Christopher Cole v Endless Solar Operations

[2017] FWC 1619

[2017] FWC 1619

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Christopher Cole
v
Endless Solar Operations
(U2016/2875)

COMMISSIONER WILSON MELBOURNE, 12 MAY 2017

Application for relief from unfair dismissal - Small Business Fair Dismissal Code - dismissal consistent with Code.

[1] This decision concerns an application made by Christopher Cole for unfair dismissal remedy against his former employer, Endless Solar Operations.

[2] The matter was previously the subject of a jurisdictional hearing before Deputy President Gostencnik in September 2016 concerning the Respondent’s assertion that Mr Cole had not met the minimum period of employment for a small business, as those terms are defined in ss.382 – 384 of the Fair Work Act 2009 (the Act), for reason that Mr Cole had initially been engaged as an independent contractor, and that his subsequent period of full-time employment had otherwise not met the requisite period of 1 year.

[3] On 3 October 2016, Gostencnik DP found that Mr Cole was a person protected from unfair dismissal and that the minimum period of employment had been completed. Specifically, the Deputy President found that Mr Cole’s employment was initially as a casual employee on a regular and systematic basis with a reasonable expectation of continuing employment, as opposed to an independent contractor relationship, and as such his initial period of casual employment counted towards the period of continuous service completed with the Respondent. That decision also confirmed that the Respondent is a small business employer within the meaning of the Act. 1 An appeal of that decision was dismissed by the Full Bench on 18 November 2016.2

[4] Section 396 of the Act requires the determination by the Commission of four initial matters before consideration of the substantial merits of an unfair dismissal application. For the purposes of this section, I find that Mr Cole’s application for unfair dismissal remedy was made within the requisite 21 day period for the making of such applications. I also note the earlier decision of the Commission that Mr Cole was a person protected from unfair dismissal.

[5] The Respondent, in its Form F4 – Objection to Unfair Dismissal Application, filed on 14 July 2016, raises objections on three jurisdictional grounds. The first concerns the satisfaction of the minimum employment period, which objection has already been determined by the Commission. The Form F4 also objects on the grounds that the dismissal was consistent with the Small Business Fair Dismissal Code, and that Mr Cole was made genuinely redundant. These latter two objections are both initial matters to be considered for the purposes of s.396 of the Act. The redundancy argument initially raised by the Respondent was not the subject of written or oral submissions in these proceedings. In any event, and for the reasons outlined below, I find that Mr Cole’s dismissal by Endless Solar Operations was consistent with the Small Business Fair Dismissal Code, and that as a result his application for unfair dismissal remedy should be dismissed.

BACKGROUND AND EVIDENCE

[6] Endless Solar is the trading subsidiary of Endless Solar Corporation Ltd, with its business being primarily concerned with the manufacture and supply of evacuated tube solar water heaters. Mr Cole was engaged, as alluded to above, as a casual employee between 30 March 2015 and 10 July 2015, and on a full-time basis from 13 July 2015 until the date of his termination. At the time of his dismissal, the company employed three people, including Mr Cole, and three directors also participated to varying degrees in running the business.

[7] Evidence in this matter was received for the Applicant from Mr Cole directly, and for the Respondent from Ms Cathy Lin, Director; Ms Ivy Li, who is employed in a receptionist and bookkeeping role; and Mr David Craig, Chairman and Executive Director of Endless Solar.

[8] Mr Cole contests a very significant part of the evidence of the Respondent’s witnesses to a very large degree; both their written witness statements and their oral evidence. His recollection of how he came to obtain his job, its purpose, and how he performed in the role is diametrically different to the evidence of the Respondent’s witnesses, especially from Ms Lin. He also has a starkly different recollection of events on the last day of his employment. Having heard all of his evidence and considered it in conjunction with his written submissions and statements, I am satisfied that he endeavoured as well as he could to present a coherent depiction of what occurred and the key events that led to his dismissal.

[9] Even so, I prefer Ms Lin’s evidence on the key matters of evidence on which she and he disagreed. Ms Lin’s recollection of those critical matters provides a continuous, well-explained and plausible chronology and explanation. In key respects, Mr Cole’s recollection was patchy or provided a less-likely version of events.

[10] The Respondent puts forward that Mr Cole’s tasks “primarily involved sales, operations and IT. His sales and operations roles were the most important.” 3 Ms Lin emphasized Mr Cole’s sales role,4 and elaborated upon verbal discussions with Mr Cole in the days leading up to the commencement of his full-time employment as follows;

“Before Mr Cole started full-time employment with Endless Solar in July, we had discussions about the scope of his role. The company’s sales figures had declined quite a lot over the last few years. Mr Cole knew this from the previous work he had done with Endless Solar, and approached me about being employed as a salesperson, and said that he would be able to help us increase our sales. In our discussions, Mr Cole and I talked about the fact that the business needed someone to assist with making actual sales and also to help the business implement marketing, operational and sales strategies to better sell our products and increase our turnover. He was very enthusiastic about helping the business do this.” 5

[11] Ms Lin also relates a conversation she says took place with Mr Cole on or around 9 July 2015 where his sales targets were discussed. Her statement provides that;

“…I sent him our sales figures for the last few financial years. Mr Cole first suggested a target of $2 million per year. However, I did not think this was achievable. We instead agreed on a target of $1.3 million (or $100,000 every four weeks). This was a high target given the sales figures for the company over the last couple of years, however Mr Cole had been employed specifically to increase company sales, and he appeared very confident that he would be able to achieve this target. Mr Cole and I agreed that his annual sales turnover target would be $1.3 million per year…” 6

[12] Mr Cole’s perspective is that he was “lured away” from a small business he ran, and that such occurred for bad motives;

“I was lured away from the small business I had operated for over 10 years, with an offer of full time IT employment that was most likely made up by Ms Lin and Mr Craig. I had an established customer base with loyal clients, many of which had become friends. It is very likely that Ms Lin and Mr Craig needed a large amount of IT work completed, and simply used me as cheap labour. I was tricked away from contract work, into a full time position where they could use me to complete vast IT works, and then dismiss me while hiding behind the Small Business Code.

