[2021] FWC 6143 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Stuart Gates
v
Blugibbon Pty Ltd
(U2021/4290)
DEPUTY PRESIDENT EASTON |
SYDNEY, 15 OCTOBER 2021 |
Application for an unfair dismissal remedy - valid reason - suspected misconduct - alleged unauthorised computer activities on sick leave - failure to make reasonable inquiries which would have brought existing facts to light before the dismissal occurred - procedural unfairness - remedy - compensation.
[1] On 19 May 2021 Mr Gates made an application to the Fair Work Commission (Commission) under s.394 of the Fair Work Act 2009 (Cth) (FW Act) for a remedy, alleging he had been unfairly dismissed from his employment with Blugibbon Pty Ltd (Blugibbon). Mr Gates seeks revocation of the dismissal, compensation and a statement of service from the employer.
[2] On 29 April 2021 Mr Gates’ employment was terminated for alleged “serious misconduct” related to dishonesty and unauthorised use of confidential information.
[3] Blugibbon is a medical recruitment agency that directly engages and places medical practitioners in locum and other short-term roles in Local Health Districts, private hospitals and with the Commonwealth Department of Home Affairs.
[4] Blugibbon collects various documents and information from its clients, including CVs, identity documents, qualifications, registrations, employment preferences, insurance policies, visa information and the like. All of Blugibbon’s employees have access to shared storage drives containing such information for over 1000 medical practitioners.
[5] Mr Gates was issued with a laptop computer from which he could access Blugibbon’s databases.
[6] In early April 2021 Mr Gates was given a warning of sorts about his performance and his conduct. Mr Gates stayed at work for the next two days and then went on sick leave.
[7] Mr Gates told Blugibbon on Saturday 10 April 2021 that he was unfit to work for the next seven days. Mr Gates ultimately took sick leave for the whole of April 2021 and was covered by successive medical certificates. Unfortunately, Mr Whitaker, a Director of Blugibbon, immediately formed the view that Mr Gates was making plans to leave his employment and that Mr Gates was a threat to the business.
[8] Unsurprisingly the relationship between Mr Gates and Mr Whitaker then rapidly deteriorated. Polite but pointed emails ensued before a flurry of activity on 28 and 29 April 2021.
[9] Around midday on 28 April 2021 Mr Whitaker received a report of abnormal download activities using Mr Gates’ laptop, assumed Mr Gates was using his laptop for unlawful purposes (despite removing Mr Gates’ login privileges), retrieved the laptop, performed some preliminary searches and rang Mr Gates the next morning to dismiss him from his employment.
[10] Mr Whitaker’s apparent priority was to build the strongest possible case for Blugibbon to commence proceedings against Mr Gates in the Supreme Court of New South Wales which it eventually did on 21 May 2021. As such, nobody took time to properly investigate Mr Gates’ activities before dismissing him and Mr Gates was not afforded procedural fairness in any way.
[11] Even after conducting an ex post facto investigation using a computer expert, Blugibbon has not established that Mr Gates engaged in any misconduct at all.
[12] For the reasons set out below, I find that Mr Gates was unfairly dismissed (per s.385 of the FW Act). Fortunately, Mr Gates obtained employment shortly after the dismissal. I have decided to order that Mr Gates be paid compensation under s.392 of the FW Act.
[13] On Wednesday, 7 April 2021 Mr Gates met with Mr Whitaker to discuss certain performance issues, being issues relating to financial targets as well as personal conduct. Mr Whitaker followed up the meeting with an email to Mr Gates which included the following:
“Lastly, following our conversation (detailed in the attached email), I really wanted to see accountability, a desire to turn things around, and a drive for you to prove yourself. Since that time, instead, I feel you've been defensive and tried to shift the blame. Specifically, for a Senior Recruiter to pull me aside and ask "How do I find candidates? Other agencies are getting more referrals and leads than me each week?" is very concerning. The role of a Recruiter is to source candidates and place them in roles, as a Senior Recruiter, I would expect that you should be able to do this. Leads and candidates come from hard work and building a reputation in the market; clients have to become exclusive and candidates have to become your raving fans.
I know you can create this. I know you have been working on your mindset and positive behaviour. Let's make it happen, problem solve, add significant value, ask better questions and show the market you are the expert.
Any questions let me know.
Please work on the below action points and have them ready by the end of the week…”
[14] Mr Gates worked the remainder of the week and then took sick leave from Saturday, 10 April 2021. Mr Gates says he took sick leave because of an adjustment disorder with anxiety symptoms. At hearing he provided a report from his treating practitioner detailing his state of mental health at the time.
[15] Mr Gates sent Mr Whitaker a medical certificate by email on Saturday, 10 April 2021. The certificate was somewhat nondescript about Mr Gates’ illness. It said Mr Gates “has a medical condition and will be unfit to attend work from 10/4/21 to 17/4/21 inclusive.”
[16] On Monday, 19 April 2021 the same doctor provided a further certificate in similar nondescript terms indicating Mr Gates was unfit from Monday, 19 April until Friday, 23 April 2021.
[17] On Wednesday 21 April 2020 Mr Gates obtained a further certificate, this time identifying Mr Gates’ condition with specificity by indicating that Mr Gates “is currently been (sic) treated for an adjustment disorder with anxiety symptoms. He will bee (sic) unfit to attend work from 21/4/21 to 30/4/21 inclusive. His return to work date will be pending on his review with me on 30/4/21.”
[18] In his email at 4:58pm on the Saturday evening to Mr Whitaker, Mr Gates indicated:
“I visited my GP today as I haven’t been feeling well lately and he has deemed me unfit to work.
At this stage it will by (sic) up to and including Saturday 17th April and my condition will be reassessed again on Monday 19th when I have my follow-up appointment at 8.15am.”
[19] At 5:34pm Mr Whitaker replied in the following terms:
“Is everything ok Stuart whats happened? Can I do anything?
