INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 2602 of 1995 B E T W E E N : JOANNE MAGAGNA Applicant AND FAI WORKERS COMPENSATION VIC PTY LTD Respondent AND VI 2601 of 1995 BETWEEN TOLIC PORTNOY Applicant AND FAI WORKERS COMPENSATION VIC PTY LTD Respondent Before: Judicial Registrar Millane Place: Melbourne Date: 21 September 1995 REASONS FOR DECISION Applications have been made by Joanne Magagna (the First Applicant) and Tolic Portnoy (the Second Applicant) alleging that their employment was unlawfully terminated by the Respondent on or about 24 April 1995. It is necessary to determine as a preliminary matter whether their employment as client services manager and accountant liaison officer respectively was terminated at the initiative of the Respondent, who strongly denies any intention to terminate; much less conduct amounting to termination of the Applicants' employment. It needs to be said at the outset that if the Court accepts that terminations occurred at the initiative of the Respondent the Respondent's case at hearing suffered from the failure to clearly state what the basis for terminating the employment of the Applicants was. On the evidence called I have been persuaded that the Respondent has a good case for saying that there was conduct amounting to serious misconduct which conduct would have entitled the Respondent to summarily dismiss the Applicants without notice or compensation in lieu of such notice from the date it discovered that such conduct had occurred on or about 19 April 1995. Notwithstanding the opportunity this presented, it appears that the Respondent took the view that it could not at the time of its initial investigation prove there had been serious misconduct where both employees flatly denied any conduct which divulged to another insurer the identity of a client of a competitor they were targeting as a potential client for the Respondent, or any breach of confidence arising out of or connected with their attendance at a job interview with a rival insurer. Faced with this dilemma the Respondent relied on what it viewed as their "false representation of (sic) the out of office register" to redeploy each Applicant to new positions as a "levy collections officer" and as a "file clerk" respectively. The so-called redeployment of the Applicants was treated and accepted by them as a repudiation of their individual contracts of employment. Accordingly, if there was a relevant act of termination at the initiative of the Respondent the question the Court must ultimately decide is whether such redeployment was harsh, unjust or unreasonable and further whether the employees were given a proper opportunity to defend themselves. Evidence was called from the following witnesses by: (a) the Applicants, namely: (i) the First Applicant; (ii) the Second Applicant; (iii) Denise Lock, an employment consultant and; (b) the Respondent, namely: (i) Grantley Shane Milsom, the former state manager of the Workcare division of CIC Insurance; (ii) Shaun Thomas Standfield, the Victorian manager of the Respondent; (iii) Robyn Lynette Traynor, a policy division manager of the Respondent with a background in personnel training. The First Applicant The First Applicant is a 29 year old Applicant with some 10 years employment experience, first in Workcare with the Accident Compensation Commission and then from December 1991 with the Respondent Workcare Insurer in various positions including that of legal manager until May 1994 when she went overseas for some months. On her return she was offered and accepted a position as a business development manager with the Respondent in its business development and customer education department. This was essentially a marketing job which required the small group of employees in that department to market the Workcare services of the Respondent to Victorian employers. With sixteen insurers competing for employer premiums the consensus is that it is a highly competitive business operation. Apart from conceding that she had executed a "Confidentiality Undertaking" as part of her employment contract (See Exhibit A5), the First Applicant (and the Second Applicant) agreed that it would be inappropriate and a breach of that undertaking to disclose to a competitor the identity of prospective clients being targeted by the Respondent for their insurance premium business before the potential client was secured. I further understood from the Applicants' evidence that they conceded that it would be a serious breach of their contract of employment to attempt to market their skills to a potential employer in a manner which might cause loss to their current employer. Paragraphs 1 and 3 of the Confidentiality Undertaking signed by both employees reads as follows:- "CONFIDENTIALITY UNDERTAKING I the undersigned, in consideration of my employment by your company, hereby agree that:- 1. Except as authorised or required by my duties as an employee of the Company I shall not reveal to any person, firm or company any of the confidential information concerning the Company its business, finances, transactions or affairs which may come to my knowledge during my employment and shall keep with complete secrecy all confidential