr Durant submitted that to the extent that the applicant could be regarded as having lied, this was in a context of highly personal sexual indiscretions committed in a state of inebriation and did not show that she was not a trustworthy person capable of carrying out with honesty the tasks required of her by the job.

[70] Mr Durant submitted that the applicant’s conduct did not constitute a valid reason for termination of employment.

[71] Mr Durant also drew attention to the applicant’s significant length of service with the respondent, and submitted that the Commission should also have regard to the loss of confidence and self esteem of the applicant for being terminated for serious misconduct, her relative youth and possible future loss of opportunity, and that it was open to the respondent to have given a warning and counselled the applicant, rather than summarily dismissing her.

[72] The applicant submitted that even if the Commission were to consider reinstatement inappropriate, it would be quite feasible to re-employ her in another of the respondent’s numerous shops.

Respondent’s Submissions

[73] In addition to the reasons given in her letter of termination (see paragraph above), the respondent submitted that also relevant to the decision to terminate the applicant’s employment were her misconduct during a course of events involving Mr Hatzistergos, Mr Sharma and Ms Hanlin, and her conduct in grabbing Mr Forner’s behind in the presence of colleagues and Mr Forner’s wife.

[74] Mr Wood submitted that the applicant’s misconduct breached her duty of good faith and fidelity, and involved a breach of Telstra’s Code of Conduct, Values Policy, Equal Opportunity and Bullying Policy and Business Principles. These were policies about which the applicant had received training. This misconduct warranted summary dismissal.

[75] Mr Wood also submitted that Ms Streeter had been less than frank in her recollection of the course of events which led to her termination.

[76] In the circumstances, it was submitted, the respondent had a valid reason for terminating the applicant’s employment.

[77] Mr Wood submitted that the applicant’s conduct at Rydges Hotel occurred in a work related context.

[78] In support of this contention, he submitted that the conduct occurred in the context of a course of events which included a Telstra funded Christmas party at which all staff from the Miranda Store were either invited or present; the Christmas party having been advertised, and organised in conjunction with a hotel room being booked for those from the store who wished to accommodate themselves in it; circumstances where the employees would not have been in the hotel room together were it not for the Christmas party and the events surrounding it, circumstances where various employees, including those who did not stay in the room overnight, had been at the hotel room for drinks prior to and after dinner at the Christmas party; circumstances where it was intended that the hotel room would be paid for at reduced corporate Telstra rates and the applicant being invited to the hotel room by Mr Sharma, a fellow colleague, who had assisted in organising the room from the Miranda Telstra Store; and Ms Streeter knowing all the employees by virtue of her working relationship and the work Christmas party they had all attended earlier in the night.

[79] The respondent submitted that even if the conduct was not held to occur in a work related context, the behaviour which occurred at the hotel was sufficiently connected to the employment relationship to constitute a valid reason for the termination of the applicant’s employment.

[80] Mr Wood submitted that where the connection is clear, relatively minor conduct might justify the finding of a valid reason. Conversely, significant, gross or illegal conduct might justify the finding of a valid reason, even if the connection with the employment is tenuous. The connection with the employment is merely one part of the factual matrix in relation to which the assessment of the validity of the reason is made.

[81] In any event, Mr Wood submitted, the behaviour which occurred at the hotel was sufficiently connected to the employment relationship because it amounted to a “breach of trust and confidence”, a “breach of Telstra’s interests or a “breach of duties” (to use the test applied in Rose v Telstra, or otherwise amounted to “exceptional circumstances” (to use the test applied in Applicant v Respondent 5).

[82] Mr Wood summarised the principles set out by Ross VP in Rose v Telstra which could be applied in considering the extent to which an employer can discipline an employee in relation to out of hours conduct. In Mr Wood’s summary, Ross VP held that there must be a clear and relevant connection between an employee's out of hours conduct and his or her employment. In essence, in order for this connection to exist, the conduct must be of such gravity or importance as to indicate a rejection or repudiation of the employment contract by the employee. The circumstances in which conduct may be considered as such are limited to circumstances where:

[83] Ross VP concluded that, absent such considerations, an employer has no right to control or regulate an employee's out of hours conduct.

[84] Several subsequent decisions have applied the principles outlined by Ross VP.

