Brendan Kavanagh v Expo Signage and Digital Pty Ltd
[2021] FWC 537
•10 FEBRUARY 2021
| [2021] FWC 537 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Brendan Kavanagh
v
Expo Signage and Digital Pty Ltd
(U2020/4528)
DEPUTY PRESIDENT BINET | PERTH, 10 FEBRUARY 2021 |
Application for an unfair dismissal remedy.
[1] On 9 April 2020 Mr Brendan Kavanagh (Mr Kavanagh) made an application to the Fair Work Commission (FWC) pursuant to section 394 of the Fair Work Act 2009 (Cth) (FW Act) for a remedy alleging that he had been unfairly dismissed from his employment with Expo Signage and Digital Pty Ltd (Expo).
[2] On 22 April 2020 Expo filed a Form F3 - Employer Response to an Unfair Dismissal Application objecting to the Application on the grounds that Mr Kavanagh had not completed the minimum employment period to be eligible to make the Application (Jurisdictional Objection).
[3] On 18 June 2020 directions were issued to the parties for the determination of the Jurisdictional Objection on 4 August 2020.
[4] On 20 July 2020 Expo withdrew the Jurisdictional Objection.
[5] Taking into account the parties wishes and circumstances it was determined that a hearing rather than a determinative conference would be the most effective and efficient way to determine the merits of the Application. Consequently, the Application was listed for a merit Hearing in Perth on 21 October 2020 (Hearing).
[6] Directions for the filing of materials in advance of the Hearing were issued to the parties on 24 July 2020 (Directions).
Permission to be represented
[7] The Directions invited the parties to make submissions as to whether the FWC should grant permission to the parties to be represented. A determination of this issue is necessary to ensure that the manner in which the Hearing is conducted is fair and just.
[8] Having considered the submissions of the parties I exercised my discretion to grant both parties leave to be represented by a lawyer or paid agent because I was satisfied that it would enable the matter to be dealt with more efficiently, taking into account the complexity of the matter.
[9] At the Hearing Mr Kavanagh gave oral and written evidence on his own behalf and was represented by Mr Patrick Mullally, a paid agent.
[10] At the Hearing, Expo was represented by Mr Talt Anast a solicitor from Allied Legal. Ms Alana Dunning, Commercial Sales Manager for Expo, gave written and oral evidence on behalf of Expo (Ms Dunning).
Background
[11] Galena Nominees Pty Ltd as trustee for the Jason Signmakers Unit Trust (Jason Signmakers) is a signage manufacturing business based in Welshpool, Western Australia. It is the parent company of Expo.
[12] Mr Kavanagh commenced employment with Bokay Signage (Bokay) in the role of Business Development Manager on 19 August 2019. 1 Bokay engaged in business design and the production of signs.
[13] In November 2019 negotiations took place between Jason Signmakers and Bokay which resulted in a transfer of assets from Bokay to Jason Signmakers, which was completed on 16 December 2019. The new business and its employees continued to perform the same work as previously performed by Bokay. 2
[14] Prior to 16 December 2019, Bokay employees were interviewed for available roles at Expo. An offer of employment with Expo was made to a number of Bokay employees, including Mr Kavanagh. 3
[15] On 16 December 2019 Mr Kavanagh commenced employment with Expo in the role of Business Solutions Manager pursuant to a written contract of employment (Employment Contract). 4
[16] The role of Business Development Manager at Bokay and the role of Business Solutions Manager at Expo involved the performance of substantially the same duties. 5 The role was a senior sales position within the Business Solutions Management Team. The duties of the members of the Business Solutions Management Team are to:6
a. retain existing and secure new clients;
b. scope quote requirements and provide these to the quoting team;
c. calculate adjustments, including overheads and profit margin, from the cost price set by the quoting team; and
d. convert the quotes into sales.
[17] The members of the Business Solutions Management Team, including Mr Kavanagh, were expected to meet certain sales targets. Appendix 2 of the Employment Contract provided for the payment of commission to Mr Kavanagh, only if his invoiced sales exceed $80,000 per month for the first six-months of employment and $100,000 per month thereafter. 7
[18] Clause 3 of the Employment Contract provides: 8
“3. Probation
3.1 A probation period will apply in all cases of new employment see Item 8 at Appendix 1. During this time, we will assess your progress and performance in the position.
3.2 During the probation period you or the Company may end your employment by providing notice in accordance with the table in Clause 14.1.”
[19] Item 8 of the Appendix to the Employment Contract provides for a six-month probationary period. 9
[20] Mr Kavanagh says that he was unaware that a probationary period applied.
[21] Item 12 of the Annexure to the Employment Contract provides for the payment of a incentive payment (Retention Incentive Payment) in the following circumstances: 10
“A Retention Incentive payment of $4,000 gross will be paid in the next payroll immediately following 6 months of service from the Start Date referenced in Item 2, and successful completion of the Probationary Period.”
