Published 28 June 2016
The Federal Circuit Court found termination without notice can be valid where the employee commits a serious breach of their employment contract.
Mr Baird’s employment as managing principle of two of the Respondent’s offices was terminated without notice. Mr Baird argued he was entitled to be paid notice either under his contract of employment or section 117 of the Fair Work Act 2009 (Cth) (the Act).
Mr Baird’s employer, Crow Horwath, claimed Mr Baird engaged in conduct that constituted serious misconduct, enabling them to validity dismiss him without notice according to section 123(1)(b) of the Act.
The conduct in questions included:
- Meeting with Macquarie Capital in an effort to persuade Macquarie Capital to acquire part of the Crow Horwath business
- Persuading two employees of Crow Horwath to leave the business and join Mr Baird in operating a business that would compete against Crow Horwath
- Soliciting clients from Crow Horwath
Mr Baird had a fiduciary relationship with his employer, requiring him to act in the best interest of Crow Horwath and not in his own interests. Mr Baird also had a duty of loyalty not to take ‘an opportunity within the sphere of the employee’s business operation without the employer’s informed consent’.
Decision
In order for the termination to be valid, serious misconduct must be proved.
The Court found that approaching Macquarie Capital demonstrated Mr Baird’s plan to profit at the expense of his employer and this breached his fiduciary duty and his duty of loyalty.
Mr Baird’s solicitation of clients and two employees of Crow Horwath also breached Mr Baird’s duty to his employer, as he acted out of his own self-interest and against the interest of his employer. Further, he did not have the employer’s informed consent to engage in these acts.
In light of this, the Court found Mr Baird committed a serious breach of his employment contract and this constituted serious misconduct. Therefore, Crow Horwath was entitled to terminate his employment without any payment for notice.
The Court found that Mr Baird’s serious misconduct resulted in the repudiation of his employment contract and accordingly he was also not entitled to rely upon the notice entitlement provision set out therein.
The Court dismissed Mr Baird’s claims.
This content is general in nature and provides a summary of the issues covered. It is not intended to be, nor should it be relied upon, as legal or professional advice for specific employment situations.
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