[2012] FWA 8300

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FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s 394 - Application for unfair dismissal remedy

Samantha Crockett
v
Vondoo Hair t/as Vondoo Hair
(U2012/8050)

DEPUTY PRESIDENT SAMS

SYDNEY, 9 OCTOBER 2012

Termination of employment - allegations of serious misconduct - allegations not made out - serious procedural faults - dismissal ‘unreasonable and unjust’ - reinstatement not appropriate - compensation ordered

[1] Ms Samantha Crockett (the ‘applicant’) was employed as a Hair Stylist by Vondoo Hair (the ‘respondent’) for two periods totalling around two and three quarter years. She was dismissed, without notice, for alleged serious misconduct on 5 May 2012. Her dismissal was confirmed four days later in the following letter sent to her by the respondent’s Artistic Director, Mr Craig Goodland:

[2] Not surprisingly, the applicant strenuously denied that she was guilty of any wrongdoing and claims her dismissal was unfair. On 14 May 2012, she filed an application, pursuant to s 394 of the Fair Work Act 2009 (the ‘Act’) seeking compensation as a remedy for her alleged unfair dismissal. Curiously, she seeks four weeks’ pay in this respect. With this in mind, when the matter came on for hearing on 3 September 2012, it seemed entirely appropriate at the outset, to inquire of the parties if a conference might result in the matter being able to be settled. Unfortunately, given the strongly held convictions of both sides, this was not possible. Accordingly, the matter proceeded to a hearing.

[3] As both parties were unrepresented, the hearing was conducted in a rather free flowing, informal way and, from time to time, the proceedings were a little unstructured, accusatory and emotional. Nevertheless, within the parameters of what a Tribunal member can do to assist the parties to conduct the process, at least in an orderly fashion, and using my best endeavours to ensure the parties focused on the relevant issues in the matter, I am satisfied that they both put whatever they wished to say about their respective positions. Arrangements had also been made to list the matter on a Monday as the respondent is closed on that day and said he could not afford to close on any other day (to attend the hearing).

THE EVIDENCE

[4] The applicant provided a witness statement in which she described the circumstances leading up to her dismissal on 5 May, 2012. In it, she stated that about four weeks earlier, Ms Lauren Ballesty, a friend of the hers and an employee of the respondent, was coerced into signing a letter of resignation. The applicant said that during the next four weeks, the owners of the salon, Mr Vaman and Mr Goodland had expressed their total contempt for Ms Ballesty. They had asked the applicant what was more important, her friendship with Ms Ballesty or her job. She said she could not, and would not, choose between the two.

[5] The applicant said that on 4 May 2012 she was told to sign a document which essentially was a restriction on employees from working in competition to the respondent or passing on information to a third party about the respondent’s clients and products. The next day, the applicant had arranged to have her own hair done after the salon closed. At around 5pm, she asked Mr Vaman and Mr Goodland if she could do so. Mr Goodland replied ‘as of this moment you are fired’. She said he yelled at her and accused her, in front of all the other employees, of stealing client information. She began crying and was in shock. She said she felt totally humiliated and belittled. She was given no opportunity to defend herself. She rejected the reasons given for her dismissal as untrue (see letter at para 1). The applicant claimed that she was not paid her outstanding entitlements and only received her last week’s wages after requesting it.

[6] The applicant said the day after her dismissal Mr Goodland sent her a text as follows: ‘is your friend!! going to look after you now?? loser!!’

[7] Attached to the applicant’s statement were various conversations with persons on Facebook. She said that these arose after a Police report was filed by the respondent against her on 3 June, 2012. She had then received a message from Mr Goodland, which said, in part:

[8] The applicant said she commenced new employment on 6 June 2012. However, around 28 June 2012, her new employer received a call from Mr Goodland. He warned the new employer about the applicant. She believed Mr Goodland’s intention was to have her dismissed. However, her new employer gave her the opportunity to defend herself and she retained her job. She believed Mr Goodland’s behaviour was very vindictive. It had caused her a great deal of additional stress and anxiety.