[85] In NSW Attorney General's Department v Miller 6 a Full Bench of the New South Wales Industrial Relations Commission (NSW IRC) held the dismissal of a court officer for sexually harassing a colleague outside working hours had a sufficient connection with his employment so as to be able to be taken into account in determining whether there was a valid reason for the termination. In that case, the Full Bench held that the officer, who occupied a senior position as Assistant Registrar at the Manly Local Court, had engaged in the following inappropriate behaviour:

[86] The Full Bench held that the above conduct amounted to breaches by the officer of the employer's Prevention of Sexual Harassment in the Workplace Policy, and Code of Conduct and Ethics. Although the conduct had occurred out of hours, each incident of sexual harassment perpetrated by the officer was considered to have a relevant connection to the officer's employment. This connection arose because the conduct was considered to be incompatible with the officer's duties as a senior employee with supervisory responsibilities, which included the maintenance of a harmonious workplace environment. That is, it was a "breach of duties" in the sense described by Ross VP in Rose v Telstra.

[87] In the event, and on the specific facts of that case, the Full Bench considered the termination of the officer's employment to have been harsh in the circumstances.

[88] In Farquharson v Qantas Airways Limited 7 a Full Bench of the AIRC held the dismissal of a flight steward for assaulting a colleague during "slip time" (i.e. the break between flights) was not unfair. In that case, the flight steward had gone to a hotel function room for a New Year celebration party (arranged and partly funded by the employer), drank heavily, and struck a colleague in the face in response to an offensive comment (causing severe facial injuries and hospitalisation).

[89] The Full Bench held that there was a relevant connection between the steward's behaviour and his employment in two respects. Firstly, the steward's conduct amounted to a "breach of the employer's interests" in the sense described by Ross VP in Rose v Telstra, to the extent that it could have exposed the employer to negative publicity, damage to its local reputation, liability for medical and legal expenses, and a shortage of staff in the absence of the injured employee. In this regard, the Full Bench held that conduct which merely gives rise to a material risk of damage to an employer's interests, even if there is no actual damage in the particular case, may constitute a valid reason for dismissal.

[90] Secondly, the steward's conduct amounted to a "breach of duties" in the sense described by Ross VP in Rose v Telstra. This breach arose because the conduct of the flight steward was contrary to the standards of behaviour set out in the employer's Cabin Crew Operations Manual, an acknowledgment of which employees were required to sign before each flight.

[91] In Graincorp Operations Limited v Markham 8, a Full Bench of the AIRC held that the dismissal of an employee for sexually harassing a colleague outside working hours was not unfair. In that case, the employee had sexually harassed his colleague after dinner and drinks which had been partly funded by the employer during a work-related training conference. The harassment had involved the employee banging on the door of his colleague's hotel room (paid for by the employer) and yelling sexually charged abuse at her. This led to the colleague seeking assistance at the time and being afraid of any future interaction with the employee who had harassed her.

[92] The Full Bench considered the employees to have been "put in a situation of proximity" by virtue of the training conference, rather than by a truly private choice, and that the conduct was therefore sufficiently connected to the employment relationship. Further, the relevant mitigating factors, such as the employee's remorse, and his level of intoxication at the time of the incident, were not considered to be of sufficient weight to render the employee's dismissal unfair in all the circumstances.

[93] Although the Full Bench in Markham did not directly apply the principles set out in Rose v Telstra, it did refer to an earlier decision of the Full Bench of the AIRC in Applicant v Respondent. In Applicant v Respondent, the Full Bench held that "it is only in exceptional circumstances that an employer has a right to extend any supervision over the private activities of employees". The examples of exceptional circumstances then given were very similar to those set out in Rose v Telstra. Specifically, circumstances may be sufficiently "exceptional" where:

[94] Mr Wood submitted that, while he acknowledged the binding effect of Full Bench decisions following the approach in Rose v Telstra, the appropriate test was not that set out in that decision. It is not necessary to show that an employee has repudiated his contract of employment to find that there is a valid reason for termination. He referred to the Full Bench decision in Annetta v Ansett Australia 9. In that decision, the Full Bench stated

[95] Mr Wood submitted that there is no need to find that an employer could give a lawful and reasonable command to an employee to cease doing something for it to constitute a valid reason for termination. He gave the example of an employee who had murdered someone.

[96] He added

[97] Mr Wood submitted that the further you are away from the connection with the employment the more serious the conduct would need to be to amount to a valid reason for termination, the closer you are to the workplace, the less serious the conduct has to be.

