Colin Smith v Scientific Pest Management (Australia Pacific) Pty Ltd
[2013] FWC 4767
•22 JULY 2013
[2013] FWC 4767 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Colin Smith
v
Scientific Pest Management (Australia Pacific) Pty Ltd
(U2013/5532)
COMMISSIONER WILSON | MELBOURNE, 22 JULY 2013 |
Application for Unfair Dismissal Remedy.
[1] Colin Smith commenced employment with Scientific Pest Management (Australia/Pacific) Pty Ltd (SPM) in Darwin on 10th August 2009. His position with SPM was Darwin Branch Manager, which was a small branch with responsibility for the services offered by the company throughout the Northern Territory. He was dismissed from employment by SPM on 4 December 2012, and finished with the company on the same day. At the time of the hearing he was 62 years of age. 1
[2] Mr Smith says that his dismissal was unfair, because there was not a valid reason for the dismissal, and because he had not been aware of concerns the company had about his performance, or given an opportunity to improve.
[3] In contrast, the company argues that Mr Smith had been given ample time to prove himself as Branch Manager and to ensure the Darwin Branch could sustain itself and the number of staff it employed. SPM’s Managing Director, Chris Jones, argues that Mr Smith understood what was required of him by the company, but that he had been unable to achieve what was wanted.
[4] Both Mr Smith and Mr Jones represented themselves in these proceedings.
LEGISLATION
[5] The legislative provisions which are relevant to this matter are set out in s.387 of the Fair Work Act 2009 (the Act), which is as follows;
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.
BACKGROUND
[6] Scientific Pest Management (Australia/Pacific) Pty Ltd is a national pest control firm; its Managing Director is Chris Jones, who was part of a partnership that established the business in 1990. 2 The business is now run by a company owned by Mr Jones and his wife3 and at the time of the hearing it had 12 branches throughout Australia, having reduced from 14 branches about 12 months previously.4 At the time of Mr Smith’s dismissal, the company had approximately 50 to 55 employees in total.5
[7] Colin Smith responded to a newspaper advertisement for the position of Branch Manager NT in early July 2009. On 7 July 2009, Mr Smith was offered employment with SPM by Mario Said, State Manager, WA, SA & NT. 6 The offer included the following salary arrangements;
“Base salary – $65,000.00 per annum gross, Paid weekly ($1250.00 gross/week).
Superannuation – 9% compulsory
All of that statuary (sic) entitlements such – Four weeks annual leave, Sick leave, 17.5% holiday loading and any others statuary (sic) entitlements.
Fully maintained company car with agreed (sic) level for personal use.
Company mobile phone.” 7
[8] Mr Smith accepted the offer on 8 July 2009 and confirmed he would tender his resignation from his current position and commence with SPM on 10 August 2009. 8
[9] When he commenced employment, the NT Branch had two other employees. Mr Smith described their role, his role and that of the Darwin branch in the context of the Northern Territory in the following way;
“THE COMMISSIONER: Tell me about the organisation at that time. How many staff did it have? What work was it doing? Who were its clients?
MR SMITH: It had two full time technicians.
THE COMMISSIONER: What was their role?
MR SMITH: Field work, pest control work entirely. They had no – they weren't actively seeking business. They were simply servicing the existing clients and the main two clients that the company had in Darwin - they had the defence contract for all the defence bases throughout the Northern Territory and the Kimberley bases and there was also work on Grout Island (sic) 9 with a service company called (indistinct) – sorry, ESS who were looking after the mine for BHP Billiton.
THE COMMISSIONER: So what was your role with the company at that time?
MR SMITH: I was employed as branch manager to control those contracts, as I say, the day to day running of the branch, supervising the technicians and obviously to seek further business.
THE COMMISSIONER: So the day to day running of the branch – what did that involve?
