FWA 9309
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mrs Sandra McKenna
Home Theatre Group Pty Ltd T/A Home Theatre Group
MELBOURNE, 30 OCTOBER 2012
Termination of employment –small business code complied with- summary dismissal - unfair dismissal.
 The matter arises from an application filed on 28 February 2012 and updated and amended on 7 March 2012 under s 394 of the Fair Work Act 2009 (the Act) by Ms Sandra McKenna (the Applicant) for relief in respect to the termination of her employment from Home Theatre Group Pty Ltd T/A Home Theatre Group (HTG or the Respondent).
 The Applicant was employed by the Respondent from 6 August 2006 until she was dismissed on 17 February 2012. She was notified of her dismissal on that day. The letter of termination of that date stated that the dismissal was for serious misconduct and that no notice would be paid. The letter was from Ben Cooper, Associate Director of Livingstones Employment Relationship Advisors. The letter also stated that “Home Theatre Group considers that you have been given adequate opportunity to respond to its concerns and notes that you have addressed some of these in your correspondence.” Those concerns had been set out in a letter of 7 February 2012 1 and a further allegation was made in a letter of 13 February 2012.2 The reason for termination was that the employer “has determined that your recent conduct is unacceptable” and “it considers, in particular, that your disparaging remarks about Peter Curley made to Ben Osborne and some HTG employees amount to serious misconduct.” It is reasonably apparent that the expression “in particular” in the context of the general expression of recent conduct means that the other matters raised in the letter of 7 February are not excluded from the reasons for termination. Read in context it is reasonably apparent that HTG is relying on the matters raised in the 7 February correspondence to justify the termination but regards the disparaging emails as the most significant matters.
 The Respondent says that further financial irregularities were discovered after the termination.
 The matters listed in the correspondence of 7 February related to disparaging emails about Mr Curley, Mr Ali Wraight and Mr Brown which had been sent to Mr Osborne and also in one case to other employees of HTG and also to allegations of poor conduct or performance in respect to financial accounting, payment of superannuation to employees, failure to record annual leave taken, failure to reimburse personal expenses made on company credit card, removal of petty cash without authorisation, reimbursement of personal loan in excess of the value of the loan, and threatening or intimidating behaviour towards Mr Curley the Managing Director.
 The Applicant wrote a number of emails to the Respondent between 3 February 2012 and 17 February 2012. On 3 February 2012 she made it clear that she had seen an email from Mr Curley to Livingstones saying that he did not want the Applicant back at work. 3 In her next correspondence it was clear that she was expecting a letter outlining allegations against her and in response she detailed a number of outstanding claims she had against the Respondent for entitlements and other matters.4 She only responded to two of the matters raised by the Respondent. Firstly, she claimed that the credit card policy had never been adhered to and that it was commonplace and encouraged by Mr Curley that employees would put personal expenses on the company credit card and that these amounts were then repaid in cash.5 Secondly, she disputed the complaint that she did not record her annual leave by saying that she worked so hard that she did not take leave and when she did have time off at Christmas she was still working whilst away.6 In her responses the Applicant emphasised that she was unwell and on medication and was not in a position to respond.
 The Respondent is an importer and wholesale distributor of home theatre products. At the time of the dismissal the Applicant was the General Manager and earned a gross salary of $75,000 per annum. The Applicant had been the General Manager since 2008 or 2009. A contract of employment was signed in November 2010. 7 That contract incorporates the Clerks Private Sector Award 2010.8 Relevantly neither document says anything about the private use of email but the documents do contain commitments to act in the best interests of the company and to maintain commercial confidentiality. The Applicant reported directly to the Managing Director, Mr Curley.
 The Respondent argued that they were a small business employer and that it employed 8 employees at the time of the termination.
 It is not in contention that the Applicant is protected from unfair dismissal in that HTG is a national system employer, the Applicant had been a full time employee for more than 12 months, there is no suggestion that the termination was a genuine redundancy and the Applicant was dismissed at the initiative of the employer.