Can you get your mobile phone to me so we can cover the desk and I'll put a forward on your emails.
Cheers
Sam”
[20] The reference by Mr Whitaker to Mr Gates’ mobile phone is significant. Mr Whitaker also immediately changed the password on Mr Gates’ work email account and then pressed him in a number of emails to return the company phone as soon as possible.
[21] In his emails Mr Whitaker referred to needing to “cover the desk” and wanting “to ensure from that time any doctors and clients that needed servicing were managed appropriately from Saturday.”
[22] It is apparent that as soon as Mr Gates took sick leave Mr Whitaker assumed that he would resign and that he was a threat to his business. Mr Whitaker moved quickly to protect his client base from potential damage by Mr Gates.
[23] Mr Whitaker said he changed the password because he had “never received a medical certificate for seven days before [and that his] gut response was to make sure the clients are looked after.” This reference to making sure “the clients are looked after” could be understood superficially as referring to making sure that the interests of Blugibbon’s clients are properly serviced by Blugibbon’s personnel. However, I do not accept this to be Mr Whitaker’s primary motivation for the actions he took. It is apparent that Mr Whitaker decided as soon as Mr Gates gave notice of seven days sick leave that Mr Gates was going to leave his employment. The sick leave period shortly followed a performance counselling session and Mr Gates was close to the end of the two-year period of his visa.
[24] Mr Whitaker’s immediate response, in his email to Mr Gates, was to retrieve Mr Gates’ mobile phone. There is no reasonable operational requirement for Mr Gates to return his mobile phone at this point if he was only going to be away from the workplace for one week. Even more to the point, there is no reasonable operational requirement to revoke Mr Gates’ access to his work email account at this time.
[25] I accept on face value that Blugibbon’s database and resources have significant commercial value and that Blugibbon is entitled to take reasonable measures to protect its confidential information and intellectual property. I also accept that Blugibbon is entitled to take reasonable precautions to protect its confidential information and intellectual property, particularly in moments when it perceives there to be a threat to those assets. However, on 10 April 2021, when Mr Whitaker withdrew Mr Gates’ access to his emails and asked Mr Gates to return his mobile phone, the only information upon which Mr Whitaker acted was the fact that Mr Gates had supplied him with a nondescript medical certificate for seven days absence.
[26] Mr Gates went out drinking with former employees of Blugibbon on the night of Monday, 12 April 2021. Pictures of the occasion appeared on social media. Unsurprisingly, the pictures quickly made their way to Mr Whitaker who “felt betrayed” by Mr Gates’ actions. Mr Whitaker explained in his evidence that he felt betrayed because Mr Gates was out drinking and leaving “others to answer the phone”, and he felt that Mr Gates was “taking the Michael”.
[27] Over the period of Mr Gates’ sick leave, he and Mr Whitaker exchanged polite but pointed emails about access to the email account, the return of the mobile phone, the servicing of clients and the splitting of commission payments (because other employees would be taking time away from their own client base to service Mr Gates’ clients).
[28] At some point after 10 April 2021 Mr Whitaker says he noticed that Mr Gates had cleared his desk of personal items prior to taking sick leave. At hearing Mr Gates disputed this and said that he did not have many personal belongings at work and that he did not clear out any belongings prior to taking sick leave.
[29] Blugibbon also made a submission that the circumstantial evidence indicates that Mr Gates was going to resigning his employment as soon as his permanent visa was granted.
[30] Blugibbon filed and tendered an email exchange between Mr Whitaker and Mr Samuel Brouff, on Tuesday, 13 April 2021. Mr Brouff is a solicitor and a registered migration agent and appeared for Blugibbon in these proceedings. Mr Brouff had been advising Blugibbon and also Mr Gates for some time in relation to Mr Gates’ working visa. In the email exchange on 13 April 2021 Mr Whitaker forwarded to Mr Brouff the earlier email to Mr Gates about Mr Gates’ performance, which caused Mr Brouff to ask, “Has he responded to this?” Mr Whitaker replied to Mr Brouff:
“Yes verbally but he didnt give me the things I requested
if not on target by arpil I’ll terminal however he is ‘sick’ now.
Id rather get rid of him today if I can.”
[31] Under cross examination Mr Whitaker indicated that when he wrote these words he “felt that Mr Gates had given up.”
[32] Mr Brouff replied “Let me know before you terminate him - if you are going to do that. I need to withdraw from his visa application first.”
[33] On Thursday morning, 15 April 2021, Mr Whitaker sent an email to Mr Gates in the following terms:
“Hey Stuart,
Sam B just called me and said the PR visas seem to be getting proceeded super speedy at the moment which he says is a good sign. Thought I'd let you know.
Just an FYI I wouldn't ever do anything to affect your residency status here. As long as you do right by me, the team and Blugibbon I won't do anything to affect your living situation in Aus.
Wanted to make sure that you and Kayleigh knew that.
Hope you are feeling better.
Cheers
Sam”
[34] The reference to “Sam B” above is of course a reference to Mr Brouff.
[35] Mr Gates says he took the words in this email to be a threat. Mr Whitaker denies making any threat. It is difficult to see Mr Whitaker’s words as anything other than a threat. Mr Whitaker had already decided that Mr Gates had betrayed him and that he would “rather get rid of him”. The second and third paragraphs of the email are extraneous. They pledge ongoing support to Mr Gates, but only “as long as you do right by me, the team and Blugibbon”. The reference to not doing anything to affect Mr Gates’ residency status can readily be understood as a threat that Blugibbon might do something to adversely affect Mr Gates’ residency status if he does not “do right” by them.
[36] Mr Gates said in his evidence that he does not have any of Blugibbon’s confidential information or intellectual property, and that even if he did, he has no use for it.
