Ashley McLaren-Gates v The Trustee of the Peter Stevens Motorcycle Retail Business Trust T/A Peter Stevens Motor Cycles

[2015] FWC 3041

[2015] FWC 3041

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Ashley McLaren-Gates
v
The Trustee of the Peter Stevens Motorcycle Retail Business Trust T/A Peter Stevens Motor Cycles
(U2014/15585)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 8 MAY 2015

Application for relief from unfair dismissal - valid reason - physical contact - investigation process - remedy - calculation of compensation amount.

[1] Mr McLaren-Gates lodged an unfair dismissal application with the Fair Work Commission (the FWC) on 2 December 2015. That application related to the termination of his employment, on 25 November 2014 by Peter Stevens Motor Cycle Retail Group Pty Ltd (Peter Stevens). The application was the subject of a determinative conference in Adelaide on 27 April 2015. At this conference Mr McLaren-Gates was represented by Mr Jakobsen of counsel and Peter Stevens by Ms Bingham, of counsel. Grants of permission were made in each case pursuant to s.596(2)(a) and (c) of the Fair Work Act 2009 (the FW Act).

[2] There is little dispute about the background to the matter. Mr McLaren-Gates was employed by Peter Stevens from July 2012 He was initially a supervisor but in July 2014 was promoted to a new position as the Spare Parts and Accessories Manager at Harley Heaven, which is a component of Peter Stevens. Mr McLaren-Gates’ position required the management and supervision of around eight employees. On 23 November 2014 one of those employees, Mr Minear, provided another Peter Stevens manager, Mr Kelly, with a formal written complaint about Mr McLaren-Gates’ behaviour toward him. Mr Kelly referred that complaint to the Peter Stevens Dealership Manager, Mr Bell.

[3] Mr Bell discussed the matter with the Peter Stevens Human Resources Manager, Ms Innes when they were both in Adelaide on 25 November 2015. Mr Bell and Ms Innes subsequently interviewed each of the employees who reported to Mr McLaren-Gates, including Mr Minear. They then interviewed Mr McLaren-Gates and concluded that he admitted hitting Mr Minear on more than one occasion. They suspended the meeting to seek advice from an employer association and confer with Mr Munro, a Director of Peter Stevens, before deciding to terminate Mr McLaren-Gates’ employment.

[4] Mr McLaren-Gates was advised that he was dismissed on that same day. Formal written advice of the termination was then sent to him. Notwithstanding that the termination of his employment was described as an instant dismissal, he was paid two weeks pay as an ex-gratia payment.

The Submissions

[5] Mr McLaren-Gates asserts that there was no valid reason for the termination of his employment and that the process followed by Peter Stevens was procedurally unfair. Mr McLaren-Gates gained alternative employment two weeks after his dismissal. He does not seek reinstatement but seeks compensation based on the difference between his previous salary and his current income.

[6] The Peter Stevens position is that its investigation and Mr McLaren-Gates’ own admission established that he had punched a subordinate employee and this was clearly in breach of its established policies and its expectations of him as a manager. Peter Stevens asserts that its investigation was conducted in a fair and reasonable manner.

The Evidence

[7] Whilst I have considered all of the evidence before me, I have summarised the witness evidence in the following terms.

[8] Mr McLaren-Gates’ evidence went to his employment history, his dealings with his subordinate employees and the process followed by Peter Stevens to dismiss him. He also gave evidence about the employment he subsequently gained. Critical to Mr McLaren-Gates’ evidence were his assertions that he had not behaved in a manner which warranted summary dismissal and that he had not been given a fair opportunity to respond to the allegations against him. In terms of the use of his work provided mobile phone, Mr McLaren-Gates advised that he had not taken or stored inappropriate photographs on the telephone.

[9] Mr McLaren-Gates’ evidence went to his salary and remuneration arrangements, whilst employed by Peter Stevens and, in his current job.

[10] Ms Innes’ evidence covered her role with Peter Stevens and her involvement in the interviews which followed receipt of Mr Minear’s complaint. Ms Innes recounted her involvement in the decision to terminate Mr McLaren-Gates’ employment.