[9] In cross-examination, the applicant acknowledged that she was not present when Ms Ballesty left employment. However, that day both Mr Vaman and Mr Goodland had told her they were firing Ms Ballesty. The applicant said that after Ms Ballesty had left, she had requested her own codes be changed because Mr Vaman had told her that Ms Ballesty had taken information from the computer. She agreed she was aware of some of Vondoo’s clients going over to Ms Ballesty. However, she did not know how they came to do so, how Ms Ballesty had contacted them, what they were charged or how they were charged. The applicant told FWA that she brought Ms Ballesty to the Tribunal to prove that she had not passed on any client information to her. She believed Ms Ballesty to be a credible and honest person.

[10] The applicant insisted that she did not know Ms Ballesty was taking client information while she was employed by the respondent. However, she believed there was no proof Ms Ballesty had done so; she may have contacted people through Facebook. The applicant believed she had been dismissed because she would not end her friendship with Ms Ballesty.

[11] The applicant said the derogatory comments on Facebook were not made by her, but by others. She had always had business cards to give to friends and family and she only had them reprinted because her mobile number had changed. She had not been aware, at the time, that Ms Ballesty had business cards printed by the same company. She could not remember why she had been at the salon desk by herself, with the lights off, the day before she was dismissed.

[12] The applicant denied yelling and screaming in the salon on the day she was dismissed. She denied saying ‘who gives a fuck about those two? So what if I gave her (Ms Ballesty) their formulas’ (two clients who went to Ms Ballesty).

[13] The applicant conceded that the salon was a safe, fair and fun place to work. In further cross-examination, she agreed that she had twice been paid in advance, had taken sick days, had been provided with training and given cash bonuses and had her hair done during salon times. The applicant claimed that when Mr Goodland and Mr Vaman were going through a breakup, they had taken their anger out on her and the other staff.

Lauren Ballesty

[14] Ms Ballesty deposed that she had never asked the applicant to retrieve Vondoo client information, nor had the applicant ever passed any Vondoo client information to her. Ms Ballesty said she had business cards made after her dismissal. She denied conducting a ‘cash only’ business.

[15] Ms Ballesty conceded that one of Vondoo’s client’s had contacted her on Facebook after her dismissal - not the other way round. Ms Ballesty denied taking any client information from the respondent. After being asked to explain how she came to have obtained the numbers of seven named clients of Vondoo, Ms Ballesty said that she did take two numbers, but the other persons were either related to, or knew, those two clients. She said that just prior to her being forced to resign, it was common knowledge someone was going to be dismissed, so she ‘just grabbed the two numbers’.

Respondent’s Evidence

[16] The respondent’s objection to the application was first expressed in its F4 as follows:

[17] Mr Craig Goodland and Mr Gene Vaman tendered a joint statement in the proceedings. To the extent that the statement dealt with Ms Ballesty’s employment, I do not refer to it. They described how the relationship with the applicant had been very friendly; she was paid well above award wages and had been ‘showered’ with gifts, cash bonuses, vouchers, movie tickets and dinners. They had trusted her and expected her to protect their business. Throughout this time, Mr Goodland and Mr Vaman claimed to be struggling financially.

[18] After Ms Ballesty left, the applicant started to change her attitude and behaviour towards them, other staff and clients. She was dismissive and stopped saying ‘hello’. Mr Goodland and Mr Vaman said they became suspicious when the applicant, without any explanation, asked if her access to the computer could be disabled. The same day, they confronted her about Ms Ballesty and she told them she had witnessed Ms Ballesty going through Vondoo’s Facebook page to contact clients she had not recorded or could not remember. She also told them that Ms Ballesty was intending to cut a Vondoo client’s hair at his home, and be paid in cash. They believed the applicant did not fulfil her duty to protect the business from Ms Ballesty’s fraud. In the following week, the applicant told them that Ms Ballesty had asked for information about the formula used on another of Vondoo’s clients.

[19] Mr Goodland and Mr Vaman claimed that on 4 May 2012, the applicant was observed in the early morning at the reception desk. The salon’s lights were off and there was no record of any work being done. That evening they had after-work drinks, to give the applicant an opportunity ‘to come clean’. She did not do so. The next day the applicant picked up Mr Goodland and Mr Vaman for work. They had decided to confront her after work about Ms Ballesty. However, around 11am, a client gave Mr Vaman an envelope containing printed business cards of the applicant and Ms Ballesty. This was ‘the last straw’.

