Fair Work Act 2009

s.394 - Unfair dismissal

Application for an unfair dismissal remedy - series of disparaging remarks made to client about director - duty of fidelity - misconduct - application dismissed

[1] This decision concerns an application by Ms Lidia Lucisano for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (Cth) (Act). Ms Lucisano was summarily dismissed from her employment with Fictiv Pty Ltd (company) because of a series of messages she sent to a client of the company in which she made disparaging remarks about its director, Mr Andy Singh. Ms Lucisano contends that she was telling the client the truth, and that her dismissal was unfair. The company submits that the dismissal was consistent with the Small Business Fair Dismissal Code (Code), and that the dismissal was in any event not unfair.

[2] Section 396 requires the Commission to decide four matters before considering the merits of an unfair dismissal application. I record my determination of those matters. First, Ms Lucisano's application was made within the 21-day period required by s 394(2). Secondly, Ms Lucisano was a person protected from unfair dismissal, as she earned less than the high-income threshold and had served the minimum period of employment (s 382). Thirdly, the dismissal was not a case of genuine redundancy. Finally, as I explain below, I consider that the dismissal was consistent with the Code and that the application must therefore be dismissed.

[3] The company develops websites for clients. In March 2019, it employed Ms Lucisano as its 'studio manager', reporting to Mr Singh. In May 2019, Whittlesea Council became a client of the company. This occurred as a result of Ms Lucisano's friendship with an employee of the council, Ms Jennifer Pearson. The council engaged the company to develop a tourism website. The arrangements were discussed at a meeting in mid-May 2019 attended by Mr Singh, Ms Lucisano, Ms Pearson, and the council's tourism officer, Ms Tanaya Preece.

[4] On 18 June 2020, Ms Preece sent Ms Lucisano an email asking for an update on the work. On 23 June 2020, Ms Lucisano replied via Facebook messenger, stating: 'I'm so angry and embarrassed that you haven't received your website yet. Andy [Mr Singh] is on his way in from meetings this morning but I will be at him to handover (sic) today'.

[5] On 29 June 2020, Ms Pearson met Ms Lucisano for a coffee and told her, 'as a friend', that she was concerned that the project was taking too long, and that the council's manager was unhappy. Ms Lucisano replied that she would follow up on the matter. Back at the office, Ms Lucisano asked Mr Singh how the project was going. He said that it was all but complete and that he was waiting for the council's feedback. Later that day, Ms Preece sent Mr Singh an email, copied to Ms Lucisano, asking about the status of the work. Mr Singh replied, stating that he would finish it that day. Ms Lucisano then sent Ms Preece a message via Facebook messenger (Facebook message), suggesting that she tell Mr Singh that the council needed the work for a meeting the next day, and that Ms Preece should 'get angry now'. On 30 June 2020, Ms Lucisano sent Ms Preece a further Facebook message, asking if she had received the work. Ms Preece said that she had not. Ms Lucisano replied that Mr Singh was not in the office and that he was avoiding her.

[6] On 2 July 2020, Ms Lucisano sent another Facebook message to Ms Preece, stating: 'Hello have you got what you need from Andy or is he still spinning me b.s. that it's all done on our part?' Ms Preece said that she had not received the work. Ms Lucisano replied: 'He said he spoke with you yesterday and gave you everything, I just hate being lied to that's all.' Ms Preece said that Mr Singh had not spoken to her the previous day. Ms Lucisano said: 'I'm just so sorry about the lies', and then asked Ms Preece whether she should 'call his bluff when he comes into the office.' Ms Preece replied that she had sent Mr Singh a message, and that she did not want Ms Lucisano to 'push him' on the matter.

[7] On 6 July 2020, Ms Preece sent Mr Singh an email inquiring about the outstanding work and stating that council management was asking her about it. Mr Singh replied, copying Ms Lucisano, stating that he would send the final link that day. Shortly afterwards, Ms Preece sent Ms Lucisano a Facebook message, stating that in all the circumstances she could not recommend the company to her colleagues. Ms Lucisano replied that she was 'seriously embarrassed' and that Mr Singh was 'full of it', because no-one was working on the project.

[8] From 27 to 31 July 2020, Ms Lucisano took sick leave. On 28 July 2020, Ms Preece sent an email to Mr Singh, copied to Ms Lucisano, asking for an update on the work. Mr Singh replied, copying Ms Lucisano, saying that he would send 'the review' that day. Ms Lucisano then sent a Facebook message to Ms Preece, stating that Ms Preece needed 'to get really tough' with Mr Singh, and that Mr Singh had told her that the delay was on the council's side, 'when in reality he takes the web designer off your project to work on new clients'. She said that the council should 'call his bluff', and 'look at whether this is a breach of contract'. She said that it was a 'disgrace'. In a further Facebook message to Ms Preece on 29 July 2020, Ms Lucisano said that Mr Singh was 'such a liar' and that she was 'over the lies'.