I was very happy to be working in the Green industry, with products that worked and offered real savings, and for a reduced rate of pay. However, the financial cost of agreeing to work for Ms Lin and Mr Craig was far greater than expected. I gave up many loyal clients, as after 14 months of absence, I had lost the majority of them to other providers. It will take some years to re-build my business and confidence, all at significant financial loss.” 7

[13] Mr Cole also puts forward evidence that his role involved IT, operations and sales activities, listing numerous tasks associated with each of those functions, 8 and that he provided services not only in relation to Endless Solar, but another associated company, Dromana Estate Winery.9

[14] Central to this matter is the work that Mr Cole performed for the company after he became a full-time employee in July 2015. The evidence before the Commission allows a finding that Mr Cole after that time performed a combined role of IT and operations manager and that a significant, if not dominant, part of his work was the eliciting of sales for the company. At the time that he moved into this combined role other people within the company had responsibility for sales as well; however there is little doubt that Mr Cole had his own responsibility for achieving sales.

[15] Material before the Commission shows that the parties documented an “annual sales turnover target for financial year 2016” of $1.3 million. 10

[16] A part of the dispute between the parties is whether or not that sales target was Mr Cole’s alone or whether it was a shared responsibility with other employees responsible for sales. Ms Lin’s evidence is that it was Mr Cole’s target alone and that it was not a shared objective. The combination of Ms Lin’s oral evidence as well as correspondence from Mr Cole to Ms Lin at around the same time and shortly before he signed a contract of employment for the ongoing role suggests that it is more likely that it was an individual target than a shared objective. In particular Mr Cole wrote to Ms Lin and Mr Craig on 25 June 2015 putting forward his credentials as a salesperson, with him writing in the context of what amounted to a job application;

“… I began part-time at Endless-Solar on 30 March 2015. Since then, I have become very familiar with the product and processes surrounding the operation of the business. I have identified my place, and been granted the title ‘Manager of IT and Operations’. This role also comprises a large sales component, which perhaps I enjoy most and is certainly an area I believe I can develop.

I believe I have what it takes to grow this company into something big. Given the chance, I will find, facilitate and close commercial clients with large scale solar projects. I am a people person and can identify the needs of clients at all levels. I know how to overcome the barriers to a sale, and then make those sales. What’s more I have a strong business background, with over 10 years managing and working in my own IT company. I have extensive experience in sales, marketing and business operations, as well as strong IT skills.” 11

[17] Ms Lin’s evidence includes that originally Mr Cole had put forward a greater amount as the sales turnover target, namely $2 million per year, which she did not believe was achievable. While even $1.3 million was deemed a high target given the past few years’ sales for the company, the parties agreed that to be the target and settled a salary and bonus structure dealing with the eventuality of Mr Cole achieving the target.

[18] By the end of 2015, Ms Lin started to have concerns about Mr Cole’s capacity to achieve the sales turnover target, as well as over his interactions with other employees. She considered that by the end of September 2015 he had sold only $20,627 worth of product; he did not have any sales plans or strategies about making further sales; and he did not come up with any marketing campaigns or contribute much to internal meetings. She also thought he seemed to have difficulty communicating with both her and Mr Craig. Further, in February 2016 another staff member complained to Ms Lin about him allegedly shouting at her about a minor request to provide a sick leave form, and she was told by another staff member that “Mr Cole threw things at the wall and at the ceiling”. 12

[19] Mr Cole’s witness statement relates difficulties in developing his role, and attributes them to others in the company. In this regard, he notes the following relevant matters; 13

“11. On 30 March 2015, Endless Solar comprised of a warehouse in Sydney with a small showroom and upstairs office/administration area. The Melbourne office consisted of Ms Lin, Mr Craig, and Ms He, all of whom, to my knowledge, had a very limited input in the day-to-day operation. The Melbourne office may have performed accounting and finance tasks, but operationally Endless Solar was all Sydney.

12. The Melbourne office, from a sales and marketing perspective, was a brand new operation. Endless Solar had no client base or brand awareness.

13. Almost immediately after beginning, Ms Lin informed me that two of the three Sydney staff were to be dismissed. At that time one was in charge of IT, and I was to prepare to take control of all IT systems at the point of their dismissal. The key component was about 200GB of company data, which included; hot water systems registered with the CER (the details vital to ongoing business), sales and marketing material, employee data, company history, everything.”

“21. Endless Solar is a small company. Much of the time a single phone call connected all staff (myself and the Renewable Energy Engineer sitting opposite each other on a conference call the Sydney office). While I developed and refined several processes and aspects of how we operated, the reality was that we simply did not need an overly complex system. However, whatever I did I ensured scalability was built in. Should orders begin to flow at a great rate, I had contingency plans for the rapid expansion needed on an operational level.”

“23. Many people in the company had difficulty dealing with the first National Sales Manager. Very soon after starting, other staff has raised their concerns with me, but I gave him the benefit of the doubt. I tried not to engage with either negative forces from inside the team, or with the increasing difficulty of the individual.

24. In terms of sales and marketing, I was on my own. No help came from inside the
company, I had to learn and produce much of my own material.

25. It soon became apparent that this person was actively working against others in the company, in order to make more sales or please Mr Craig. Mr Craig seemed very happy to engage and even foster this negative rivalry. It cost the company sales and much valuable time. In one case, this behavior cost the company a large amount of money when it seemed the sale was given to a rival.”