[20] At 4pm that day, they confronted the applicant and the following exchange was said to have occurred:

[21] Mr Goodland and Mr Vaman said the discussion continued and the applicant said she had not informed them of Ms Ballesty’s activities because she was a friend. She claimed no knowledge of Ms Ballesty’s business card and said she had had her own business card for some time, to give to friends and family. When asked about secretly accessing the computer, she said the client she accessed had already gone over to Ms Ballesty. The applicant denied any wrongdoing and when Mr Vaman said that if you are innocent ‘let’s all sit around as a team and go through all the events’. The applicant yelled ‘I don’t give a fuck about those idiots’ and left.

[22] Mr Goodland and Mr Vaman stressed the seriousness of Ms Ballesty’s conduct in ‘poaching’ their clients. It risked the business’s ongoing operation and the other employees’ jobs. It was still continuing. They added that since the applicant’s departure, they had received a number of adverse comments and complaints from clients about the applicant’s lack of care and bad attitude. These clients had chosen not to say anything beforehand because they knew how much Mr Goodland and Mr Vaman cared about the applicant. In addition, some clients who were previously lost, have since returned.

[23] In a reply statement, Mr Vaman pointed out that there had been a break in the applicant’s employment when she left for England to take another position. The more recent period of employment was 17 months (actually 19 months). Mr Vaman said that the applicant was not present when Ms Ballesty hastily resigned. Ms Ballesty had not been ‘fired’. Mr Vaman denied using any insulting language to describe Ms Ballesty. He said that, if anything it was the applicant’s friends and relations who had used horrendous insults to defame himself and Mr Goodland.

[24] Mr Vaman noted that the applicant signed a policy of non disclosure and confidentiality designed specifically with Ms Ballesty’s conduct in mind. He insisted that no one was threatened into signing the document. The applicant had then breached the policy by passing on Vondoo client formulas to Ms Ballesty.

[25] As to the day of dismissal, Mr Vaman stated that no one had yelled at the applicant and she had never shed a tear. On the contrary, she was aggressive and very rude, and said she had done nothing wrong. She insulted everyone and when her rage and anger got the better of her, she left.

[26] Mr Vaman reiterated that the applicant had admitted her knowledge of Ms Ballesty stealing client information and had no shame in admitting it. Mr Vaman challenged the applicant to bring letters of reference from any of her former employers. He noted that the reverse side of Ms Ballesty’s and the applicant’s business cards were identical. He questioned why she described herself as the ‘owner’ of a business, while she was still working for the respondent.

[27] In oral evidence, Mr Vaman conceded that he had no direct evidence of the applicant accessing client formulas from the computer and then providing that information to Ms Ballesty. However, the last person’s name to comes up on the computer was the client with the specific formula who had gone over to Ms Ballesty. He also agreed he had no direct evidence of the applicant’s business cards being handed out to his clients. Mr Vaman said he had brought five staff to the proceedings to demonstrate that he is a good and fair employer and had done nothing wrong.

[28] In re-examination, Mr Vaman said that on 5 May 2012, after he had dismissed the applicant, she was asked twice to come back, sit down and talk about the issues, but refused.

[29] Ms Donna Dwyer provided a glowing reference of the respondent, describing Mr Vaman and Mr Goodland as supportive and very helpful to her when she had embarked on a new career at 40 years of age and with 3 children. They had always been fair and professional and provided employee incentives to keep staff motivated.

[30] In oral evidence, Ms Dwyer, who was present in the salon on 5 May 2012, said she observed the applicant was crying. The applicant was asked to come back and talk about the allegations with all the staff, but she did not want to do so. The applicant had said that she did not ‘give a fuck about what we thought!’

[31] A document (Exhibit C) addressed ‘to whom it may concern’ was signed by Mr Vaman, Mr Goodland and four of the respondent’s employees. It was in the following form:

SUBMISSIONS

[32] In short oral submissions, the applicant said she was dismissed for something which was completely untrue. She had never stolen anything from the respondent and never would have. She believed the way they had dismissed her, was unfair and harsh.