[11] Mr Minear is an apprentice at Peter Stevens. His evidence went to the incidents which led to his formal complaint and to the investigation process which then followed.

[12] Mr Bell’s evidence went to the investigation process he undertook after being advised of Mr Minear’s complaint. He recounted his recollection of the interviews with all of the employees who reported to Mr McLaren-Gates and with Mr McLaren-Gates himself. Mr Bell also gave evidence about his involvement in the termination decision-making process and implementation.

[13] In a separate and belatedly provided witness statement, Mr Bell asserted that, following the termination of Mr McLaren-Gates’ employment he became aware of inappropriate photographic material stored on Mr McLaren-Gates’ work provided mobile telephone. His evidence was that, had he known this before Mr McLaren-Gates was dismissed it would have strongly supported the termination of employment.

[14] Mr Munro’s evidence went to the consultation with him about the proposed termination of Mr McLaren-Gates’ employment and his endorsement of that course of action.

Findings

[15] Section 387 sets out the factors to which I must have regard in determining this matter. Before considering that section I have set out my conclusions about the contested facts relevant to the termination decision and process.

[16] The complaint made by Mr Minear went to the way in which Mr McLaren-Gates treated him personally, together with Mr McLaren-Gates’ treatment of other employees in the Spare Parts function. Mr Minear’s complaint 1 was that Mr McLaren-Gates:

● was abrupt in dealing with him

● punched him in the arm at least once a month despite requests to stop doing so

● referred to him as a “fucking idiot” and consistently asked him if he had got “fucked up” on weekends

● belittled him in front of a customer

● refused to respond to his requests for help

[17] Notwithstanding that Mr McLaren-Gates disputes each of these assertions, I have accepted the Peter Stevens advice that the termination of his employment occurred because of the punching allegation. 2 In this regard I note that there is no evidence that indicates that the other allegations made by Mr Minear were investigated or taken into account in the termination of employment decision.

[18] Notwithstanding this, I have concluded that the various allegations of bullying and inappropriate behaviour made by Mr Minear, separate from the punching allegation, all fall into a category of allegations which, without proper investigation and the provision of an opportunity for a response by Mr McLaren-Gates, are not able to be described as misconduct.

[19] The evidence of Ms Innes about her recollections of the various interviews of employees who worked in the Spare Parts area confirmed that, apart from Mr Minear, none of the other employees advised, in the interviews, that they witnessed Mr McLaren-Gates hit Mr Minear. I have noted that these employees were not specifically asked that question.

[20] I have only the benefit of Mr Minear’s and Mr McLaren-Gates’ evidence in this matter. Mr Minear’s evidence is inconsistent in that his complaint 3 addressed the punching allegation in the following terms:

“From about 3 months into working at Harley Heaven he has punched me in the arm at least once a month leaving bruises (thinking he is joking around with me) every time he comes to the computer or walks past me I flinch because I am waiting to be punched in the arm, I have wanted to turn around and hit him back but not once have I ever retaliated and punched him back as I do not want to jeopardise my job and knowing him he would turn it back on me. I have also asked him to stop on numerous times but he just say’s some smart alike remark” 4 (sic)

[21] In contrast, in his evidence, Mr Minear said that the last time that Mr McLaren-Gates hit him was some two months prior to the termination of Mr McLaren-Gates’ employment. 5 Additionally, I have concluded that Mr Minear’s complaint that he was frequently hit by Mr McLaren-Gates must be seen in the context of his broader suite of complaints about Mr McLaren-Gates which were neither investigated, substantiated, or conceded. Mr Minear also agreed that horseplay and limited physical contact occurred in the workplace and that there were occasions when he tapped Mr McLaren-Gates on the shoulder to get his attention.6