[22] The start date referenced in Item 2 of the Annexure to the Employment Contract is 16 December 2019. 11
[23] Sales representatives, including Mr Kavanagh, were given 24/7 access to a personal dashboard called MyVox which displayed performance targets and tracked performance against targets on a real time basis.
[24] Mr Kavanagh acknowledges that he was aware that his monthly target during the probationary period was $80,000. 12
[25] Ms Dunning says that from commencement of his employment with Expo she held formal and informal discussions with Mr Kavanagh regarding his sales performance and the need for increased sales. 13
[26] According to Ms Dunning each morning a whole team huddle took place focusing on quotes, sales and production with general comments regarding sales performance and challenges. She says daily reference was made to the need to increase sales significantly, especially for Bokay. 14
[27] She asserts that all members of the sales team were acutely aware targets were not being met and a step up in performance was required. 15
[28] Mr Kavanagh denies that meetings were held with him individually to discuss his sales figures or performance and says that he was never notified of his sales figures. 16
[29] Ms Dunning conceded at the Hearing that other than the meeting at which he was dismissed that the only other occasion she met with him to formally was on 7 February 2020. 17 At the meeting on 7 February she says they discussed that another employee (Mr Young) was to be dismissed for poor performance.18 She says at that meeting they discussed the need to focus on personal sales performance and the achievement of monthly sales targets because the company was struggling financially.19 Ms Dunning asserts that at that meeting Mr Kavanagh indicated that when called to the meeting he thought that he was going to be dismissed for poor performance like his colleague Mr Young.20
[30] Ms Dunning concedes that the other discussions she had with Mr Kavanagh were informal and that Mr Kavanagh was never required to participate in any formal performance management or performance improvement program. 21
[31] Mr Kavanagh says that in January 2020 Expo restructured how quotes were prepared for clients by removing the task from sales representatives and giving it to the estimating team. Mr Kavanagh says that the estimating team applied high profit margins and took much longer to prepare quotations. He says that this adversely impacted on sales because prices became non-competitive and were not provided quickly enough, so that work was awarded to other suppliers. 22
[32] Ms Dunning says that the estimating team was established to support the Business Solutions Managers to allow them to focus on sales because it had been identified that they were spending as much as 60% of their time preparing estimates. Ms Dunning says that the estimating team provided only a cost price and it was the Business Solutions Managers who actually set the price. 23
[33] During his employment with Expo Mr Kavanagh’s total quotes amounted to $801,918, however he only managed to convert these quotes to only $65,358 worth of gross sales. This occurred during a period when he was expected to secure as a minimum, sales in excess of $300,000. Mr Kavanagh’s conversion rate of 15% compared to the company average of 70% and his average monthly sales equated to only 23% of his monthly target.
[34] Mr Kavanagh says that at around 10.50am on 3 April 2020 Ms Dunning informed Mr Kavanagh that he was required to attend a meeting in the Board Room at 11.00am. 24 There is no evidence that she explained to him the purpose of the meeting.25
[35] At the meeting Ms Dunning informed Mr Kavanagh that an analysis of the sales reports had been undertaken and a decision had been made to terminate his employment as the weakest performer in the sales team overall. Ms Dunning informed Mr Kavanagh that the dismissal would take effect immediately and he would be paid two weeks’ pay in lieu of notice.
[36] Mr Kavanagh says that he responded by saying: 26
“I knew this was going to happen when Dane Meade was appointed to the position of Sales Representative (Business Sales Manager) instead of CFO as he was at Bokay. And you then employed Zak McDowall in January 2020 as another Sales. And then you let Larry Young (Business Solutions Manager) go, and assigned some of mine and all his high earning accounts to Dane and Zak."
[37] Ms Dunning presumed that Mr Kavanagh was still within a probationary period given the six-month probationary period set out in his Employment Contract. 27
[38] Ms Dunning provided Mr Kavanagh with written confirmation of the termination of his employment (Termination Notice). The Termination Notice describes the reasons for the termination of his employment as follows: 28
“As per your employment contract, a probationary period is in place for 6 months from the commencement date of your employment with Expo Signage and Digital.
During this time Management assesses your progress and performance in the position. The Company has also been faced with a rapid downturn in activity in the Expo Signage and Digital which has meant we have reviewed all current staff. The outcome of this assessment to date is that we have decided not to continue your employment.”
[39] Ms Dunning says that after Mr Kavanagh’s departure Expo became aware that he had been providing quotes without being requested to do so to artificially increase his sales pipeline. 29 Mr Kavanagh denies that he did so.30
[40] She says that Expo also became aware that a tender had been submitted by Mr Kavanagh without Ms Dunnings review contrary to company procedure, notwithstanding that Ms Dunning had specifically requested that she review the tender before it was submitted. The tender was rejected because it did not meet the qualitative requirements set by the prospective client.