[98] He submitted that the applicant’s conduct was in breach of her employer’s policies, and that those policies had a legitimate application beyond the workplace, even if the employer could not lawfully direct the applicant to cease doing what she was doing on the night in question.

[99] Mr Wood submitted that Ms Streeter’s conduct amounted to sexual harassment, including under Section 28B (2) of the Sex Discrimination Act 1984 (SDA).

[100] The meaning of sexual harassment is defined in section 28A of the SDA as including where a person:

[101] Mr Wood submitted that the sexual intercourse engaged in by the applicant in the hotel room was clearly unwelcome to Ms Andrews, Ms Hyett and Ms Barrett, was “in relation to” them because of the high geographical proximity and would have been anticipated by a reasonable person to have offended, humiliated or intimidated them (PN 2660-3). He also submitted that the incident in the bathroom and grabbing Mr Forner’s behind also amounted to sexual harassment.

[102] Mr Wood drew the Commission’s attention to a number of cases in order to support the respondent’s construction of the term “sexual harassment”.

[103] In Daley v Barrington  11 Raphael FM observed

[104] In Zanella v Carroll’s Auto Repairs 12 the NSW Administrative Decisions Tribunal (ADT) noted

[105] Mr Wood maintained that the relevant connection in the current case was by virtue of the geographical proximity of Ms Streeter and her fellow employees when she engaged in the relevant conduct.

[106] Mr Wood also referred to Carter v Linuki Pty Ltd 13 in which the ADT stated that the phrase “in relation to”

[107] Mr Wood submitted that under section 28B of the SDA it is unlawful for a person to sexually harass a fellow employee irrespective of whether this takes place at work. Moreover, under section 106 of the SDA, Telstra could be liable for Ms Streeter’s conduct if it were held that it occurred in connection with the employment of the employee.

[108] Mr Wood submitted that it would be extraordinary if an employer could be held liable for an employee’s conduct under the SDA but that same conduct could not constitute a valid reason for termination of employment.

[109] Mr Wood drew the Commission’s attention to a number of cases that dealt with the vicarious liability of an employer for sexual harassment that occurred away from the workplace, including Lee v Smith and Ors 14, South Pacific Resort Hotels Pty Ltd v Trainor15, Chief Constable of the Lincolnshire v Stubbs16, and Smith v Christchurch Press Company Ltd17. He submitted that these cases indicated that a broad construction should be given to the relevant connection with employment (PN2696-2717).

[110] In addition to Ms Streeter’s conduct constituting sexual harassment, Mr Wood asserted that it also amounted to an indecent act, within the meaning of Section 61N of the NSW Crimes Act.

[111] Finally, Mr Wood submitted that the applicant had lied to her colleagues and through the investigation process, as well as to the Commission. This constituted a separate valid reason for the termination of the applicant’s employment. Moreover the applicant’s unwillingness to apologise for her behaviour undermined any claim that her termination was harsh.

Consideration of the issues

[112] In determining whether a termination was “harsh, unjust or unreasonable” the Commission must have regard to the matters identified in s.652 (3) of the Act, namely:

[113] In Rose v Telstra Ross VP considered what McHugh and Gummow JJ had to say about the meaning of the expression “harsh, unjust or unreasonable” in their joint judgement in Byrne v Australian Airlines 18 and concluded that, for the purpose of s.170CG(3) (the forerunner provision to s.652(3)) a termination of employment may be:

[114] The central issue to be decided in the current case is whether the respondent had a valid reason for the termination of Ms Streeter’s conduct.

[115] Much of the legal argument during the hearings was concerned with whether there a sufficient nexus between Ms Streeter’s conduct and her employment for that conduct to be considered as a basis for the termination of her employment.

[116] I do not intend to canvass all the authorities on “out of hours” conduct. I have previously referred to a number of them in summarising the submissions of the applicant and respondent.

[117] As noted previously, most of Telstra’s concerns about Ms Streeter’s conduct concern her alleged sexual harassment of fellow employees. Section 106 of the SDA concerning vicarious liability provides as follows:

[118] It would be inappropriate for the Commission to find that a reason for termination was invalid on the grounds that there was an insufficient nexus with employment, when that reason was in relation to conduct for which the employer could be held vicariously liable under an Act of Parliament.