[20] Between January 2016 and the date on which Mr Cole was informed of the company’s decision to dismiss him, 29 April 2016, Ms Lin held five meetings with him to discuss aspects of his work performance;

• On 13 January 2016, which coincided with the end of the six month period after his engagement as IT and operations manager, and thereby the end of the contractual probationary period, she discussed with Mr Cole his work performance, as well as his work plans for the next six months. She also raised with him her concerns about his working relationship with staff and in particular a salesperson then based in Sydney. Ms Lin’s diary notes, which I accept as both contemporaneously made and broadly accurate, record that she spoke with Mr Cole “to warn him about his performance” and that Mr Cole responded that he had never worked for others before as an employee; that he would try a number of other selling avenues and that he will try to improve; 14

On 25 January 2016 Ms Lin noted to Mr Cole that his probation had ended on the 13th of January 2016 and that she wished to raise her concerns with him about his absences from the workplace over the past six months. She also spoke with him about the impact that absences had on the office and others and inquired of him what his target for sales would be that year, noting there had only been one commercial sale. Ms Lin’s contemporaneous diary note records that Mr Cole replied he had tried very hard and the pair then discussed various tactics for Mr Cole to pursue sales leads. She asked him to develop a detailed sales and marketing plan for the business and discussed his managerial skills. She records that Mr Cole seemed agitated after hearing some of her criticism and that she “warned him that if he cannot improve, the company cannot survive, everyone suffers. We may have to let him go. We cannot afford to keep him if he cannot perform as what he has promised. Chris threatened me that no one can do his job for me: I said I do not believe it”; 15

• On 29 February 2016, having previously received a complaint from an employee that Mr Cole had shouted at her about a sick leave form that she had asked him to sign, 16 Ms Lin met with Mr Cole about the subject. Ms Lin’s diary notes recorded she had;

“…a private chat with Chris Cole.
– To inform about his absence from work & about the company’s policies of filling in forms like everyone in the company.
– To warn him to control his anger. It is not acceptable at work.
– Seek some help for his anger.” 17

• On 17 March 2016 Ms Lin called another meeting with Mr Cole to discuss his performance as well as his absences from work. In the meeting Ms Lin told him she was not impressed by his sales and operations performed so far and that he needed to improve. Her diary notes also record that “I reminded him his position is at risk if he cannot perform”; 18



• On 12 April 2016 Ms Lin met with Mr Cole and also Mr Craig and again expressed concerns about his performance. Her notes record that they indicated they had concerns about his poor organisational, communication and management skills and that he did not take on responsibility. They also expressed concerns about his overall sales performance and state that Mr Cole agreed to improve his performance. Ms Lin’s evidence is that she said to him words to the effect that “if you don’t improve, you might have to find another job”. 19 Ms Lin’s diary notes on the subject also record the following;

“Conclusion: Chris promised to improve himself. next review in July 2016”; 20

• On 26 April 2016 Endless Solar’s Board met and considered Mr Cole’s performance and resolved to terminate his employment; 21



• On 29 April 2016 Ms Lin met with Mr Cole and informed him he was to be dismissed. She also provided to him a letter of termination which was in the following terms;

“Dear Chris,

I advise you that The Board of Endless Solar Corporation Ltd has decided to terminate your position as Operation and IT Manager of Endless Solar Operations Pty Ltd due to your incompetence and poor duty performance in the last ten months.

According to your contract, I am giving you 4 weeks’ notice of your termination. Your final working date will be 27th May 2016. All of your employment entitlement will be paid out on 27th May 2016.

I wish you good luck for your future.

On behalf of the Board

Cathy Lin
Director” 22

[21] Mr Cole agrees that by 29 April 2016 his position had become untenable, with the situation having deteriorated prior to that time;

“By 29 April 2016, the situation at Endless Solar was bad; my position was untenable. Prior to the dismissal I had attempted discussion by highlighting recent progress or a good achievements, but both Ms Lin and Mr Craig were uninterested. even in successful sales. After receiving notice, My Craig would barley (sic) acknowledge me, not even to say good morning. He was unapproachable.” 23

[22] Mr Cole’s reflection about his termination is that it was unjustified and unreasonable; while he had done his best, he had not been given a fair go. Mr Cole believes he was dismissed for other than the stated reasons. His submissions included these contentions;

“I gave Ms Lin, Mr Craig and Endless Solar my very best. After a steep learning curve, I achieved some good sales, and had bigger projects planned. Coupled with the IT successes, I felt I was making progress. However, when told of concerns about my performance, I redoubled my efforts to make progress and please Ms Lin and Mr Craig. The first half of 2016 was a stressful time for me, and I was very sad to finally learn that all of my efforts were pointless. They were always going to be for nothing, as Ms Lin and Mr Craig did not care about my achievements at Endless Solar.

I wondered for some time, what were the real reasons for my dismissal. I felt the situation was great for both me and my employer; I was making sales and almost enough to cover my wages in full, Ms Lin and Mr Craig were getting a full time IT specialist available to both of their businesses, I had a full time IT position in an industry that I loved, and with big growth potential for the future. Endless Solar was only small; an average of 5 employees at any given time, but with an almost 100% turnover rate. In the short time I was there, only the positions of accountant and engineer remained. These positions all Ms Lin and Mr Craig need to apply for and receive Government monies in the form of grants and incentives, for various business activities such as R&D.” 24

[23] Having been dismissed and given one month’s notice of his impending termination of employment, Mr Cole was expected to work out that notice which he proceeded to do. Ms Lin told Mr Cole on Tuesday, 24 May 2016 that he did not need to attend the office for work on his last day of employment, being Friday, 27 May 2016. 25 As a result, Mr Cole’s last day in the office of Endless Solar was to be Thursday, 26 May 2016, even though he would be paid for the following day but not required to attend.