[41] Mr Kavanagh has since obtained alternative employment, initially on a commission only basis, and since 31 July 2020 as a permanent employee. 31 Expo assert that Mr Kavanagh actually secured work earlier than this date. In support of this assertion they tendered a copy of his LinkedIn page which records that he commenced employment with Static/Digital Print & Signage Solutions in May 2020.32
[42] Mr Kavanagh seeks an order for compensation for a ten-week period (less income he earned by way of commission during this period) plus the Retention Incentive Payment of $4,000 gross.
Is Mr Kavanagh protected from unfair dismissal?
[43] An order for reinstatement or compensation may only be issued if Mr Kavanagh was unfairly dismissed and Mr Kavanagh was protected from unfair dismissal at the time of his dismissal. Section 382 of the FW Act sets out the circumstances that must exist for Mr Kavanagh to be protected from unfair dismissal.
[44] Section 382 of the FW Act provides:
“382 When a person is protected from unfair dismissal
A person is protected from unfair dismissal at a time if, at that time:
(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and
(b) one of more of the following apply:
(i) a modern award covers the person;
(ii) an enterprise agreement applies to the person in relation to the employment;
(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.
[45] At the time of Mr Kavanagh’s dismissal the high income threshold was $148,700.
[46] I am satisfied that Mr Kavanagh has completed the minimum employment period. 33 His annual salary at the date of his dismissal was $70,000 plus a motor vehicle allowance of $12,000.34 There is no dispute, and I am satisfied, that his earnings were below the high income threshold. Consequently, I am satisfied that Mr Kavanagh was protected from unfair dismissal.
[47] Section 385 of the FW Act provides that a person has been unfairly dismissed if the FWC is satisfied that:
a. the person has been dismissed;
b. the dismissal was harsh, unjust or unreasonable;
c. the dismissal was not consistent with the Small Business Fair Dismissal Code; and
d. the dismissal was not a case of genuine redundancy.
[48] There was no dispute, and I find, that Mr Kavanagh’s employment with Expo was terminated at the initiative of Expo.
[49] I am therefore satisfied that Mr Kavanagh has been dismissed within the meaning of section 385 of the FW Act.
Was the Application made within the period required?
[50] Section 394(2) of the FW Act requires that the Application be made within 21 days after the dismissal took effect.
[51] It is not disputed, and I find, that Mr Kavanagh was dismissed from his employment on 3 April 2020 and made the application on 9 April 2020. I am therefore satisfied that the Application was made within the period required in subsection 394(2) of the FW Act.
Was Mr Kavanagh’s dismissal unfair?
[52] Section 385 of the FW Act provides that:
“385 What is an unfair dismissal
A person has been unfairly dismissed if the FWC is satisfied that:
(a) the person has been dismissed; and
(b) the dismissal was harsh, unjust or unreasonable; and
(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and
(d) the dismissal was not a case of genuine redundancy.
Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.”
[53] It is not disputed, and I find, that Expo was not a small business employer within the meaning of section 23 of the FW Act at the relevant time, having in excess of 14 employees. I am therefore satisfied that the Small Business Fair Dismissal Code does not apply.
[54] It was not in dispute, and I find, that the dismissal was not a case of genuine redundancy.
Was the dismissal harsh, unjust or unreasonable?
[55] Section 387 of the FW Act provides that:
“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.”
[56] The ambit of the conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 465 by McHugh and Gummow JJ as follows:
“.... It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”
[57] It is necessary to consider each of these criteria, to the extent they are relevant, to the factual circumstances of the Application.
Was there a valid reason for the dismissal related to Mr Kavanagh’s capacity or conduct?
[58] An employer must have a valid reason for the dismissal of an employee, although it need not be the reason given to the employee at the time of the dismissal.35 The reasons should be “sound, defensible and well founded” 36 and should not be “capricious, fanciful, spiteful or prejudiced.”37 However, the FWC will not stand in the shoes of the employer and determine what the FWC would do if it was in the position of the employer.38
[59] Where a dismissal relates to an employee’s conduct, the FWC must be satisfied that the conduct occurred and justified termination. 39 “The question of whether the alleged conduct took place and what it involved is to be determined by the FWC on the basis of the evidence in the proceedings before it. The test is not whether the employer believed, on reasonable grounds after sufficient enquiry, that the employee was guilty of the conduct which resulted in termination.”40
[60] Expo say that Mr Kavanagh’s performance was inadequate and that he was intentionally deceitful. 41 Expo submit that these are valid reasons for Mr Kavanagh’s dismissal.42 Mr Kavanagh denies that his performance was deficient or that he was ever warned that his performance was deficient.43 Mr Kavanagh also denies that he behaved in a deceitful or misleading manner.
