s.394 - Unfair dismissal

Application for an unfair dismissal remedy - whether dismissal harsh, unjust or unreasonable

• [1] Mr Nathan Dragicevich was employed by Me Trading Group Pty Ltd trading as Habitania (Habitania) in Miranda, New South Wales from 20 March 2024 until he was dismissed on 20 December 2024 on the grounds of serious misconduct.

• [2] On 26 December 2024, Mr Dragicevich applied in time for an unfair dismissal remedy under section 394 of the Fair Work Act 2009 (the Act). Mr Dragicevich is protected from unfair dismissal because the minimum employment period of at least 6 months has been completed; the employment was covered by a modern award; and his annual rate of earnings was below the high-income threshold.

• [3] The dismissal was not a case of genuine redundancy. The Small Business Fair Dismissal Code did not apply because Habitania is not a small business employer.

• [4] The question is whether I am satisfied that the dismissal was harsh, unjust or unreasonable and if so, what is the appropriate remedy. For the reasons below, Mr Dragicevich has been unfairly dismissed, and compensation is the appropriate remedy.

• [5] On 16 December 2024, Ms Samantha Jones, Habitania's Operations Manager, sent an email to Mrs Bing Ye, Chief Executive Officer, and Mr Alexander Duch, General Manager. The email described a message she had received the previous Thursday from Mr Dragicevich about a $10 till discrepancy. The message from Mr Dragicevich implied that another employee had been involved in an alleged "pattern of shortages". Ms Jones expressed concern that Mr Dragicevich had made a serious implication of fraud without clear basis. She said she had looked into the matter and that the named employee was highly unlikely to have been involved. She said it was "unacceptable that someone is willing to implicate a colleague who demonstrably did not process any sales during the shift" because it damaged the reputation of a team member and reflected poorly on Mr Dragicevich's integrity. She described the behaviour as "inappropriate, toxic and not conducive to a collaborative work environment". She went on to say that Mr Dragicevich frequently whispered to other staff when he thought she was out of view, which she found disruptive and fostering of discomfort and unease among the team. She concluded the email by writing:

"So you are aware, I have been fair with his roster this week, giving him an opportunity to demonstrate his commitment. However, for next week, I have reduced his hours and prioritised rostering team members who have consistently shown they have the best interests of the store at heart and are willing to put in the effort needed to help us reach our goals. [...]

As we approach the quieter period, I plan to phase him out of the roster entirely. Given his casual status, this transition is straightforward. My decision is based solely on what is best for the store and its team. I firmly believe this is the necessary step to create a more productive and positive work environment, as no progress will be made if the current situation continues."

• [6] On 17 December 2024, Ms Jones' email was forwarded to the personal email address of Mr Dragicevich. Mr Dragicevich called Mr Duch with understandable concern because it disclosed the likely termination of his employment. Mr Duch said he would speak to Ms Jones and did so. Ms Jones sent Mr Duch a copy of a message she had received from another employee that showed Mr Dragicevich sharing a copy of the email with the other employee.

• [7] On the evening of 17 December 2024, Mr Dragicevich was sent a notice to show cause. Habitania alleged that he had accessed confidential email accounts without proper authorisation. Mr Dragicevich was notified that the conduct, if substantiated, may be serious misconduct leading to disciplinary action including termination of employment. He was asked to respond to the allegations by close of business on 18 December 2024.

• [8] At 9.11pm on 17 December 2024, Mr Dragicevich responded to the allegations with an apology and an accusation. He wrote:

"I sincerely apologise if any of my actions have led to misunderstandings or concerns about my conduct. I want to state that I have not accessed confidential email accounts without proper authorisation. The information I received came from a former employee, and I had no intention of breaching company policies or trust."

• [9] The assertion that Mr Dragicevich had received the information from a former employee was mischievous. At the time of the response, the three possibilities about what he knew to be true were that: Mr Dragicevich had accessed the information and sent it to himself; his mother (who also worked at the store at the time), Mrs Janelle Dragicevich, had accessed and sent it to him; or Mr Dragicevich did not know who had sent him the email (including whether it was Ms Jones). He had no basis for concluding or asserting that it had come from a former employee (named in the hearing as 'Mary'). Mr Dragicevich gave evidence that on 17 December 2024 his mother had said to him "maybe it was Mary". If this is what she told him, it was speculation at best. It was no basis for the assertion of fact. There is also doubt about what was said between Mr Dragicevich and his mother on 17 December 2024 in the context of her apparent confession to the email breach.