[24] A dispute between Mr Cole, Ms Lin and Mr Craig arose in the course of Thursday, 26 May 2016. Until this point, Endless Solar relies upon the “other dismissal” provisions within the Small Business Fair Dismissal Code as being the basis of the fairness of its dismissal of Mr Cole. That is, the company believes it has satisfied the provisions of the Code allowing a dismissal relating to his work performance.

[25] However, because of the dispute which then arose between the parties, Endless Solar put forward that Mr Cole’s conduct on that day allowed for his summary dismissal and that the facts of the circumstance show that he was summarily dismissed on that day. Mr Cole contends that he was never sent any correspondence regarding an alleged summary dismissal and that the first time he knew of the allegation that he had been summarily dismissed was in reading it in in the form filed by the Respondent in the Commission when it raised the objection that his dismissal was consistent with the Small Business Fair Dismissal Code. 26

[26] Ms Lin’s evidence on the subject of the dispute, which I prefer, is that she noticed Mr Cole on 26 May 2016 with a large box in the company’s office and that later she observed he had removed the box. She had reason to believe that he was using the box to remove things from his workplace and she was concerned that he may be taking company property. At about 2 PM on that day she put on Mr Cole’s desk a “return of company property” form together with a Centrelink Separation Certificate. He was not in the office at that time. Later that day, at about 4:30 PM, she asked Mr Cole whether he had signed the form, with her witness statement then relating the following course of events;

“35 At approximately 4:30 pm, I went back to Mr Cole’s office and asked him whether he had signed the forms. Mr Cole said he refused to sign the ‘return of company property’ form, and when I asked him why, he refused to give me a reason. I asked him what he had taken out of the office earlier that afternoon. He refused to tell me. He was also carrying a medium sized carry bag. I asked him what was in the bag and he refused to tell me.

36 Mr Cole became very emotional and refused to co-operate. I told him that he could not take possessions out of the office without signing the forms. He became further agitated and I instructed one of the employees in the office to call the police, to prevent Mr Cole leaving the office. At this point I was standing in the doorway to Mr Cole’s office. He walked past me out of the office, pushing me hard against the wall as he walked past.

37 I followed Mr Cole to the lift as I was concerned about what property he had taken from the office and I again tried to tell him that he had to tell me what was in the bag he was carrying. Mr Craig had also come out of his office at this point, and was standing near us. The lift did not come, and Mr Cole turned and pushed me again hard against the lift, and ran out of the office via the fire escape.

38 At approximately 5:00 pm, I contacted the police and reported the incident. I reserved my right to press charges against Mr Cole.

39 At approximately 5:15 pm that afternoon, I received a call from Mr Cole and told him that I had reported the incident to police, and that he was not allowed to come back into the office at all because of the violence of this incident, including the following day which was supposed to be the last day of his employment. We changed the locks of the office the next week.” 27

[27] Ms Lin accuses Mr Cole of pushing her on two occasions: when he moved out from his office and she was standing in the doorway, she was pushed hard against the wall; and when he retreated from the lift lobby toward the stair, when she was pushed against the lift. Mr Craig corroborates those allegations. 28 Ms Li did not directly witness these events, but records that she heard Ms Lin say “don’t push me, otherwise I will call the police”, after observing Ms Lin standing in the doorway of Mr Cole’s office. Although she did not see the events when the argument had moved to the lift lobby, she reported hearing “several loud thumps” and Ms Lin say “don’t touch me” and “you can’t leave”.29

[28] Mr Cole disputes that he pushed Ms Lin on the two occasions she records or that she told him that he was not allowed to come back into the office. His evidence about the failure to sign the form provided by Ms Lin was that he wanted to seek advice about it. Mr Cole also disputes that being told he was not allowed to come back into the office amounts to a dismissal because he was not, in any event, going to come back into the office after leaving on Thursday night because he had been told that he did not need to attend for work on Friday, 27 May 2016.

[29] Mr Cole, Ms Lin and Mr Craig were standing near the lift with Mr Cole holding the box and waiting for the lift to come, which failed to do so in a timely manner. Both Ms Lin and Mr Craig describe Ms Lin as having been pushed as Mr Cole retreated from the lift well to the stairs on the other side of the office. 30

[30] Mr Cole’s evidence on the dispute that arose includes that he did not refuse to sign the form; that Ms Lin was becoming verbally abusive and yelling; and that Mr Craig grabbed him by the arms as he tried to leave the office;

“50. At approximately 5pm, Ms Lin approached my desk and enquired whether I had completed the form. I replied that I had not, and requested that I be allowed time for another party to review it before signing. I never refused to sign it. I told Ms Lin of my concerns, which I felt were genuine. I felt certain that at this point I was not legally required to sign the form.

51. Ms Lin advised me that I could not leave the office until the form was signed.

52. I did not refuse to sign the document, and was again clear in my intention to only seek clarification before making a decision.

53. Ms Lin then took the form from me and would not let me take a copy for clarification. Ms Lin became verbally abusive, she was yelling again asserting that I had to sign the form, and that I could not leave the office until this is done.

54. I was concerned for my safety and thought it would be best for me to leave the situation.

55. I had a bag in my hand containing a farewell gift for a colleague, who had become a friend during my employment. I was unable to say good bye properly, and just handed them the bag. I calmly explained to Ms Lin that I intended to leave the office.

56. I started to walk to the elevator, but only got as far as the reception area. Ms Lin stood blocking the exit to the lift lobby, where she continued to yell that I wasn’t leaving without signing the form. It was my intention to leave as quickly as possible only to defuse the situation.