[61] There is no doubt that incompetence and underperformance on the part of an employee constitutes a valid reason for the dismissal of an employee. An employer is not required to retain underperforming employees. 44
[62] Mr Kavanagh agreed that he was aware of his monthly targets which are detailed in his Employment Contract and in the business management software which he was freely able to access. However, he asserts that his sales performance was not brought to his attention. 45
[63] While there is limited evidence that Ms Dunning discussed with him his sales performance formally and/or individually I accept Ms Dunnings evidence that Mr Young attended daily team briefings which reinforced the expected targets and identified failures to meet these targets.
[64] Furthermore, sales representatives including Mr Kavanagh, were given 24/7 access to a personal dashboard called ‘MyVox’ which displayed performance targets and tracked performance against targets on a real time basis. It is difficult to comprehend circumstances in which a person whose primary role was sales and who was renumerated, at least in part by way of commission, would not be aware of their performance in relation to targets.
[65] To the extent that Mr Kavanagh could have been in any way oblivious to the importance of his sales performance, the dismissal of his peer Mr Young should have caused Mr Kavanagh to focus sharply on his own performance. Mr Kavanagh’s comments at the meeting at which he was dismissed suggest that he was aware that Expo were scrutinising his performance and were likely to review his employment.
[66] Expo produced, as evidence, sales reports detailing Mr Kavanagh’s sales performance during his employment with Expo. Those records reveal that while his total quotes amounted to $801,918 he managed to convert these quotes to only $65,358 worth of gross sales during a period when he was expected to secure, as a minimum, sales in excess of $300,000. Mr Kavanagh’s conversion rate of 15% compared to the company average of 70% and his average monthly sales equated to only 23% of his monthly target.
[67] Mr Kavanagh chose not to call any witnesses to corroborate his assertion that he was a proficient salesperson. Nor did he seek production of corporate records which would demonstrate that he was not in fact the worst salesman as asserted by Ms Dunning. 46 Ms Dunning was not cross examined in relation to the sales data which was tendered and there was no assertion made that the data was inaccurate. Nor was any evidence produced or submissions made on behalf of Mr Kavanagh that the monthly targets were unreasonable.
[68] After his dismissal Expo became aware of conduct by Mr Kavanagh which they say was deceitful and would have justified his summary dismissal.
[69] Mr Kavanagh’s duties included the preparation and issuing of quotations to prospective clients. The quotations are entered in the business management software. Expo say that employees are aware that quotations should only be raised at the request of a client. 47 Mr Kavanagh acknowledges that he was aware that his performance was in part assessed by reference to his sales pipeline.48
[70] Expo allege that Mr Kavanagh entered quotations not raised at the request of a client into the business management system and failed to remove quotations which he knew to have been unsuccessful, presumably to artificially inflate his sales pipeline and misrepresent his performance. 49
[71] Expo cited as an example of such conduct a quotation for work at the QEII Medical Centre valued at $84,000 which Mr Kavanagh was advised on 27 March 2020 was unsuccessful. 50 Expo also cited quotations for Mills Oakley Perth Signage valued at $15,155 and entered into the business management system five times by Mr Kavanagh and 600 Murray Street valued at $5000 entered into the business management system three times by Mr Kavanagh.51
[72] Clause 15.1 of the Employment Contract provides that:
“This contract of employment may be terminated immediately by the Company in the event of serious or wilful misconduct by you. These grounds will include, but are not limited to:
• Significant dishonesty (including theft, fraud or deceptive conduct).”
[73] There is no doubt that reasons for dismissal which rely on facts which came to light after the dismissal can form a valid reason for dismissal.52
[74] Mr Kavanagh says that as project tenders were put out to multiple companies it was necessary to duplicate quotes in the business management system for each of these companies, notwithstanding only one company would ultimately be awarded the tender and require Expo’s products. 53 If this were common practise it does not explain why the conversion rates of other sales employees averaged 70% as compared to Mr Kavanagh’s rate of 15%. It does not explain why the QEII quotation was not removed from the sales pipeline when Mr Kavanagh was informed that it was not accepted. Nor does it explain why Expo received feedback from clients that quotations were provided without them requesting a quotation.
[75] Mr Kavanagh produced no evidence to establish that it was common practise to enter multiple quotations. Nor did he produce any evidence to indicate that the multiple quotations were legitimate or that he removed them once a tender was awarded. He also produced no evidence to explain the complaints of unsolicited quotations.
[76] On the balance of the evidence before me, I am satisfied that Mr Kavanagh’s performance was deficient and that it appeared that he was artificially inflating his sales pipeline. I find that these matters form a valid reason for his dismissal.