information entrusted to me and shall not use or attempt to use any such information in any manner which may injure or cause loss either directly or indirectly to the Company or its business or may be likely so to do. This restriction shall continue to apply after the termination of my employment without limitation in point of time. "Confidential information" shall specifically include but shall not be limited to all information including that concerning the insurance and/or Workcover activities of the Company and the proposals and intentions of the Company in the course of its business activities, any feasibility studies or analyses of any other corporation or business or profit making venture or any information, report, document, drawing, oral communication, relating thereto or of the agents, advisers or other contact, affiliates and communicants of the Company. 3. In addition to everything else herein contained I shall be bound by the common law rules in respect of confidentiality and this undertaking shall be construed as being additional to the common law and shall not in any way derogate from or limit the common law." The letter dated 15 August 1994 (See Exhibit A2) confirming the First Applicant's new position states that:- "You will have the use of a company car. This vehicle is part of the position and not included in your salary package. All drivers of company vehicles must keep the vehicle in sound order and in a clean state for other personnel to use the vehicle from time to time. There will be occasions when someone may borrow your vehicle overnight." At the time of the offer of the new position the salary was approximately $35,000 to $36,000 per annum. However by a letter dated 22 September 1994 the First Applicant was notified that her new title would in fact be "Client Services Manager" with an increased salary of $42,000 per annum (see Exhibit A3). One of the issues between the First Applicant and the Respondent is the question of whether the benefit of a motor vehicle should be included for the purpose of calculating any entitlement to compensation. The unsubstantiated claim of the First Applicant is that in reality she was in receipt of a salary package of $60,000 per annum inclusive of the motor vehicle. The evidence of the Respondent demonstrates that apart from the letter dated 15 August 1994 referred to above where it specifically excluded the motor vehicle from any salary component, it has a system of remuneration whereby some employees do receive motor vehicles as part of a salary package but others, such as the First Applicant are paid as non-package employees (see Exhibit R3). I am satisfied on the abovementioned evidence of the Respondent that the motor vehicle was clearly excluded from the salary paid and there was no identifiable salary sacrifice attributable to the motor vehicle. The motor vehicle and the mobile phone used by the First Applicant were provided for use in the marketing division because employees needed these items of equipment to attend on clients and prospective clients. In the case of the motor vehicle if it was not borrowed during the day or needed overnight the employee was at liberty to take it home and use it for personal use. So far as the value of any benefit derived from the use of the motor vehicle is concerned the First Applicant did not provide any explanation to the Court of how she arrived at the figure of some $18,000 per annum for the use of a 1994 Ford Falcon. Because of my findings on liability it has not been necessary for me to consider whether I should allow any sum for the loss of the use of the vehicle however if I had been required to do so on these facts I am inclined to treat the motor vehicle as a piece of equipment provided by the employer, essential to the performance of the task the employee was engaged to do, which gave the employee some incidental use and benefit but was not given to her in lieu of salary or remuneration that might otherwise have been paid to her and any benefit derived by her should be treated as a nominal one where there is no evidence of actual loss. It was generally accepted at hearing that the First Applicant was a valued and talented employee with an excellent work record. The Second Applicant The Second Applicant is 24 years of age and after befriending the First Applicant during Christmas 1993 was introduced by her to the Respondent. The Second Applicant was employed from September 1994 in the Respondent's enquiries unit as a claims services officer. This job generally involved the Second Applicant in answering telephone enquiries from the Respondent's claimants. In the three years prior to his employment with the Respondent the Second Applicant was employed in customer relations but was not previously employed in the insurance industry. The Second Applicant commenced his employment with the Respondent for a probationary period of 3 months at a rate of $25,000 per annum reviewable "annually each July" (see Exhibit A10). He too signed a "Confidentiality Undertaking" (see Exhibit A13) containing the same undertakings as those given by the First Applicant. It is alleged that in December 1994 the Second Applicant was promoted by the Respondent to