57. Ms Lin shouted ‘call the police’ several times and grabbed me by the arms. I just wanted to leave, so I pushed through the door and called the elevator.

58. Mr Craig arrived at this point and when I attempted to enter the elevator, he grabbed me hard on both sides of my arms. I shook off Mr Craigs’ hold and ran back through the office to the fire escape stairs. Nine flights of stairs was my only way out of the building.” 31

[31] The evidence of each of the Respondent’s witnesses, which is accepted and preferred by me to that of Mr Cole’s, is that following Mr Cole’s departure from the office a call was made to report the incident to the police. Ms Lin’s evidence is that she spoke to a telephone operator and communicated to them her version of events. The police returned her call the same day, however because she had not realised they had returned the call at the time, she did not actually speak to a police officer until the following day. 32

[32] Following the initial report of the matter to the police, Ms Lin had a further telephone call with Mr Cole, in which she told him that she had reported the incident to the police and that he was not allowed to come back into the office at all (with her evidence on the subject reported above). Noticeably, Ms Lin’s witness statement, which is consistent with her oral evidence, does not say that she said to him he was dismissed with immediate effect. The high point of the communication is that she told him “he was not allowed to come back into the office at all”. 33

[33] Mr Cole’s evidence on the subject of the further phone call includes that he “called Ms Lin with the intention of talking about what had happened, and how we could move forward. We had a very short conversation during which Ms Lin said words to the effect of ‘you must sign the form’ and hung up.” 34

LEGISLATION

[34] The legislative provisions which are relevant to this matter are set out in s.388 (The Small Business Fair Dismissal Code) and s.387 (Criteria for considering harshness, etc) of the Act. The first consideration in this matter surrounds whether Mr Cole’s dismissal was consistent with the Small Business Fair Dismissal Code. If it was, then his application fails; if it was not consistent with the Code, the Commission must necessarily turn to the provisions of s.387.

[35] Section 388 of the Act provides the following;

388 The Small Business Fair Dismissal Code

(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.

(2) A person’s dismissal was consistent with the Small Business Fair Dismissal Code if:

(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and

(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.

[36] So far as is relevant, the Code provides the following;

Summary dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Procedural matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.

[37] If there is a finding that a dismissal is not consistent with the Code, then the Commission must have regard to the criteria set out within s.387 of the Act, which outlines the considerations for the determination of whether a dismissal was unfair. Section 387 is in the following terms;

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.

CONSIDERATION

[38] The Respondent relies upon both limbs of the Code being complied with, namely the “summary dismissal” and “other dismissal” parts of the Code.

Whether a “small business”?

[39] As outlined above, the Commission has already determined that the Respondent is a small business employer within the meaning of the Act.

Consistency with the Code – “summary dismissal”

[40] The application of the Code with respect to summary dismissals was considered by the Full Bench in Ryman v Thrash Pty Ltd, where it was held that the reference to “serious misconduct”, in relation to the Code’s reference to conduct being sufficiently serious to justify immediate dismissal, is to be read as bearing the same meaning in reg.1.07 of the Fair Work Regulations 2009 (the Regulations). 35 The Full Bench expounded as follows;

“[38] We therefore consider that the “Summary dismissal” section of the Code applies to dismissals without notice on the ground of serious misconduct as defined in reg.1.07.

[39] To be clear, nothing stated above is to be taken as suggesting that in relation to such a dismissal it is necessary for the Commission to be satisfied that the serious misconduct which is the basis for the dismissal actually occurred in order for the dismissal not to be unfair. As was explained in Pinawin T/A RoseVi.Hair.Face.Body v Domingo:

“[29] … There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.”

[40] Whether the employer had “reasonable grounds” for the relevant belief is of course to be determined objectively.

[41] In summary, drawing on the conclusions stated above and the ratio in Pinawin, we consider that the “Summary dismissal” section of the Code operates in the following way:

(1) If a small business employer has dismissed an employee without notice - that is, with immediate effect - on the ground that the employee has committed serious misconduct that falls within the definition in reg.1.07, then it is necessary for the Commission to consider whether the dismissal was consistent with the “Summary dismissal” section of the Code. All other types of dismissals by small business employers are to be considered under the “Other dismissal” section of the Code.

(2) In assessing whether the “Summary dismissal” section of the Code was complied with, it is necessary to determine first whether the employer genuinely held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal, and second whether the employer’s belief was, objectively speaking, based on reasonable grounds. Whether the employer has carried out a reasonable investigation into the matter will be relevant to the second element.” 36 (reference omitted)

[41] The Full Bench’s decision in Pinawin related to concerns about the impact of an employee’s drug-taking on the business premises. In relation to the absence of an investigation, the Full Bench concluded;

“Normally in order to hold a belief on reasonable grounds it will be necessary to have a discussion with the employee about the perceived serious misconduct and pay regard to the explanations and views given by the employee. We are concerned in this case that no discussions took place about the implications of Mr Domingo’s conduct for his future employment. However this is a very unusual case. The employer was very small. The owners knew Mr Domingo well. They directly observed his behaviour. They believed that he had made lifestyle choices that involved drug-taking and this directly related to his capacity to perform his work. His work involved close personal dealings with clients. At the time they made their decision, Mr Domingo was hospitalised. They were conscientious in considering the grounds for summary dismissal in regulatory material available on the internet. In these unusual circumstances we are of the view that the employer, when considering Mr Domingo’s recent erratic and unusual behaviour, formed the belief that Mr Domingo had engaged in conduct that justified immediate dismissal on reasonable grounds.” 37

[42] In considering whether Mr Cole’s dismissal was consistent with the Code, with respect to the “summary dismissal” limb of the Code, it is appropriate to utilize the principles in Ryman v Thrash regarding whether the Respondent had “reasonable grounds” for its belief that Mr Cole’s conduct was sufficiently serious to justify immediate dismissal. 38 Essentially the question will be to consider;

• whether the Respondent genuinely held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal; and



• whether that belief was, objectively speaking, based on reasonable grounds, and relatedly whether a “reasonable investigation into the matter” has been carried out.