[22] Mr McLaren-Gates’ evidence relative to the hitting or punching allegation was that he understood from the Peter Stevens policy requirements that no physical contact was acceptable. 7 In the determinative conference, Mr McLaren-Gates demonstrated the manner of his physical contact with Mr Minear. This demonstration indicated that Mr McLaren-Gates used a loosely closed fist to lightly hit Mr Minear on the upper arm. I have concluded that this reflected physical contact, that this contact could have been painful to Mr Minear but that it was not the catalyst for Mr Minear’s complaint about Mr McLaren-Gates as Mr Minear’s complaint was made two months after his last assertion of physical contact. Nonetheless, that physical contact was inconsistent with the Peter Stevens policies and procedures and its documented expectations of Mr McLaren-Gates as a manager. It was directed at an apprentice with limited workplace experience and represented misconduct. On the evidence before me, I regard it as wilful misconduct because Mr McLaren-Gates’ evidence indicates that it was deliberate.

[23] In the interview with Mr Bell and Ms Innes, Mr Bell asked Mr McLaren-Gates if he had ever hit Mr Minear. 8 Mr McLaren-Gates responded by saying words to the effect that “I wouldn’t call it hit, more of a tap” and further said “I only gave out what I got and that Zak never asked me to stop”.9 Mr McLaren-Gates then commented that this was in the context of “mucking around”. I have considered whether Mr McLaren-Gates’ admission of a “tap” could reasonably have been taken to be an admission of a punch or a hit. I do not think this inference can be reasonably taken but, at the same time, it is clear that the “tap” described by Mr McLaren-Gates must still be regarded as misconduct, particularly given the relatively senior management position held by Mr McLaren-Gates and Mr Minear’s junior position.

[24] The extent to which Mr McLaren-Gates’ conduct in this respect should be characterised as serious misconduct is more difficult to determine on the material before me and would require consideration of regular workplace practices and Mr Minear’s other complaints about Mr McLaren-Gates. On the material before me, I am unable to describe it as serious misconduct but accept that it was clearly inappropriate.

[25] I have considered the evidence before me about what photographic material was on Mr McLaren-Gates’ work provided mobile phone when it was returned to Peter Stevens. The evidence of Mr McLaren-Gates is diametrically opposed to that of Mr Bell. However, absent the capacity to view that material and any evidence about how it may have found its way onto that telephone, I am unable to conclude that this is indicative of misconduct on the part of Mr McLaren-Gates.

[26] I have concluded that, whilst Mr Bell commenced the initial interview with Mr McLaren-Gates on 25 November 2014 by advising him that he was going to be asked some questions about some complaints made by Mr Minear and could have a support person, I am not satisfied that Mr McLaren-Gates was made aware that the matter could result in the termination of his employment. Further, I am not satisfied that, when the meeting was reconvened after Peter Stevens management had considered Mr McLaren-Gates’ initial response, he was advised of the possibility of employment termination and given the opportunity to respond to that possibility.

[27] Section 387 states:

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.”

[28] I have considered each of these factors in the context of the material before me.

Valid reason for the dismissal

[29] Notwithstanding subsequent legislative changes, I have adopted the principles inherent in Northrop J in Selvachandran v Peterson Plastics Pty Ltd 10.

[30] On the material before me I am satisfied that Mr McLaren-Gates’ misconduct in making physical contact with Mr Minear represented a breach of the Peter Steven’s policies and expectations of him as a manager so that it was a valid reason for the termination of his employment. It was deliberate physical behaviour toward a substantially more junior employee, in breach of the Peter Stevens’ policies. This is particularly so given that Mr McLaren-Gates held such a management position.

[31] Notwithstanding this finding, I am not satisfied that the intensity and the precise nature of that conduct and the extent to which it reflected normal and accepted workplace behaviour in Mr McLaren-Gates’ workplace have been established so as to make termination of employment the only appropriate outcome.

Notification of the reason for the dismissal

[32] Mr McLaren-Gates was advised, by Mr Bell, of the reasons for the termination of his employment at the second interview on 25 November 2014. Ms Innes forwarded correspondence to him on 26 November 2014 11 which confirmed this advice.

Opportunity to respond

[33] Mr McLaren-Gates was given an opportunity to respond to the allegation that he had hit Mr Minear. I am satisfied that he responded by referring to a “tap” in the context of “mucking around”. I am no satisfied that the precise nature of that “tap” was established such that Mr McLaren-Gates could respond properly to a ‘hitting’ allegation. I am not convinced that Mr McLaren-Gates was given an opportunity to respond to the specific proposition that his employment could be terminated as a result of his behaviour.

