EMPLOYMENT APPEALS TRIBUNAL
CLAIM(S) OF: CASE NO.
Debbie Forder
UD927/2011
MN1057/2011
- claimant WT385/2011
Against
AV Pound & Company Limited
- respondent
Under
UNFAIR DISMISSALS ACTS, 1977 TO 2007
MINIMUM NOTICE AND TERMS OF EMPLOYMENT ACTS, 1973 TO 2005
ORGANISATION OF WORKING TIME ACT, 1997
I certify that the Tribunal
(Division of Tribunal)
Chairman: Ms. K.T. O'Mahony B.L.
Members: Mr. P. Casey
Mr J. Flavin
heard this claim at Cork on the 18 October 2012, the 16 and 17 January 2013, the 17 and 18 June 2013 and the 26 and 27 August 2013
Representation:
Claimant(s) : Mr Eamon Shanahan B.L. instructed by Frank Nyhan & Associates, Solicitors,
11 Market Square, (Opposite Courthouse), Mallow, Co Cork
Respondent(s) : Mr Peter Ward SC instructed by O’Flynn Exhams and Partners Solicitors
58 South Mall, Cork
The determination of the Tribunal was as follows:-
Summary of Evidence
The respondent is one of a group of companies, which act as middlemen/brokers facilitating commercial contracts between suppliers and buyers of industrial chemical raw materials. The original company operated out of South Africa. Similar operations were commenced in or around 2001 in Australia and in 2002 in Ireland. MB had joined the group in South Africa in March 1980 as a product manager and became Group CEO in 1990.
The claimant commenced employment in the South African company in 1981 and moved to Ireland in 2003 to take up employment with the respondent. Her contract of employment contained a confidentiality clause and a non-solicitation clause. She held a senior position with the respondent as product manager and was part of a three-person sales team, which included GW. There were problems in the Irish office and MB took over the management of the office in 2005/6. Shortly thereafter he informed the other directors that he and the claimant were in a relationship.
MB was also a director of another company, Multi Bulk Consulting Ltd (hereinafter Multi Bulk). It was originally set up to invoice group companies for salaries but had never been used for that purpose. In 2007 MB bought out the other two directors GW & DB and the claimant was appointed a director at that time. It was MB’s evidence that Multi Bulk was dormant at the time and did not trade until July 2011. The claimant’s evidence was that she resigned as director in February 2010
Problems arose between MB and the other directors. In January 2008 it was agreed that MB would take 6 months sabbatical leave. An email was circulated to all members of staff informing them of this development and asking them to address any work queries or issues, they would normally have addressed to MB, to their regional director or DJ, who later became acting CEO (hereafter ACEO). Negotiations on an exit package for MB were ongoing and acrimonious. MB’s employment with the group was terminated on 13 August 2008. On the same day, 13 August 2008, an e-mail was sent to all staff across the group informing them that from August 2008 MB wasno longer employedin any capacity within the group of companies, that he had been asked to refrain from communicating with employees, directors and shareholders on any business related matters and that the Board requested any staff member who receives correspondence relating to company matters from MB, not to reply and to immediately forward the correspondence to the ACEO or specified others. By way of response MB sent an e-mail on 14 August to certain persons within the group, excluding the directors, stating that the instruction from ACEO was effectively unauthorised and added that he did not want to place them in the awkward position of having to choose any request for information and the instruction from the board. By further e-mail of 18 August 2008 employees including the claimant were assured that all decisions were taken after communication and legal advice.
An exit package of over €5.5 million was finalised in mid February 2010 and MB resigned as a director of the holding company with retrospective effect from January 2009. All staff were informed of his resignation. The settlement, although payable over a five-year period, was paid by the end of November 2010.
It was common case that GW and the claimant had their differences.GW believed that the claimant felt she was not receiving due recognition in the company and that she ought to have his position. From January 2010 onwards the claimant felt isolated and excluded in the office: there was little dialogue between her and GW, she had no prior knowledge of the purchase of a UK supplier company for which she was the product manager, and in July 2010 she received a salary increase of only 1% while her assistant received a 2% increase. Around the end June/early July she felt overwhelmed and could not perform some of her functions because she was not receiving all information. She was absent on sick leave for 3/4 days in June/July. She had informally discussed her position with the group HR manger (GHR) when he visited the site in February 2010. In August 2010 following a period of stress related sick leave she outlined her concerns in an e-mail to GW. Her position was that she merely wanted to raise and discuss her concerns but GW treated it as a formal complaint and convened a formal grievance meeting for 5 October 2010. Her complaint was not upheld and GHR’s decision was notified to her on 17 November 2010. The claimant had no confidence in the process as the directors were embroiled in a dispute with MB. The respondent’s position was that the claimant had made a written record of her alleged difficulties and had medical certificates stating that she was suffering from stress.