its marketing department, which is the business development and customer education unit as an accountant liaison officer. This position involved him in helping develop packages to attract accountants and as a consequence their clients to the insurance services offered by the Respondent. It is disputed by the Respondent that this alteration in his position was anything other than a change of duties and, on the Respondent's evidence, the salary increase granted on 27 February 1995 to $27,000 per annum, was no more than a reward for the Second Applicant's enthusiastic efforts in the marketing division and should not be characterised as being part of any promotional package. The Events Leading Up to the Alleged Termination It was not contested that the Applicants had a close friendship and working relationship. In the few months the Second Applicant worked in the marketing department he and the First Applicant often visited clients together. It was the Respondent's practice to encourage more senior staff like the First Applicant to train junior staff by taking them with them when they attended on their clients; although at one stage it was necessary for the Respondent to instruct the First Applicant to give more attention to junior staff other than the Second Applicant. Other than pointing to some general dissatisfaction with their jobs and the salaries paid it was not clear from their evidence why, so soon after they were transferred to the Respondent's marketing division, in about February 1995 the Applicants approached the employment consultant, Denise Lock (Lock) with a view to obtaining employment with another insurer. Whilst it was not disputed that both employees were good at their marketing jobs it seems from their evidence that they believed they were worth much more than they were being paid by the Respondent and this view was endorsed by Lock who suggested that they should seek packages of $65,000 plus car and $45,000 plus car respectively. In the First Applicant's case she had already been approached by Lock on an earlier occasion at the request of CIC Insurance, another insurer in the Workcare area. She had rebuffed that approach. However, despite his very modest experience in both the work force and the insurance area the Second Applicant felt he could command the package suggested to him. Together the Applicants determined that they would offer themselves to an insurer employer as a team. Lock agreed that the abovementioned approach was a novel one and she was, after discussion with the Applicants, instructed by them to first approach CIC Insurance on their behalf. It is interesting to note that the Applicants deny that they instructed Lock to approach CIC Insurance first; rather their evidence is that they were guided by Lock as to whom they should approach and how the approach should be made. However Lock's evidence is that the First Applicant believed that CIC had problems with its customer service and retention of client services and that that insurer could be helped by the skills she and the Second Applicant had to offer. On balance I am satisfied that the Applicants made the decision as to who they should approach first. That decision was influenced by their belief that there was a need for a proper retention policy and the fact that they were then targeting clients of CIC as potential clients to be moved to the Respondent. Lock had an arrangement whereby she could recommend potential employees to CIC Insurance if she found someone suitable. As a result of her instructions she set about making arrangements to effect an introduction to the company. The discussions and arrangements with Lock all occurred in February 1995 and were all prefaced on the approach to CIC being made on a confidential basis. Grantley Shane Milsom (Milsom) commenced his position as state manager of CIC Insurance from 8 December 1994. In about February or early March 1995 he and Lock and another manager lunched together at which time Lock was introduced to Milsom and mentioned to him that she had two prospective employees for his company. It is Milsom's evidence that he was not initially interested in interviewing any employees because he then had a full staff complement together with budgetary constraints precluding consideration of new employees in that financial year. In contrast, Lock recalled that Milsom was immediately interested and because of this she set about arranging an interview time and venue convenient to them all, with the rider that the meeting to take place was to be a confidential one. It is Milsom's evidence that on or about 24 March 1995 he received a voice mail message from Lock to the effect that he should speak to these two employees urgently as they "had a significant part of my business in their palm." Because of the tenor of the message and the urgency expressed in it he rang Lock and was allegedly informed that the Applicant's had "about $500,000 to move at their behest and one account was in the order of $350,000." What Milsom understood from his conversation with Lock was that the Applicants had been marketing to CIC's clients and were now in a position to take those clients from CIC with premiums to the value of $500,000 