• [10] In his response of 17 December 2024, Mr Dragicevich expressed concern that the allegations against him may have been retaliation for his participation in an investigation into complaints about Mary. He also renewed an earlier request for conversion from casual to part-time employment first raised in September 2024 and which remained unresolved.

• [11] On 18 December 2024, Habitania held its Christmas party. During the party, Mr Duch and Mr Dragicevich spoke about the accessing and sharing of confidential emails and what the process would look like from then on. Mr Dragicevich denied breaching confidentiality or communicating the email amongst the team. After the Christmas party, Habitania notified Mr Dragicevich that his upcoming shifts were cancelled effective immediately as a temporary measure in light of the "ongoing investigation into his conduct".

• [12] On 19 December 2024, Mr Dragicevich provided a further response to the allegations:

"Hi Alex,

I want to sincerely acknowledge the concerns that have been raised, and I accept full responsibility for my actions. I deeply regret the situation and have reflected on how important this job is to me. I truly value the trust, opportunities, and professional relationship we've built, and I don't want to lose that.

I also understand that confidentiality is essential in the workplace, and I recognise how challenging it can be when colleagues are also close friends or when personal relationships overlap with professional ones. These situations are difficult to navigate, and I'm sure you've faced similar challenges yourself. I'm asking for the same understanding and chance that I believe anyone in a similar position deserves.

I've always strived to be honest, dedicated, and committed to the company. I genuinely believe I am one of the most passionate and dedicated team members here, and I hope that dedication has been evident throughout this entire situation. My goal has always been to excel and contribute positively, and I don't want another job - I want to continue growing and succeeding here.

I'm pleading for the opportunity to move forward with a formal warning rather than termination. I believe this is the fair approach given my hard work, honesty, and commitment I have shown. I've learned a valuable lesson, and I'm determined to apply it and ensure it never happens again.

Please consider giving me this chance to prove that I can continue to be a valuable part of the team. I am fully committed to proving and earning back your trust. Thank you for your understanding and for taking the time to consider my request.

I've decided not to bring a support person to the meeting. As we discussed over the phone, I feel you've always been supportive, and I believe we can have a respectful and open conversation. We've always gotten along well and hope this meeting isn't just to cause further heartbreak.

Best regards,

Nathan."

• [13] On 20 December 2024, Mr Duch met with Mr Dragicevich. His employment was terminated with immediate effect. The decision was confirmed in a letter sent to Mr Dragicevich later the same day, stating that he was dismissed for serious misconduct, including unauthorised access to confidential company emails and sharing sensitive company emails with other staff member without authorisation.

• [14] On 22 December 2024, Mrs Dragicevich resigned. In her email to Mr Duch, she expressed how she had thoroughly enjoyed her time at Habitania and that her decision was "due to personal and family pressures it has become all too difficult to manage."

• [15] On 23 December 2024, Mr Duch received a second email from Mrs Dragicevich. The email was headed "Explanation of Actions and Resignation" and stated as follows:

"At Mary's suggestion I accessed Samanthas email account using the same password as Miranda account [REDACTED] to watch out for Nathan and myself. Upon reading Samanthas email , I forwarded it to Nathan and forced sharing with Angelica via text, I thought she might be able to help and was concerned for Nathans wellbeing as it isn't fair she planned to roster him off in the new year when she has done nothing for the store and staff and Nathan has consistently worked hard.

Also when I learned about Mary's investigation from Taylor I disclosed this information to Mary because of our friendship and my inability to keep it to myself. While my actions were driven by care for others and concern for Nathan I now realise they did not follow company protocols.

This situation has caused me significant stress and the work environment no longer feels the same as it once did for me with Samantha as manager. As a result I have decided to resign from my position , hence my email last night. I deeply regret any harm my actions have caused and apologise but hope you can understand my position as a mother.