Was Mr Kavanagh notified of the valid reason?
[77] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made to terminate their employment,54 and in explicit,55 plain and clear terms.56
[78] Expo only became aware of Mr Kavanagh’s artificial inflation of his sales pipeline after he was dismissed therefore was unable to notify him of this reason for his dismissal, prior to his dismissal.
[79] Expo concede that Mr Kavanagh was not explicitly informed that he would be dismissed for poor performance prior to the decision being made to terminate his employment. 57 Expo say that he should have been aware that his employment was under scrutiny by:58
a. implication during the probationary period specified in his contract;
b. by virtue of the informal discussions/meetings Ms Dunning had with him and his team regarding sales performance; and
c. by virtue of the formal discussions Ms Dunning held with him on 7 February 2020 and 3 April 2020.
[80] Expo say that reasons for Mr Kavanagh’s dismissal were provided orally at the Termination Meeting and in writing through the Termination Letter.
[81] Providing the reasons for dismissal after a decision to dismiss has been made gives the obligation to give notice of the proposed reasons for dismissal, little utility.
[82] In Crozier v Palazzo Corporation Pty Ltd59 a Full Bench of the Australian Industrial Relations Commission dealing with a similar provision of the Workplace Relations Act 1996 stated the following:60
“[73] As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. Much like shutting the stable door after the horse has bolted.”
[83] Ms Dunning’s evidence is that her discussions with Mr Kavanagh in relation to his performance were almost exclusively of an informal or group nature. 61
[84] Discussions about sales performance and a desire by the business for increased sales would, presumably, hardly come as a surprise to an employee engaged in a sales role. There are likely few sales roles where an employer does not encourage sales employees to increase sales.
[85] Ms Dunning concedes that at the 7 February 2020 meeting she did not expressly warn Mr Kavanagh that his sales performance might result in his dismissal. 62
[86] Expo say that Mr Kavanagh was clearly aware that his employment was in jeopardy because he made a comment to that effect at the 7 February 2020 meeting where the allocation of clients of Mr Young, who was dismissed for poor performance, was discussed. 63 Expo also point to the comments he made at the meeting on 3 April 2020 at which he was dismissed.
[87] There is no evidence of Mr Kavanagh being formally warned about his performance or placed on any performance improvement program. The fact that he wasn’t dismissed with Mr Young or expressly warned that he may be dismissed for poor sales performance despite comments he made at the 7 February 2020 meeting could have led him to conclude that his employment was not at risk. While Mr Kavanagh may have held suspicions that his employment was in jeopardy, it was incumbent on Expo to make this explicitly clear.
[88] I therefore find Mr Kavanagh was not notified of the reason for his dismissal in explicit, plain and clear terms before the decision was made to terminate his employment.
Was Mr Kavanagh given an opportunity to respond to any valid reason related to his capacity or conduct?
[89] An employee protected from unfair dismissal must be provided with an opportunity to respond to any reason for dismissal relating to the conduct or capacity of the person. This criterion is to be applied in a common-sense way to ensure the employee is treated fairly and should not be burdened with formality.64
[90] Expo only became aware of Mr Kavanagh’s artificial inflation of his sales pipeline after he was dismissed, therefore it was unable to provide him with the opportunity to respond to this reason for dismissal prior to his dismissal.
[91] Expo concede that Mr Kavanagh was not explicitly warned that he would be dismissed for poor sales performance prior to the decision being made to terminate his employment. 65 Expo say that he should have been aware that his employment was under scrutiny by implication as Mr Kavanagh was subject to a probationary period and by virtue of discussions Ms Dunning had with him and his team regarding sales performance. Expo also say that Mr Kavanagh had the opportunity to respond to performance issues raised with him during discussions with Ms Dunning about his sales performance.66
[92] There is no evidence of Mr Kavanagh being formally warned about his performance or placed on any performance improvement program. The fact that he wasn’t dismissed with Mr Young or expressly warned about his performance at the 7 February 2020 meeting despite the comments he made could have led him to conclude that his employment was not at risk. While Mr Kavanagh may have held suspicions that his employment was in jeopardy, it was incumbent on Expo to make this explicitly clear so that he had a real opportunity to respond to those concerns.
[93] As Mr Kavanagh was not notified of the reason for his dismissal in explicit, plain and clear terms before the decision was made to terminate his employment, he had no real opportunity to respond to the reasons for his dismissal before he was dismissed.
[94] I therefore find Mr Kavanagh was not given an opportunity to respond to the reasons for his dismissal.
Did Expo unreasonably refuse to allow Mr Kavanagh to have a support person present to assist at discussions relating to the dismissal?
[95] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, an employer should not unreasonably refuse that person being present.
