Andreas Kuellmer v Pacific Access Pty Ltd t/as Yellow Pages Australia
[1995] IRCA 173
•03 May 1995
C A T C H W O R D S
INDUSTRIAL LAW - Termination of employment - complaint of unlawful termination - conduct and performance - valid reason.
Industrial Relations Act 1988, S170CA, S170DE.
Minister of State for Immigration and Ethnic Affairs v. Ah Hin Teoh (1995) 128 ALR 353
ANDREAS KUELLMER v. PACIFIC ACCESS PTY LTD T/AS YELLOW PAGES AUSTRALIA - No. NI 0602 of 1994
Before: Judicial Registrar WALKER
Place: Sydney
Hearing Date: 3 February 1995 and 16 March 1995
Judgment Date: 3 May 1995
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY N0. NI 0602 of 1994
Between: ANDREAS KUELLMER
Applicant
And: PACIFIC ACCESS PTY LTD T/AS YELLOW PAGES AUSTRALIA
Respondent
Before: Judicial Registrar WALKER
Place: Sydney
Hearing Date: 3 February 1995 and 16 March 1995
Judgment Date: 3 May 1995
MINUTES OF ORDER
THE COURT DECLARES
The termination of the employment of the Applicant did contravene s 170DE of the Industrial Relations Act, (the Act) 1988.
AND THE COURT ORDERS THAT:
The Respondent is to pay to the Applicant the sum of fourteen thousand dollars.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NO. NI 0602 of 1994
Between: ANDREAS KUELLMER
Applicant
And: PACIFIC ACCESS PTY LTD T/AS YELLOW PAGES AUSTRALIA
Respondent
Reasons for Judgment
3 May 1995 JR WALKER
The applicant commenced employment with the respondent on the 2 December 1991 as an Advertising Consultant (Premise), having been an insurance salesman prior to this position. His job with the respondent was to canvas advertising for the Yellow Pages telephone directory and certain incentives were offered to the employees of the respondent in order to maximise sales. During the applicant’s first year employees were subject to a commission scheme known as the “net scheme,” which was based on a formula of new business, plus renewals, minus cancellations which were to equal a net figure expressed in dollars. Under this scheme the applicant proved to be a very successful salesman for the respondent, in fact he was so successful that, in his Parramatta region for the overall Metro performance ranking taken from the 25 January 1993 to 13 August 1993, he came second. As a result of this performance he was rewarded with a trip to Rio De Janeiro and Buenos Aires. He was also given membership to Yellow Pages of Australia, Globe Trotters Club, and on the 17 January received a letter from Mr Ric Bierling as set out hereunder:
“Dear Andy
As you are aware Premise Sales Consultants may be classified as either Advertising Consultants (Premise), Senior Advertising Consultant (Premise) or Executive Advertising Consultant (Premise) and individual placement within these classifications is dependant upon meeting criteria in performance standards over the course of a year or at end of canvas period.
The performance standards are set out within the position descriptions for each of the classifications concerned, with particular reference in Clause 5, Qualifications and skills required and Clause 11, Loss of title. The position descriptions are contained in Section 1 of the Sales Policies and Procedures (NSW/ACT) as previously issued.
In consideration of the 1993 ranking report and your percentage to objectives which attained a 106.6 percent result, you have been classified as a Senior Advertising Consultant (Premise) for 1994. This classification will result in your salary being adjusted to a level of $30,980 per annum with such variation to apply on and from Monday 31 January 1994.
All other conditions of employment previously advised remain unchanged.”
Having now been promoted to a Senior Advertising Consultant (Premise) the applicant completed an IDS training course and received a certificate of competence in the area of Sales Enquiry and Procedures on the 24 January 1994. It seemed that the applicant was well on the way to a successful career with Yellow Pages.