I want to emphasise that Nathan had no involvement in these actions. He has always worked hard and demonstrated professionalism and contributed greatly to the team even Mary knows this. I respectfully ask that his termination be reconsidered and that he be reinstated as he has done nothing wrong and he is suffering because of being terminated unfairly for no reason.

Thank you for understanding."

• [16] On 24 December 2024, Mr Duch wrote to Mrs Dragicevich to state:

"Following your recent communications, I am writing to confirm that your employment with Habitania is terminated, effective immediately, due to serious misconduct. As such, the notice period associated with your resignation will not proceed."

• [17] The letter did not expand on the nature of the serious misconduct. It can be inferred that it was some or all of the conduct admitted by Mrs Dragicevich in her email of the previous day (not limited to accessing Ms Jones' email on 17 December 2024 and forwarding it on).

• [18] On 28 December 2024, Mr Dragicevich wrote to Mr Duch seeking a reversal of his dismissal. He wrote:

"... I want to reiterate that I have never shared or discussed confidential company communications with unauthorised individuals. I have always been committed to maintaining professionalism and integrity in all my dealings, and this accusation deeply concerns me, as it is inconsistent with my values and conduct.

To clarify further:

• I am aware of specific individuals who have received the confidential email as I can see through my iCloud messages and Janelle's admission to me that she had shared it with Jenny [REDACTED], Hailee [REDACTED] and Tiani [REDACTED]. Janelle has explicitly stated her role in sharing this information.
• Any subsequent discussions or gossip surrounding this are beyond my control. I am also aware that such information and other confidential company information often spreads through informal group chats among staff, but I was not invited to any of these group chats as they are framed as "girls only" for work gossip purposes.
• These group chats affect the company's work culture and reliability. I have been made aware of instances of bullying and backtalk from individuals, including Ella and Taylor, towards other staff members, as well as disrespectful remarks about the company and its upper management. Mary [REDACTED] was also aware of this, which is why she planned to decrease Ella and Taylor's shifts coming into the new year, as their behaviour and attitude towards others were causing negative effects on the whole team.
• My professional communication style and adherence to company policies are consistent and verifiable. As you know, I have always sought your direct permission and advice regarding any confidential matters.

It is hurtful and disheartening to have this issue attributed to me. If necessary, I am willing to have Janelle write a formal statement regarding her access and admission to the sharing of this email and her continued involvement with specific staff members that may undermine company operations, including her involvement with the investigation regarding Mary.

I legally assert that I have not engaged in any misconduct and respectfully request that the decision to terminate my employment be reversed. I am also willing to provide a formal statement regarding Janelle's admission if necessary.

..."

Was the dismissal harsh, unjust or unreasonable?

Was there a valid reason for the dismissal related to capacity or conduct, and was it notified to Mr Dragicevich?

• [19] Mr Dragicevich's evidence about the extent of his involvement in the accessing and sharing of Ms Jones' work email is not without doubt. A summary of his statements on the matter is set out below.

I sincerely apologise if any of my actions have led to misunderstandings or concerns about my conduct. I want to state that I have not accessed confidential email accounts without proper authorisation. The information I received came from a former employee...

(In conversation with Mr Duch, Mr Dragicevich denied breaching confidentiality or communicating the email amongst the team)

I want to sincerely acknowledge the concerns that have been raised, and I accept full responsibility for my actions...

... Please consider giving me this chance to prove that I can continue to be a valuable part of the team.

On 20/12/2024, I was terminated from my employment at Habitania (Me Group Pty Ltd) following allegations of misconduct, specifically unauthorised access to confidential company emails and sharing sensitive company emails with other staff members without authorisation. However, I did not commit these actions, and another employee, Janelle, admitted to carrying out these actions and was terminated for them.

I want to reiterate that I have never shared or discussed confidential company communications with unauthorised individuals.

I had to share this email to defend my reputation which was being attacked and seek support/advice from colleagues.

The content of the email directly concerned me, and I shared it with others to seek advice on protecting my rights and defending my reputation, as I was personally attacked.

The unauthorised access claim was ultimately resolved when it was confirmed that another employee (Janelle) had accessed the email account in question... I have maintained a consistent stance through the process that I did not commit this action nor had anything to do with it.

