Sex files & summary dismissal

A recent decision has highlighted the need for employers to have robust internet and computer use policies in place.

In a recent Victorian County Court decision, an employee, Keith Watson, sought damages against his employer, Swatch Group (Australia) Pty Ltd, for distress as a result of allegedly being directed to engage in price fixing against the law.  Swatch had terminated Mr Watson’s employment on grounds of poor performance and had paid him 3 months’ pay in lieu of notice, but failed to pay him his car allowance and superannuation.

Sex files

Subsequent to that termination, Swatch had found that Mr Watson had created and stored an electronic file on his work computer titled “FUN”.  The file included sexually explicit material showing multiple photographs of naked women in a solarium.  It appeared that the photos were taken without the women’s consent.  Swatch argued that if it had known of this material at the time that it terminated Mr Watson’s employment, it would have summarily dismissed him without paying him any notice and sought that Mr Watson repay the 3 months’ notice he had been paid.

Price fixing claim not proved

The judge found that Mr Watson had not been directed to engage in price fixing and did not believe his evidence in this regard, and so Mr Watson was unsuccessful in his damages claim.  However, he also sought that he be paid his car allowance and superannuation in respect of the 3 month notice period.  Mr Watson had only been paid his base salary for the 3 month notice period.

Summary dismissal justified?

The first question which needed to be resolved was whether Swatch was entitled to summarily dismiss Mr Watson on the basis of the sexually explicit material he had kept on his work computer.  It is established law that an employer may rely on information learned after the time of termination to justify summary dismissal.  The question here was whether Mr Watson’s conduct was serious enough to warrant summary dismissal.  The tests are whether the conduct is “incompatible with”, or involves an “opposition or conflict with” or impedes “the faithful performance” of his duties.  Conduct would also justify summary dismissal where it is “destructive of the necessary confidence between employer and employee”.

In the circumstances, the judge found that whilst Mr Watson’s conduct was worthy of condemnation, it did not warrant summary dismissal.  Critical to this decision was the fact that Mr Watson did not disseminate the material and that it was not accessible to other employees.

From an employer’s point of view, therefore, it is insufficient to rely on common law notions of serious misconduct in order to justify summary dismissal in these circumstances.  The best protection for an employer is to have a robust internet and computer use policy in place, coupled with an express provision in the contract of employment giving the employer the right to summarily dismiss if the policy is breached.

Car allowance and superannuation

Mr Watson was entitled to retain his 3 months’ pay.  The next question to be determined was whether he was entitled to his car allowance and superannuation salary components in respect of his notice period.  The contractual provision in question provided that he was entitled to “3 months salary in lieu of notice”.  Swatch argued that this was a reference to base salary only.  The judge disagreed and noted that the whole point of the clause was that a payment be made which is equivalent to the payment Mr Watson would have received had he worked out the notice period.  Obviously, if he had worked out the notice period, he would have received all components of his salary and not just his base salary.  Accordingly, Swatch was ordered to pay Mr Watson the car allowance and superannuation components of his salary for the 3 month notice period.

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