Relationship with Supervisor
The applicant’s immediate supervisor was Mr Tony Perera and although they initially had a good relationship things began to break down in 1994. Mr Perera was the District Sales Manager at Parramatta and the applicant gave evidence that several incidents occurred between them and alleges that these incidents led to victimisation and eventually to the dismissal of the applicant. When asked if he had much to do with Mr Perera the applicant replied:
“Basically you are out on the road most of the time so you really don’t have that much contact. He went out with me on one occasion where every now and then they do a check to make sure, you know, you’re telling the clients the right thing and, you know, presenting properly and having prepared all the documentation properly. The day that we went out together we were in the Balmain area. One of the things that happened there which I was a bit surprised, is we went to see a client and... it was Susan and Marlene Ella Bache, it’s a cosmetic salon and they were clients that I’d had the previous year also, so that I knew them. We went in to see them and they were very reluctant to increase their advertising and Mr Perera became a bit agitated and even a bit aggressive with them and made some comments as to the type of advertising they should be taking out and they said, “Well, we have been here a couple of years,” and he said, “Well, who knows if you’ll be here next year.” At that point they asked Mr Perera to leave. I felt sorry for him because I had driven that day and it was a hot day and he had to wait outside by the car until I finished the sale. Afterwards I was told not to mention that in the office.”
The next incident related to an attempt by Mr Perera to introduce a form as a check list at a meeting in 1994. The applicant was against its introduction as it would have added to the amount of paper work required and gave the following evidence:
“We were asked for our input and I agreed with Mr Perera that the form itself was a good tool, but I thought if we just had it in laminated and then we could just, check off as we go, that would be the way to go. Mr Perera then said, “Well, you know, that’s your view. Why don’t we put it to the team for a vote?” Then it was voted upon and everyone voted in favour of what I had said. Mr Perera then said - I don’t want to use the word - he said, “Eff it, I’m the manager, we do what I say and we’ll fill them out for each and everyone.” After that I just continuously had problems.”
When asked what sort of problems, the applicant replied:
“I was constantly harassed. I couldn’t communicate with him. If I went into the office to speak to him, I got remarks like, you know, “you’re a pain in the...” you know just, “get lost,” and I mean I realise I am not the most complacent person and neither is Tony, and I really didn’t know where to go from there, so I spoke to Ric about it... then I went back to my desk and a short time later Tony Perera came up to me and said, “I want to see you in my office, now,” and we went into his office and he slammed the door behind me and I sat down and then he kind of just leaned over the desk and waved his finger in my face and got all red in the face, and he said that I was stabbing him in the back and undermining his authority and if I ever disagreed with him in public again, he would make my life hell. And that is basically what happened.”
During the 1994 campaign the applicant took two days off to get married and when he returned he discovered that Mr Perera had taken an account off the applicant’s desk and given it to another consultant. When he approached Mr Perera about the reason for this he said he was told:
“Well the reason I did it was because you don’t deserve new business, because you took two days off.”
Although this account was eventually credited to the applicant he gave evidence of a further incident concerning Mr Perera where another consultant, Ms Linda Morrow was credited with one of the applicant’s sales.
The applicant gave further evidence that Mr Perera attempted to get him to resign:
“... I was standing at my desk on the phone, making appointments and he said, “making appointments for next week, that’s pretty optimistic, you might not be here” and I said, you just can’t quit, can you, and he said, “well, you won’t quit either” and I said, no, and I won’t resign and he said, “well, if you don’t resign I’ll see you in court.”
The 1994 Campaign
The Metro campaign commenced in January 1994 and was to go through to the 13 August 1994. The applicant was allocated to a new area for this campaign and gave evidence that because of this he suffered some problems. He explained the situation in the following evidence,
“... I mean you cannot take a market and with each market obtain the same results. The previous year I had 80 percent of my market re-allocated. In other words, these were clients whom I had established a rapport with who I hadn’t forced any sales on the previous year, who trusted me the second year and went with my recommendations. Another factor is that if someone has been oversold in a previous year, they might have financial problems and financial problems are something that if they don’t have money, they can’t go in the book, or if people go out of business or they have some kind of problem where their add was printed wrong... So I also had a new market so there was no existing rapport and like there were some accounts that I just lost, because you have to operate within your territories. So, for instance, one of the accounts I had with Ford which was - I believe it was a $14,000 account, but Ford in Homebush closed down.”
The applicant gave examples of other accounts that lost revenue owing to factors beyond his control, such as the M.J. Sherrin account, however he was adamant that he worked as hard as he had done the previous year:
“I worked just as hard as I worked the previous year. Again I was almost at 90 percent the quota at the time of termination and all we had was the new business period, which means everything would have been plus, so far as I was concerned I was at least going to achieve 100 percent.”