involved; $350,000 of which was attributable to one specific client. Because of the threat to some of his company's business Milsom agreed to a meeting and interview with the two employees on 27 March 1995 at 2.00 pm at the Cafe Fitz in Brunswick Street, Fitzroy. The location was chosen in order to maintain confidentiality and according to the Applicants to protect them from the prospect of their current employer finding out that they were seeking alternative employment. Insofar as it concerned the arrangements and reasons for the interview Lock's evidence is completely at odds with that of Milsom. Apart from believing that after her first meeting with him Milsom was very interested in seeing the prospective employees Lock could not recall leaving any voice mail message. Notwithstanding her failure to specifically recall any message left prompting Milsom to ring her, she denied the contents of the alleged message and any suggestion that the meeting was arranged urgently because of the threat the Applicants' posed to CIC's business. From November 1993 it appears that Lock was and at the time of hearing was still involved in litigation with the Respondent with regard to matters other than those litigated in these proceedings. Prior to March 1995 she crossed swords with the Respondent's Victorian manager Shaun Thomas Standfield (Standfield) when she approached the First Applicant and offered her employment with CIC. Standfield had then seen fit to telephone Lock. Lock's recollection of this call was that Standfield had abused her for head hunting his staff: had told her she was acting unprofessionally and, further, had informed her that he would black list her in the industry. Interestingly enough, since the abovementioned conversation there is no suggestion that Lock has been black listed in the industry and, whilst she does not generally do business for the Respondent, she has since the conversation with Standfield placed at least one temporary staff member with the Respondent company. Standfield's version of the conversation with Lock is that it occurred in approximately September 1994 after the First Applicant had approached him and told him that she had been contacted by Lock. This issue was not canvassed with the First Applicant either in her evidence in chief or cross examination. Nevertheless, it seems that Standfield was prompted to call Lock who informed him amongst other things that "you are my hunting ground", presumably referring to her ability to approach the Respondent's employees. In addition to this comment Standfield alleges that there was some mention by her of the existing legal proceedings between Lock and the company, which caused an acrimonious exchange between the two. In considering the weight I should give to Lock's evidence I have taken into account her direct financial interest in placing the two potential employees with CIC; her less than harmonious relationship with the Respondent and ongoing litigation with that company and her tendency, whilst giving evidence, to give evidence of what she would have done rather than specifically recalling facts and conversations. Moreover, I found her explanation of her alleged behaviour in some instances improbable. For instance, she accepted that any message left by her for Milsom on 24 March 1995 may have expressed some urgency about the need to meet with him as soon as possible. One explanation given for this by her was that if the senior management of CIC found out that the Applicants took CIC business, the Applicants would be viewed less favourably by CIC. It seems unlikely to me that a prospective employer could be critical of the Applicants exercising the very skill in marketing they were paid to exercise, which skill made them valuable employees. If anything the explanation offered lends credibility to the Respondent's argument that the employees and Lock were trying to use a potential marketing coup as a lever to negotiate lucrative employment contracts with CIC and were refraining from moving CIC clients to their employer pending the outcome of their employment negotiations with CIC. Lock also conceded that at the conclusion of the meeting with Milsom and the Applicants at the Cafe Fitz they had stressed it was "urgent" that they have a response from Milsom as soon as possible. Her rather unsatisfactory explanation of the urgency referred to at this meeting was the Applicants' desire to know one way or another whether they would be offered employment because they were going to leave the Respondent and would look for other jobs. If anything her evidence tends to support Milsom's evidence that he attended the meeting because he was led to believe that there was some risk to CIC's business if it did not grab these two employees who were about to move substantial CIC client business to a competitor and because of the timing of this exercise there was a sense of urgency in both arranging the meeting and pursuing the results of that meeting. It is agreed that the Applicants, Lock and Milsom meet at the cafe on 27 March 1995 for a lunchtime meeting from approximately 2.00 pm. Insofar as it is necessary to determine what occurred at that meeting and what events led up to the alleged