[96] Expo did not explicitly refuse a request by Mr Kavanagh to have a support person present to assist at discussions relating to his dismissal. However, Mr Kavanagh was unaware of the purpose of the meeting with Ms Dunning prior to the meeting occurring. Therefore, he did not have the opportunity to seek to have a support person present at the discussions relating to his dismissal.
Was Mr Kavanagh warned about unsatisfactory performance before the dismissal?
[97] Where an employee protected from unfair dismissal is dismissed for the reason of unsatisfactory performance, the employer should warn the employee about the unsatisfactory performance before the dismissal.
[98] Mr Kavanagh denies that he was warned that his performance was unsatisfactory before his dismissal. 67
[99] Expo submit that Mr Kavanagh was aware that his performance was unsatisfactory prior to his dismissal because:
a. Mr Kavanagh was aware of his monthly targets because they are detailed in the Employment Contract and in the business management software which he was freely able to access;
b. he was aware that he was not reaching his monthly targets because he had access to the business management software which recorded his sales performance on a real time basis;
c. he attended daily team briefings which reinforced the expected targets and identified failures to meet these targets; and
d. Ms Dunning regularly discussed with him her concerns about his failure to meet monthly targets.
[100] A mere exhortation for an employee to improve their performance would not be a sufficient warning. A warning must:
a. identify the relevant aspect of the employee’s performance which is of concern to the employer; and
b. make it clear that the employee’s employment is at risk unless the performance issue identified is addressed.68
[101] Discussions about sales performance and a desire by the business for increased sales would hardly come as a surprise to an employee engaged in a sales role. It is unlikely that there are few sales roles where an employer does not encourage sales employees to increase sales.
[102] Ms Dunning’s evidence is that her discussions with Mr Kavanagh in relation to his performance were of an informal or group nature. 69
[103] There is no evidence of Mr Kavanagh being formally warned about his performance or placed on any performance improvement program which might have alerted him to the possibility that his employment was in jeopardy.
[104] While I accept that Mr Kavanagh held suspicions that his employment might be at risk, based on the evidence before me, I am not satisfied that Expo adequately warned Mr Kavanagh about the unsatisfactory performance before his dismissal or made clear to him that his performance was so deficient that his employment was at risk.
To what degree would the size of Expo’s enterprise be likely to impact on the procedures followed in effecting the dismissal?
[105] Expo concede that the size of its enterprise does not provide an explanation for the lack of procedures followed in effecting Mr Kavanagh’s dismissal, therefore I will treat this factor as not relevant.
To what degree would the absence of dedicated human resource management specialists or expertise in Expo’s enterprise be likely to impact on the procedures followed in effecting the dismissal?
[106] Expo concede that the absence of human resource expertise does not provide an explanation for the lack of procedures followed in effecting Mr Kavanagh’s dismissal, therefore this factor is not relevant.
Are there any other matters which are relevant?
[107] Section 387(h) of the FW Act requires the FWC to take into account any other matters that the FWC considers relevant.
[108] Mr Kavanagh submitted that the overall circumstances on his employment including the unfairness of the manner in which his dismissal was effected is an ‘other matter’ which is relevant to the FWC’s consideration of whether his dismissal was harsh, unjust or unreasonable. 70
[109] Expo submitted that the following other matters are relevant to the FWC’s consideration of whether the dismissal was harsh, unjust or unreasonable:
a. Notwithstanding his prior service with Bokay, Mr Kavanagh was a ‘new’ employee to Expo with a limited work history which was consistently unsatisfactory.
b. The fact that Mr Kavanagh’s contract provided for a period of probation meant that he ought to have been aware that his employment was conditional and as such his performance was under scrutiny without further warning.
c. Ms Dunning erroneously believed that there was no statutory or contractual limitations to terminating Mr Kavanagh’s performance because he was well within the six-month probationary period of his employment with Expo.
[110] I have considered all of these matters in my consideration of whether the dismissal was harsh, unjust or unreasonable.
Was the dismissal of Mr Kavanagh harsh, unjust or unreasonable?
[111] Mr Kavanagh’s dismissal clearly suffered from procedural defects. A dismissal is not necessarily harsh, unjust or unreasonable merely because of the existence of procedural defects. In this regard Expo sought to rely on the decision of SDP Lacy in Roweena Ann De Silva v ExxonMobile Chemical Australia Pty Ltd (Unreported, Print PR10623, SDP Lacey, 9 January 2002) (ExxonMobile Case)and the decision of Commissioner Bissett in Damien Lennen v Hallmark Editions Pty Ltd t/a Hallmark Editions [2012] FWA 6691(Hallmark Case).