Genuine belief

[43] The first consideration is whether the Respondent “genuinely held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal”.

[44] The evidence of Ms Lin allows a finding that she believed Mr Cole to have committed an act of serious misconduct when he pushed her on two occasions in the altercation that took place on Thursday, 26 May 2016. The first element of the test for assessment of whether the “summary dismissal” section of the code has been complied with, as identified by the Full Bench of the Commission in Pinawin and confirmed in Ryman v Thrash, is thereby satisfied.

Whether belief based on reasonable grounds

[45] The second consideration is whether the Respondent’s belief “was, objectively speaking, based on reasonable grounds”.

[46] The Full Bench of the Commission has held that the reference to “serious misconduct” bears the same meaning for these purposes as that provided in reg.1.07 of the Regulations, which provides;

1.07 Meaning of serious misconduct

(1) For the definition of serious misconduct in section 12 of the Act, serious misconduct has its ordinary meaning.

(2) For subregulation (1), conduct that is serious misconduct includes both of the following:

(a) wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;

(b) conduct that causes serious and imminent risk to:

(i) the health or safety of a person; or

(ii) the reputation, viability or profitability of the employer’s business.

(3) For subregulation (1), conduct that is serious misconduct includes each of the following:

(a) the employee, in the course of the employee’s employment, engaging in:

(i) theft; or

(ii) fraud; or

(iii) assault;

(b) the employee being intoxicated at work;

(c) the employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment.

(4) Subregulation (3) does not apply if the employee is able to show that, in the circumstances, the conduct engaged in by the employee was not conduct that made employment in the period of notice unreasonable.

(5) For paragraph (3)(b), an employee is taken to be intoxicated if the employee’s faculties are, by reason of the employee being under the influence of intoxicating liquor or a drug (except a drug administered by, or taken in accordance with the directions of, a person lawfully authorised to administer the drug), so impaired that the employee is unfit to be entrusted with the employee’s duties or with any duty that the employee may be called upon to perform.

[47] In this case the belief held by the employer was that two occasions of physical action by Mr Cole against the company director, Ms Lin, were sufficient to make the employment relationship from that point forward untenable since Mr Cole’s actions were inconsistent with the continuation of the employment contract. The two occasions alleged by the Respondent were when Mr Cole moved out from his office and Ms Lin was standing in the office doorway, he pushed Ms Lin hard against the wall, and then again when he retreated from the lift lobby toward the stair, when he is alleged to have pushed Ms Lin against the lift.

[48] Having heard the evidence of Ms Lin, Mr Craig and Mr Cole on the subject of the altercation that took place on 26 May 2016 shortly before 5 PM, and taking into account the witness statement of Ms Li, I am satisfied that Mr Cole pushed Ms Lin out of the way as he left his office, and again when he wanted to move from the lift lobby to a stairwell. I am satisfied that each event was resisted by Ms Lin and was not a retaliation by Mr Cole to a physical action by Ms Lin.

[49] In the first instance, Ms Lin was in the doorway to Mr Cole’s office and he wanted to leave. It is not said that she was blocking the entrance and that he could not leave without moving her aside; neither is it said that the only way Mr Cole could leave was to squeeze past her, unavoidably making contact with her. Instead, the evidence is that Mr Cole walked past her and pushed her hard against the wall as he walked past. 39 In the second instance, Mr Cole, Ms Lin and Mr Craig were standing near the lift with Mr Cole holding the box and waiting for the lift to come, which failed to do so in a timely manner. Both Ms Lin and Mr Craig describe Ms Lin as having been pushed “hard against the wall”40 as Mr Cole retreated from the lift well to the stairs on the other side of the office.

[50] On each occasion both Ms Lin and Mr Cole had been within the other’s personal space and the argument that had ensued was unpleasant and uncomfortable for each. The evidence allows a finding that each needs to take some responsibility for what had occurred; there appears to have been some, relatively low, level of belligerence by each towards the other. They were both arguing, and loudly enough for Ms Li to hear. Ms Lin could not understand why Mr Cole would not sign the forms and was concerned about him taking valuable property from the premises, not that she actually knew that he had any such property in his possession at the time. Mr Cole could not understand why Ms Lin was asking him about a form when, so far as he was concerned, he had nothing to explain.

[51] It seems more likely than not on that occasion that Mr Cole simply wanted to leave, and acted to move Ms Lin out of the way when she stood in the doorway. However, there is no evidence that he needed to push her in order to leave. On the second occasion when the lift did not come he appears to have panicked and barged through the people who were in front of him in order to get to the stairs. In the process he pushed Ms Lin. While that is obviously unacceptable, it appears unlikely that he intended to do more than move her out of the way. On each occasion, there was no retaliation by Ms Lin and no further physical action on Mr Cole’s part.

[52] It could be posited that Mr Cole’s pushes of Ms Lin on each occasion are likely to have been acts of frustration on his part, as well as an endeavour to extricate himself from what had, by that point, become argumentative and unpleasant circumstances. The descriptions given by the witnesses is that each was in relative proximity to each other with each likely being within what might be described as the “personal space” of the other. Ms Lin’s evidence includes that Mr Cole was very emotional when she spoke with him about his failure to sign the “return of company property” form and that after doing so he became further agitated. I accept that he was agitated and in some level of distress about what was happening around him. However, none of that excuses what happened. Even if he was frustrated, the overall circumstance must lead objectively to a finding by me that what he did, on two occasions, was wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment.