termination of the Applicant's employment in April 1995 it is necessary to decide as between Milsom and the other three people attending the interview whose version of events was the most likely. On balance I have accepted Milsom's evidence generally for a number of reasons. These reasons include the probability that his version of events is more accurate, his demeanour when giving evidence and the absence of any plausible reason offered for Milsom to concoct such an elaborate story and approach his counterpart, Standfield at FAI, with this story. In short Milsom recalls that he attended the meeting primarily to protect the interests of his company and find out the identity of the clients at risk. I accept that any state manager would do exactly that. Milsom's recollection is that at the meeting the Applicants discussed amongst other things the business of CIC they had the ability to move to the Respondent, without actually naming the clients. However, by an astute process of elimination Milsom was able to extract from them information which disclosed that in the days preceding the meeting the Applicants travelled on business to South West Victoria where CIC had a number of clients, including the Hamilton Based Hospital; a client with a $350,000 premium base. At that time Milsom was aware that the Respondent had been making overtures to the Hamilton Based Hospital and he, as it turns out, correctly surmised that this client was the one the Applicant's were suggesting they could move from CIC. In cross examination the First Applicant conceded that they had, as she put it "joked" with Milsom about seeing one of his clients although she denied they mentioned any names or premium figures. What they did mention however was where they had been working in the days preceding the meeting and I am satisfied that their behaviour and the matters raised by them in discussion, combined with the matters raised by Lock who was acting on their instructions, disclosed to Milsom information which was confidential. I am further satisfied that they were at the time engaged in an attempt to use information available to them in a manner contrary to the interests of their employer. It is clear from the Applicants' evidence that they were keen to perform what they described as retention work and they felt that CIC was more pro-active in this area. Essentially retention work is marketing to existing clients to retain their business. It is consistent with this desired area of employment that the Applicant sought to approach CIC on the basis that they were skilled in moving business and, in particular, CIC's business and this made their services valuable to CIC both in the future and, at that time, to avoid the loss of the clients then being targeted by the Applicants. Because of their potential skill in moving business the Applicants asked for considerable wage packages far exceeding the salaries already paid to them. Further, it is clear from Milsom's evidence that he found their joint approach and suggested salaries somewhat over-rated and, whilst he regarded the First Applicant as an able candidate for future employment if a position was available, he told the Court that he did not regard the Second Applicant as at all suitable. I accept that at the conclusion of their luncheon discussion Milsom expressed interest in the employees and told them and Lock it would be some weeks before he could make the necessary budgetary arrangements and discuss their prospective employment with his head office. He made these comments because he was playing for time to allow CIC to take whatever steps were necessary to avert this threat to its clients, which in the case of the Hamilton Based Hospital was successfully averted. Within days of that meeting he was telephoned by Lock whom he alleges told him he would have to move rapidly because the Applicants could not hang on. After discussions with his superiors Milsom formed the view that even though CIC was a competitor of the Respondent he should report their approach to the Respondent. On or about 11 April 1995 CIC was taken over by another insurer C E Heath at which time the Applicants ceased to pursue their employment enquiries with CIC and directed Lock to look elsewhere. The opportunity for Milsom to impart his information to Standfield presented itself on or about 19 April 1995 when he attended a Workcare Authority launch of an advertising campaign at the MCG. Before this encounter he and Standfield had only met briefly in about January 1995. At the conclusion of the advertising launch on 19 April 1995 Milsom told Standfield what had occurred between him and the Respondent's employees. If anything I formed the view on observing the witnesses and hearing the evidence that the approach taken by the Applicants to CIC was a naive one, fuelled by Lock's recommendation to them that they could command decidedly more lucrative salary packages than those paid to them by the Respondent. Not surprisingly, Standfield was somewhat taken aback by what he was told by Milsom on the afternoon of 19 April 1995. He together with Robyn Lynette Traynor (Traynor) subsequently interviewed the Applicants separately. The Employees' Interviews on 19 & 