[119] The issue of whether an employer can be held vicariously liable for sexual harassment outside of work hours was dealt with in the case of South Pacific Resort Hotels Pty Ltd v Trainor referred to by Mr Wood. The authorities on this issue were set out by Kiefel J in her judgement in that case. The case involved sexual harassment outside of the work hours of employees in staff quarters provided by their employer. Paragraphs 70 to 74 provide as follows:

[120] For an employer to be held vicariously liable for sexual harassment out of working hours it must be done “in connection with the employment of the employee”. However those words are to be given a broad construction. In the case of Leslie v Graham the conduct occurred in an apartment made available to two employees while they attended a work related conference. Likewise, in the case of South Pacific Resort Hotels Pty Ltd v Trainor the conduct occurred between two employees in accommodation provided by the employer as an incident of employment. In a recent case, Lee v Smith & Ors 19 the Department of Defence was held vicariously liable for a rape that took place outside the workplace but was a culmination of a series of sexual harassments that took place in the workplace and that adversely affected the working environment.

[121] Because of the nature of the allegations against Ms Streeter and the potential vicarious liability of her employer, it is not appropriate to conclude that there was no valid reason for the termination of her employment on the grounds that there was an insufficient connection between her conduct and her employment.

[122] I have already made a number of findings about Ms Streeter’s conduct. I now need to characterise her conduct.

[123] Apart from the issue of lying, which I will discuss later, the main allegations used to justify the termination of Ms Streeter’s employment concern sexual harassment.

[124] Sexual harassment is defined in s.28A of the SDA in the following way:

[125] For present purposes, the concept of sexual harassment can be broken down into the following elements:

[126] If we first consider the incident where Ms Streeter grabbed Mr Forner on the behind, it is clear that this conduct was sexual in nature, was unwelcome, and was in relation to Mr Forner. In relation to the last element, a reasonable person would have to have regard to the relative situation of Ms Streeter and Mr Forner. Ms Streeter worked for Mr Forner. He was in a position of authority over her. It would be a much more serious matter for a manager to grab the behind of a junior employee than vice-versa. In particular it would be much more likely in those circumstances for the employee in a subordinate position to feel humiliated or intimidated. A reasonable person might however consider that Mr Forner would feel somewhat offended by Ms Streeter’s conduct. Indeed that it is consistent with the evidence he gave during the hearing. However, while inappropriate and probably constituting sexual harassment, it is hard to characterise this particular incident as anything other than a relatively minor misdemeanour.

[127] The second key incident referred to by the respondent justifying Ms Streeter’s termination related to her conduct when Ms Hyett needed to use the bathroom at the hotel.

[128] Ms Streeter’s conduct in relation to this incident cannot properly be characterised as sexual harassment. Indeed, while this is not determinative, Ms Hyett did not describe it as such when asked during cross examination. Ms Hyett asked to be let inside the bathroom. It would obviously have been more appropriate if Ms Streeter, Mr Hatzistergos and Mr Sharma allowed her to use the toilet in private. However Ms Hyett insisted on being let into the bathroom despite their presence, and did not ask them to leave, which she clearly could have done. It seems to me that Ms Hyett showed Ms Streeter no more respect than Ms Streeter showed her. Moreover, the applicant’s dropping her towel, saying “fuck it” and getting back into the bath tub was hardly conduct “in relation” to Ms Hyett.

[129] The most serious incident concerning Ms Streeter’s conduct was her behaviour in having sexual intercourse with Mr Sharma in the same hotel room as Ms Andrews, Ms Hyett and Ms Barrett.

[130] Mr Wood asserted that this behaviour was an indecent act within the meaning of section 61 N of the Crimes Act 1900 (NSW). Section 61 N provides:

[131] The New South Wales Court of Criminal Appeal, in the case of Regina v Gillard made the following comment:

[132] It follows that it is not an act of indecency with or towards someone merely to have sexual intercourse in their presence. Something more is needed, such as an invitation or encouragement to watch. There is no such evidence in this case. When Ms Streeter had intercourse with Mr Sharma it was in a hotel room with the lights out in the middle of the night. While it was in the presence of Ms Hyett, Ms Andrews and Ms Barrett, I accept Ms Streeter’s evidence that she thought they were asleep. The respondent’s own evidence is that they were all lying in bed, and no one spoke. I reject the proposition that there was an act of indecency.