[9] While Ms Lucisano was on sick leave, Mr Singh logged on to her work computer, to ensure clients were being properly serviced in her absence. The Facebook messenger conversations between Ms Lucisano and Ms Preece were displayed. Mr Singh read them.

[10] When Ms Lucisano returned from sick leave on 3 August 2020, Mr Singh called her into a meeting room. He showed her a print out of her Facebook messages to Ms Preece and asked: 'Is this what you really think of me?' Ms Lucisano said 'yes'. Mr Singh said that it was her duty to help him fix any problems that might exist and that her conduct was unacceptable. He gave Ms Lucisano a termination letter, which stated that she had engaged in conversations with a client that had disclosed confidential information and that she had tarnished the reputation of the director and other employees. It said that her conduct was wilful and deliberate and inconsistent with the continuation of her contract of employment. It said that she had caused a serious risk to the reputation of the business, that her actions constituted serious misconduct, and that her employment was terminated immediately.

[11] The facts in this matter are largely uncontested. In particular, the content of the messages sent by Ms Lucisano to Ms Preece is not disputed. There are however several factual conflicts. First, Ms Lucisano maintained that she was only telling Ms Preece the truth about Mr Singh's dishonesty whereas Mr Singh denied lying to Ms Preece or Ms Lucisano. I find Ms Lucisano's claim that Mr Singh was lying to be unsubstantiated. I accept that Ms Lucisano believed that there were inconsistencies in what Mr Singh had said, and that she thought that he had been dishonest. But it has simply not been demonstrated that any inconsistencies arose from untruthfulness on the part of Mr Singh, rather than some other cause, such as a misunderstanding or a mistake. I also find unsubstantiated Ms Lucisano's claim that Mr Singh was avoiding her. I find it implausible that Mr Singh would feel the need to avoid Ms Lucisano. He denied it and I believe him.

[12] Secondly, Mr Singh disputed that the council had been unhappy with him. In my view Ms Pearson and Ms Preece were clearly concerned about the slow pace of the project. But it is also clear that the council was happy with the final product. On completion, the council's manager sent Mr Singh an email stating that the website was 'wonderful' and thanking him 'very much for all [your] efforts'.

[13] Thirdly, Ms Lucisano gave evidence that she told Mr Singh of the council's concerns about the work being late, whereas Mr Singh said that she did not. I prefer and accept Mr Singh's evidence. It was clear and convincing. In her witness statement, Ms Lucisano recounts in some detail her discussion with Ms Pearson on 29 June 2020 about the council's concerns, and her subsequent discussion with Mr Singh at the office. She makes no mention of telling Mr Singh about the council's concerns. This would have been an obvious opportunity for Ms Lucisano to tell Mr Singh about this. I find that Ms Lucisano did not tell Mr Singh about the council's concerns.

[14] Ms Lucisano contended that there was no valid reason for her dismissal, and that Mr Singh's decision to dismiss her was capricious and spiteful. She said that the termination letter had alleged that she had committed misconduct by disclosing confidential information and by tarnishing the company's reputation, but that neither of these things had been established. She said that there was no disclosure of confidential information, that any damage to reputation was caused by the company's own actions in not delivering the project on time, and that reputational damage concerned only one client, which she had brought to the company through her connections.

[15] Ms Lucisano submitted that her candid appraisal of Mr Singh to Ms Preece did not breach her employment contract. She said that no duty of trust and confidence is implied into contracts of employment, as the High Court confirmed in Commonwealth Bank of Australia v Barker[1] (Barker). She also contended that the duty of good faith 'should no longer be applied to employment contracts', and that she therefore owed no such duty to the company.

[16] While arguing primarily that she did nothing wrong, Ms Lucisano said that, at worst, her efforts to mollify an already disgruntled client were merely negligent, clumsy and inappropriate, and that they occurred partly at a time when she was home on sick leave and taking medication. She said that such behaviour might merit a warning but not summary dismissal.

[17] Ms Lucisano further contended that her dismissal was procedurally unfair because she had had no prior warnings; received no notice of the termination meeting on 3 August 2020; was not told that her employment was at risk; was not given a chance to bring a support person to the meeting; and was not afforded an opportunity to respond to the allegations. Ms Lucisano also said that her dismissal was disproportionate to her conduct, and unfair because of the adverse personal and economic consequences it caused, including loss of income.