[37] Mr Whitaker says that on 28 April 2021 he identified a download of Blugibbon’s data from the virtual drive of Mr Gates’ laptop between 10 April 2021 and 28 April 2021.
[38] At 1:00pm Mr Whitaker called Mr Gates to discuss what he described to him as a “data breach”. Mr Whitaker says Mr Gates’ response to him “I haven’t opened my laptop since 11 April 2021.”
[39] Mr Whitaker then made arrangements for the immediate return of the laptop.
[40] By 4:30pm on 28 April Mr Whitaker had retrieved the laptop and ran a Windows Audit Log that confirmed that the laptop “had been logged into several times since 11 April 2021.” Mr Whitaker’s filed evidence was:
“The most concerning action I noticed on the Google Drive virtual disc application located on the laptop was deleted from the laptop on Thursday, 28 April 2021 at 13:13 (11 minutes after I called [Mr Gates] to request his laptop that afternoon).”
[41] Mr Whitaker was aggrieved that Mr Gates had lied to him about using the laptop at all since 11 April 2021, and also that Mr Gates had deleted the Google Drive application from the laptop.
[42] Mr Gates provided a different account of the phone conversation at 4:30pm on 28 April 2021. He says that Mr Whitaker spoke to him about a data breach and said “there has been some kind of breach so I need your laptop.” Mr Gates said that he replied to Mr Whitaker in the following words “I haven’t really used my laptop for anything like this to happen but have used it for some personal use and some work.” In his filed evidence Mr Gates says he used his work laptop between 10 April 2021 and 28 April 2021 for the following purposes:
“• to check relevant doctor’s weekly timesheets to enable me to identify from the contents of those timesheets both how I was tracking against my monthly revenue targets for those particular weeks and the commission which I could expect to receive in respect of that month, which was calculated by reference to those revenue targets; and
• to access my personal files that were located on the work laptop, including on the two occasions described in the next point below; and
• to try to view minutes taken of a meeting that occurred as I was the account manager for that client and usually took minutes and/or chaired the meetings; and
• to find any policies relating to my employment
on 22 April 2021:
• I inserted two flash drives into my work laptop in order to download a soccer training drill which was stored amongst my personal files for use at a soccer training session I attended that afternoon as a volunteer soccer coach. I inserted a second flash drive for this purpose as the first flash drive encountered an error and could not be used. The only file transferred to the second flash drive was the soccer training drill document, which I then took to a nearby convenience store to be accessed and printed for use at the training session; and
• I inserted an external hard drive to my work laptop. This hard drive is my backup of all my personal files, and I connected it to my work laptop to check whether I had a complete backup of all of my personal files on my work laptop. I undertook this checking and backing up process regularly. I did not transfer any of Blugibbon’s confidential files, or any material from the G-drive, to my external hard drive when it was connected to my work laptop;”
[43] Mr Gates agrees that he deleted the Google Drive application. His explanation for this is:
“On 28 April 2021, after I received a telephone call from Mr Whitaker demanding the surrender of my work laptop, I accessed the work laptop to delete my personal files. In doing so, I opened the Application, and noticed that it had encountered a regular error preventing access to the Application. I, by force of habit, deleted the Application as I usually did when I encountered this error. I omitted to reinstall the Application because I no longer needed access to the G-drive using my work laptop (given it was to be returned) and assumed it could be reinstalled by a member of Blugibbon when required.”
[44] On 29 April 2021 Mr Whitaker and Mr Gates spoke again by telephone. Mr Whitaker’s account of the conversation is as follows:
“On 29 April 2021, I tried to call [Mr Gates] on his personal mobile phone. He then called me back. I told him “my laptop audits indicated that you have logged into the laptop while he was on sick leave. Why did you tell me me on 28 April 2021 that you had not logged into the aptop at all while on leave?” He told me with words to the effect that “I have logged into the laptop to watch Netflix because the battery on my personal laptop was flat.” I told him words to the effect: “my audit report and review of the laptop showed that you have deleted the Google Drive application.” He responded with words to the effect “the Google Drive application was showing an error, so I deleted it.”
[45] Mr Gates’ account of the same conversation is as follows:
“• On 29 April 2021 at 10.33 AM I received a phone call from Mr Whitaker who said words to the effect that "a significant number of files have been downloaded or shared on your laptop since you have been off sick from 11th April 2021.”
• Mr Whitaker mentioned words to the effect that “I called yesterday as there had been a security breach and needed your laptop. Have you used your laptop at home?” I responded “yes a few times for a bit of work and Netflix and access to personal files as my personal laptop wasn’t working.”
• Mr Whitaker said words to the effect of “I am disappointed that you said that you hadn’t been on the laptop and I was expecting a better response other than that “I didn’t know what had happened and that I have no idea what you are talking about.”
• I said words to the effect “Sam, you are not listening to me and you have fabricated a lot of what I have and haven’t said, I wish to have someone witness this conversation going forward.” This request was ignored and Mr Whitaker went on to say words to the effect that “I don’t want to get personal so I will be keeping this chat black and white. My investigations show a breach of data therefore this is a breach of your employment contract. I am terminating you from your contract with Blugibbon”
• In response to this I asked Mr Whitaker words to the effect of “Are you being serious? I can’t believe this. Can you please send me what you have allegedly found so I can respond to that” to which I got no response.
• I was teary, very sad and disappointed and didn't understand what had happened so then asked what the next steps were, Mr Whitaker responded with words to the effect of “I need to seek advice from our HR person and seek legal advice before following up with an email later.”
• Mr Whitaker continued with words to the effect of “You haven’t been hitting targets since November and your performance was really bad and you have been on performance review.”
• I was really upset by this point and said that I was intending to return to work on Monday 3rd June to which Mr Whitaker responded by saying words to the effect “I’m disappointed you didn't keep me up to date with regards to your sick leave and I needed more communication so I could manage the expectations. Terry (A Blugibbon employee) is off now as his wife’s waters broke and will be having a baby, therefore I need to manage your desk and Terry’s desk in your absence whilst also trying to run the business too.”