20 April 1995 Before interviewing the Applicants Standfield told the Court that he checked the Respondent's out of office register to determine their whereabouts on 27 March 1995. This register is a book kept by the Respondent in which employees are required to record their whereabouts when they go out of the office on business. It was agreed that from time to time the employees would forget to properly complete the register and, Standfield's secretary was required on occasions to remind employees; including the Applicants, to complete the register. However, it was never suggested that on any previous occasion the omission to complete such a register or complete it in a detailed way warranted sacking an employee. Standfield's enquiries showed that on the relevant date that the First Applicant had completed the register (Exhibit R1) showing appointments with "Claud Doncaster" and "City of S/Vale" between the hours of 12.15 pm and 3.15 pm. The Applicants allege that the First Applicant completed the register on behalf of both Applicants, however, the document shows that there is no reference to the Second Applicant's whereabouts on that day. In any event Standfield checked the Second Applicant's diary entries for that day which accorded with the appointments registered by the First Applicant. Neither the register nor the diary entries showed any lunch time appointments between 2.00 pm and 3.00 pm. It was Standfield's evidence that Milsom in his discussions with him mentioned the Hamilton Based Hospital account and from that I understood that Standfield believed this account had been specifically mentioned, whereas it is apparent from Milsom's evidence that he had been shrewd enough to extract sufficient information from the Applicants enabling him to identify the client; rather than its name being directly mentioned to him. Otherwise the names of other clients belonging to the Respondent mentioned by the Applicants at the meeting were existing clients publicly known to be the Respondent's clients. Standfield alleges that he was disturbed by the discussion between Milsom and his employees and further the proposition that the employees by their actions may have attempted to stop accounts about to be moved tothe Respondent from being secured by the Respondent. He confirmed that in the period immediately preceding 27 March 1995 the Applicants were targeting the Hamilton Base Hospital on behalf of the Respondent and they were under pressure from the Respondent to bring the negotiations to a conclusion. On the evidence of both Standfield and Traynor I am satisfied that initially the Second Applicant, who was interviewed first was evasive in his responses to questions about his whereabouts and activities on 27 March 1995. Both Applicants dispute any mention of the out of office register until the second meeting with Standfield on 20 April 1995. However, Standfield and Traynor, who told the Court that she was taking notes and attended only the meetings on 19 April 1995, recall reference to both breaches of confidence in allegedly identifying target clients and their actions in holding back on the target client accounts as well as the failure to complete the out of office register properly or at all. In the Second Applicant's case the last allegation is correct insofar as there is no question that he omitted to complete the register. In contrast, in the First Applicant's case it seems that she completed it but without reference to her lunchtime activity and, as it turned out, completed it in anticipation of attending the City of Springvale to deliver a tender document during the afternoon. They both failed to do this delivery because, according to the Applicants, the meeting at Doncaster ran over time and there was not enough time for them to drive to Springvale and attend their lunchtime appointment at 2.00 pm in Brunswick Street, Fitzroy. This being so they arranged to courier the document to Springvale rather than hand deliver it. Such an alternative arrangement was not an unusual one and the Respondent suffered no prejudice because of this change of plan. The failure to record their lunchtime activity whether it be in the diary or register is, in my view, not a matter which can be held against either employee. Whilst there may have been an expectation that they would take their one hour lunch break between the hours of 12.00 pm and 2.00 pm their uncontradicted evidence was that the morning appointment took much longer than anticipated and from time to time they and other employees took lunch breaks outside the normal lunch period without complaint and any need to report their lunchtime movements and activities to the employer. Indeed, the Respondent at hearing accepted that employees may attend private business such as job interviews during their lunch breaks. Indeed, it was a distraction from the main issues in this case for the Respondent to in any way suggest that the employees may have needed to reveal their whereabouts and activities during lunch time. It was not suggested at any time that if any employee failed to attend an afternoon appointment either diarised or recorded in the register they were then required to amend the record to show that