I did share the email for support and advice forwarded by Samantha Jones to my inbox on 17/12/2024 at 6.46pm, which I had already apologised to the employer for.

• [20] As can be seen, Mr Dragicevich's version of events is affected by inconsistency. In addition to the mischievous accusation about Mary, his account varied between both acceptance and denial of partial and full responsibility. At the time of dismissal, he had responded to the allegations by accepting full responsibility for his actions without stating what those actions actually were.

• [21] I hold similar concerns about the evidence of when Mr Dragicevich became aware of his mother's alleged involvement in the email breach. Initially, Mr Dragicevich said he discovered the email was not from Ms Jones after he had seen "Janelle's statement" (a reference to her letter to Mr Duch of 23 December 2024). He changed this evidence to say that when he spoke to Mrs Dragicevich outside of the store on 20 December 2024 (after he had been dismissed), she told him she was responsible for accessing the email and went immediately to confess to Mr Duch. This is denied by Mr Duch. Mr Duch says he first became aware of Mrs Dragicevich's alleged involvement in the conduct when she emailed him to say so on 23 December 2024. Mr Dragicevich's evidence about what was said between Mr Duch and Mrs Dragicevich is speculation at best. He was not present and could not have heard what was said. Mrs Dragicevich did not give evidence. I accept Mr Duch's evidence on the matter.

• [22] Further, the email of 23 December 2024 is quite different in content and tone to the letter of resignation sent by Mrs Dragicevich the day before. In her first email, there is no mention of any difficulties she is having at work. The second email refers to having "to watch out for Nathan and myself" (for reasons unexplained) and also implicates Mary in the alleged misconduct. It describes a deteriorating work environment under the management of Ms Jones.

• [23] These doubts, combined with a lack of evidence, preclude me from reaching a reasonable state of satisfaction about who accessed Ms Jones' email at 6.46pm on Tuesday 17 December 2024. It could have been Mr Dragicevich, who then forwarded the email to himself. It could have been Mrs Dragicevich, who forwarded it on to her son. It could have been someone else. There is no evidence about who was at work (and so had the opportunity) at the time the email account was breached on a Tuesday evening. Mr Dragicevich regularly worked on Tuesdays. Although the only roster in evidence shows no work for that week, this appears to conflict with commentary in the email from Ms Jones about rostering Mr Dragicevich fairly for that week. There is no evidence about Mrs Dragicevich's roster or working days.

• [24] Aside from Mr Dragicevich's own generalised acceptance of responsibility on 19 December 2024 (the day before he was dismissed), there is no evidence to refute the admission made by Mrs Dragicevich on 23 December 2024 (after the dismissal). As noted above, Mrs Dragicevich did not give evidence at the hearing. She also did not provide a witness statement. This is surprising in light of her claimed responsibility for the act that led to his dismissal. I infer that her evidence would not have assisted Mr Dragicevich. It is to be hoped that she was being honest when she wrote to Mr Duch to take responsibility for the email breach on 23 December 2024. Given the timing of the email, however, and without the benefit of Mrs Dragicevich as a witness, I cannot exclude the possibility that the email was simply an attempt to 'take the fall' to help her son get his job back.

• [25] Mr Dragicevich is 16 years old. He lives in close quarters to his mother, and they see each other regularly, including to eat or watch television together. On Mr Dragicevich's evidence, Mrs Dragicevich knew on 17 December 2024 that he was facing disciplinary action for accessing Ms Jones' email, but did not tell him it was her until after he had been dismissed (on either 20 or 23 December 2024). This seems implausible to me - that a mother, whose concern is to 'watch out for' her son, would stand by waiting for him to lose his job for something she knows he didn't do because it was her, in circumstances where an earlier confession may have prevented the outcome of dismissal altogether.