• At that point, the call was ended abruptly by Mr Whitaker hanging up.
• I was in complete shock as I couldn’t believe what just happened or what might happen next. I phoned my wife and was very emotional to which she left her work immediately to come home and support me.”
[46] Mr Whitaker feared that Mr Gates was going to use its confidential information in some way adverse to Blugibbon and it decided not to put the allegations to Mr Gates prior to dismissing him because to do so would [somehow] compromise its capacity to take legal action in the Supreme Court.
[47] Mr Whitaker confirmed the dismissal in an email sent the same day. The email was in the following terms:
“Dear Stuart,
I am writing to you about the termination of your employment with Blugibbon Pty Ltd.
For the period 10 April 2021 to now, I have a report showing Blugibbon data download activity from your laptop in your location, and a report showing the log-in activity to your work laptop (as in log-ins to the desktop using a login PIN).
As you are now aware, your computer was used to download a significantly large number of confidential documents from Blugibbon’s Google Cloud Drive to a local physical drive. After being confronted about this issue, I consider that you then attempted to hide the evidence of the data breach by deleting the G-Drive from your computer and its Trash folder.
I consider that you have not been able to provide me with any believable explanation as to why Blugibbon data has been downloaded to a local physical drive using your work computer.
I consider your conduct to be a misuse of company property, and acts of dishonesty (potentially constituting theft). These actions have put Blugibbon at serious financial and reputational risk.
We deem this to be serious misconduct, warranting summary dismissal.
In line with section 16.6 (b, c, e,& f) of your employment contract, this letter is confirming that we are terminating your employment effective immediately for reasons of serious misconduct.
In line with section 16.8 of your employment contract, on Friday, 30 April 2021, you will be paid:
• Payment for time worked up to and including 29 April 2021; and
• 63.057 Hours accrued annual leave
We request that you return all copies of downloaded information immediately. Should we discover that any downloaded information has been shared with an external party, we will pursue all civil and criminal law actions and remedies available to protect Blugibbon’s data.
We must also inform you that we are obligated to notify the Immigration Department of the change to your employment status, which will likely have implications on your Permanent Residency application.
Stuart, I’m disappointed that your employment has ceased in this manner. I wish you all the best for the future.”
[48] On 30 April 2021 Blugibbon’s solicitor, Mr Brouff, sent a letter to Mr Gates in the following terms:
“Your employment with Blugibbon was terminated by summary dismissal on 29 April 2021 for reasons of serious misconduct related to dishonesty and unauthorised use of confidential information.
The evidentiary basis of the summary dismissal is summarised as follows:
Report evidencing significant log-in activity to the Windows desktop of your work laptop in the period 10 April 2021 to 29 April 2021;
Report evidencing significant Blugibbon data download activity from your work laptop in your location in the period 10 April 2021 to 29 April 2021;
That on physical inspection of your work laptop on 28 April 2021, the G-Drive virtual disc drive had been deleted from the desktop and Recycle Bin of your work laptop;
That data can be downloaded from a G-Drive virtual disc drive to a local physical hard disc where a user password has been changed in Google Admin.
Blugibbon says this evidence is sufficient basis for your summary dismissal and, more importantly, to protect the interests and reputation of the business and its clients.
Evidence of your unauthorised use of confidential information will be discoverable at any court hearing, be it in the Fair Work jurisdiction or other civil or criminal law forums.
We put you on notice that if Blugibbon becomes aware that its confidential information is used to your benefit, or the benefit of your employers and associates, it will not hesitate to refer the matter to the police and initiate civil law proceedings against the relevant parties. Costs will be sought in civil law proceedings.
You should seek independent legal advice. We will not respond to correspondence sent by you.”
[49] One-week later Blugibbon engaged a “cyber security specialist” to examine Mr Gates’ laptop. Mr Brouff’s letter of instruction to the expert is dated 13 May 2021, although the report itself indicates that the laptop was provided to the expert on 7 May 2021.
[50] The report of the cyber security specialist was explicitly prepared for the Supreme Court proceedings. Taken at their highest the central findings of the report are:
(a) Mr Gates accessed the laptop on ten occasions over six separate days between 10 April 2021 and 28 April 2021;
(b) three USB devices were connected to the laptop. The first device malfunction and the second device was connected shortly after the first;
(c) in four sessions Mr Gates accessed and opened files and folders;
(d) Mr Gates accessed fifteen of Blugibbon’s files;
(e) the expert does not know what files, if any, were copied to an external drive;
(f) “it can be speculated” from the creation of a folder called “New Folder” on the Desktop that Mr Gates was gathering files to move then to a final location; and
(g) Mr Gates viewed documents using a web browser.
[51] On 21 May 2021, Blugibbon filed a summons and supporting affidavit in the NSW Supreme Court equity list seeking to restrain Mr Gates from disclosing or dealing with Blugibbon’s data. On 27 May 2021, the matter was disposed of by consent orders, and Mr Gates provided an undertaking to the Court that he would not disclose or deal with Blugibbon’s data. The undertaking was provided to the Court on a without prejudice basis and it appears that each party bore their own costs for the Supreme Court proceedings.
[52] Section 387 of the FW Act requires me to take into account the following matters in determining whether Mr Grantham’s dismissal was harsh, unjust or unreasonable:
(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.
[53] I am required to consider each of these criteria, to the extent they are relevant to the factual circumstances before me. 1 I set out my consideration of each below.
[54] 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
[55] In Sydney Trains v Gary Hilder [2020] FWCFB 1373 (“Hilder”) the Full Bench summarised the well-established principles for determining matters of alleged misconduct 4:
“[26] The principles applicable to the consideration required under s 387(a) are well established, but they require reiteration here:
(1) A valid reason is one which is sound, defensible and well-founded, and not capricious, fanciful, spiteful or prejudiced.