[18] The company contended that it complied with the Code in relation to Ms Lucisano's dismissal. It is not disputed that the company was a small business employer at the relevant time, as it employed only five employees and had no associated entities. The company submitted that it believed on reasonable grounds that Ms Lucisano's conduct was sufficiently serious to justify immediate dismissal and that the dismissal was therefore consistent with the first limb of the Code. It contended that Ms Lucisano's messages to Ms Preece constituted serious misconduct, as they wrongly conveyed to the company's client that Mr Singh was lying both to Ms Lucisano and to Ms Preece and encouraged Ms Preece to think poorly of Mr Singh. Ms Lucisano had compromised the company's relationship with its client and failed to act in the interests of her employer.

[19] The company submitted alternatively that Ms Lucisano's messages to Ms Preece amounted to a valid reason for dismissal for the purpose of s 387(a). It said that it was clear from Ms Preece's messages that she did not want Ms Lucisano to get involved in following up on the work, but that she continued to do so, in a way that undermined the company. The company said that it notified Ms Lucisano of the valid reason for dismissal and gave her an opportunity to respond, and that its decision to dismiss her was proportionate to her misconduct and fair in all the circumstances.

[20] The first limb of the Code states that 'it is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal'. In my opinion, that is what occurred in this case. The company believed that Ms Lucisano's conduct was very serious, because, among other things, it was inconsistent with the continuation of her contract of employment, and that this warranted immediate dismissal. The company plainly had reasonable grounds to hold this belief, given the contents of the messages sent from Ms Lucisano to Ms Preece, in which she repeatedly called Mr Singh a liar and thereby undermined the company.

[21] There is Full Bench authority that the summary dismissal section of the Code applies to dismissals that occur without notice on the ground of serious misconduct as defined in Regulation 1.07 of the Fair Work Regulations 2009 (Cth).[2] There is also Full Bench authority that the regulation does not apply to the Code.[3] I prefer the latter view, because the expression 'serious misconduct' is not used in Part 3-2 of the Act. The Code itself is a legislative instrument. However, on either view, Ms Lucisano's conduct constituted serious misconduct. If the Regulation does apply, I consider that Ms Lucisano's behaviour was wilful and deliberate and inconsistent with the continuation of the contract of employment (see Regulation 1.07(2)(a)). It should be noted that the definition of serious misconduct in Regulation 1.07 is inclusive, not exclusive, and in my view Ms Lucisano's conduct fell comfortably within it. If Regulation 1.07 is not relevant to the meaning of serious misconduct in the first limb of the Code, I consider that the misconduct was sufficiently grave to constitute serious misconduct under the general law. An employee impugning the honesty of her own employer without proper cause is fundamentally inconsistent with the duty of fidelity (see further below).

[22] I agree with Ms Lucisano that it is not clear what confidential information she is said by the company to have revealed. I do not consider that she did disclose confidential information. But it is not necessary, for the purposes of the first limb of the Code, that all of the company's grounds for believing immediate dismissal is warranted be reasonable. So long as there are reasonable grounds for the belief, the employer complies with the first limb of the Code, even if there are other reasons that are not reasonable.

[23] Because the dismissal was consistent with the first limb of the Code, it cannot have been not unfair (s 385(c)), and the application must be dismissed. However, even if I had concluded that the dismissal was not consistent with the Code, I would nevertheless have considered that the dismissal was not unfair, having regard to s 387.

[24] First, there was plainly a valid reason for the dismissal (s 387(a)). Ms Lucisano's contention that she owed no duty of good faith to the company is wrong. The supporting footnote for this proposition in Ms Lucisano's written submissions is a reference to a passage in Walker v Citigroup Global Markets Pty Ltd[4], where Kenny J stated that 'no duty of good faith is implied into employment contracts'. However, as the context makes clear, her Honour was referring to, and rejecting, a proposition that the general law imposed a 'duty of procedural regularity or fairness' on an employer's right to terminate a contract.

[25] In Barker, the High Court rejected the proposition that under the common law of Australia there was a term of 'mutual trust and confidence' to be implied by law into all employment contracts, which prevented an employer from doing anything likely to seriously damage the relationship of trust and confidence without proper cause. However, the Court endorsed the long-established principle that employees are subject to a duty of good faith to their employer. French CJ, Bell and Keane JJ noted that an employee 'has an implied duty of fidelity to the employer not to engage in conduct which "impedes the faithful performance of his obligations or is destructive of the necessary confidence between employer and employee."'[5]

[26] Ms Lucisano owed the company a duty of good faith. She breached that duty by disparaging Mr Singh and his work to a client. Ms Lucisano's various imputations were not substantiated. It does not matter that Ms Lucisano may have believed that the imputations were true. On any view of the matter, she did not make reasonable inquiries to establish whether this was the case. If she thought there were inconsistencies in what Mr Singh had said, she should have asked him about this. Instead, she assumed that he was not telling the truth. She told the client that he was a liar and was 'spinning b.s.', and that he was not making proper efforts to complete the project. It was wrong of Ms Lucisano to do these things. It constituted serious misconduct and justified summary dismissal. Ms Lucisano also breached her duty of fidelity by not alerting Mr Singh to the council's concerns about the delay, and by encouraging the council to tell the company that it was in breach of contract. This was in direct opposition to her duty of fidelity to the company.