MR SMITH: It involved scheduling the work that needed to be done throughout, say, a given month. It meant going through the database looking for work that was on the schedule, putting it in on appropriate days for the work to be done, making sure the technicians were scheduled out on the schedules for the technicians and they were out doing the work, reporting back, doing the invoicing which I would then process and, yes, amongst, you know, anything else that needed to be done for the branch, you know, like, obviously petty cash and all the mailing requirements, statements. That's basically it, just office administration.
THE COMMISSIONER: Were there other branches of Scientific Pest Management in the Northern Territory?
MR SMITH: No, there wasn't.” 10
[10] There had not been a Branch Manager in the NT Branch immediately before the appointment of Mr Smith, and instead the branch’s business was run out of the Perth office. 11
[11] Mr Smith’s background included having worked for the Northern Territory Government for approximately 2 years before SPM. 12 Prior to that he had been a manager for another pest control business in Darwin. During that employment he had not worked “on the tools”, however he had obtained a pest control certificate.13
[12] Mr Smith’s evidence is that (at the time he was employed) he received “[n]o job description or expectations outlined”. 14 Notwithstanding this, Mr Smith described in evidence his duties as Branch Manager NT as including the matters indicated above, as well as the following;
“MR SMITH: They were looking for a branch manager to obviously control their business here in Darwin. As there was no office staff here, it was an admin role for the running of the branch as well as – not so much wages, but as far as scheduling work and day to day running of the office as well as control of the technicians.” 15
[13] Mr Jones described the duties of a Branch Manager, and that of Mr Smith, more generally, and in the context of the company wanting to build up its NT business;
“... The objective of putting a manager on was to try and take the branch to the next level because prior to that the branch was quite profitable, not having to bear the overhead burden of a manager or office. So we rented an office space and appointed a manager on the basis of taking that branch to the next level so that it would grown (sic) and become a more successful branch.” 16
[14] Mr Smith was appointed by, and reported to the State Manager, WA, SA & NT. Mr Smith’s evidence is that contact with any managers of the company was infrequent. He did not participate in regular management meetings and management and financial reports sometimes arrived late 17. Mr Jones submitted the following background to his decision making and how he viewed Mr Smith’s branch;
“... 12 to 18 months after Col had been there I started to become more involved with his, I guess, management of the Darwin branch. One of the things conveyed to Col during that time which was a well-known, I guess, level of profitability, for want of a better way of putting it, for a pest control branch in the pest control industry is that if you don't have at least sales to support three full time technicians and you've got a fully unsupported manager, then that branch is not profitable. I believe I made that clear to Col during that time and that was always the target, to make the branch profitable, because until such time the branch wasn't going to be making money.” 18
[15] Mr Jones said he formed this view of the Darwin branch in mid-2012, connecting it with business decisions he was making about other branches;
“In the time Col was there for some periods it [the Darwin branch] did make small amounts of profit. As we progressed into the latter part of – through 2012 and onwards it became unprofitable. Col has already pointed out the problems he had with obtaining technicians. I'd just like to say there that that's just not a Darwin localised issue. Our whole industry, as I believe many trades in the industries, is difficult to get good people. We have managers in branches throughout Australia and Darwin was really the only one where we had a protracted non-success rate. There again poor English, but that's if I can convey it that way. Colin, as a result, engaged a subcontractor to solve that problem as we were going through a lot of re organisation of our business throughout Australia and one of the branches that was flagged for attention was Darwin because it simply wasn't making money and when we delved into the structure and looked at the viability of having a subcontractor versus an employee, it clearly didn't stack up. 19
[16] From September 2012, Mr Smith received two significant visits from Mr Glenn Brown, who was the company’s National Sales and Marketing Manager.
[17] The first visit was on 24 September 2012, when Mr Brown discussed with Mr Smith, a “productivity report”. 20 According to Mr Smith the report was a breakdown of the subcontractors time and payments.21 Mr Smith asked some questions which questioned the accuracy of the report and he understood Mr Brown to undertake to check the information it contained.22
[18] Mr Brown was not asked to give evidence in these proceedings, however Mr Jones says that he asked Mr Brown to go to Darwin for the discussion. 23 In this regard, he saw the following objectives for the meeting between Mr Brown and Mr Smith;
“THE COMMISSIONER: What motivated you to make that request?