 This matter was originally listed for hearing in June 2012. The Applicant provided submissions and evidence upon which she relied on 22 May 2012. However, on 2 May 2012 the Applicant advised that she wished to withdraw from any hearing. In response the hearings of the matter were cancelled. The Applicant did not file the notice of discontinuance as requested by FWA. On 20 July 2012 the Applicant requested that the case be reopened. Directions were issued for a new hearing date and the parties complied with directions to provide materials.
 The Applicant did not attend the hearing in Brisbane on 19 October 2012. Immediately following the hearing my Associate advised the Applicant as follows:
“As you are aware the matter U2012/5586 was listed for hearing today at 9am in Brisbane. When you failed to attend I spoke to your husband on the phone who advised that you would not be attending the hearing.
You are required by close of business on Tuesday 23 October 2012 to either advise us in writing (by email or by lodging a notice of discontinuance form (F50, which can be found on the website)) that you are discontinuing your application OR provide us with written reasons as to why it would be a denial of natural justice for the Commissioner to now dismiss the matter. If you wish to argue that the matter should continue then medical evidence in respect to 19 October 2012 will need to be provided.
At the hearing today (19 October 2012) the Commissioner admitted the evidence and the submissions of the Respondent employer as had been provided to you earlier – the submission and the statement of Mr Curley with attachments. The Commissioner did not admit at this stage the additional materials provided by the Respondent.”
 On Tuesday 23 October 2012 the Applicant replied as follows:
“I was unable to attend on Friday due to a panic attack, I can provide a medical certificate.
My doctor has requested that due to my panic attacks am I able to have my husband Wayne McKenna represent me? If permission is granted my doctor can provide or complete the necessary paperwork to confirm that due to panic attacks I could not represent myself. I am not in a financial situation to pay for legal representation like Home Theatre Group.
As Wayne is also aware of what has transpired I would be comfortable with his representation.
If this option is not available to myself I have no other option than to withdrawal from the hearing.”
 On Tuesday 23 October 2012 my Associate replied as follows:
“I refer to your email of Tuesday 23 October 2012.
The Commissioner notes that you were unable to attend the hearing on Friday due to a panic attack and that you can provide a medical certificate but have not yet done so.
If permission was granted for your case to proceed then your case has no capacity to be successful unless your evidence is able to be tested. Your evidence is the main material you have put forward in support of your case. Therefore you would need to be present in person and be cross examined by the representative for Home Theatre Group.
It appears from you email that you wish to withdraw or discontinue your application unless you can proceed with the case without having to be present and be available for cross examination.
Therefore, could you please confirm by return email whether you wish to withdraw or discontinue your application.”
 On Thursday 25 October 2012 my Associate wrote further as follows:
“I refer to my correspondence of 23 October 2012 to which I have not yet received a response.
Unless you provide contrary advice or advice that you wish to withdraw or discontinue your application by close of business on Friday 26 October 2012, the Commissioner will act on your advice on 23 October 2012 that you are not willing or able to appear in person so that your evidence can be cross examined and will issue a decision in the matter on that basis.”
 No response was received. Given the history of this matter and the fact that the Applicant has on a previous occasion withdrawn the matter and then sought to have it reinstated I do not consider that it would be fair to all parties or appropriate to delay the matter further. I therefore will proceed to determine the matter on the basis that the Applicant is not available for cross examination and that the Applicant was the sole witness put forward by the Applicant in support of her case.
 It is not in contention that Mr Curley the Managing Director placed a great deal of trust in the Applicant. Mr Curley greatly valued the work performed by the Applicant. Their personal lives became closely intertwined. The Applicant provided considerable personal support to Mr Curley, including care and support for his children. The Applicant and Mr Curley are both deeply hurt by the breakdown in trust between them which culminated in the termination of the Applicant’s employment. Until the termination the Applicant held enduring power of attorney for Mr Curley and also was sole executor for his will. As late as 6 December 2012 in an email to the Applicant and other staff Mr Curley acknowledged the Applicant’s hard work and dedication and said in relation to the Applicant “Sandra we all love you!” and “I am sorry you were part of my family issues as you have been a shining light to my boys and I thank you again for your help.”