(2) When the reason for termination is based on the misconduct of the employee the Commission must, if it is in issue in the proceedings, determine whether the conduct occurred and what it involved.
(3) A reason would be valid because the conduct occurred and it justified termination. There would not be a valid reason for termination because the conduct did not occur or it did occur but did not justify termination (because, for example, it involved a trivial misdemeanour).
(4) For the purposes of s 387(a) it is not necessary to demonstrate misconduct sufficiently serious to justify summary dismissal on the part of the employee in order to demonstrate that there was a valid reason for the employee’s dismissal (although established misconduct of this nature would undoubtedly be sufficient to constitute a valid reason).
(5) Whether an employee’s conduct amounted to misconduct serious enough to give rise to the right to summary dismissal under the terms of the employee’s contract of employment is not relevant to the determination of whether there was a valid reason for dismissal pursuant to s 387(a).
(6) The existence of a valid reason to dismiss is not assessed by reference to a legal right to terminate a contract of employment.
(7) The criterion for a valid reason is not whether serious misconduct as defined in reg 1.07 has occurred, since reg 1.07 has no application to s 387(a).
(8) An assessment of the degree of seriousness of misconduct which is found to constitute a valid reason for dismissal for the purposes of s 387(a) will be a relevant matter under s 387(h). In that context the issue is whether dismissal was a proportionate response to the conduct in question.
(9) Matters raised in mitigation of misconduct which has been found to have occurred are not to be brought into account in relation to the specific consideration of valid reason under s 387(a) but rather under s 387(h) as part of the overall consideration of whether the dismissal is harsh, unjust or unreasonable.”
[56] As can be seen from the letters of 29 April and 30 April 2021, the stated reasons for dismissing Mr Gates are somewhat vague. The stated reasons can be distilled into the following:
a) there was log in and data download activity on Mr Gates’ laptop while he was on sick leave; and
b) Mr Gates deleted a G-drive virtual disc drive from the laptop and also the recycling bin of the laptop.
[57] I accept the possibility that in some businesses cyber security is so sensitive that even merely logging into the system at a time when an employee is not expected to be working might constitute valid grounds for dismissal. There is no evidence before me that Blugibbon’s security requirements are of this kind. As such, the mere fact that Mr Gates engaged in “log in activity” is not, of itself, a valid reason for dismissal.
[58] Mr Gates was paid a salary plus commission and says that he accessed Blugibbon’s system to check how he was tracking against his monthly revenue targets. In an email exchange between Mr Gates and Mr Whitaker they discussed who would cover Mr Gates’ clients and, more significantly, how commissions would be split if other staff had to work on his clients. Blugibbon led no evidence that contradicted Mr Gates’ evidence. The mere logging into the system to review revenue targets is not a valid reason for dismissal.
[59] Similarly, Mr Gates said he logged on to Blugibbon’s system to “find any policies relating to my employment.” This is not improper conduct for an employee on sick leave, particularly if the policies he searched for related to his sick leave. Many employers publish policies on an intranet for employees to access and it would be silly for an employer to criticise an employee for accessing such material. Blugibbon has not actually criticised Mr Gates for accessing personnel policy documents because it did not take the time to ask him what he was doing when he logged on. The conclusion that using a work laptop on sick leave to log in and access personnel policies is not a valid reason for dismissal is somewhat obvious.
[60] The apparent deleting of materials from the laptop is more concerning and is potentially a valid reason for dismissal. Mr Whitaker suspected that Mr Gates downloaded materials from the server to a virtual drive on the laptop in order to then copy the materials for himself. Mr Whitaker’s suspicions were no doubt bolstered by the fact that Mr Gates deleted the virtual drive and emptied his recycling bin on the laptop on the day it was returned - which I accept carried the odour of concealment. If Mr Gates had merely deleted the virtual drive because of an error message and then there is no apparent need to take the extra step of emptying the recycling bin.
[61] I accept that Blugibbon’s concerns about the deletion of the virtual drive were reasonable. However two key factors mean that in this instance Mr Gates’ action in deleting the virtual drive was not a valid reason for dismissal.
[62] Firstly, there is no evidence, or even a suggestion that the materials deleted by Mr Gates were not also on Blugibbon’s server. That is, there is no suggestion that Mr Gates deprived Blugibbon of any material by irretrievably deleting it. Secondly, there is no evidence that Mr Gates had copied any material out of the drive for himself before deleting the virtual drive.
[63] Mr Gates did remove what he said were personal documents stored on the laptop, and presumably he tried to permanently delete those personal documents. Again, if this is true, doing so is not a valid reason for dismissal.
[64] In the present case, the mere fact that Mr Gates deleted a virtual drive on his corporate laptop was not a valid reason for dismissal.
[65] Therefore, none of the reasons for dismissal stated to Mr Gates on 29 or 30 April 2021 were valid reasons for dismissal.
[66] At hearing Blugibbon relied on the report prepared by the cyber security expert. Blugibbon did not have this report at the time that it decided to dismiss Mr Gates, instead relying only on its own preliminary searches of the laptop. It was reasonably open for Blugibbon to suspend Mr Gates’ employment and arrange for the laptop to be properly interrogated but he chose not to do so. In deciding to dismiss Mr Gates, Blugibbon was consciously focused on building a case to litigate against him in order to restrain him from future conduct.
[67] In the circumstances, I am reluctant to place much weight at all on the expert report because it is the product of enquiries that were reasonably open for Blugibbon to make prior to dismissing Mr Gates. Blugibbon had little more than suspicions of foul play and decided to dismiss Mr Gates based on those suspicions rather than find out if the suspicions were correct. Understood in this way, Blugibbon’s under-investigated suspicion was not a valid reason for dismissal.