Around mid-September 2010 the claimant casually informed GW that she was attending the trade fair in Dusseldorf at the end of October 2010. Either then or later on, the claimant mentioned that she was accompanying MB to the trade fair. Although initially encouraging about her attendance at the trade fair the respondent had its own representatives attending and being concerned, as a number of the respondent’s suppliers would be attending the trade fair, GW instructed the claimant on 22 October 2010, by way of written communication, that she was not to represent the respondent at the trade fair.
In early November the respondent received information that MB approached a supplier wanting to meet him at the trade fair (e-mail 2.8). GW and DB of the respondent, being concerned that the claimant might have been meeting suppliers at the trade fair examined her e-mails and felt she had a case to answer. GW prepared a list of questions to put to her at an investigation meeting on 2 December 2010. The list of questions centred on her visit to Dusseldorf and whether she had communicated with suppliers or customers prior to her visit there. GW conducted the meeting and DB was present as note taker. In response to the questions the claimant indicated that MB had been representing Multi Bulk at the trade fair and, maintaining that this was MB’s private business, refused to answer any further questions on this issue. The claimant was adamant that she did not hold a position outside the respondent company. The claimant’s attitude was that she had nothing to worry about. She refused to sign the minutes of the meeting. GW interpreted one of the claimant’s concluding remarks:“Just ask me to leave and cough …” as a suggestion to pay her off. The claimant’s position was that she was asking him“to spit out” what was on his mind.
At the end of the meeting the claimant was handed a letter confirming her suspension pending further investigation and she was asked to hand over her laptop, blackberry/mobile phone, passwords and keys. The claimant did not leave the premises immediately but proceeded to her desk where she deleted material from her blackberry and desk top and continued to do so even though requested again to desist and leave. When the claimant left GW found that messages and e-mails had been deleted from the blackberry and only contact details remained. The following day GW needed the claimant’s password to unlock and reboot the blackberry but the claimant ignored all requests over the following months to provide the pin/password. The claimant’s position wasthat she had only deleted personal material from her blackberry and laptop computer and that in any case the e-mail link to her blackberry had not been reconnected on her return to work after her illness in September 2010. To date she cannot remember the pin/password. The respondent did not accept that she could not remember a password that she had used daily for over three years. The claimant refused to sign the minutes of the meeting. She returned the keys the following weekend. GW prepared the letter of suspension prior to the meeting in case it would be required. GW passed his note of the investigation meeting to the Board. Following the investigation meeting GW prepared a pack of several other e-mails to be considered at the next meeting. (GW had earlier obtained the authorisation of the Board, to access the claimant’s file of work e-mails from the IT server). ACEO, a group director from Australia, was selected to conduct the disciplinary meeting.
By letter of 4 January 2011, the claimant was invited to a disciplinary hearing on 3 February 2011 where she would be afforded an opportunity to answer the following allegations:
(i) Allegedly undertaking private work on company premises and in working hours without express permission;
(ii) Allegedly working in competition with this company,namely it is alleged that you hold a position with a competing company to Hobart which, if true, would allegedly represent a direct conflict of interest with your position with Hobart.
(iii) Allegedly taking part in activities which have caused the company to lose faith in your integrity and engaging in conduct which may be construed as being in breach of the Company’s core rules on confidentiality, as well as serious breaches of Company rules and procedures.
(iv) Failure to follow reasonable managementinstruction, the particulars being that having been placed on suspension and directed by management to finish up, you proceeded to return to your desk and both knowingly and wilfully delete e-mails and documents from your computer and mobile phone, and continued to do so despite being told by management to stop and leave the premises.
Copies of the e-mails on which the allegations were based were enclosed with the letter.
Due to the claimant’s unavailability, mainly because of illness, the meeting was rescheduled and the disciplinary hearing was ultimately held on 25 March 2011. The claimant’s solicitor (the solicitor) accompanied the claimant. The solicitor objected to having ACEO conduct the disciplinary hearing on the grounds that he was not independent but none the less he agreed that they proceed with the disciplinary hearing. The claimant did not want to answer the e-mails and shortly into the discussion the solicitor suggested that ACEO should take the claimant’s prepared written responses. The meeting progressed and the more significant e-mails relating to each of the allegations were then put to the claimant. ACEO took the written responses and following a short adjournment the meeting ended.At the close of the meeting the claimant referred to the damaged relationship between GW & DB in the Irish office and herself and asked why she hadn’t been approached to reach a “sensible ending”. ACEO believed she was suggesting that she would leave with a pay-off. MB had helped in the preparation of the written responses. The more significant e-mails put to the claimant on each of the allegations include the following.