[112] However, having considered each of the matters specified in section 387 of the FW Act, I am satisfied that the dismissal of Mr Kavanagh was unjust because the extent of procedural defects resulted in him suffering a substantial denial of procedural fairness.
[113] Mr Kavanagh’s circumstances can be distinguished by those of the applicant in the ExxonMobile Case. In the case cited by Expo the applicant had been placed on a formal performance improvement plan. The evidence before SDP Lacy satisfied him that the applicant had been warned on several occasions that her performance was unsatisfactory and that a failure to improve may result in the termination of her employment. Similarly, Mr Kavanagh’s circumstances can be distinguished from those of the applicant in the Hallmark Case in which Commissioner Bissett was satisfied that the applicant had been given prior warnings about their conduct and an opportunity to respond to at least of the some reasons for which they were dismissed.
[114] I am therefore satisfied that Mr Kavanagh was unfairly dismissed within the meaning of section 385 of the FW Act.
Remedy
[115] Mr Kavanagh seeks, as a remedy for his unfair dismissal, an order for compensation for a ten-week period less the income he earned as commission at his new employment during this period. He also seeks an order for compensation for the loss of his opportunity to receive the Retention Incentive Payment of $4,000 gross. 71
[116] An order for reinstatement or compensation can only be made in circumstances where the FWC is satisfied that an applicant: 72
a. made an application for an order granting a remedy under section 394 of the FW Act;
b. was a person protected from unfair dismissal; and
c. was unfairly dismissed within the meaning of section 385 of the FW Act,
[117] For the reasons outlined above I am satisfied that Mr Kavanagh was protected from unfair dismissal pursuant to section 382 of the FW Act, and that he was dismissed unfairly pursuant to section 385 of the FW Act.
[118] An order for payment of compensation may not be made unless the FWC is satisfied that reinstatement is inappropriate and payment of compensation is appropriate in all the circumstances of the case. 73
[119] Mr Kavanagh has since obtained alternative employment. He commenced in his new role on 31 July 2020.
[120] Mr Kavanagh does not seek reinstatement and Expo opposes his reinstatement. Given that Mr Kavanagh has obtained alternative employment and my findings in relation to his performance at Expo, I am satisfied that reinstatement is not appropriate in the circumstances of this case.
[121] Given the lack of procedural fairness he was afforded I am satisfied that an order for payment of compensation is appropriate in all of the circumstances of this case.
[122] Section 392(2) of the FW Act requires all of the circumstances of the case to be taken into account when determining an amount to be paid as compensation to an applicant in lieu of reinstatement, including:
a. the effect of the order on the viability of the employer’s enterprise;
b. the length of the applicant’s service;
c. the remuneration that applicant would have received, or would have been likely to receive, if the applicant had not been dismissed;
d. the length of the applicant’s service;
e. the efforts of the applicant to mitigate the loss they have suffered because of the dismissal;
f. the amount of any remuneration earned by the applicant from employment or other work during the period between the dismissal and the making of the order for compensation;
g. the amount of any income reasonably likely to be so earned by the employee during the period between the making of the order for compensation and the actual compensation; and
h. any other matter that the FWC considers relevant.
[123] The evidence is that Mr Kavanagh:
a. was aware or should have been aware of the targets he was expected to achieve;
b. was comprehensively failing to meet those targets;
c. was aware that a peer had recently been dismissed for poor sales performance and failed to adjust his own performance;
c. believed, and continues to believe, that his performance was not deficient; and
d. was artificially inflating his sales pipeline.
[124] In these circumstances it appears unlikely that if Ms Dunning had commenced a formal process of performance management that Mr Kavanagh would have changed his performance sufficiently enough to safeguard his employment.
[125] Expo submit that had it been aware of the qualifying periods in the FW Act which applied to Mr Kavanagh, that Mr Kavanagh’s employment would have ended on the same date by way of genuine redundancy. There is insufficient evidence before me to support this assertion.
[126] However, I am satisfied that given:
a. the allegations of the inflation of his sales pipeline;
b. his failure to improve his performance not withstanding the dismissal of his colleague; and
c. the impact of the COVID19 Pandemic
the business would have adopted a show cause and/or an expedited performance management process, which would have been completed within four weeks.
[127] I am satisfied, in all the circumstances, that a period of four weeks would have been an adequate period of time for Ms Dunning to conduct a show cause process in relation to Mr Kavanagh’s inflation of his sales pipeline and/or formally warn Mr Kavanagh about the consequences of a failure to improve his performance and for Mr Kavanagh to demonstrate a willingness to improve his performance. On the evidence before me I am not satisfied that Mr Kavanagh’s employment would have continued beyond this time and therefore would not have continued for the necessary period of time for his contractual right to the Retention Incentive Payment to vest.
[128] The amount of renumeration which Mr Kavanagh would have received during this period is $5,769.23 gross.