[68] However the test is not whether the employer believed, on reasonable grounds after sufficient enquiry, that the employee was guilty of the conduct which resulted in termination. 5 The Commission’s does not stand in the shoes of the employer and determine what it would do in the employer’s position.6 Nor is the test whether the conclusion reached by the employer reasonable on the information available to it at the time.7
[69] The test is whether, on the evidence before the Commission, there was a valid reason for dismissal connected with the employee’s capacity or conduct.
[70] As such, there is no barrier for the Commission to receive and consider evidence of facts not known to the employer at the time of the dismissal 8 as long as the facts existed at the time of dismissal.9 The way in which such evidence might be considered will depend on the circumstances of the case. As Von Doussa J reasoned in Lane v Arrowcrest Group Ltd (1990) 27 FCR 427 at 45610:
“… In my opinion it is still open to an employer to justify a dismissal by reference to facts not known to the employer at the time of the dismissal, but discovered subsequently, so long as those facts concern circumstances in existence when the decision was made. Whether the decision can be so justified will depend on all the circumstances. A circumstance, likely to favour the decision to dismiss, would be that fraud or dishonesty of the employee had caused or contributed to the employer's state of ignorance. A circumstance likely to weigh against the decision would be that the employer had failed to make reasonable inquiries which would have brought existing facts to its knowledge before the dismissal occurred…”
[Emphasis added].
[71] It may be that after-acquired knowledge/evidence improves an employer’s case in relation to establishing a valid reason for dismissal but, as the Full Bench in APS Group (Placements) Pty Ltd v Stephen O’Loughlin (2011) 209 IR 351; [2011] FWAFB 5230 found, such evidence might weaken the employer’s case in relation to procedural fairness:
“[51] Section 387(a) of the FW Act requires FWA to consider “whether there was a valid reason for the dismissal”. This language directs attention to whatever reason or reasons for dismissal emerge from the evidence and are relied upon by the employer. The tribunal is not confined to a consideration only of the reason or reasons given by the employer at the time of the dismissal. An employer is entitled at the hearing of an application for an unfair dismissal remedy to rely upon whatever reason(s) the employer wishes to rely upon at that time, albeit that in relation to any reason not relied upon at the time of dismissal the employer will have to contend with the consequences of not giving the employee an opportunity to respond to such reason (see s.387(b) and (c) of the FW Act).”
[72] In this matter the report from the cyber security expert does not help Blugibbon’s case in any material way but it does add to the procedural unfairness of Blugibbon’s conduct.
[73] The report quantifies Blugibbon’s suspicions but does not actually establish that any wrongdoing by Mr Gates. Mr Whitaker knew that there was log in and download activities that made him suspicious about Mr Gates’ actions and intentions. The report simply provides dates and times of the log in and download activities. The suspicion held by Mr Whitaker was that Mr Gates was accessing and/or taking Blugibbon’s confidential information when he undertook the log in and downloading activities. However the report does not identify any particular files that Mr Gates copied or stole or even that files were copied or removed from the laptop. The expert speculated about why a folder called “New Folder” was created on the Desktop but this part of the report is no more than speculation.
[74] Even though the report was not finalised until 3 weeks after dismissal, none of the activities described in the report, of themselves or even in total, constitute a valid reason for dismissal.
Was the Applicant notified of the valid reason?
[75] Proper consideration of s.387(b) requires a finding to be made as to whether Mr Gates “was notified of that reason.” Sections 387(b) and (c) are related to the concept of procedural fairness – in general terms a person should not exercise legal power over another, to that person’s disadvantage and for a reason personal to him or her, without first affording the affected person an opportunity to present a case. 11
[76] Contextually, the inquiry to be made under s.387(b) is whether the employee was “notified” of the reason before the employer made the decision to terminate. 12 The reference to “that reason” is to the valid reason found to exist under s.387(a).13 As a matter of logic, procedural fairness requires that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified.14 Notice must be given in explicit and plain terms.15
[77] As I am not satisfied that there was a valid reason related to dismissal, this factor is not strictly relevant to the present circumstances. 16
[78] I do note that Mr Whitaker sent Mr Gates a letter stating certain reasons for dismissal after phoning him to dismiss him. This letter cannot constitute notification of the reason for his dismissal for the purposes of s.387(b) because it was not given before the decision to dismiss was made. 17
Was the Applicant given an opportunity to respond to any valid reason related to their capacity or conduct?
[79] The opportunity to respond to which s.387(c) refers is an opportunity to respond to the reason for which the employee may be about to be dismissed.
[80] This factor is similarly not strictly relevant to the present circumstances because I have not found that there was a valid reason related to dismissal.
[81] I do note that Mr Gates was not given any meaningful opportunity to respond to Blugibbon’s stated reasons for dismissal.
Did the Respondent unreasonably refuse to allow the Applicant to have a support person present to assist at discussions relating to the dismissal?
[82] Mr Gates did ask for a support person during his phone call with Mr Whitaker on 29 April 2021 but his request was refused. As much as this conversation could be understood to be a “discussion relating to dismissal” Mr Gates was unreasonably refused a support person.
Was the Applicant warned about unsatisfactory performance before the dismissal?
[83] As the dismissal did not relate to unsatisfactory performance, this factor is not relevant to the present circumstances.
To what degree would the size of the Respondent’s enterprise be likely to impact on the procedures followed in effecting the dismissal?
[84] The size of Blugibbon’s enterprise was not likely to impact on the procedures followed in effecting the dismissal.
To what degree would the absence of dedicated human resource management specialists or expertise in the Respondent’s enterprise be likely to impact on the procedures followed in effecting the dismissal?