On the 20 April 1994 Tony Perera sent a letter to the applicant, appraising him of his position within the Customer Centre. The letter advised him that he had to meet a target over the next four weeks, and this target was to be the average level for the customer centre at Parramatta. To achieve this target Mr Perera gave the applicant the advice that:
“To do this you really need to put more quality time and effort into your working day, and generally improve your call and completion rate.”
Having offered this advice the letter went on to explain that:
“However, I do not need to mention that should you not improve and not meet and maintain the basic requirements in the allocated time, your continued employment will be reviewed.”
Performance Enhancement Program
There was agreement between the parties that the applicant was placed on the “performance enhancement program” on the 20 June 1994 as his comparative performance measured against fellow employees was below average for the centre, however Mr Perera had placed the applicant on such a program by the letter of the 20 April 1994 when he had indicated if there was no improvement his employment would be reviewed. When asked if he recalled such an agreement he replied:
“Well, I mean obviously it was said that they were going to constantly monitor my results.”
He was then asked, if he agreed to anything in that regard and he said:
“It wasn’t much of a question, but more or less a statement that my results will be monitored.”
The applicant was then asked, what was the work enhancement program and he explained:
“... it was terminology basically for being put on probation. If your results don’t improve, then you’re history, but work enhancement program sounds nicer.”
In answer to the question, did the program involve any training the applicant said:
“Oh no, there was no program as such, it was basically just either you improve or you don’t.”
In answer to the question, if he entered into an agreement with Mr Bierling about a review of his performance, of his final results at the close of BOTS on the 8 July 1994, the applicant said:
“No, my point of view was that at the end of the campaign would be the time to look at it.”
The applicant went on to explain that the reason for this was that the close of BOTS on the 8 July does not correctly reflect the true picture with regard to the accounts. Clients that have been advertising with the respondent over a number of years know that this date is not the real closing date and that they are able to delay their contracts up until the 13 August before they miss out on being included in the Yellow Pages.
Up until the applicant was placed on the final performance enhancement program on the 20 June 1994 he had been subject to the “program.” Mr Perera had implemented back on the 20 April 1994. Mr Perera had indicated to the applicant that he would be terminated if he did not exceed the Parramatta regions average, an achievement that the applicant admitted in evidence that he secretly knew was not possible on the criteria being used by Mr Perera. He did however show signs of improvement and was congratulated for this improvement by memorandum of the 4 May 1994. The applicant received further memorandums on the 11 May and the 27 May 1994, each of which threatened him with termination as he had failed to meet the targets set.
By letter of the 20 June 1994, Mr Bierling the regional manager for the Parramatta area took control and extended the enhancement program to the 8 July 1994. The letter advising the applicants is set out below:
“Dear Andy,
I have reviewed your results in relation to the teams average and Performance Enhancement conditions. I have also noted an improvement in your results to date and, although there are notable variances in most Banks, the bottom line has improved and the gap has narrowed.
Tony and I have agreed to give you a further opportunity to exceed the Customer Centre average. I have a concern that your losses are being withheld, therefore, your final result will be reviewed again on final flash figures, being 8 July 1994.
All previous conditions still remain, that is, should you not improve and not meet and maintain the overall average of the Customer Centre in all Banks, your continued employment with this Company will be terminated.
Andy, it is important that your self motivation remains positive, both within the Customer Centre and office in general. Tony and I will not tolerate any negativity being generated by you at any time.
Regards Ric Bierling.”
This letter is somewhat amazing as on, the one hand Mr Bierling is saying the applicant has improved, yet on the other hand he says that if the applicant does not meet and maintain the Customer Centre average within 14 working days he will be terminated. Added to this is the final threat that, “... its important that your self motivation remains positive... Tony and I will not tolerate any negativity being generated by you.”
The applicant gave evidence in chief and in cross examination that during the counselling sessions he was not advised how he could improve or correct his performance. Strangely, Mr Perera was not called as a witness at this hearing, however when the matter was stood over to a further date for addresses the respondent produced an affidavit from Mr Perera. I accepted the affidavit, however as the deponent was not available for cross examination I am not able to add much weight to its contents.
Mr Bierling was present at the counselling sessions and was asked by counsel in examination in chief if the applicant was told what he had to do to improve his performance, Mr Bierling replied:
“He needed to improve his advertise again area; he needed to improve his - various areas what he needed to do to improve those areas.”