• [26] When he made the decision to dismiss, Mr Duch acted on the information that he had: a screenshot of Mr Dragicevich's message sharing the email of Ms Jones with another employee on 17 December 2024; Mr Dragicevich's subsequent apology for unspecified actions that may have led to misunderstandings or concerns about his conduct accompanied by his denial of accessing the email account of Ms Jones; and his acceptance of full responsibility for unspecified actions two days later. In the circumstances, it is unsurprising that Mr Duch formed the view that Mr Dragicevich had done what was alleged at the time of the dismissal. On the evidence, however, this was an assumption rather than a sound conclusion. Although the evidence points in the direction of Mr Dragicevich, there are gaps that leave open the possibility that it was someone else. For these reasons, I am not satisfied that the unauthorised access of Ms Jones' email was a valid reason for Mr Dragicevich's dismissal.

• [27] What remains is the undisputed conduct of Mr Dragicevich in sharing the email from his own email account to another employee on 17 December 2024. On its own, I am not satisfied that this conduct was a valid reason for Mr Dragicevich's dismissal. It is important to observe that my conclusion would have been different if I had found Mr Dragicevich to have been involved in accessing Ms Jones' email.

• [28] The email was never intended for Mr Dragicevich's eyes. His evidence speaks to the ease with which employees were able to access email accounts used by others in the business. Although it seems unlikely that Habitania approved of a system of access by employees to their manager's email accounts, there was little standing in their way. Passwords were all the same, and published to employees on a 'dashboard'. The business must take responsibility for failing to put in place even the most basic of appropriate security measures, including individualised and secure passwords. The failure to do so created a significant risk that confidential communications would be disclosed. In this case, disclosure of the email led to Mr Dragicevich being put on notice of his impending dismissal. It is unsurprising in the circumstances that he shared the email with another colleague for support and advice.

• [29] I do not find the dismissal to have been in retaliation for Mr Dragicevich's participation in other workplace activities: specifically, his request to convert from casual to permanent employment, which was the subject of a dispute in the Commission filed on 18 December 2024; and an investigation into Mary's conduct in which he says he was both whistleblower and witness. It is clear on the materials that the dismissal was related only to the unauthorised access of Ms Jones' email account and the sharing of her email to Mr Dragicevich and others. To the extent that a link is sought to be drawn between the incident and the casual conversion dispute, it is important to recall that the dispute was filed one day after Mr Dragicevich became aware that his employment was at risk (both because of the incidents described in Ms Jones' email on 16 December 2024 and because he had received a notice to show cause about the separate incidents on 17 December 2024).

• [30] It follows that I am not satisfied on the evidence that Habitania had a valid reason for the dismissal of Mr Dragicevich at the time he was dismissed.

Was there an opportunity to respond to any capacity or conduct related reason?

• [31] Mr Dragicevich was given an opportunity to respond to the allegations and did so in writing on 17 and 19 December 2024.

Was there any unreasonable refusal to allow a support person to be present to assist at any discussions relating to dismissal?

• [32] I am not satisfied on the evidence that there was any refusal to allow a support person to be present in discussions about the dismissal. Mr Dragicevich refers to such a refusal in his submissions, but the only discussions about the dismissal were a 14-minute phone call on 17 December 2024, a brief discussion at the Christmas party and the meeting on 20 December 2024. On 19 December 2024, Mr Dragicevich had "decided not to bring a support person to the meeting". This suggests that there had been some earlier discussion about the matter. The reason for his decision is extracted above and repeated below:

"As we discussed over the phone, I feel you've always been supportive, and I believe we can have a respectful and open conversation. We've always gotten along well and hope this meeting isn't just to cause further heartbreak."

Was Mr Dragicevich warned about relevant unsatisfactory performance?

• [33] This is not a relevant consideration in the circumstances. Mr Dragicevich was dismissed for conduct rather than because of his performance.

Degree to which the size of the employer's business and any absence of dedicated human resources management specialists or expertise in the business would be likely to impact on procedures followed in effecting the dismissal

• [34] Although Habitania is not a small business employer for the purposes of the Act, it does not give the impression of being a sophisticated business from the perspective of organisational administration. The apparent absence of dedicated human resources expertise is likely to have contributed to the haste with which the dismissal was carried out after a rather summary investigation and conclusion on the facts.

• [35] Mr Dragicevich's length of service was only 9 months. As he was dismissed for serious misconduct, he was not given notice or paid in lieu of notice of termination.