Any unreasonable refusal to allow a support person

[34] Mr McLaren-Gates was offered the opportunity to have a support person present at the commencement of the discussions on 25 November 2015. He did not take up that offer. However, I have concluded that this offer was put before the seriousness of the allegations against him was made clear and that the manner in which the interview was conducted meant that the matter progressively became more significant as the interview progressed. Had the allegations been more thoroughly detailed to Mr McLaren-Gates at all before the interview on 25 November 2015, Mr McLaren-Gates could then have made a more informed decision about whether a support person was necessary.

Warnings about unsatisfactory performance

[35] The termination of Mr McLaren-Gates’ employment did not relate to unsatisfactory performance.

Size of the Peter Stevens enterprise - impact on procedures and access to dedicated human resource management expertise.

[36] Peter Stevens is a medium-sized business. I have noted that it has policies dealing with conduct expectations and that Ms Innes is its human resource management specialist. I have also noted that advice about this issue was sought from an employer association before Mr McLaren-Gates’ employment was terminated.

[37] Notwithstanding this, had a more extensive investigation process been followed in this matter it may have established a more sustainable basis for the termination of Mr McLaren-Gates’ employment.

Any other matters considered relevant

[38] Mr McLaren-Gates was summarily dismissed. Notwithstanding this, he was paid two weeks pay at his base rate. Given my conclusion that his misconduct has not been established as serious misconduct, the summary nature of that dismissal, in these circumstances introduces a further element of unfairness.

Conclusion

[39] I have concluded that the termination of Mr McLaren-Gates’ employment was not unjust because I am satisfied that he was guilty of misconduct which would represent a valid reason for his dismissal. Whilst that dismissal was on a summary basis, I have noted that Mr McLaren-Gates was paid two week’s pay which could be regarded as a payment in lieu of notice. Notwithstanding this, I consider that termination to be unreasonable in that I am not satisfied it was based on facts as distinct from inferences which arose from the manner of the investigation undertaken by Peter Stevens. In this respect, the primary inference related to the nature and intensity of the physical contact which Mr McLaren-Gates engaged in. Because of that uncertainty, I also regard that termination to be harsh in that it was disproportionate to the misconduct which I am satisfied occurred. Further, it was harsh in terms of the manner in which the employment termination was effected.

[40] Accordingly, I consider that the termination of Mr McLaren-Gates’ employment was unfair. In these circumstances s.390 of the FW Act provides that the Commission may order reinstatement or compensation. This section makes it clear that reinstatement is the primary remedy and that compensation can only be considered if I am satisfied that reinstatement is inappropriate.

[41] Neither Mr McLaren-Gates nor Peter Stevens seek reinstatement and I have concluded that, given their respective positions, reinstatement would be inappropriate. In these circumstances I consider an amount of compensation would be appropriate.

[42] Section 392 establishes the criteria which must be considered in the determination of an amount of compensation. This section states:

“392 Remedy—compensation

Compensation

(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

Criteria for deciding amounts

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer’s enterprise; and

(b) the length of the person’s service with the employer; and

(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and

(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and

(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and

(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the FWC considers relevant.

Misconduct reduces amount

(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

Shock, distress etc. disregarded

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

Compensation cap

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and

(b) half the amount of the high income threshold immediately before the dismissal.

Note: subsection 392(5) indexed to $66,500 from 1 July 2014

(6) The amount is the total of the following amounts:

(a) the total amount of remuneration:

(i) received by the person; or

(ii) to which the person was entitled;

(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.”

[43] The operation of this section of the FW Act was recently considered by a Full Bench in McCulloch v Calvary Health Care Adelaide. 12 I have adopted that approach.

[44] In terms of the effect of any order for compensation on the viability of Peter Stevens, I not satisfied that the information before me establishes that the order I propose to make would affect the viability of that business.