[53] While it is the case that the question of whether the employer has carried out a reasonable investigation into the matter will be relevant to consideration of whether the employer’s belief is reasonably founded, the absence of an investigation and the denial of procedural fairness which that may amount to may be mitigated in a small business by the fact that the decision-makers are witnesses to the conduct complained of, with the result that an investigation of the matter was not likely to advance their knowledge of what occurred. 41 In this matter, the overall circumstances, in which the employee’s conduct was acted out in front of the decision makers, Ms Lin and Mr Craig, do not require there to have been an investigation into what occurred.

[54] As a result I find there were reasonable grounds for Endless Solar to hold the belief that Mr Cole’s conduct was sufficiently serious to justify immediate dismissal.

Consistency with the Code – “other dismissal”

[55] I also find that Mr Cole’s dismissal was consistent with the Small Business Fair Dismissal Code in respect of the “other dismissal” category of the code.

[56] There is ample evidence to the effect that Mr Cole was given a reason as to why he was at risk of being dismissed and that such reason was a valid reason based upon Mr Cole’s conduct or capacity to do the job. Consistent with that finding I also find that Mr Cole was warned verbally on several occasions that he risked being dismissed if there was no improvement. I also find that he was provided with an opportunity to respond to the warnings and was given a reasonable chance to rectify the problems identified to him.

[57] In this regard, I accept the Respondent’s evidence to the effect that the period of Mr Cole’s full-time employment with Endless Solar involved a contractual commitment by Mr Cole to the company that he would be responsible for an annual sales turnover target for the financial year 2016 of $1.3 million. Mr Cole’s evidence to the effect that this objective was not his alone and was instead shared by anyone else responsible for sales within the company is not only disingenuous and self-serving, but ultimately one that if it was true would still not explain his lack of sales performance. There is no question that, through his email to Ms Lin dated 25 June 2015 he was touting for employment in a sales role and that he was putting forward, very strongly, the proposition that his sales credentials were not only extensive but ultimately an answer to the malaise the company was going through at the time. In retrospect he was plainly embellishing his sales credentials. Even Ms Lin thought his first bid for a sales target of $2 million per year was too ambitious, which is why they settled upon a target of $1.3 million.

[58] There is nothing within the documentation available to the Commission or indeed within the evidence that I have accepted that would lead to the conclusion that the sales target was to be shared amongst everyone with selling responsibility. To the contrary, the contract that was drawn up between the parties, entitled “Details of Employment Offer and Letter of Agreement” makes it clear that there was to be a bonus payable to Mr Cole “according to budget agreed by both you and the board upon your starting date” and the workings attached to the contract show clearly that the bonus to be paid to Mr Cole alone, and not to others, was to be calculated upon the overall sales target. It was explicitly set out within the Details of Employment Offer that if sales of $1.3 million was achieved a bonus of 1.4% would be paid, with it being stated;

• within the Details of Employment Offer;

“Your remuneration package is apportioned as follows:

1. Base Salary

$70,000 per annum, plus Statutory Superannuation contribution payments at the required minimum rate set by the Superannuation Guarantee Scheme (and in accordance with the Clause below entitled “Superannuation”).

2. Bonus

Bonus per quarter will be awarded to you according to budget agreed by both you and the Board upon your starting date. The bonus for the previous quarter will be paid in the first month of the following quarter. The Bonus for 2016 financial year is attached to this letter. Future bonus will be negotiated and agreed by both you and the Board in July every year during your employment.” 42

• within an attachment to the Details of Employment Offer; as offered by Ms Lin and accepted by Mr Cole;

“I would like to put the following as the base for your sales bonus:

Annual Sales Turnover Target for Financial Year 2016: $1,300,000
Sales bonus: 1.54% ($1,300,000 x 1.54% = $20,020)

ESO will pay you the bonus every quarter:

Sales of that quarter x 1.54% = sales bonuse e.g $325,000 x 1.54% = $5,005 ($1,300,000 /4 = $325,000)

If the total sales for the year is over $1,300,000 by the 30 June 2016, the bonus you receive should be over $20,000.

If the total sales for the year is less than $1,300,000 by the 30 June 2016, the bonus you receive should be less than $20,000.” 43

[59] The evidence shows that the company is a small one. At the time Mr Cole was employed there were only three employees in addition to Ms Lin, Mr Craig and another director. There was a salesperson engaged in the Sydney office who left during the time of Mr Cole’s employment and was later replaced. If the argument that Mr Cole puts forward that the sales target of $1.3 million was to be shared amongst all people with selling responsibility then his own performance against that metric was still lacking. The evidence provided by Ms Lin is that Mr Cole’s sales performance was still minuscule against her expectations. Mr Cole argues that the evidence provided by the Respondent from its general ledger does not accurately record sales in which he had some role in achieving and that some or all of the disputed sale should be attributed to his own performance. Ms Lin’s evidence is that Mr Cole was directly responsible for sales of just $21,641 between July 2015 and April 2016. 44 If Mr Cole’s disputed sales are included, that total would rise to $55,054. If all sales for the company for the year were attributed to Mr Cole, the total for consideration is $192,437. Irrespective of any of these methods of assessment, the total is a very long way from the sales target of $1.3 million. On the least generous assessment, and taking into account that he was notified of his dismissal near to 10 months of completion of the financial year (thereby imputing a year to date sales objective of $1.08 million) Mr Cole had achieved just 2% of his annual sales target by the end of April 2016; or, on the most generous assessment, only 17.8%.

