Small employer argued job search was ‘disloyal’ and serious misconduct
Belinda Taft was a casual employee at Go Home Lifestyle Products (employer), a small furniture and design business. After approximately 16 months of service, her employment was summarily terminated for serious misconduct when the employer discovered she had contacted an industry acquaintance to inquire about potential alternative roles.
While Taft was on leave, the employer accessed her work email and, on her return, handed her a pre-prepared termination letter alleging serious misconduct. She had not been informed of the allegations and was denied an opportunity to respond before the decision to summarily dismiss her was finalised.
The employer argued that the dismissal was consistent with the Small Business Fair Dismissal Code (code), claiming that Taft’s actions were disloyal and amounted to serious misconduct. It contended that, as a small business, it was entitled to act immediately once it lost confidence in her employment relationship.
Commissioner Matheson rejected those arguments, holding that the employer had misconceived both the scope of “serious misconduct” and the procedural standards imposed by the Fair Work Act 2009 (Cth).
Valid reason for dismissal?
The Fair Work Commission (FWC) first addressed whether there was a valid reason for dismissal. Commissioner Matheson found there was not. Taft’s conduct – making a private, off-duty inquiry about possible employment – did not breach her contractual or fiduciary obligations of fidelity and good faith.
The FWC decided that employees may explore new opportunities while still employed, provided they do not:
- Misuse confidential information or intellectual property.
- Solicit clients, suppliers or co-workers.
- Damage their employer’s business interests.
- Conduct their job search using company time or resources.
None of these factors were present in this case. The Commissioner described the conduct of Taft as “a legitimate and private exploration of future prospects,” falling well short of serious misconduct.
Procedural fairness
Having found no substantive justification, the FWC went on to identify serious procedural defects in the termination process. The employer had already decided to dismiss Taft before any discussion, failed to specify the allegations, and denied her an opportunity to respond.
Commissioner Matheson concluded that the process “fell well short of what fairness requires,” observing that even if the employer had possessed a valid reason, the denial of procedural fairness would independently render the dismissal unfair. Under Australian law, both elements – valid reason and procedural fairness – must coexist.
The FWC dismissed the employer’s reliance on the code. While the code allows small businesses to summarily dismiss for serious misconduct if they reasonably believe it has occurred, that belief must be based on clear, objective evidence. Here, the employer’s decision was “driven by assumption and emotion rather than reason.” The case illustrates that small business status does not excuse non-compliance with the procedural fairness standards embedded in the Fair Work Act.
Unjust dismissal
The FWC found that the dismissal was harsh, unjust and unreasonable within s. 385 of the Fair Work Act. Reinstatement was considered inappropriate given the breakdown of trust and confidence, but Taft was awarded $2,600 gross (approximately four weeks’ pay) as compensation.
Implications for employers and global HR teams:
- Exploring work elsewhere (whilst still employed) is not misconduct: Employees may look for other roles privately provided they do not misuse confidential information, comply with their obligations, and conduct their search outside of working hours.
- Procedural fairness: Even if there appears to be a valid reason, failure to put allegations and allow a response will invalidate the dismissal.
- The FWC applies consistent fairness obligations across all employers regardless of the size of the employer.
- Strengthen contractual protections: with Australia moving towards limiting non-compete clauses, employers should consider reviewing confidentiality, IP and non-solicitation terms to protect key relationships and important proprietary information.
- Global alignment: multinational employers should ensure Australian operations meet local due-process standards within global HR frameworks.
Mariam Chalak is a Senior Associate and Team Leader at Harmers Workplace Lawyers in Sydney. Hannah Nesbitt is a Senior Associate at Harmers Workplace Lawyers in Sydney. Callum Sirker is a Graduate-at-Law at Harmers Workplace Lawyers in Sydney.