they had not attended the appointment. What seems to have happened in this case is that Standfield assumed that there was some misrepresentation, active or passive, in the completion of the register and that was a worthy reason for redeploying both employees to other duties because of the difficulty in substantiating the breaches of confidence. However, standing alone this conduct could not provide a valid reason for termination in the sense that such reason could be said to be sound, defensible and well founded (see Selvachandran v Peteron Plastics Pty Ltd, unreported Northrop, J., No. VI 1322R of 1994 at page 6). All those present at the various interviews agree that both employees were vigorous in their denials that they had breached any confidentiality by their conduct or in revealing the identity of prospective clients the Respondent was targeting. Indeed, it was agreed by Standfield that he was not able to prove this assertion other than by relying on what Milsom said and any action he took after the meetings was based on the loss of trust in these employees and the omissions from the register at one level or another. Because of this view the employer elected not to summarily terminate the employees' employment. It is alleged by the Second Applicant that the first meeting was an angry one and he was told, amongst other things, he could not be trusted. In effect, Standfield told him he wanted his resignation. Traynor and Standfield deny this last allegation and, I accept that whilst there was some anger and frustration expressed at the meeting and the subsequent meeting on the following day Standfield did not actively seek the Second Applicant's resignation; nor did he as is alleged by the Second Applicant terminate the Second Applicant's employment before giving the Second Applicant a letter dated 20 April 1994 suspending the Second Applicant on full pay until 26 April 1995 (see Exhibit A12). This letter is consistent with the Respondent at that time still considering its options and, as alleged by Standfield, telling the Second Applicant to think about his options. The First Applicant was more forthright in her meetings with Standfield and, according to both he and Traynor, was very distressed on 19 April 1995. I accept the Respondent's allegation that on a number of occasions she offered her resignation which offer was declined by Standfield. She was also given a letter of suspension on 20 April 1994. On 19 April 1994 she was asked for the return of her car keys and mobile telephone. Until at least 20 April 1995 I am satisfied that there was no act of termination on the part of the Respondent. It is not suggested that the applicable award or the contracts of either employee provided for suspension for some days between 20 April 1995 and 26 April 1995 even with full pay. Nevertheless, it is apparent from the employees' actions that they accepted the so called suspensions until, on 24 April 1995, they received letters from the Respondent (see Exhibits A6 and A14 respectively) purporting to redeploy each employee to alternative duties on the same salary as they were receiving before their contratemp with their employer. If there is any conduct at all which points to acts of termination on the part of the Respondent and accepted as such by the Applicants it is the attempt by the company to discipline the two employees allegedly without any reference to the breaches of confidence the Respondent in fact believed had occurred by redeploying them in the First Applicant's case to a position as a levy collections officer reporting to a person in the premiums department, who until then was according to the First Applicant on the same level as she had been as client services manager, and, in the Second Applicant's case, redeploying him to a filing clerk position. The reasons offered for the abovementioned redeployment and those referred to by Standfield in his evidence were lack of trust and the "false representations contained in the out of office register." It was apparent from Standfield's evidence and particularly his responses to cross examination that he believed they had breached confidence but then assumed that he had no way of substantiating this. However the lack of trust of the employees as a consequence of this belief was a strong motivating factor in redeploying them. On the evidence I am satisfied that although the alternative duties may have been classified as at the same grade or level as that attributed to the employees' pre-24 April 1995 positions, as well as the same salary, there was no evidence at all to support the conclusion that either contract of employment contemplated such profound variations in the duties performed by either employee (see Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 540). Accordingly, I find on the evidence that the purported variations in duties were not authorised by the contracts of employment and the acts of redeployment amounted to termination of their employment at the initiative of the Respondent. The alternative argument put by the Respondent is that each employee was guilty of serious misconduct which justified immediate termination without notice. The principle reason proffered for