1. The allegation that the claimant was undertaking private work on the company premises and in working hours without express permission.
ACEO felt that in her e-mail of 27 May 2009 in which she asked MB whether a particular company has “any interest for us”, the claimant was passing on a potential business lead to MB; the respondent had never done business with the company. ACEO did not accept the claimant’s explanation that “us” referred to the respondent or that she was seeking MB’s advice. As regards the claimant’s e-mail of 29 May 2009, ACEO’s position was that she had no reason to be discussing the “iso-tainer” with MB as the respondent has its own UK shipping company to advice on shipping. The claimant’s position was that she was responsible for exporting materials from South Africa. In the e-mail of 4 March 2010 to MB, the claimant was using the respondent’s e-mail andtime discussing an accountancy invoice in relation to the affairs of Multi Bulk, the company which ACEO believed was competing with the respondent. The claimant’s position was that the respondent was at all times aware that she had been a director of Multi Bulk and in any case her evidence was that she had resigned from the directorship in February 2010. In his 4 May 2010 e-mail to the claimant MB suggested to the claimant that they should consider working from the boat in Spain and it also contained a reference to one of the respondent’s suppliers.
2. The allegation that the claimant had been working in competition with the respondent and holding a position with a competing company.
The central plank of the respondent’s case under this heading was MB’s e-mail 2.8 of 28 October 2010 sent from his Multi Bulk address to Kelvin Lai (one of the respondent’s key suppliers), which the supplier forwarded to a group subsidiary. In this e-mail, having referred to his acrimonious exit from the group, MB continued:
“I am now in the process of setting up businesses in all regions where Carst and Walker operate and will re-enter the chemical distribution business early in the New Year. I will be visiting the K 2010 show next weekend and wondered if you would be attending so that we might meet to discuss potential business prospects which might be of mutual benefit.”
ACEO regarded this e-mail as a blatant attempt to solicit one of the respondent’s key suppliers and further believed that Multi Bulk was to be the competing company. The solicitor’s attitude was that the claimant was not aware of this e-mail and that the respondent was making wild assumptions that Multi Bulk would be competing with the respondent.In his 4 May 2010 e-mail MB suggested to the claimant that they should consider working from the boat in Spain and the e-mail contained a reference to one of the respondent’s suppliers. The claimant’s response was that this was a private e-mail. In his 13 October 2010 e-mail to the claimant MB referred to “the next step of the journey”. Although instructed by GW on 22 October 2010 not to represent the respondent at the trade fair the claimant sent an e-mail on 27 October 2010 enquiring as to whether anybody from Kolon (a supplier) would be attending the trade fair. The claimant’s response was that she was product manager for Kolon and that the e-mails did not demonstrate an intention to compete.
3. The allegation that the claimant was taking part in activities which have caused the company to lose faith in your integrity and engaging in conduct which may be construed as being in breach of the Company’s core rules on confidentiality, as well as serious breaches of Company rules and procedures.
In April 2009 the claimant provided the new IP address to MB, enabling him to access the respondent’s computer in Mallow which would give him access to all management and financial decisions as well as the financial affairs of all the companies in the group including their balance sheets and sales and stock data, all of which would be very useful to a competitor. This was given to him at a time when his exit package was being negotiated. There was no reason for MB as a director of the holding company to have the IP address. Nor was there any other reason for him to have it as he was no longer an employee of any group company. If MB had needed the IP address he could have asked the Board for it. The claimant’s position was that she had given him this as he was still on the Hobart e-mail list and she felt that his name was inadvertently omitted when circulating the new IP address (e-mail 3.2) and in any case it could be otherwise accessed. The respondent’s position was that there was no reason for the claimant and MB to communicate about the respondent’s business. MB was not involved in the day-to-day running of the respondent from January 2008 and had not been in the respondent’s employment since August 2008.