[85] Blugibbon does not appear to have any human resource management specialists or expertise within its enterprise. I note that Mr Whitaker acted on advice from Mr Brouff and also from an external human resources consultant. Curiously Mr Whitaker spoke with this consultant “on or about 27 April 2021”. Mr Whitaker’s evidence was that on 28 April 2021 he “checked the activity on the applicant’s laptop in the period from 10 April 2021” and then discovered the so-called download activity that led to Mr Gates’ dismissal. Recalling that two weeks before Mr Whitaker had indicated to Mr Brouff “I’d rather get rid of him today if I can”, it seems that Mr Whitaker engaged a HR consultant the day before searching and finding problems with Mr Gates’ laptop activities.
What other matters are relevant?
[86] Section 387(h) requires the Commission to take into account any other matters that the Commission considers relevant. There are no other relevant matters that I must take into account.
[87] I have made findings in relation to each matter specified in section 387 as relevant. I must consider and give due weight to each as a fundamental element in determining whether the termination was harsh, unjust or unreasonable and therefore an unfair dismissal.
[88] Of the matters considered above that have direct relevance to this application, all of them point towards the conclusion that the dismissal was harsh, unjust or unreasonable and therefore unfair. There was no valid reason for dismissal, even taking into account the result of ex post facto investigations that could and should have happened prior to dismissal. Mr Gates was not notified of the reasons for dismissal prior to the dismissal taking place, nor was he given the opportunity to respond Blugibbon’s concerns. Blugibbon acted on legal advice and also specialist HR advice and intentionally dismissed Mr Gates by a process designed to place Blugibbon in the best possible position to litigate against him.
[89] I therefore find that Mr Gates was unfairly dismissed within the meaning of section 385 of the FW Act.
[90] Being satisfied that Mr Gates made an application for an order granting a remedy under s.394, was a person protected from unfair dismissal and was unfairly dismissed within the meaning of s.385 of the FW Act, I may order Mr Gates’ reinstatement, or the payment of compensation to him, subject to the FW Act.
[91] Mr Gates found new employment three weeks after he was dismissed and does not seek re-instatement. Re-instatement is therefore not appropriate.
[92] Mr Gates also seeks revocation of the dismissal and a statement of service – neither of which are remedies I have any capacity to grant.
[93] Having found that reinstatement is inappropriate, it does not automatically follow that a payment for compensation is appropriate. The question whether to order a remedy remains a discretionary one. 18
[94] Where an applicant has suffered financial loss as a result of the dismissal, this may be a relevant consideration in the exercise of this discretion. 19
[95] Mr Gates seeks 12 weeks compensation on the basis that he was unemployed for three weeks, that his new job is on a lower salary, because he was not given any notice of termination and because he was no longer receiving commission payments.
[96] Blugibbon’s submissions on remedy were:
“$0.
The applicant derived the following intangible benefits in his employment with the respondent:
1. permanent visa;
2. waiver of the respondent’s right in contract and equity to enforce a restraint on the applicant’s post-employment conduct, including approaching certain clients of the respondent;
3. the applicant is approaching the respondent’s clients (both doctors and hospitals/ clinics).
The applicant has not provided evidence of his current pay and commission arrangement. We suggest that he is now on a more modest base salary because he is a permanent resident (thanks to the respondent).
Without the safety net of a higher base salary, the applicant must supplement his income with commissions. Respectfully, it is not the Commission’s place to order the respondent to supplement the applicant’s income while he ‘builds a desk’ at a competitor.”
[97] In all the circumstances, I consider that an order for payment of compensation is appropriate to compensate Mr Gates for financial losses he has suffered arising from being unfairly dismissed.
Compensation – what must be taken into account in determining an amount?
[98] Section 392(2) of the FW Act requires all of the circumstances of the case to be taken into account when determining an amount to be paid as compensation to the Applicant in lieu of reinstatement including:
(a) the effect of the order on the viability of the Respondent’s enterprise;
(b) the length of the Applicant’s service;
(c) the remuneration that the Applicant would have received, or would have been likely to receive, if the Applicant had not been dismissed;
(d) the efforts of the Applicant (if any) to mitigate the loss suffered by the Applicant because of the dismissal;
(e) the amount of any remuneration earned by the Applicant from employment or other work during the period between the dismissal and the making of the order for compensation;
(f) the amount of any income reasonably likely to be so earned by the Applicant during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the Commission considers relevant.
[99] I will consider these factors in sequence:
a) There is no dispute and I am satisfied that an order for compensation would not have an effect on the viability of the employer’s enterprise;
b) Mr Gates’ length of service was less than two years, which is not insubstantial and slightly favours a greater amount of compensation;
c) if Mr Gates had not been dismissed on 29 April 2021 his employment was unlikely to have continued for any more than a few weeks. I accept the distinct likelihood that the meeting on 7 April 2021 was the start of the end of Mr Gates’ employment. I note in this regard Mr Whitaker’s indication to Mr Brouff on 12 April 2021 (reproduced above) that “if not on target by arpil I’ll terminal”. I also accept that Mr Gates’ absence on sick leave and the subsequent laptop-related issues brought forward Mr Gates’ dismissal. Mr Gates says he earned $61,560 in the previous 6 months of employment and $118,431 in the previous 12 months. Using the 12-month figure, which is slightly lower, he received an average of $2,277 per week including commission. For six weeks, which is my best estimate of how long the employment would have lasted, Mr Gates might have earned $13,665 including averaged commission;
d) Mr Gates mitigated his loss by finding other employment within three weeks;
e) Mr Gates indicated under cross-examination that his salary in his new position was $80,000 per annum plus superannuation. I will assume for present purposes that Mr Gates earns $1,528 per week in his new job and that he earned $4,615 in his first three weeks;
f) the amount of income reasonably likely to be earned by Mr Gates between the making of the order for compensation and the payment of compensation is not directly relevant; and
g) There are no other directly relevant matters. I don’t regard the “intangible benefits” referred to by Blugibbon are relevant.
Compensation – how is the amount to be calculated?