redeployment was related to the register and, of itself, was certainly not evidence of misconduct sufficient to warrant summary termination. As I have already indicated on the evidence the Respondent has failed to establish any clear or actual misrepresentation through the register record. However, Milsom's evidence supports a conclusion that at the relevant time the employees were in breach of their implied duty of fidelity and good faith in that their conduct in leading a competitor to believe that in return for employment they would refrain from pursuing or moving that competitor's clients to the Respondent was inconsistent with their contract of employment with the Respondent. Moreover, by their conduct they alerted a competitor to the fact that the Respondent was targeting a particular client for work and that the Respondent was in a position to move that client. Having found that there has been a breach of the employment contracts amounting to serious misconduct and that this would have entitled the Respondent to summarily terminate the Applicants' employment without notice, the question remains as to what effect the redeployment had once the Respondent did not exercise its right to summarily terminate for serious misconduct. Standfield spent a considerable amount of time trying to establish that the failure to complete the register or to complete it in a way he determined was satisfactory led to his belief that he could not trust either employee. As I have already indicated I am satisfied on the evidence and, in particular, because of the answers given by Standfield in cross examination that the actions in redeploying the employees were to a large extent motivated by lack of trust brought about by the alleged disclosures to Milsom even if Standfield could not be certain that he could substantiate this belief. In other words, the main reason for redeploying the Applicants was the belief that they had breached confidentiality and the matters to do with the register were ancillary to that principle reason. Instead of approaching these matters head on the Respondent adopted a rather circuitous course by purporting to redeploy the Applicants for reasons other than these breaches of their contract of employment. In doing so it brought about this messy legal tangle, which it was no doubt trying to avoid in adopting the softer option of redeploying the employees to positions where they would be less likely to harm the Respondent's interests. On the evidence I am satisfied that there has been no breach of s.170DC of the Industrial Relations Act 1988 because the employees were given adequate opportunities to explain all the conduct complained of. Whilst I have found that the redeployments were tantamount to terminations of the existing contracts of employment this does not mean that in taking the action the Respondent took because of the employees breaches of their contractual duties the Respondent breached s.170DE(2) of the Act and acted harshly, unjustly or unreasonable. On the contrary, even if it may have only achieved this result by default the Respondent in exercising the less drastic option of redeploying the two employees avoided any harsh consequences of summary dismissal. Accordingly, s.170DE(2) does not come into play to vitiate an otherwise valid reason for termination. The abovementioned findings lead to the conclusion that each application should be dismissed. MINUTES OF ORDERS THE COURT ORDERS THAT: 1. Joanne Magagna's application is dismissed. 2. Tolic Portnoy's application is dismissed. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules. I certify that this and the preceding twenty-six (26) pages are a true copy of the reasons for judgment of Judicial Registrar Millane. Associate: Dated: 21 September 1995 Solicitors for Applicants: Messrs Ryan Carlisle Thomas Counsel for the Applicants: Melanie Young Solicitors for the Respondent: Messrs Purvis Clarke Richards Counsel for the Respondent: Mr B Shaw Date of hearing: 16, 17 & 18 August 1995 Date of judgment: 21 September 1995 C A T C H W O R D S INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - SERIOUS MISCONDUCT - BREACH of confidence - implied duty of fidelity and good faith - COMPENSATION and the calculation of the benefit obtained from the use of a motor vehicle. Industrial Relations Act 1988 ss.170DE(2) & 170DC. CASES: Selvachandran v Peteron Plastics Pty Ltd, unreported Northrop, J., No. VI 133R of 1994. Quinn v Jack Chia (Australia) Ltd [1992] I VR 540). JOANNE MAGAGNA -v- FAI WORKERS COMPENSATION VIC PTY LTD No. VI 2602 of 1995 AND TOLIC PORTNOY -v- FAI WORKERS COMPENSATION VIC PTY LTD No. VI 2601 of 1995 Before: Judicial Registrar Millane Place: Melbourne Date: 21 September 1995 INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 2602 of 1995 B E T W E E N : JOANNE MAGAGNA Applicant AND FAI WORKERS COMPENSATION VIC PTY LTD Respondent AND VI 2601 of 1995 BETWEEN TOLIC PORTNOY Applicant AND FAI WORKERS COMPENSATION VIC PTY LTD Respondent MINUTES OF ORDERS Judicial Registrar Millane 21 September 1995 THE COURT ORDERS THAT: 1. Joanne Magagna's application is dismissed. 2. Tolic Portnoy's application is dismissed. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.