The respondent produced several e-mails sent by the claimant to MB, or forwarded on or blind-copied to him or sent to her own private e-mail address. These e-mails contained costings of raw materials, the respondent’s pricing and margins. ACEO’s position was that knowing the respondent’s prices gives an advantage to a competitor. On 13 May 2009 the claimant twice emailed lists of costings to MB to print for her while in South Africa and later in the month she forwarded pricing information from suppliers to him (14 & 15 May) to print thereby giving him access to information that was the essence of the respondent’s business. On 14 May 2009 the claimant forwarded to MB pricing information the respondent had obtained in respect of its sales to Secol. The respondent’s position was this information would help MB to compete with the respondent. Secol had a parallel business to the respondent’s and it bought from the respondent and sold on to Klinger. The claimant’s position was that MB was a trustee of Secol and would have these prices and in any case they change every few days. The claimant, who had access only to the respondent’s weekly sales reports, sought the weekly sales reports for the group’s subsidiaries from NS. The claimant’s position was that as she had not received her own weekly sales report for three or four weeks and had sought only those but NS had forwarded the weekly sales reports of the subsidiaries to her. The claimant’s response to many of these allegations was that she sent the e-mails to MB because he was a director of the holding company.
Over a period of time the claimant sent company information, including information on the supply of raw materials, customer pricing and transaction information and the respondent’s quotations to her own hotmail account and contended she was doing so to prove that she was being excluded at workor that she was doing it for safe keeping in case the system crashed. ACEO did not accept the claimant’s explanations. The respondent could see no reason why the claimant blind-copied to MB her e-mail of 25 November 2009 to Cindy Liu, about the latter’s leaving the employment of one of the respondent’s suppliers. ACEO believed that the claimant was storing information which would be used to compete with the respondent.
The allegation that the claimant failed to follow reasonable instruction is covered in paragraph 9 above.
Having considered the claimant’s written and oral responses to the allegations put to her ACEO concluded that the claimant was sending market confidential information to MB to assist him in competing with the respondent and that she was doing so while taking a salary from the respondent. She had breached her contractual duty of confidentiality which resulted in irreparable damage to the respondent’s trust and confidence in her. ACEO believed the claimant had planned with MB to compete and was hoping for a payoff from the respondent. ACEO was unable to provide any examples of loss of business or customers by the respondent due to the claimant’s actions. His position was that the dismissal was based on information that came to light and had nothing to do with the claimant’s grievance. Employees may send private e-mails but are not permitted to convey or discuss confidential business in them.
The claimant did not avail of the opportunity to appeal her dismissal to an independent third party.
MB’s evidence to the Tribunal was that in and around April 2010 he was planning to set up a new company to trade in chemical raw materials other than those in which the respondent was trading. However, he felt short changed in his final severance agreement and was irritated that a promised donation to a charity had not been made. In November 2010 he decided to compete with the group and set up a new company (BFG) for this purpose. He went to Dusseldorf to meet with potential business clients and exhibitors and was representing BFG there. He only informed the claimant of the existence of BFG in December 2010. MB believed that the motivation behind the claimant’s dismissal was her involvement with him and her knowledge of impropriety within the organisation. He denied that the claimant was involved in any joint enterprise with him. His evidence was that she does a little work, but nothing material, for Multi Bulk and she does not do any work for BFG which competes with the respondent. Multi Bulk was dormant and technically insolvent but traded again in July 2011.BFG first traded in 2012. Secol was owned by a trust, MB was a trustee and his family are the beneficiaries; it was a parallel business selling the same chemicals as the Group. Secol was a customer of the respondent and knew all these prices and in any case the prices change regularly. Although on a sabbatical from January 2008 he continued to receive emails from various individuals in the organisation during the period January 2008 to as late as 2010.
In her evidence the claimant further told the Tribunal that she had never competed nor had intended to compete with the respondent. She had not discussed any business with any supplier at the trade fair. She did not regard the information she had sent to MB as confidential. She sent the e-mail of 28 April 2010 to Cindy Liu asking for her help or advice with the new company as she felt she was on the way out of the company at the time but had hoped things would change, that the directors would resolve their problems and that she would remain in the respondent. While MB had told her around December 2010 about his new company BFG, he had never told her he intended to compete with the respondent or group. In cross-examination the claimant could not remember Multi Bulk’s income for 2011 but could recall that the company only paid €894 to Revenue that year. The evidence was that Multi Bulk had an income of €509,000 .00 in 2011. The claimant did not know its income for 2012. Much of the information she had transmitted to MB had been because he was a director of the holding company. She felt that she was not bound by the instruction not to communicate with MB.
She explained that the email of the 30 March 2010 which she sent to Cindy L in which she referred to starting a new company and asked for her help or advice was sent at a time when things were difficult for her in her employment and she had to consider that she may have to seek alternative employment. She was seeking help but had not intended ever competing with the respondent. During that time she sought medical assistance and was advised to, get away from the stressful work environment.