[100] The well-established approach to the assessment of compensation under s.392 of the FW Act is to apply the “Sprigg formula” derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul’s Licensed Festival Supermarket (Sprigg). 20
[101] The approach in Sprigg is as follows:
Step 1: Estimate the remuneration the employee would have received, or have been likely to have received, if the employer had not terminated the employment (remuneration lost).
Step 2: Deduct monies earned since termination. Workers’ compensation payments are deducted but not social security payments. The failure of an applicant to mitigate his or her loss may lead to a reduction in the amount of compensation ordered.
Step 3: Discount the remaining amount for contingencies.
Step 4: Calculate the impact of taxation to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.
Step 1
[102] I have estimated the remuneration Mr Gates would have received, or would have been likely to have received, if Blugibbon had not terminated the employment to be $13,665 on the basis of my finding that Mr Gates would likely have remained in employment for a further period of six weeks.
Step 2
[103] I have found that the amount of remuneration earned by Mr Gates in the first six weeks after the date of dismissal was $4,615.
[104] The difference between the two sums is $9,050.
Step 3
[105] I now need to consider the impact of contingencies on the amounts likely to be earned by Mr Gates for the remainder of the anticipated period of employment. 21
[106] Given the short period that Mr Gates was out of work I do not think it is appropriate to deduct any amount for contingencies.
Step 4
[107] I have considered the impact of taxation but have elected to settle a gross amount of $9,050 and leave taxation for determination.
[108] Having applied the formula in Sprigg, I am nevertheless required to ensure that “the level of compensation is an amount that is considered appropriate having regard to all the circumstances of the case.” 22
[109] I am satisfied that the amount of compensation that I have determined above takes into account all the circumstances of the case as required by s.392(2) of the FW Act.
[110] In this matter the amount of the order for compensation is not to be reduced on account of misconduct (per s.392(3)).
[111] The cap on compensation in s.392(5) of the FW Act has no impact upon the present matter.
[112] In light of the above, I will make an order that Blugibbon pay $9,050 gross less taxation as required by law to Mr Gates in lieu of reinstatement within 21 days of the date of this decision, plus an additional component for superannuation.
DEPUTY PRESIDENT
Appearances:
Mr S Gates, Applicant
Mr S Brouff for the Respondent
Hearing details:
2021.
Sydney (By Video)
August 20.
Printed by authority of the Commonwealth Government Printer
<PR734970>
1 Sayer v Melsteel Pty Ltd [2011] FWAFB 7498, [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 at 373.
3 Ibid.
4 Citing Gelagotis v Esso Australia Pty Ltd [2018] FWCFB 6092 at [117]; Titan Plant Hire v Van Malsen [2016] FWCFB 5520, 263 IR 1 at [28]; Sharp v BCS Infrastructure Support Pty Limited [2015] FWCFB 1033 at [25]- [35].
5 Gelagotis v Esso Australia Pty Ltd [2018] FWCFB 6092 at [111] citing Yew v ACI Glass Packaging Pty Ltd (1996) 71 IR 201; Sherman v Peabody Coal Ltd (No 2) (1998) 88 IR 427; Australian Meat Holdings Pty Ltd v McLauchlan (1984) 84 IR 1 and King v Freshmore (Vic) Pty Ltd Print S4213
6 Commonwealth of Australia (Australian Taxation Office) v Shamir [2016] FWCFB 4185 at [46] citing Walton v Mermaid Dry Cleaners Pty Ltd (1996) 142 ALR 681 at 685.
7 Yew v ACI Glass Packaging Pty Ltd (1996) 71 IR 201 at 205-6.
8 Hyde v Serco Australia Pty Limited T/A Serco Australia Pty Limited [2018] FWCFB 3989 at [71].
9 Ibid at [64] citing Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 430 per Brennan CJ and Dawson and Toohey JJ; Australia Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1 at 14; Paech v Big W Monarto Warehouse [2007] AIRCFB 1049 at [8]; Dundovich v P&O Ports Print PR923358; Jetstar at [55]. See also Gautam v Costco Wholesale Australia Pty Ltd [2021] FWCFB 1097 at [44].
10 Cited in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 410; 61 IR 32 at 43 and Australian Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1 at 9 and Hyde v Serco Australia Pty Limited T/A Serco Australia Pty Limited [2018] FWCFB 3989 at [71].
11 Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at 151 [70].
12 Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at 150 [67]-[69], Sydney Trains v Trevor Cahill [2021] FWCFB 1137 at [60].
13 Bartlett v Ingleburn Bus Services Pty Ltd [2020] FWCFB 6429 at [19]; Reseigh v Stegbar Pty Ltd [2020] FWCFB 533 at [155].
14 Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at 151 [73].
15 See Sydney Trains v Trevor Cahill [2021] FWCFB 1137 at [60] citing Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at 151 [70] and Previsic v Australian Quarantine Inspection Services Print Q3730 (AIRC, Holmes C, 6 October 1998.
16 Read v Cordon Square Child Care Centre [2013] FWCFB 762 at [46]-[49] citing Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41].
17 Bartlett v Ingleburn Bus Services Pty Ltd [2020] FWCFB 6429 at [21].
18 Nguyen v Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australia Chapter [2014] FWCFB 7198 at [9].
19 Vennix v Mayfield Childcare Ltd [2020] FWCFB 550, [20]; Jeffrey v IBM Australia Ltd [2015] FWCFB 4171 at [5]-[7].
20 (1998) 88 IR 21. See also Bowden v Ottrey Homes Cobram and District Retirement Villages (2013) 229 IR 6; [2013] FWCFB 431 and Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries [2016] FWCFB 7206 at [16].
21 Enhance Systems Pty Ltd v Cox PR910779 (AIRCFB, Williams SDP, Acton SDP, Gay C, 31 October 2001) at [39].
22 Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries [2016] FWCFB 7206 at [17].