For the respondent

[33] Mr Vaman said that the applicant was dismissed because she was aware of Ms Ballesty’s theft and had never told the respondent. She had also participated in the theft. He submitted that because of this theft and the loss of clients, the other employees could lose their jobs. The applicant had blatantly sent insults about him and Mr Goodland to FWA. Mr Vaman insisted the respondent had done nothing wrong. Rather, it was he and Mr Goodland who had been ‘hard done by’. They had nowhere to go to stop this ‘poisonous’ conduct.

CONSIDERATION

Legislation and principles to be applied to this case

[34] Neither party put any submissions on the application of the relevant statutory provisions to the facts and circumstances of this case. Given my earlier observations (see para [3]), that is entirely understandable. Nevertheless, there is little doubt that the relevant provisions under s 387 of the Act can be readily applied to the circumstances, leading up to and including, the applicant’s dismissal. I shall come back to these matters shortly. At this point, however, it is appropriate that I refer the parties to the relevant legislative provisions and a number of authorities which can be applied to this case.

[35] For the jurisdiction of FWA to be invoked in the present case it must first be established that the applicant was a person who is protected from unfair dismissal. This is a requirement of s 382 as follows:

[36] As to the minimum employment period, even on the respondent’s own reckoning, the applicant was last employed for a period of 17 months. While the respondent did not raise any pleadings as to being a small business employer (one who has less than 15 employees), I do not think there is any doubt that this was the case. In any event, the applicant had the requisite minimum employment period and was covered by the relevant modern award.

[37] Section 385 describes the circumstances in which an unfair dismissal takes place, as follows:

[38] I am satisfied that the applicant was dismissed on 5 May 2012 by Mr Vaman. On the state of the evidence, it could not be said that the respondent was aware of, let alone applied the Small Business Fair Dismissal Code (the ‘Code’). Even so, the dismissal was not consistent with the Code. Obviously, the dismissal was not a case of genuine redundancy. It is clear the applicant relies on subsection (b) of s 385 to claim her dismissal was ‘harsh, unjust and unreasonable’. The meaning of ‘dismissed’ is found at s 386(1) as follows, and I am well satisfied that the circumstances disclose a termination of employment at the employer’s initiative:

[39] Thus, the only matters FWA is now required to take into account are those found at s 387 as follows:

[40] I shall come back to these matters, in the context of this case shortly, but at this point highlight some authorities which are relevant to this matter.

[41] The meaning of the expression ‘harsh, unjust or unreasonable’ is to be found in Byrne v Australian Airlines Ltd [1995] HCA 24 where the High Court said at para [128]:

[42] Of course, this is not an exhaustive list of what may constitute an unfair dismissal which is ‘harsh, unjust or unreasonable’. Nor is it necessary for each of the three descriptors to apply to a particular case.

[43] The meaning of ‘valid’ reason in subsection (a) of s 387 is to be found in the following extract from Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 where Northrop J at page 373 said:

[44] Subsections (b) (c) (d) and (e) of s 387 are matters going to whether the procedure adopted by an employer was fair. In this case, as I will shortly develop, I consider that the respondent’s actions did not provide the applicant with procedural fairness. The requirements on an employer to afford procedural fairness to a dismissed employee is no inconsequential matter. Nor can the employer merely pay ‘lip service’ to giving an employee an opportunity to respond to allegations; particularly where it was said, as here, that the applicant had engaged in serious misconduct. Moore J in Wadey v YWCA Canberra (1996) IRCA 568 identified these principles as follows:

[45] There is no doubt that the respondent dismissed the applicant for alleged serious misconduct (see the dismissal letter above at para 1) However, the test of whether or not an employee is guilty of misconduct is not whether the employer merely believed the employee was guilty of misconduct, but whether the employer is able to establish that there were reasonable grounds for holding the belief. I refer to what SDP O’Callaghan said in Harley v Rosecrest Asset Pty LTd t/a Can Do International [2011] FWA 3922 at paras [8]-[9]:

[46] Fraud and theft are obviously serious allegations to make against an employee. They are but two of the definitions of serious misconduct found in the Act. However, as was said in O’Connor v Palmer & Others (No. 1) (1959) 1 FLR 397, ‘misconduct’ involves something more than mere negligence, error of judgment or ‘innocent mistake’. I turn now to the evidence.