[133] Did the conduct constitute sexual harassment by Ms Streeter of her three fellow employees? It was clearly sexual conduct, and unwelcome. I also consider that a reasonable person would have anticipated that Ms Streeter’s fellow employees would have felt offended as well as perhaps humiliated. Certainly this appears to have been so in the case of Ms Andrews. A much harder issue to determine whether the conduct was “in relation to” Ms. Hyett, Ms Andrews and Ms Barrett.

[134] In Carter v Linuki  20 the ADT had this to say (at paragraph 27):

[135] In other words, it is not enough that sexual conduct offends another person – the conduct must either be done with that person in mind or have a connection with that person.

[136] The ADT referred to the case of G v R and the Department of Health, Housing and Community Services 21.

[137] In that case, the complainant saw a penis shaped toy on someone else’s desk, which caused her offence. Although the toy was not shown to the woman, she remained aware of its presence due to continuing comments she overheard other staff make over a period of some weeks.

[138] Sir Ronald Wilson, in his judgement, expressed difficulties in finding that the conduct complained of was “in relation to the complainant”. Nevertheless for the purposes of the application he was prepared to accept that the conduct could be so interpreted. However he only did so on the grounds that

[139] The ADT concluded

[140] Mr Wood submitted that the relevant connection between Ms Streeter’s conduct in having sexual intercourse with Mr Sharma (and in his submission, Mr Hatzistergos) was physical proximity.

[141] While there may have only been a few feet between Ms Streeter and her fellow employees, as I have already noted the conduct took place in a hotel room, with the lights out, in the early hours of the morning, when Ms Streeter thought – not entirely unreasonably – that the other employees were asleep. I cannot conclude that her conduct was “in relation to” them. That they were upset by her conduct is not enough to establish that it constituted sexual harassment. I should add that even if it were considered sexual harassment, it was only of the most indirect kind.

[142] This leaves the issue of Ms Streeter’s lies to her employer during the investigation into the matters that occurred during the night in question.

[143] It is not in dispute that Ms Streeter lied about some of her behaviour during the investigation. Moreover I have not accepted some of the evidence Ms Streeter gave during these proceedings.

[144] In McIndoe and BHP Coal the Full Bench determined that the Commissioner whose decision was being appealed was entitled to take the view that it was not harsh, unjust or unreasonable to terminate the employment of the appellant in circumstances where the latter had knowingly set out to breach company policy and then fabricated an excuse for his behaviour – a subterfuge with which he persisted during the hearing. The Full Bench stated:

[145] The circumstances in this case are rather different. The conduct about which Ms Streeter lied was of an inherently personal nature. Lying is never to be condoned. However, given the nature of the conduct about which she has been untruthful, I do not consider that any dishonesty on her part has been such that it should be regarded as likely to destroy the necessary relationship of trust between an employer and employee. In drawing this conclusion I have also had regard to the evidence of Mr Forner who said that he had no reason to believe that Ms Streeter was dishonest when it came to stock or cash (PN2184).

Conclusion

[146] As the Full Bench in McIndoe v BHP Coal noted, these cases are always a matter for the exercise of judgement in all the circumstances. Allegations of sexual harassment must be taken seriously by employers. Indeed they may be held liable for sexual harassment by their employees even where this occurs out of hours and away from the workplace. That is why I have rejected the argument that there was no connection between Ms Streeter’s conduct and her employment. Moreover there is no real issue that at least some of her behaviour during the night in question was inappropriate and inconsiderate to her fellow employees, especially Ms Andrews, Ms Hyett and Ms Barrett.

[147] However all the circumstances need to be considered. Was Ms Streeter’s conduct so bad that it constituted a valid reason for the termination of her employment?

[148] The respondent’s submissions greatly exaggerated the seriousness of Ms Streeter’s misconduct, particularly the suggestion that she committed a criminal act of obscenity. Moreover, I have found most of the behaviour complained of either did not constitute sexual harassment as defined by the SDA or only did so in a relatively marginal way.

[149] As the respondent conceded, the less direct the relationship with the workplace the more serious the misconduct would need to be to justify termination of employment. Most of the impugned behaviour occurred well away from the workplace, after rather then during a work function, in a hotel room that was booked and paid for privately.

