Fair Work Commission finds that two employees were unfairly dismissed for discussing another employee’s salary

In the recent decision of Claudia McLeod and Sierra Louie v Project 88 TPF Pty Ltd T/A Pink Flamingo Spiegelclub [2023] FWC 2630, the Fair Work Commission (FWC) has found that two employees of a Queensland-based entertainment venue were unfairly dismissed for discussing the salary of another employee.

Facts

Ms Claudia McLeod and Ms Sierra Louie were both employed by Project 88 TPF Pty Ltd T/A Pink Flamingo Spiegelclub (Project 88), an entertainment venue based in Broadbeach, Queensland. At the time of their dismissals, Ms McLeod was employed in the position of Box Office and Administration Officer and Ms Louie was employed as a waitress.

On 31 January 2023, Ms McLeod attended a social dinner with two other Project 88 employees, Ms Gabrielle Scotson and Ms Drew Holden. Following the dinner, on 2 February 2023, Ms Scotson disclosed Ms Holden’s salary rate to Ms McLeod. Ms McLeod then disclosed Ms Holden’s salary rate to Ms Louie, who subsequently disclosed it to another Project 88 employee, Ms Melissa Kocac via text messages (the Messages). Neither Ms Louie nor Ms McLeod understood at the time that Ms Holden wished for her salary to remain confidential.

Project 88 became aware of the discussion of Ms Holden’s salary by accessing Ms Kocac’s private social media accounts without her consent using her former work phone and viewing her private messages with Ms Louie.

On 3 February 2023, Ms Louie was called to a meeting with Project 88. At the meeting, Ms Louie was informed that Project 88 had ‘been sent’ screenshots of the Messages. At this stage, Ms Louie informed Project 88 that she had obtained the information regarding Ms Holden’s salary from Ms McLeod. Ms Louie was informed by Project 88 that it was a ‘criminal offence’ to discuss another employee’s salary without their consent.

On the same date, Ms McLeod was called into a meeting with Project 88. Ms McLeod was also informed that her disclosure of Ms Holden’s salary constituted a ‘criminal offence’.

Following these meetings, Ms McLeod and Ms Louie were both summarily dismissed, on the basis that they had engaged in a ‘deliberate and wilful’ breach of their employment agreements by ‘distributing confidential personal financial information of another employee’. Ms Louie and Ms Holden were subsequently provided with letters of termination to this effect.

Ms McLeod and Ms Louie both made applications to the FWC on the grounds that they had been unfairly dismissed. Both matters proceeded to a hearing and were subsequently heard together.

Decision

In determining the matter, the FWC separately considered whether both Ms Louie and Ms McLeod has been unfairly dismissed.

Ms McLeod

The FWC determined that by disclosing Ms Holden’s salary information to Ms Louie, Ms McLeod had breached the confidentiality clause of her employment agreement.

However, the FWC considered that Ms McLeod’s breach of her employment agreement was not ‘wilful and deliberate’ as at the time she disclosed this information, she was under the impression that Ms Holden had voluntarily informed Ms Scotson of her new salary rate. The FWC considered that this was not an unreasonable assumption given there had clearly been some discussion of salary at the social dinner on 31 January 2023.

The FWC rejected Project 88’s argument that Ms McLeod’s disclosure constituted a breach of section 183 of the Corporations Act 2001 (Cth), as she was not using the information to gain an advantage or to cause detriment to Project 88. The FWC was satisfied that this discussion was akin to a discussion of work issues with a friend.

The FWC noted that Project 88 had only became aware of Ms McLeod’s disclosure due to Ms Louie’s admission during the meeting on 3 February 2023. The FWC considered that Ms Louie’s admission should be given less weight, considering the admission was made after she was provided with false information about how the Messages were obtained.

The FWC also noted that Ms McLeod was seemingly ambushed by Project 88 in the 3 February meeting, considering she was not provided with notice as to what would be discussed, nor was she provided with the opportunity to bring along a support person.

Accordingly, the FWC was satisfied that Project 88 did not have a valid reason to dismiss Ms McLeod.

Ms Louie

The FWC was satisfied that Ms Louie had breached the confidentiality clauses of her employment agreement by discussing Ms Holden’s salary with Ms Kocac. However, for the same reasons as Ms McLeod, the FWC was satisfied that this did not provide Project 88 with a valid reason for her dismissal.

In addition to the reasoning provided for Ms McLeod, the FWC noted that Project 88’s conduct in accessing Ms Louie’s private messages without her consent was far more serious than either Ms McLeod’s or Ms Louie’s conduct. The FWC further noted that Project 88’s conduct in misinforming Ms Louie as to how they obtained the Messages was a ‘terrible way to treat a young employee’ given this would have led Ms Louie to believe that Ms Kocac had disclosed the Messages to Project 88.

In closing, the FWC noted that the way Project 88 had presented the severity of what had occurred during the meetings on 3 February 2023 made it seem like Ms McLeod and Ms Louie had ‘broken into Project 88’s equivalent of a “Watergate complex”, stolen key intellectual property secrets and posted them on WikiLeaks’. The FWC noted that what they had actually done was privately discuss the salary of a friend, which was quite unremarkable.

Accordingly, the FWC was satisfied that both Ms McLeod and Ms Louie had been unfairly dismissed. The FWC ordered Project 88 to pay compensation to Ms McLeod and Ms Louie in lieu of reinstatement.

Take Home Messages

This matter highlights the importance for an employer to conduct thorough and procedurally fair workplace investigations where it suspects that an employee has committed some form of misconduct. Employers should ensure that any disciplinary action they elect to take against an employee is proportionate to the severity of the employee’s misconduct.

For more specific information on any of the material contained in this article, please contact Lincoln Smith on +61 8 8210 1203 or lsmith@normans.com.au, Anastasia Gravas on +61 8 8217 1331 or agravas@normans.com.au, or Christian Beltrame on + 61 8 8217 1315 or cbeltrame@normans.com.au.