MR JONES: It was simply to start the wheels turning in terms of making – at that point the objective was to fix what was broken in the branch that Col was running. He had problems getting work done. He was starting to have difficulties with the subcontractor he had because he was becoming a little bit pedantic about what he would do and what he wouldn't do. So we saw as a high priority the first thing was to get rid of the subcontractor and find a good long term employee. That was the initial motivation and to address that fundamental problem that was in the branch with this existing structure of three people, being Col and the two technicians. I'm leaving Ann out of it at this point as a clerical person.” 24
[19] Following the meeting, Mr Brown sent an email to Mr Smith as follows;
“Hi Col,
Just to recap on my visit over the last couple of days. Priority must be given to the following areas
1. Costs must be monitored and reduced on all work
2. We must ensure that we use mat fully to all jobs that he can fit in
3. Branch sales need to be actively chased increased and monitored for good margin
4. Tool Box meeting need to be held, recorded and details sent to Phil K for action
5. Weekly monthly reports completed fully. If figures not available still send through calls, new business quotes pipeline etc.
6. Use of Agents/Sub contractors only used as required (secondary not main)
7. Productivity report to be updated and sent through to you regularly.
8. Update me/Chris Jones on progress of Mat
Col, as discussed we need to be lean and do any work we can in house.
Kind regards
Glenn Brown
National sales and marketing manager” 25
[20] Mr Smith did not interpret this meeting with Mr Brown as being especially important or one in which he was warned about the future of his employment and I am satisfied that he was not so concerned. In this regard, Mr Smith said the following;
“THE COMMISSIONER: Looking back at it in hindsight, could it have been that he was there to deliver you a message?
MR SMITH: If he was delivering a message, certainly it wasn't clear. I spoke to the – I had a part time office assistant with me who at the time – that I employed who was privy basically to the conversation that we had in the office. I was a little bit at a loss to actually why Mr Brown came. He didn't really have anything – apart from the figures that talked about in relation to (indistinct) he didn't seem to really have any issues at all that he wanted to raise. ...” 26
[21] The evidence of Mr Jones indicates the company was concerned about a number of matters in relation to the operation of the Darwin branch, and in particular Mr Smith was having “problems getting work done” and he “was starting to have difficulties with the subcontractor he had because he was becoming a little bit pedantic about what he would do and what he wouldn’t do” 27 According to Mr Jones, Mr Smith was having difficulties with an employee and with the contractor, (referred to as KD for identification purposes), who was “threatening not to go”28 to the offshore location of an SPM contract.
[22] When Mr Brown reported back to Mr Jones from the September 2012 meeting he confirmed Mr Jones’ views about the business and that a change in the status of subcontractor to a full-time technician was needed. 29 Mr Jones agrees that Mr Brown was not sent to Darwin in September with an instruction to provide a warning to Mr Smith about his performance.30
[23] During October 2012, Mr Smith learned Mr Brown had approached a technician in Darwin regarding working for SPM. 31 He learned this from the father of the person concerned, whom he had been endeavouring to contact as well.32 He consequently called Mr Jones about the matter. Because he was concerned, he made some notes about the phone call in his diary; the reason for making the notes was because he “was merely smelling a rat”. 33The diary note reads;
“..."Spoke to Chris Jones re Glenn's conversation with SS; asked if my role as Darwin manager had changed, that is, why wasn't this discussed with me? Chris said everything was okay and they were looking at putting on another full time tech. I said I hoped they would let me know if they expected something more from me other than what I was doing and he said he would certainly do this if the need arose."” 34 (name omitted)
[24] Mr Smith’s evidence is that around this time he was, in any event, looking for a new employee for the business; 35
“At that point there was enough work to sustain – there was just enough work to sustain a full time – a second full time technician. It would have meant getting rid of KD. Certainly there was extra work for two full time technicians employed. It would've meant getting extra work but one follows the other. I mean, you can't take on extra work without the staff to do it.” 36 (name omitted)
