15 Aug 2013

Employee connects on LinkedIn, gets disconnected from job

by Michael Byrnes

Some employees wrongly believe that no matter what they post on social media, it is always a private matter and nothing to do with their employers.

The Fair Work Commission has upheld an employer's dismissal of an employee for attempting to solicit his employer's clients through LinkedIn in an effort to expand his own private business.

Bradford Pedley v IPMS Pty Ltd T/A peckvonhartel [2013] FWC 4282 illustrates the potential pitfalls of an employee pursuing out-of-work activities that are incompatible with his or her duties to an employer, and is a reminder that:

  • employees' private use of social media can lead to adverse consequences for their employment; and
  • employers should set clear guidelines for their employees' use of social media.

Mr Pedley links himself in

Bradford Pedley took up the role of Senior Interior Designer with national architecture and design company peckvonhartel (PVH) in 2011. Before doing so, he informed PVH that he intended to continue carrying out private design work in his own time through his own business Reveal ID. PVH did not try to stop him.

Over the 2012 Christmas break, Mr Pedley decided that PVH had no interest in his career progression. On 14 January 2013, he sent a group email to some LinkedIn connections which explained that he has "been running a part time design service called Reveal ID for the past 5 years", described some of its recent projects, and then announced "I am now seeking to expand Reveal ID to a full time design practice over 2013". The email directed readers to Reveal ID's website and social media pages.

That evening, one of PVH's directors learnt of the email. The next day, PVH summarily dismissed Mr Pedley for sending the email; in an email of its own it confirmed his dismissal for breaching his employment contract, which said he must not "undertake any appointment or position (including directorship) or work or advise or provide services to, or be engaged, or associated with any business or activity that:

  • results in the business or activity competing with Us;
  • adversely affects us or our reputation; or
  • hinders the performance of your duties."

Mr Pedley's employment contract also required him to "at all times act honestly and in a manner consistent with your employment".

Mr Pedley files a claim

Mr Pedley filed an unfair dismissal claim with the Fair Work Commission alleging that his dismissal was harsh, unjust or unreasonable.

Although PVH accepted that it had not placed any restriction on Mr Pedley performing private work outside his employment, it argued that the LinkedIn email was a clear attempt to solicit business from its clients for his own business. This, it said, was "serious misconduct".

What is serious misconduct?

"Serious misconduct" is defined in the Fair Work Regulations as including "wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment" and "conduct that causes serious and imminent risk to the reputation, viability or profitability of the employer’s business".

What were Mr Pedley's obligations to PVH?

Mr Pedley was a "relatively senior" employee with a reasonable degree of autonomy, and PVH had trusted him to deal directly with its clients.

Commissioner Deegan found that during employment Mr Pedley "owed an obligation to his employer to faithfully promote his employer’s interests":

"While the applicant’s employment agreement may have more clearly articulated the applicant’s obligations in this regard post his employment, it is my view that this was because the existence of the obligation during employment 'goes without saying'."

The LinkedIn email was serious misconduct

Commissioner Deegan rejected Mr Pedley's assertions that he did not believe he had sent the email to current clients of PVH, that the email represented solicitation for only small jobs, or that by sending the email he was actively seeking work for PVH:

"[The email] clearly stated that he wished to build to a full-time operation and that his interest was not confined to small jobs that his employer would not take on. The applicant was clearly intending to set up a business that could be in opposition to his employer, albeit in a small way. He was soliciting work from current clients of his employer in clear breach of his obligation to put the interests of his employer before his own interests."

This was inconsistent with the continuation of Mr Pedley's contract of employment and amounted to serious misconduct.

The termination was not harsh, unjust or unreasonable

Commissioner Deegan rejected Mr Pedley's assertion that PVH had waived any right to object to him soliciting private work given that it had permitted him to do so during his employment. She found that PVH's consent was limited to his "performing small private jobs outside his work hours in circumstances which did not conflict with his obligations to the respondent". The LinkedIn email went beyond this by soliciting its clients to move their business from PVH to Reveal ID.

As a result of Mr Pedley's conduct, PVH, "with clear justification", had lost confidence that he would promote its interests, and thus it had a valid reason to terminate the employment contract. The application was therefore dismissed.

Where to now for employees' use of social media sites?

While LinkedIn content is generally more benign, less scandal-prone content than that on its social media counterparts Facebook or Twitter, the often inextricable blending of the personal and professional on LinkedIn might mean it turns out to be the platform that most frequently gives rise to issues of this kind.

The key lessons for employers from this case are:

  • set clear policies for employees' use of social media. Some employees wrongly believe that no matter what they post on social media, it is always a private matter and nothing to do with their employers. That will often be the case but, as this case illustrates, sometimes their postings are incompatible with the duties they owe to their employers; and
  • where an employee has a side business that potentially conflicts with that of the employer, you should clearly spell out what the employee can and can't do.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.