[47] Unsurprisingly, the evidentiary foundation of the respondent’s case was not particularly strong. Doing the best I can, from the informal nature of the proceedings, I would wish to make a few observations.

[48] While I understand why the applicant asked Ms Ballesty to give evidence on her behalf, the questioning of Ms Ballesty by Mr Goodland and Mr Vaman was primarily directed to her own conduct and the reasons for her ‘resignation’. It must be stressed that these proceedings were not about Ms Ballesty, her conduct or the setting up of her own business. Questions going to these matters are irrelevant to the applicant’s case.

[49] In contrast, the applicant sought to establish only one matter by calling Ms Ballesty to give evidence, being that she had not been asked by Ms Ballesty to retrieve information about Vondoo’s clients and had never given her such information. Ms Ballesty supported the applicant in this respect. Nevertheless, Ms Ballesty admitted that she had grabbed a couple of numbers from the computer before she was dismissed. It was therefore unlikely that the applicant had been asked to do so, or that she did so on her own initiative. On the other hand, it also seems understandable that Mr Vaman and Mr Goodland became suspicious of the applicant, being a friend of Ms Ballesty, and being unwilling to sever that friendship, when a number of their clients told them about contact, either directly or indirectly, from Ms Ballesty. But did the respondent have proof of what it alleged against the applicant?

[50] As to the printing of business cards by the same printer, Mr Vaman and Mr Goodland did not dispute that the applicant had a business card during her employment with them. It was a ‘long bow’ to draw a conclusion of aiding and abetting Ms Ballesty by having the business cards printed by the same printer. In addition, there was no evidence that the applicant or Ms Ballesty had engaged in ‘cash only’ business. In any event, such allegations are not relevant to FWA’s consideration of this matter.

[51] The respondent claimed that in para 9 of the applicant’s statement she admitted that she knew Ms Ballesty was stealing client information. On a correct reading of para 9 this is not an admission at all. The applicant was merely quoting from what the respondent had alleged against her. Moreover, in the first sentence of para 9, the applicant said that the reason she was dismissed was ‘not factual’. In other words, she expressly rejected the allegation. She goes on to quote from the termination letter, and does not make any admissions.

[52] The respondent also relied on the six signatures, including Mr Vaman and Mr Goodland, to a statement (Exhibit C - see para 31) in which it was said that on 5 May 2012, the applicant made a number of damning admissions in front of them. The other four are employees of the respondent. However, only Ms Dwyer gave short evidence of what happened that day. It went as follows:

[53] In the respondent’s reply statement, Mr Vaman said at para 8:

[54] It can be seen from Exhibit C, tendered by the respondent, that it was a detailed and expansive admission of guilt by the applicant, allegedly heard by six persons, including four of the other employees. In my view, there is an irreconcilable disconnect between Exhibit C and Mr Vaman’s evidence above, that the applicant aggressively denied doing anything wrong, was rude, enraged, insulted everyone and departed. Both versions of the incident cannot be right, nor can there have been two parts to the same incident. Ms Dwyer, in her oral evidence, made no mention of the admissions of guilt and seemed, in part, to corroborate Mr Vaman’s version of what occurred. Putting aside the unsatisfactory form of the witness statement, signed by six persons all claiming to have heard exactly the same thing, and the failure of the other three employee witnesses to give independent evidence of what was said by the applicant, I have serious doubts that she made any admissions, at all on 5 May 2012.

[55] It follows from the above observations that whatever were the issues the respondent had, and continues to have, with Ms Ballesty, I cannot be comfortably satisfied that the applicant was engaged in serious misconduct, such as she was aware of Ms Ballesty’s client ‘poaching’ and failed to inform her employer. At its highest, the evidence was that the applicant admitted to giving Mr Ballesty information about a client’s formula. Her explanation was that the client had already left Vondoo Hair, and so it was irrelevant. In my opinion, this conduct was irresponsible and unacceptable. However, I do not consider it falls within the category of serious misconduct. It is more appropriately characterised as an ‘error of judgment’.