[60] At the time that she first spoke with Mr Cole about his work performance in January 2016, Ms Lin held a valid reason for doing so. By 13 January 2016 she plainly believed, and was reasonably entitled to do so, that Mr Cole’s sales performance was not impressive and that he was unduly absent from the workplace as well as having poor working relationships with other staff, in particular the salesperson based in Sydney. Even though that date coincided with the end of the contractual probation period, Ms Lin was prepared to let the employment continue but counselled Mr Cole that his performance needed to improve. By 25 January 2016, being the date of the next conversation between Ms Lin and Mr Cole, Ms Lin’s attitude to Mr Cole had hardened and he was told unambiguously that he needed to improve and that the consequence of him not performing to the agreed level was that the company could not afford to keep him. In the same conversation Ms Lin discussed with Mr Cole sales tactics that he could use to improve his performance.

[61] On 29 February 2016 Ms Lin counselled Mr Cole about an outburst at work towards another employee. She was entitled to draw that to his attention and to expect a correction in his behaviour. She reiterated those concerns in unambiguous terms to Mr Cole on 17 March 2016; the company was not impressed with his sales and operational performance so far; he needed to improve; his position was at risk if he did not perform. On 12 April 2016 Ms Lin and Mr Craig met again with Mr Cole. The company’s concerns were again raised with Mr Cole in explicit terms, with Mr Cole agreeing to improve his performance and Ms Lin having said words to him to the effect that “if you do not improve, you might have to find another job”.

[62] The combination of those discussions with Mr Cole is that there is no question Endless Solar presented to him its concerns together with an indication of the consequences for lack of remediation. The company also gave Mr Cole opportunities for him to provide a response and he did so within the course of the meetings.

[63] In hindsight there is likely a disconnect between the company’s expectations about the dominant purpose of the job and what Mr Cole thought it should be. As he presented the case to the Commission, it would appear that Mr Cole thought the dominant role was as an IT manager with a lesser role of selling the company’s product. However, viewing the purpose of the position through that lens is not consistent either with the negotiation that took place between Mr Cole, at his initiative, and Ms Lin at the time the position was developed and offered to him or with how the company saw the job and its attendant requirements once he was actually in the position.

[64] By the time Endless Solar decided to dismiss Mr Cole in its board meeting on 26 April 2016, it had formed the view that his performance was so lacking and unlikely to improve that separation needed to occur. By that time Ms Lin had reasonably and cogently put to Mr Cole her views about his performance to date as well as her expectations about his performance into the future. Having discussed those matters with Mr Cole she allowed him an opportunity to put forward his response; she discussed with him alternative approaches that he could use to selling; and she discussed with him the consequences of a lack of change.

[65] For all those reasons I consider that Mr Cole’s dismissal was consistent with the “other dismissal” part of the Small Business Fair Dismissal Code.

[66] Having found that Mr Cole’s dismissal was consistent with both parts of the Code, it is unnecessary for me to consider any other aspect of this matter, and I must also dismiss his application for unfair dismissal and an order to that effect will be issued by me.

COMMISSIONER

Appearances:

Ms N Dawson with Mr C Cole, on his own behalf.

Mr A M Bell,of Counsel, for the Respondent.

Hearing details:

2016.

Melbourne:

14, 15 March.

 1   [2016] FWC 6663.

 2   [2016] FWCFB 8130.

 3   Exhibit R3, Respondent’s Outline of Submissions (Jurisdiction), [9].

 4 Exhibit R1, Witness Statement of Cathy Lin, [8]-[9].

 5 Ibid [6].

 6 Ibid [10].

 7   Exhibit A1, Applicant’s Outline of Arguments: Merits, 12–13.

 8 Exhibit A4, Statement of Evidence of Christopher Cole, [18]–[22].

 9   Ibid [29]–[32]

 10   Exhibit R1Attachment CL-1.

 11   Exhibit R2, Supplementary Witness Statement of Cathy Lin, Attachment CL-9.

 12   Exhibit R1 [13]–[18].

 13   Exhibit A4 [11]-[13], [21], [23]-[25].

 14   Exhibit R2 Attachment CL-12.

 15   Ibid Attachment CL-13.

 16 Exhibit R1 [18]; Exhibit R2 [24].

 17   Exhibit R2 Attachment CL–14.

 18   Ibid Attachment CL–15.

 19 Exhibit R1 [26].

 20   Ibid Attachment CL-6.

 21 Ibid [30].

 22   Ibid Attachment CL-8.

 23   Exhibit A1 12.

 24   Ibid 13.

 25 Exhibit R1 [32].

 26   Exhibit A2, Applicant’s Outline of Arguments: Objections, [28].

 27   Exhibit R1 [35]-[39].

 28   Exhibit R6, Witness Statement of David Craig, [28]–[ 29].

 29 Exhibit R5, Witness Statement of Ivy Li, [9]–[10].

 30 Exhibit R1 [37]; Exhibit R6 [29].

 31   Exhibit A4 [50]-[58].

 32   Exhibit R2 [30]–[32].

 33 Exhibit R1 [39].

 34   Exhibit A4 [60]

 35   [2015] FWCFB 5264 [37].

 36   Ibid [38]–[41], with reference to Pinawin[2012] FWAFB 1359, (2012) 219 IR 128.

 37   Pinawin v Domingo[2012] FWAFB 1359, (2012) 219 IR 128, at [38].

 38 2015 FWCFB 5264 [41].

 39 Exhibit R1 [36].

 40 Exhibit R1 [37]; Exhibit R6 [28].

 41   Ryman v Thrash[2015] FWCFB 5264 [55].

 42   Exhibit R1 Attachment CL-1.

 43   Ibid Attachment CL-1.

 44 Ibid [29].

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