[45] Mr McLaren-Gates had been employed by Peter Stevens for some 2½ years. I do not consider that to be a particularly long duration of employment such that it supports a substantial grant of compensation. However, in terms of the requirement that I take into account the remuneration that Mr McLaren-Gates would have received, or would have been likely to receive, if he had not been dismissed, there is nothing that indicates that his ongoing employment would have been of a short duration. I think that, but for the termination of his employment, Mr McLaren-Gates would have been employed for at least 12 months. I have calculated his likely income over that time on the basis of the advice provided by Peter Stevens, which includes commission payments made to him on a regular basis. In this respect I have estimated his weekly wage to be $1839 or $95,628 per year. From this amount I have deducted 15% for contingencies given the extent to which a significant component of that anticipated one year’s income related to discretionary commission payments. Consequently, the remuneration that Mr McLaren-Gates would have received, or would have been likely to receive had he not been dismissed, is $81,284.

[46] Mr McLaren-Gates clearly took immediate steps to obtain alternative employment. His evidence was that he commenced a new position some two weeks after the termination of his employment. 13 No amendment to the amount of compensation is thus appropriate because of a failure to mitigate his losses. In considering that alternative employment I have noted that there is no dispute that Mr McLaren-Gates’ salary is $45,000 per annum with the addition of commission or bonus payments of between $120 and $170 per week from February or March. As a consequence, and in terms of the amount of remuneration I estimate would be earned by Mr McLaren-Gates over the same one year period, this amounts to $48,490. In terms of the approach applied in McCulloch it is tolerably clear that the Full Bench considered that a combination of subsections 392(2)(e) and (f) require consideration of income earned, or reasonably likely to be earned, over the same period assessed pursuant to s.392(2)(c). To the extent that s.392(2)(f) permits that account is taken only of income reasonably likely to be earned between the making of the order for compensation and the actual payment of that compensation, I have concluded that s.392(2)(g), with its reference to any other matter that the Commission considers relevant, must be read such that it gives the Commission the capacity to compare estimated income losses and achievements over the same period of time.

[47] Additionally, in terms of other matters considered relevant, it is appropriate that I deduct the two weeks pay provided to Mr McLaren-Gates on the termination of his employment. I have assessed this amount on the basis of the base weekly rate applicable to Mr McLaren-Gates.

[48] Section 392(3) requires that the amount which would otherwise have been ordered must be reduced on account of misconduct if I conclude that Mr McLaren-Gates’ misconduct contributed to the employer’s decision to dismiss him. I am satisfied that this was the case. Accordingly, I have decided that the amount of that reduction should be 70%. Mr McLaren-Gates was a manager who I have concluded was aware of the policy and operational expectations of him. His conduct in engaging in horseplay and associated physical contact with Mr Minear, as an apprentice, was inappropriate and represented misconduct. It led to the termination of his employment.

[49] The resulting amount is $9,117.00. This is less than the legislative “cap” specified in s.392(5). There has been no request that this amount be paid by instalments.

[50] I consider that the amount of compensation pursuant to s.392 should be $9,117.00, less tax. This amount should be payable within 14 days from the date of this decision and an Order (PR566975) to this effect will be issued.

Appearances:

P Jakobsen counsel for the Applicant.

S Bingham counsel for the Respondent.

Hearing (Determinative Conference) details:

2015.

Adelaide:

April 27.

 1   Exhibit R3, Attachment ZM1

 2   Transcript 27 April 2015, Sound Recording, 2:21 p.m.

 3   Exhibit R3, Attachment ZM1

 4   Exhibit R3, Attachment ZM1, dot point 4

 5   Transcript 27 April 2015, Sound Recording, 11:37 a.m.

 6   Transcript 27 April 2015, Sound Recording, 11:55 a.m.

 7   Transcript 27 April 2015, Sound Recording, 10:30 a.m.

 8   Exhibit R4, para 21

 9   Exhibit R4, para 21

 10 (1995) 62 IR 371 at 373

 11   Exhibit R7, Attachment, AI7

 12   [2015] FWCFB 2267

 13   Exhibit A2, page 5

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<Price code C, PR566974>