[27] Ms Lucisano had a personal relationship with Ms Pearson, and later with Ms Preece. I accept that she was genuinely concerned that the work was delayed. But that does not justify her behaviour. I also reject Ms Lucisano's contention that her correspondence with Ms Preece was private. These were work-related messages. Unbeknown to the company, Ms Lucisano was casting Mr Singh in a very bad light without justification. Ms Lucisano said that she was dismissed for not lying to clients. That is not what occurred. The present matter is not a case of a whistle-blower calling out wrongdoing, or of an employee making reasonable criticism of her employer. It is simply a case of an employee acting contrary to the interests of her employer.

[28] I reject the alternative contention of Ms Lucisano that her conduct was clumsy or negligent. These words simply do not describe what Ms Lucisano did. Her conduct and choice of words ('liar', 'b.s.', 'disgrace') were deliberate and clear. Nor do I accept that her conduct was affected by medication: she also referred to Mr Singh as a liar before she was unwell.

[29] As to the other matters in s 387, I note that Ms Lucisano was notified of the reason that I consider to be a valid reason for dismissal (s 387(b)), namely that her Facebook conversations with Ms Preece was in breach of her duty of fidelity. Different words were used in the dismissal letter, but to the same effect: the letter stated that her conduct was inconsistent with the continuation of her contract.

[30] Ms Lucisano contended that she was not afforded a reasonable opportunity to respond to the allegations at the meeting on 3 August 2020 (s 387(c)), because she was taken by surprise and overwhelmed, and that if she had had an opportunity to discuss her comments and their broader context with Mr Singh, she could have apologised to him and worked things out. However, in my opinion, she did have such an opportunity. If she was overwhelmed, she should have asked Mr Singh for more time. Ms Lucisano contended that Mr Singh had made up his mind to dismiss her before the meeting, which is why he had collected her possessions in a bag. But this does not suggest that there was no opportunity to respond. It is consistent with Mr Singh having reasonably expected that, given the seriousness of Ms Lucisano's comments, there was unlikely to be an acceptable explanation. He was right. In any event, any procedural deficiency on this score would not affect my overall assessment of this matter.

[31] Section 387(d) requires the Commission to consider whether there was 'any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal'. There was no such refusal. Section 387(e) requires the Commission to take into account whether the employee was warned about unsatisfactory performance. However, the present matter relates to conduct, not performance. Sections 387(f) and (g) concern whether the size of the employer's enterprise, and the presence or otherwise of human resources expertise, would likely have affected the procedures followed in effecting the dismissal. Although the company is a small business, I do not consider that these matters carry any particular weight in the present case.

[32] This leaves s 387(h), 'any other matters that the FWC considers relevant'. I have taken into account the submissions and evidence of Ms Lucisano about the adverse impact of the dismissal on her, in financial and other respects, including that she loved her job and has now lost it. I note her contention that it was her good work that brought the council to the company as a client in the first place, which resulted in the website project as well as other work. Ms Lucisano said that she had in fact been seeking to placate the client and work in the company's best interests. I do not accept this. I fail to see how Ms Lucisano could reasonably have expected to placate the client by telling its representatives that Mr Singh was lying to them and was ignoring their work.

[33] Ms Lucisano had a duty of good faith to the company. She repeatedly told the company's client that Mr Singh was lying and not properly attending to its work. This was a fundamental breach of her contract. I consider that Ms Lucisano's conduct was grave, that it constituted serious misconduct, and that summary dismissal was a proportionate response. Had the dismissal not been consistent with the Code, I would have concluded that the dismissal was not harsh, unjust or unreasonable, and therefore not unfair.

[34] The dismissal of Ms Lucisano was consistent with the first limb of the Code. The application must therefore be dismissed.

[1] [2014] HCA 32; (2014) 253 CLR 169

[2] Ryman v Thrash Pty Ltd t/a Wisharts Automotive Services [2015] FWCFB 5264 at [38]

[3] Sharp v BCS Infrastructure Support Pty Limited [2015] FWCFB 1033 at [33]

[4] [2005] FCA 1678 at [203] - [204]

[5] At 190, citing Dixon and McTiernan JJ in Blyth Chemicals Ltd v Bushnell [1933] HCA 8; (1933) 49 CLR 66 at 81. See also Kiefel J at 201.

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