Mr Beirling was then asked if he could recall those areas as they were spelled out to the applicant and he answered:
“It wasn’t a really deeply involved counselling session, I was there basically to witness what was going on and to ensure Andy felt comfortable with what was asked of him and at all times...”
Counsel for the respondent tendered a document identified by Mr Beirling as a performance enhancement policy document (exhibit 28). Mr Beirling then gave evidence that, he knew the procedures quite well. Of particular interest is paragraph 2.3 and 2.4:
2.3 The object of disciplinary action will be to improve or correct improper performance or behaviour. It shall not be seen as a punishment for employees.
From day one of the applicant’s program he was told his job was on the line if he failed to meet the standards set, standards, that considering the circumstances were too high. From the evidence I am also not satisfied that any action was taken to improve or correct the applicant’s problems.
2.4 Discipline must be fair, considering the offence, and should take into account the past record of the employee.
It would seem that Mr Beirling had scant regard for this procedural requirement in the light of the applicant’s ranking as number two in the region in 1993. Perhaps a demotion or a drop in salary would have been fair or the chance to continue to the end of the Metro campaign on the 13 August, particularly as he was at 88.37 percent of the 100 percent requirement.
It is also quite clear that the procedures set out under 3.0 of this document were not carried out correctly. From Mr Beirling’s evidence it is impossible to determine what actually went on at these sessions. I am sure that the objectives as set out in paragraph 3.2 were not complied with, especially the last requirement in that paragraph to:
“Establishing a plan to correct performance that is achievable and realistic.”
The applicant produced a document entitled, “Yellow Pages Australia, consultant position descriptions” which was marked as exhibit 15. This document sets out the position descriptions for, Advertising Consultants, Senior Advertising Consultants and Executive Advertising Consultants. Item 11 of both the Senior Advertising Consultant and Executive Advertising Consultant has a heading, “Loss of Title,” and set out below is the criteria of the Senior Advertising Consultant, the position the applicant occupied prior to his termination:
LOSS OF TITLE
Sales performance below requirement of 100 percent;
Credit adjustments that are considered unacceptable in number or dollar value;
Non-achievement of the required Company standards;
Not maintained general functions and activities of this job;
Unfavourable customer service record; and
Loss of title review will occur at 12 monthly intervals or end of canvas period,
whichever is appropriate.
It is clear from this that according to the company’s policy the applicant should, at the worst had been demoted back to his previous position of Advertising Consultant, the position he held up until his promotion to Senior Advertising Consultant on the 17 January 1994. It is also clear from this that the appropriate period of review should have been for a period of 12 months, or at minimum to the end of the canvas period on the 13 August 1994, rather than the 8 July 1994.
Measurement of Performance
Under the enhancement program implemented by Mr Perera the applicant was judged on the following criteria:
1. The Book Net average of the Customer Centre percentage;
2. Advertiser Gain average percentage;3. Position in office; and
4. Position in all offices.
During the enhancement period the applicant achieved salesman of the week on several occasions and it is of interest to note the figures attached to the letter of Mr Perera on the 27 May 1994 and the figures attached to the letter of Mr Beirling of the 15 July 1994 terminating the applicant’s employment. At the 20 May the applicant was at 55.03 percent to the objective of 100 percent, and his ranking in the region was 20 out of 20 while at the 11 July he had achieved 88.37 percent to objective and was ranked 18 out of 19 in the region.
To add further confusion to the performance measurement it is only necessary to compare the figures between exhibit 26 which is the points ranking at BOTS close on the 8 July 1994 and exhibit 16, the figures as at the 2 September 1994 for Consultants for the trip to Hawaii in 1994. Mr Mark Starling finished at number 19, one below the applicant on 72.87 percent compared with 88.37 percent for the applicant as at 8 July 1994. Ms Christine Toohey finished on 99.98 percent and Ms Linda Morrow on 100.91 percent. When comparing the ranking for the trip to Hawaii, Mark Starling is placed at 36, on 816,656 points, Linda Morrow at 39, on 788,239 points, and Christine Toohey at 47, on 750,522 points. The applicant gave evidence that he would have been on about 770,000 points at his termination and this was not disputed by the respondent. From this one can only ask the question, why was the applicant terminated and the others retained and why was it necessary to terminate the applicant’s employment when according to the company’s position descriptions he should of only lost his title and been demoted?
