DECISION NO:165/97 CATCHWORDS INDUSTRIAL LAW - complaint of UNLAWFUL TERMINATION - whether VALID REASON - breach of confidentiality agreement - whether SERIOUS MISCONDUCT - Workplace Relations Act 1996 ss170EA, 170DB Gooley v Westpac Banking Corporation (1995) 129 ALR 628 Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371. RADFORD -V- COMMERCIAL COMPUTER CENTRE PTY LTD VI 1079 of 1997 Before : PARKINSON JR Place : MELBOURNE Date : 8 MAY 1997 IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 1079 of 1997 B E T W E E N: Nicole RADFORD Applicant A N D COMMERCIAL COMPUTER CENTRE PTY LTD Respondent MINUTES OF ORDERS 8 MAY 1997 PARKINSON JR THE COURT ORDERS THAT: 1. The application pursuant to Section 170EA of the Workplace Relations Act, 1996, be dismissed. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 1079 of 1997 B E T W E E N: Nicole RADFORD Applicant A N D COMMERCIAL COMPUTER CENTRE PTY LTD Respondent REASONS FOR DECISION (delivered ex-tempore - revised from transcript) 8 MAY 1997 PARKINSON JR This is my decision in relation to an application made pursuant to Section 170EA of the Workplace Relations Act 1996.('the Act') The applicant was employed by a predecessor of the respondent at the business in 1993 as a data entry operator. The respondent commenced to operate the business in about November 1994 and continued the employment of the applicant. The respondent's business is the provision of data entry services to customers who contract out major data entry tasks. Its customers include a number of institutions to which privacy of data is of importance. The applicant on 30 November 1994, shortly after the respondent commenced operating the business, signed a confidentiality agreement. That agreement required that the applicant not disclose to any individual or business or company the contents of information which she had processed. On 10 October 1996 the respondent's general manager, Ms Commerford, was contacted by a major customer complaining of a breach of confidentiality. That complaint involved the applicant and alleged disclosures of information by her to a person outside of the respondent from payroll data she had been entering in the course of her employment. As a consequence of the complaint, Ms Commerford arranged for a meeting to take place that day with the applicant. There is some disagreement whether the applicant was invited to bring a companion initially or not. However, I am satisfied that the applicant was accorded the opportunity to have another person present, that this was made clear to her, and that it was made clear to her that the matters to be discussed were serious matters. Ms Commerford's evidence was that the applicant was informed that a complaint had been made, and informed by which particular client. Her evidence was, further, that the applicant was asked whether she had revealed confidential payroll information to another person. Ms Commerford's evidence was that she referred generally to payroll information, and that there was, however, specific discussion of tea allowances when the applicant admitted to having revealed information to her mother as to that matter. It was put on behalf of the applicant, that the only matter of breach of confidentiality was the disclosure by the applicant of information as to tea money contained on documents relating to the applicant's mother and her allowance entitlements. It is clear that the respondent's manager understood the complaint received from the client to be one involving a broader range of matters than the tea allowance, and that in a general sense the respondent put this when raising the issue of pay rates and allowances. The applicant's response, that the only thing she told her mother about was the tea money, suggests that there had been other matters referred to only in general terms by the respondent. Whilst I accept the applicant's evidence that the tea money was the only issue disclosed by her, the respondent nevertheless was concerned as to a broader complaint from its client. As a consequence of the representations of Mr Beales from the applicant's union, who had been contacted by Ms Commerford shortly after the meeting with the applicant, the decision to terminate the applicant's employment was deferred and a meeting arranged with Mr Beales and the applicant on Thursday 17 October 1996. I am satisfied that both Mr Beales and the applicant understood that the matter was viewed seriously and was likely to have grave consequences for the applicant's on-going employment. The termination of employment took place at the meeting of 17 October at which Mr Beales was present. The reason for the termination of the employment was the breach of the confidentiality agreement and the disclosure of confidential information. It is clear from the evidence that Ms Commerford's concern lay with the breach of confidentiality itself as opposed to the detail of the matters which were disclosed. Whilst the client may have complained of more general matters, it was the effect of the disclosure upon the clients and potentially other clients' confidence in the business, which caused the respondent to investigate the matter and take the action that it did in terminating the applicant's employment. The termination of the employment occurred in circumstances where the applicant had signed a confidentiality agreement, the terms of which she had read and I am satisfied understood. In addition, the evidence is that during the course of the employment the issue of confidentiality of information was raised on at least one other occasion in relation to another major client, and a requirement that a further confidentiality undertaking be executed specifically in relation to that client's information. I am satisfied that it was well understood in the workplace that the issue of confidentiality was a fundamental matter to the continuing operation of the respondent's business. The respondent's concern as to the effect of such a breach upon its on-going business was a reasonable and well founded response. There is no aspect of the reasons or facts relied upon by the respondent or the inquiry which resulted in the termination of the employment which suggests that the termination was not sound, defensible or well founded, or was capricious in the sense discussed by Northrop J in Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371. I am satisfied that the respondent had valid reason for the termination of the applicant's employment based upon the misconduct of the applicant in disclosing information obtained in the course of her employment which she knew to be confidential. Consequently, there has been no contravention of s170DE(1) of the Act. I turn now to consider the question of summary termination of the employment. The Statute provides by s170DB for the provision of notice of termination of employment unless the employee is guilty of serious misconduct, that is, misconduct of a kind such that it would be unreasonable for the respondent to continue the employment during the notice period. I am satisfied that the applicant was guilty of serious misconduct at common law in the sense discussed in Gooley v Westpac Banking Corporation (1995) 129 ALR 628, that being conduct which was serious in its context and wilful. In considering this matter it is relevant to take account of the fundamental importance of confidentiality to the workplace, and the knowledge the applicant had of that fact. This is the aspect of the conduct which I am satisfied constitutes the misconduct as wilful in the sense discussed in various authorities considering the common law position. However, there is a further aspect to s170DB in that the provision itself operates to define serious misconduct for the purposes of that section as conduct of a kind where it would be unreasonable to require the employer to continue the employment during the notice period. It may be that this section requires the application of a different test to that applied at common law in determining whether there has been a gross or serious misconduct, although no detailed submissions in this regard were made. I have already indicated my conclusions as to the conduct of the applicant on an application of the common law test of serious misconduct. I am also satisfied that in view of the same factual matters I have discussed in that context it would have been unreasonable for the respondent to have been required to continue the employment in the notice period. Consequently, there has been no contravention of Section 170DB of the Act. The application will be dismissed. The Order of the Court in this proceeding is that the application be dismissed. I certify that this and the preceding three (3) pages are a true copy of the reasons for decision of Judicial Registrar Parkinson. Associate : Dated : 14 May 1997 APPEARANCES Counsel appearing for the applicant : Ms. A. Duffy Representative for the applicant : The Australian Services Union Officer of the respondent : Ms. M. Commerford Date of hearing : 8 May 1997