Determination
The claimant’s contract of employment included a non-solicitation and the following confidentiality clause:
The employee hereby agrees during his/her period of employment not to disclose any information relating to the operations, dealings, or affairs of the Company or clients of the Company to any third party beyond that which is necessary in the course of his/her employment. The employee also agrees not to disclose any confidential information contractual or otherwise including all intellectual property rights that the company may have to any third party outside the fulfilment of his/her role.
The function of the Tribunal and the test to be applied in cases of misconduct has been variously stated and is well set out in Looney & Co. Ltd. v. Looney (UD 843/1984):
“It is not for the Tribunal to seek to establish the guilt or innocence of the claimant, nor is it for the Tribunal to indicate or consider whether we, in the employer’s position, would have acted as (the respondent) did in his investigation, or concluded as he did or decided as he did, as to do so would substitute our mind and decision for that of the employer. Our responsibility is to consider against the facts what a reasonable employer in (the respondent’s) position and circumstances at that time would have done and decided and to set this up as a standard against which the employer’s action and decision be judged.”
The test of “reasonableness” was set out in Noritake (Irl.) Ltd. v. Kenna (UD 88/1983), namely:
1. Did the company believe that the employee miss-conducted himself as alleged: If so,
2. Did the company have reasonable grounds to sustain that belief? If so,
3. Was the penalty of dismissal proportionate to the alleged misconduct?
Having considered the evidence adduced on the second allegation and being cognisant of the fact that the respondent had no evidence of loss of business or contracts, the Tribunal is none the less satisfied that it was reasonable for the respondent to believe that the claimant was or was intending to compete and /or she was assisting MB to compete with the respondent: MB’s e-mail (2.8) of 25 October 2010 to a supplier (Kelvin Lai) shows a clear intention to compete with the Group; MB sought to set up a meeting with the supplier in Dusseldorf to discuss potential business; the claimant accompanied MB to the trade fair; and, although instructed by GW not to represent the respondent at the trade fair, the claimant in her e-mail of 27 October 2010 was making enquiries as to whether anyone from Kolon (a supplier) would be at the trade fair. The other e-mails adduced relating to the second allegation further support this conclusion. The Tribunal’s finding on the third allegation fed into its findings on this allegation. Finally, the claimant’s email of 28 April 2010 to Cindy Liu (a former employee of a supplier), which ACEO received subsequent to the disciplinary hearing, corroborates its findings on this allegation. As regards the allegation of competing, it is irrelevant whether the respondent had correctly identified the company which was to compete or was competing with the respondent. On this point the Tribunal notes that BFG was not mentioned in the oral or written responses to the disciplinary issues and that at the investigation stage the claimant indicated that MB was representing Multi Bulk at the trade fair.
It was reasonable for ACEO to believe that the claimant was transmitting confidential company marketing information including inter alia information on the costings of its raw materials, pricing and margins to MB, her partner, contrary to the instruction and the interests of the respondent and the group. In so doing the claimant was in breach of her core contractual duty of confidentiality to the respondent, as she also was in giving MB the respondent’s IP address. It is irrelevant that in some instances MB may have, through inadvertence and oversight on the part of senior personnel, received the information from another source or sources within the group or that with the help of an expert he could have got the IP address. The Tribunal further finds that there were some grounds for the respondent’s belief that the claimant was guilty of the two other allegations.
Having considered the totality of the evidence, the Tribunal is satisfied that the respondent had a reasonable belief that the claimant was guilty of the alleged misconduct. Dismissal was not disproportionate in the circumstances.
The first three allegations constitute a breach of an employee’s duty of fidelity. This duty applies not only to establishing a competing business but also to the activities of an employee which might reasonably be considered to damage or constitute a danger to the employer’s business. In McDermott v Kemeck Ltd. ud89/1995, the Tribunal set out a number of the governing principles of an employee’s duty of fidelity, one of which was that the duty of fidelity continues so long as the employee remains in the employment. The failure of the respondent to ask the claimant to desist from the activity was not fatal in this case.
For the above reasons the claim under the Unfair Dismissals Acts, 1977 to 2007, fails.
The claims under the Minimum Notice and Terms of Employment Acts 1973 to 2005 and the Organisation of Working Time Act, 1997 were withdrawn at the commencement of the hearing.
Sealed with the Seal of the
Employment Appeals Tribunal
This ________________________
(Sgd.) ________________________
(CHAIRMAN)