 The Applicant used two email accounts provided by the employer - email@example.com and Sandra@htgroup.com.au. The first of these emails the Applicant used for business purposes during business hours. The second of these emails the Applicant says she used for both business and personal communications outside of business hours. The Respondent says that the first address is the general inquiry address for the company and the second address is the address assigned to the Applicant as General Manager. In the print out of a number of the emails produced in evidence the second address appears with the title next to the email address as “Sandra Personal”. However, I am satisfied by the evidence that the email address Sandra@htgroup.com.au was clearly identified with the company and that a person receiving an email from that address may believe that it was associated with the company.
 HTG conducted business with Milestone. The business relationship with Milestone was important to HTG. The contact person for that relationship was Mr Ben Osborne. The Applicant knew Mr Osborne since the business relationship began in February 2010. The Applicant and Mr Osborne became personal friends. The Applicant socialised with Mr Osborne and his family outside of employment. The email communications between the Applicant and Mr Osborne were not confined to the business relationship and they extended to personal matters which had nothing to do with that relationship.
 The Applicant sent emails to Mr Osborne which commented on Mr Curley and Mr Brown. The Respondent found these emails to be offensive and inappropriate. Some months after the emails were sent HTG and Milestone entered into a new contractual relationship which guarantees exclusive supply by Milestone of certain products to HTG. The Applicant says that this new contract is of great benefit to HTG and was brokered by the Applicant on behalf of HTG. The Applicant argues that if the emails had been damaging to the relationship between HTG and Milestone then such a contractual relationship would not have been entered into. I am satisfied that the emails were disparaging of Mr Curley and Mr Brown.
 HTG also alleges that the Applicant made disparaging references about Mr Curley to HTG employees. This allegation relates to an email the Applicant sent to 5 co-workers on 17 January 2012. The Applicant says that this email reflects the truth and was consistent with the culture in the office. She says that it contained the sort of detail that Mr Curley and others frequently included in communications. The email made comment on Mr Curley’s personal habits. I am satisfied that the email was disparaging of Mr Curley.
 In January 2012 the Applicant went to the US on a work related trip and when she returned to the workplace on 19 January 2012 she advised HTG that she was taking a period of stress leave. The Respondent says that on 19 January 2012 or sometime around that time the Applicant deleted emails from the two accounts. The emails were later restored by the Respondent from a back up file on 29 January 2012.
 Much of the material provided by the Applicant is material to support her allegations about the extent of support she provided to Mr Curley and inappropriate behaviour by Mr Curley. Much of this is not directly relevant to the reasons for termination.
 The Applicant says that Mr Curley was open about his life with members of staff and that she and others told him directly that they did not approve. In this sense the Applicant says that what she said in the emails was not different to what she said to Mr Curley directly.
 I am satisfied by the evidence presented by the Respondent that there is some basis for the Applicant’s assertion that the workplace culture was one in which communications of a personal nature which would normally be regarded as inappropriate between work colleagues were commonplace and tolerated.
 The Applicant also suggests that there was a great deal of merging of personal and business expenses. She suggests that the failure to pay superannuation to staff was not her decision. 9 The Applicant denies the allegations about the recording of her annual leave and says that she worked so hard that she never took annual leave except over Christmas and at that time she was still performing some work.10 The evidence of the Respondent does not establish the case on these matters. Furthermore, at the time that the Respondent made the decision to terminate the Applicant’s employment it did not have a reasonable basis to make a judgment about these matters without further investigation and without proper consideration of information from the Applicant.
Conclusions in respect to the evidence.
 The Applicant alleges that the workplace culture was one in which communications of a personal nature which would normally be regarded as inappropriate between work colleagues were commonplace and tolerated. The evidence of the Respondent in some respects supports the allegations of the Applicant. The evidence also does not clearly demonstrate that the Applicant was guilty of fraud or financial mismanagement. The evidence does not clearly demonstrate that the Applicant failed to appropriately record annual leave. There is nothing to adequately respond to the defence offered by the Applicant in writing to the Respondent in respect to these matters. The evidence suggests that the boundaries between work and personal life in the workplace were unclear. The evidence does not suggest that the Applicant was solely responsible for this failing.