[129] There is insufficient evidence before me to determine when Mr Kavanagh secured other employment and what income he received from that other employment.
[130] There is no evidence before me to suggest that an order for compensation will effect the viability of Expo.
[131] I do not propose to include any component for shock, distress, humiliation or other hurt in the compensation sum.
[132] On the evidence before me and the circumstances of this case I do not find it appropriate to apply any contingency.
[133] I have considered Mr Kavanagh’s period of service and it does not cause me to adjust the amount of compensation payable.
Conclusion
[134] I am satisfied that Mr Kavanagh was protected from unfair dismissal, that the dismissal was unfair and a remedy of compensation is appropriate. The amount of compensation which I find is appropriate is $5,769.23 gross, taxed according to the law, plus superannuation, less the amount of income he received from other employment.
[135] The parties are directed to confer and advise Chambers of an agreed amount to be ordered as compensation within 7 days of the date of this decision. If the parties are unable to reach an agreement as to the final amount payable to Mr Kavanagh within 7 days of the date of this decision then directions will be issued to the parties for the filing of further materials.
DEPUTY PRESIDENT
Appearances:
P. Mullally for the Applicant.
T. Anast for the Respondent.
Hearing details:
2020.
Perth.
October 21.
Final written submissions:
Applicant, 11 November 2020.
Respondent, 25 November 2020.
Printed by authority of the Commonwealth Government Printer
<PR726638>
1 Digital Court Book,12 – 13 (‘DCB’).
2 Ibid 4.
3 Ibid 12 - 13.
4 Ibid 14 - 21.
5 Ibid 4.
6 Ibid 35 – 36.
7 Ibid 14 – 21.
8 Ibid.
9 Ibid.
10 Ibid.
11 Ibid.
12 Transcript of 21 October 2020 at PN 64.
13 DCB (n 1), 51.
14 Ibid.
15 Ibid.
16 Ibid11.
17 Transcript of 21 October 2020 at PN 129.
18 Ibid PN 132.
19 Ibid PN 134, PN 156.
20 DCB (n 1), 51.
21 Transcript of 21 October 2020 at PN 126 – PN 131.
22 DCB (n 1), 10.
23 Ibid 51.
24 DCB (n 1), 8 - 10.
25 Ibid 9.
26 DCB (n 1), 10.
27 Ibid 11 - 12.
28 Ibid 22.
29 Ibid 52
30 Transcript of 21 October 2020 at PN 53.
31 DCB (n 1), 10.
32 Ibid 62.
33 Note: Mr Kavanagh is a transferring employee for the purpose of the qualifying period under section 383 of the FW Act.
34 DCB (n 1), 13.
35 Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359,373 (Starke J), 377-378 (Dixon J).
36 Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371, 373.
37 Ibid.
38 Walton v Mermaid Dry Cleaners Pty Ltd(1996) 142 ALR 681, 685.
39 Edwards v Justice Giudice [1999] FCA 1836, [7].
40 King v Freshmore (Vic) Pty Ltd (Unreported, Print S4213, AIRCFB, Ross VP, Williams SDP, Hingley C, 17 March 2000), [23] - [24].
41 Transcript of 21 October 2020 at PN 92.
42 DCB (n 1), 37.
43 Ibid 5.
44 Roweena Ann De Silva v ExxonMobile Chemical Australia Pty Ltd (Unreported, Print PR10623, SDP Lacey, 9 January 2002).
45 Transcript of 21 October 2020 at PN 79.
46 Ibid PN 96.
47 DCB (n 1), 38.
48 Transcript of 21 October 2020 at PN56.
49 DCB (n 1), 38.
50 Ibid66.
51 Ibid 24.
52 Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359, 373 (Starke J).
53 Transcript of 21 October 2020 at PN 42.
54 Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151.
55 Previsic v Australian Quarantine Inspection Services (Unreported, Print Q3730,AIRC, Holmes C, 6 October 1998).
56 Ibid.
57 Ibid PN 97
58 DCB (n 1), 41.
59 (2000) 98 IR 137.
60 Ibid 151.
61 Transcript of 21 October 2020 at PN 156 – PN 157.
62 Ibid PN 134.
63 Ibid PN 132.
64 RMIT v Asher (2010) 194 IR 1, 14-15.
65 Transcript of 21 October 2020 at PN 143.
66 Ibid PN 157.
67 Ibid PN 79.
68 Fastidia Pty Ltd v Goodwin (Unreported, Print S9280, AIRCFB, Ross VP, Williams SDP, Blair C, 21 August 2000), [43]-[44].
69 Transcript of 21 October 2020 at PN 142.
70 DCB (n 1), 7.
71 Ibid.
72 Fair Work Act) 2009 (Cth) s 390.
73 Ibid s 390(3).
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