• [36] Mr Dragicevich submits that Habitania inappropriately interfered with his mental health by commenting on his personal health matters when it encouraged him to seek the support of a psychologist and provided information about access to Lifeline and other support services. The submission has no merit. It is common these days for employers to provide general information to employees about where to find support for mental health when engaging with them on disciplinary matters. The information provided by Habitania fell within this description.

• [37] Mr Dragicevich alleges that he has been underpaid by Habitania. The allegations are beyond the scope of these proceedings and can separately be raised with the Fair Work Ombudsman.

• [38] On balance, I am satisfied that the dismissal was unjust because I am unable to find a valid reason for dismissal - one that was sound, defensible or well founded - on the evidence. The reason for dismissal was notified to Mr Dragicevich in advance and he was given an opportunity to respond, which he took up. Although the procedures followed to effect the dismissal were fair, the matter at issue was a relatively serious one and it warranted a more robust inquiry and evidence-gathering process before a decision was made. Given the size of the business, this should not have been beyond Habitania's means.

• [39] The result is that Mr Dragicevich has been unfairly dismissed.

• [40] Reinstatement was initially sought by Mr Dragicevich, but I am not satisfied that it is an appropriate remedy in this case. Simply put, I am not satisfied that the necessary level of trust and confidence can be restored in the relationship. I am, however, satisfied that compensation is the appropriate remedy.

• [41] Section 392(2) of the Act deals with how compensation is to be assessed in connection with an unfair dismissal. The established methodology is elaborated on in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc (Bowden).[1]

• [42] Viability (s.392(2)(a)): There is no evidence to suggest that an order requiring Habitania to pay Mr Dragicevich compensation would impact on the viability of its enterprise. It is a neutral consideration.

• [43] Remuneration Mr Dragicevich would have received, or would have been likely to receive, if he had not been dismissed (s.392(2)(c)): The evidence is that Mr Dragicevich would not have remained in employment with Habitania for much longer had he not been dismissed on 20 December 2024. Ms Jones's email described phasing him out from the roster as the business approached a quieter period. On balance, I consider it likely that Mr Dragicevich would have remained in employment for a further 3 weeks.

• [44] Mr Dragicevich's last payslip provided for a weekly wage of $1053.78 gross per week for 37.5 hours. As Ms Jones had decided to gradually reduce his hours leading into the quiet period, it is likely that he would have worked fewer hours each week for the next 3 weeks. I estimate that in the week after 20 December 2024, Mr Dragicevich would have worked 25 hours, followed by a roster of 15 hours in the second week, followed by a roster of 7.5 hours in his final week of work. That gives a total of 47.5 hours, or gross earnings in the anticipated period of future employment of $1334.78.

• [45] Remuneration earned (s.392(2)(e)) and income reasonably likely to be earned (s.392(2)(f)): There is no evidence of any remuneration earned, or likely to be earned, in the 3 week period following his dismissal. No adjustment is made on this account.

• [46] Length of service (s.392(2)(b)): Mr Dragicevich's length of service is relatively short. No adjustment in the amount of compensation is made on this account.

• [47] Mitigation efforts (s.392(2)(d)): Mr Dragicevich's evidence is that he has had difficulty finding other employment because of the dismissal. This suggests that he has been taking steps to find work. No adjustment is made on this account.

• [48] Other matters (s.392(2)(g)): Given the short period of anticipated future employment, there will be no discount for contingencies.

• [49] Misconduct (s.392(3)): Mr Dragicevich's misconduct was ultimately the reason for dismissal, but as the evidence is lacking in this regard, no adjustment of the compensation amount is made on this basis.

• [50] Shock, Distress (s.392(4)): The amount of compensation does not include a component for shock, humiliation or distress.

• [51] Compensation cap (s.392(5)&(6)): The amount of compensation is less than the compensation cap of 26 weeks' pay and no further adjustment of the amount is necessary.

• [52] Instalments (s.393): No application was made by Habitania to pay any compensation awarded by instalments and no order will be made to that effect.

• [53] A compensation amount of $1334.75 is neither clearly excessive nor clearly inadequate in the circumstances of the case.

• [54] Order [PR786026] will issue separately giving effect to this decision.

[1] [2013] FWCFB 431

Printed by authority of the Commonwealth Government Printer