 However, in the absence of any contest to Mr Curley’s evidence there is no doubt that the disparaging emails by the Applicant about Mr Curley to whom the Applicant reported did have the potential to damage the business. The Applicant was in a senior role in the business and had direct relationship with the major clients of the business. Undermining the credibility of the Chief Executive of the business to those major clients had the potential to undermine the business. The disparaging email to other employees who reported to the Applicant about the Chief Executive also had the potential to undermine the business. Furthermore, regardless of the extent to which the behaviour of others might have contributed to the situation, having sent the emails the Applicant should have understood that this would irreparably damage the relationship between herself and the Chief Executive. It was not possible for the Applicant to continue to effectively perform her role in a situation where the relationship between her and the Chief Executive had been irreparably damaged. The Applicant’s actions at least in part created this situation.
 I do have some concerns about the fairness of the process of the termination. The evidence of the Respondent demonstrates that the Applicant repeatedly advised the Respondent that she was not able, for medical reasons, to respond to the allegations made against her. The Respondent did not provide the Applicant with adequate time to respond before making the decision to terminate her employment in these circumstances. However, despite the very long period of time which has now elapsed and the opportunities provided, the Applicant as part of the process around this Application has not provided an adequate response to a number of the allegations. In particular the Applicant has not provided an adequate response to the allegations concerning the inappropriate emails. For the reasons explained earlier I do not regard the other allegations as being adequately established by the Respondent.
Small business code.
 This is a case of dismissal without notice. The only provision in the small business code which is relevant is the section headed “summary dismissal”. Under this section I must be satisfied that “the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal”.
 I am satisfied that in these circumstances I must consider whether or not there was serious misconduct. If I am satisfied that the employer had reasonable grounds to believe that there was serious misconduct then the Small Business Code has been complied with.
 The Fair Work Regulations 2009 define serious misconduct for the purposes of the Act.
“1.07 Meaning of serious misconduct
(1) For the definition of serious misconduct in section 12 of the Act, serious misconduct has its ordinary meaning.
(2) For subregulation (1), conduct that is serious misconduct includes both of the following:
(a) wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;
(b) conduct that causes serious and imminent risk to:
(i) the health or safety of a person; or
(ii) the reputation, viability or profitability of the employer’s business.
(3) For subregulation (1), conduct that is serious misconduct includes each of the following:
(a) the employee, in the course of the employee’s employment, engaging in:
(i) theft; or
(ii) fraud; or
(b) the employee being intoxicated at work;
(c) the employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment.
(4) Subregulation (3) does not apply if the employee is able to show that, in the circumstances, the conduct engaged in by the employee was not conduct that made employment in the period of notice unreasonable.”
 The evidence shows that the Respondent did not have a reasonable basis on which to conclude that the Applicant’s conduct in respect to recording of annual leave and financial matters justified dismissal. There was no evidence of any proper investigation of these matters prior to the termination and there was no proper opportunity for the Applicant to respond to the allegations.
 The evidence suggests that the Respondent did have reasonable basis to conclude that the disparaging emails sent by the Applicant caused serious and imminent risk to the reputation of the employer’s business. In the absence of the evidence of the Applicant I must accept the evidence of the Respondent. That evidence is sufficient to satisfy me that the Respondent did have a reasonable basis to conclude that the disparaging emails sent by the Applicant caused serious and imminent risk to the reputation of the employer’s business. Pursuant to Regulation 1.07(2)(b)(ii) this is serious misconduct. Regulation 1.07(4) does not apply in this circumstance.
 The small business code has been complied with. The Application is dismissed. An order to this effect will be issued.
No appearance for the Applicant.
Mr Ben Cooper, Associate Director of Livingstones Employment Relationship Advisors appeared for the Respondent.
1 Exhibit HTG 3.
2 Exhibit HTG 1, Attachment 15.
3 Exhibit HTG 1, Attachment 11.
4 Exhibit HTG 1, Attachment 12.
5 Exhibit HTG 1, Attachment 17.
6 Exhibit HTG 1, Attachment 19.
7 Exhibit HTG 1, Attachment 1.
8 Exhibit HTG 1, Attachment 2.
9 Exhibit HTG 1, Attachment 17.
10 Exhibit HTG 1, Attachment 19.
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