[56] I would make one other point. There have obviously been some rather unfortunate and unpleasant post dismissal exchanges via email and Facebook, involving both parties. Neither side can claim to be ‘lily white’ in this respect; although I note that the slanderous and abusive insults on the applicant’s Facebook, were not made personally by her. On the other hand, I do not believe that a police complaint about the applicant would result in any charge/s being laid against her. As the respondent made clear in the proceedings, client ‘poaching’ is an unfortunate, and from what I can gather, rather common and unsavoury feature of the hairdressing industry.

[57] I return to the provisions of s 387 of the Act.

[58] It follows from the foregoing that I do not consider the respondent had a valid reason for the applicant’s dismissal. What is plainly apparent is that on 5 May 2012, the applicant was denied an opportunity to defend herself and was summarily dismissed without warning. I would want to make it abundantly clear that in a case of alleged serious misconduct, it is simply not good enough, nor is it contemplated by the provisions of s 387 of the Act:

[59] Two other matters are deserving of comment: providing a letter to the applicant, four days after her dismissal outlining the reason/s for her dismissal is unfair and inappropriate. Nor was it fair or appropriate to suggest that the applicant had an opportunity (or two) to discuss the matter with the entire salon team. A degree of confidentiality and sensitivity is required, not some open free-for-all forum, involving all the other employees. I can well understand why the applicant refused to co-operate. It was bound to be humiliating and upsetting.

[60] In short, the respondent’s handling of the applicant’s dismissal was appalling. It could have been handled more appropriately by Mr Vaman or Mr Goodland, or both of them, having a meeting with the applicant, inviting her to have a support person present, putting the allegations to her, inviting an initial response and allowing her a further opportunity to properly consider the allegations and respond at a future point. In the meantime, she could have been suspended for a short period. While adopting this process might not have changed the respondent’s decision, it certainly would have placed it in a more defensible position than the course of action it chose to adopt at the time.

[61] Having said that, I accept of course, that the respondent is a small employer and is not sufficiently sophisticated or knowledgeable in human resource management. I have taken these factors into account according to ss (f) and (g) of s 387 of the Act. However, the denial of procedural fairness to the applicant was of such gravity as to constitute a serious defect in the process which can lead to only one conclusion - that the applicant’s dismissal was ‘unreasonable and unjust’. I find accordingly, within the meaning of s 387 of the Act.

What remedy should be ordered?

[62] The applicant has secured alternative employment and does not seek reinstatement. She seeks four weeks compensation for her unfair dismissal remedy. Given the respondent’s toxic view of the applicant, I am satisfied that the employment relationship is irretrievably broken down, such as to render reinstatement inappropriate. In deciding an amount of compensation to be ordered in this case, FWA must take account of the following matters under s 392 of the Act:

[63] I have considered each of the above factors and note, in particular, that the respondent is not travelling well financially. I accept the respondent’s evidence of the difficult and competitive business environment in which it operates and its desire to keep employing people. The amount of compensation sought is at the lower end of what might otherwise have been ordered. I accept the applicant is not seeking to ‘enrich’ herself by the modest amount she has sought. She has had relatively short service and has mitigated her loss by securing alternative employment. Given the growing atmosphere of suspicion and mistrust which developed between the respondent and the applicant prior to her dismissal, it seems reasonable to assume that her prospects of remaining employed for much longer, were not great. No deduction is made for the applicant’s ‘error of judgement’ (see para 55); the amount ordered does not include any component for shock, distress, humiliation or other analogous hurt and the amount to be ordered does not exceed the remuneration earnt by the applicant in the previous 26 weeks of her employment.

[64] Having considered the concept of a ‘fair go all round’ (s 381 of the Act) and that it is more likely than not that the applicant was entitled to dismissal on notice, I propose to make an order of four weeks pay to the applicant for her unfair dismissal on 5 May 2012. From the respondent’s evidence, I have calculated the rate at $22 an hour for a 38 hour week. The amount of compensation is $3,344.00 to be paid within 28 days. An order to that effect will be published contemporaneously with this decision. If there is any dispute about the basis for this calculation, the matter may be referred back to FWA for further consideration.

DEPUTY PRESIDENT

Appearances:

S Crockett, applicant in person.

C Goodland and G Vaman, for the respondent.

Hearing details:

2012

Sydney:

3 September.

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