[150] In all the circumstances, Ms Streeter’s conduct was not so serious as to constitute a valid reason for the termination of her employment.

[151] Having found that there was no valid reason for the termination of Ms Streeter’s employment (s.652(3)(a)) I do not need to spend much time on subsections (b) to (g). However as it is mandatory for the Commission to have regard to all these subsections I will briefly point out that:

Remedy

[152] Section 654 of the Act provides as follows:

[153] The applicant has sought reinstatement and an amount to compensate for lost remuneration. While she has obtained alternative employment on a similar salary to that she was earning with the respondent, she is currently on probation. Moreover she has always enjoyed working at Telstra.

[154] In response to a question from the Commission, Mr Durant indicated that the applicant would be willing to work at another Telstra Store than the one at Miranda.

[155] Ms Streeter was asked during cross examination:

[156] The respondent submitted that if the Commission were to find the applicant’s termination to be harsh, unjust or unreasonable, then the appropriate remedy would be compensation rather than reinstatement.

[157] Ms Streeter’s conduct was hardly without blemish; however I have determined that any misconduct on her part was not such as to warrant the termination of her employment. I have dealt with the issue of her honesty previously. On the whole I consider she is a woman “more sinned against than sinning”.

[158] There would be difficulties if Ms Streeter were to be reinstated to the Miranda Store. However, it would be appropriate for her to be re-employed by Telstra at another retail outlet (as close to Miranda as practicable) in a similar position to the one she previously held, on terms no less favourable than those on which she was employed immediately before the termination.

[159] The respondent should also pay Ms Streeter an amount equivalent to any remuneration lost as a result of her termination. Her service should also be treated as continuous, as if she had not been terminated, for the purposes of leave accrual and so on. In making this decision I have had regard to all the circumstances of the case, including the factors referred to in s. 654 (2). In particular,

[160] I direct the representatives of the applicant and the respondent to confer on the precise terms of the order that should be made to give effect to this decision. If the parties are unable to reach agreement with regard to the terms of the order, either party may apply to the Commission to have the matter re-listed.

BY THE COMMISSION:

SENIOR DEPUTY PRESIDENT

 1   B. Rose v Telstra Corporation Limited (Print Q9292, 4 December 1998), Ross VP

 2   Anthony Tichy v Department of Justice – Corrections Victoria (PR959660, 4 July 2005), Giudice J, Blain DP, Blair C

 3   Jones v Dunkel (1959) 101 CLR 298

 4   Regina v Gillard (1999) NSWCCA 21

 5   Applicant v Respondent (Print R1221, 1 February 1999) MacBean SDP, Duncan DP, Deegan C

 6   NSW Attorney General's Department v Miller (22 February 2007) NSW IRComm 33

 7   Farquharson v Qantas Airways Limited (PR971685,10 August 2006) Lawler VP, O’Callaghan SDP, Raffaelli C

 8   Graincorp Operations Limited v Markham (PR924103, 29 October 2002) Polites SDP, O’Callaghan SDP, Hingley C

 9   Annetta v Ansett Australia (2000) 98 IR 233

 10   Ibid. at 235

 11   Daley v Barrington and Ors (2003) FMCA 93

 12   Zanella v Carroll’s Auto Repairs Pty Ltd and anor (2001) NSWADT 220

 13   Carter v Linuki Pty ltd t/as Aussie Hire and Anor (2004) NSWADT 287

 14   Lee v Smith and Ors (2007) FMCA 59

 15   South Pacific Resort Hotels v Trainor (2005) FCAFC 130

 16   Chief Constable of the Lincolnshire Police v Stubbs (1999) IRLR 81

 17   Smith v Christchurch Press Company Pty Ltd (2001) 1 NZLR 407

 18   Byrne v Australian Airlines (1995) 185 CLR 410

 19   Lee v Smith & ors 920070 FMCA 59

 20   Carter v Linuki Pty ltd t/as Aussie Hire and Anor (2004) NSWADT 287

Daley v Barrington and Ors (2003) FMCA 93

Zanella v Carroll’s Auto Repairs Pty Ltd and anor (2001) NSWADT 220

 21   G v R & Dept of Health, Housing and Community Services (1993) HREOCA 20

 22  A. McIndoe v BHP Coal Pty Ltd (PR901846, 2 March 2001) Giudice J, Williams SDP, Bacon C