Mr Beirling’s Evidence
In evidence in chief Mr Beirling was shown exhibit 26, the points ranking at BOTS close on the 8 July 1994. This document revealed that the applicant was at 88.37 percent out of the 100 percent target and Mr Beirling was asked if this was a serious matter, he replied:
“It’s a matter of concern, yes. At this point in time, as I said previously, I doubt whether he - Andy says he could have made 100 percent, but I doubt it very much that he could have.”
If it was only a matter of concern, and there was a doubt in the witnesses mind as to whether the applicant could have achieved the 100 percent required by the 13 August 1994, why then was he terminated on the 15 July 1994, and not given the benefit of the doubt, especially so as he had been the number two salesman the year before?
In cross examination Mr Beirling was asked if it was possible for sizeable contracts to be written by consultants which can have a significant impact on their points and, he replied that it was. The witness was then given an example of a consultant who made a $100,000 contract and he agreed that this had occurred and that this sale had made the consultant eligible for a trip. The witness was then asked:
“So, as far as you are concerned, you were only guessing or estimating that Mr Kuellmer would not make 100 percent by the end of the campaign were you not?”
Mr Beirling replied:
“No, I calculated. In my opinion at that point in time as a regional manager of Parramatta office, I doubted very much whether Andy could make the 100 percent to objective.”
Later on in cross examination Mr Beirling attempted to reverse the blame of the applicant’s termination back onto the applicant for accepting the 100 percent target, the relevant part of the transcript is as follows:
MR BEIRLING: As I said to Andy, can you achieve this, can you do it, and he agreed. I said I didn’t want to give you...
THE J. REGISTRAR: Well I think he said that he had no option and I think...
MR BEIRLING: No, he did have an option.
MR CROW: Well, what would have happened, Mr Beirling, if he had said no, I can not achieve those targets?
MR BEIRLING: I would have said, why do you not achieve, what can you achieve, what direction can we take?
MR CROW: You would have terminated him straight away, would you not, Mr Beirling?
MR BEIRLING: No, I would not.
Mr Beirling’s evidence regarding the standard set is very unsatisfactory. In fact the standard was set by Mr Perera by his letter of the 20 April 1994 (exhibit 18) and was, that the applicant must compete with the other consultants and to reach the average as set by them. When Mr Beirling extended the enhancement program on the 20 June 1994 (exhibit 25) his letter affirmed this criteria. Paragraph three of that letter states:
All previous conditions remain, that is, should you not improve and not meet and maintain the overall average of the Customer Centre in all banks, your continued employment with this Company will be terminated.
Procedural unfairness
It was argued by the respondent that although the applicant was not represented at any of the counselling sessions the court should not take this into account as the recommendation is not incorporated into the Act, or given any effect in municipal law and domestic law by s 170CA. The respondent referred to several High Court decisions concerning this position however the recent decision of the High Court in, Minister of State for Immigration and Ethnic Affairs v. Ah Hin Teoh is now perhaps more relevant concerning the implementation of the procedural fairness obligations imposed by the Recommendation, especially in light of the object of Division 3 of the Industrial Relations Act 1988.
Contravention of Subdivision B of Part VIA
The termination of the applicant, was not for a valid reason, connected with his capacity or conduct or based on the operational requirements of the undertaking, establishment or service and therefore contravenes s 170 DE of the Act.
Reinstatement of the applicant to his prior position is impractical in the circumstances and I am therefore required to award an amount of compensation.
I find that the appropriate amount of compensation to be awarded is the amount of $14,000.00, and I do so order.
I certify that this and the proceeding twelve (12) pages are a true copy of the Reasons for Judgment by Judicial Registrar Walker.
Associate: Kerry Harrison
____________
Date signed: 3 May 1995
Appearances
Solicitors for the applicant: I.E. Duffield
Counsel for the applicant: R. F. Crow
Solicitors for the respondent: K. Burke,
McMillan Shakespeare Employee Relations
Advisers
Counsel for the respondent: P. J. Newall
`
Date of Hearing: 3 February 1995 and 16 March 1995
Date of Judgment: 3 May 1995
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