[25] There was a second visit from Mr Brown to Mr Smith in Darwin on 15 November 2012. Mr Brown rang Mr Smith earlier in the week; said he was in Perth and that he was going to drop into Darwin and see Mr Smith on his way back to Brisbane. The meeting was short and the material discussed was brief;
“... This was the trip that surprised me more than ever and mystified me more than ever because he basically came to Darwin. We went out and had a cup of coffee. We spent approximately one hour at the coffee. He spoke about getting rid of the subcontractor, putting on another full time technician and that we needed to do this urgently. He wanted to get rid of the subcontractor straightaway basically is what he was saying and he didn't have the productivity report amended figures that I thought he may have, but he didn't have to justify the decisions that he made. He simply said that's what we should do. ...” 37
[26] Mr Smith thought this meeting would be followed in the near future with a three-way phone conversation between him, Mr Brown and Mr Jones. 38 However, that never took place39 and Mr Smith reports he continued to look for employees for the Darwin business;
“20/11/12 – after receiving no phone calls from either Glenn Brown or the managing director, I proceeded in my attempt to find another technician in line with Glenn Brown’s request. I left messages with a potential candidate did not return my calls.” 40
[27] Between mid-November and early December, work was building up and he asked Mr Jones to help with this; 41 and he had the following exchanges with Mr Jones;
“MR SMITH: I phoned on one particular week and I had – I know it was in that period of time that we were discussing and stressed to Mr Jones that, as I said before, the work was becoming crucial that it be done immediately, that I needed assistance, "Could you please help?" Mr Jones said, "Yes, leave it with me. I'll see what I can do." Almost a week went by and the following week the situation was getting worse. I was ringing around trying to get anyone to Darwin that might be able to help me to assist. I was coming up against a brick wall. I rang Mr Jones back and I said, "What's happening regarding our conversation last week? Have you been able to help me?" He said, "I thought you'd fixed that." I said, "Well, how was I going to do that?"
I said, "I asked for help. I haven't had it." He said, "I thought you were going to contact SS," being MS’s brother who was the person that I was trying to contact and Mr Jones said, "I thought that you were going to contact him," and I said, "Well, I have." I said, "He's not returning my calls, Chris." I said, "He may not be the person that we want after all." I said, "If he can't return calls, you know, it's not a good start." Chris said, "Oh," and agreed there that, you know, we needed to do something and once again, "We'll see what we can do for you." Subsequently the reason - I found out obviously the reason that MS's brother wasn't returning my calls was he'd been obviously offered my position, and what would he talk to me about it? He obviously had that covered with Mr Brown and Mr Jones.” 42 (names omitted)
[28] Mr Smith’s evidence is that prior to 4 December 2012 he did not believe he might be dismissed. 43
[29] On 4 December 2012, Mr Smith received a phone call at approximately 7 AM from Mr Jones, who said that he and Mr Brown were in Darwin. He asked to see Mr Smith as soon as possible at the Rydges hotel near Darwin airport. Mr Smith arrived at the hotel at about 7:30 AM and he met with Mr Jones and Mr Brown in a room behind the reception. Mr Smith recollects he was told by Mr Jones that they had decided to appoint another technician who would take over some of Mr Smith’s role, with the rest of his duties being spread amongst other staff, either at head office or another branch. 44 The evidence of both Mr Jones and Mr Smith is that each understood this to be the end of Mr Smith’s employment with SPM,45 even though precise words of dismissal may not have been used in that meeting.46
[30] The three then went to SPM’s office in Winnellie; Mr Smith collected some personal belongings, arranged for a lift home and then left the premises.
[31] Later the same day Mr Smith went back to the office and returned some uniforms. He asked Mr Jones to meet with him without Mr Brown being present. Such meeting subsequently took place on Thursday, 6 December 2012. In that meeting Mr Smith expressed surprise about what occurred and sought an explanation. He said about Mr Jones that;
“MR SMITH: He was fairly quiet and basically just kept reiterating, you know, that he couldn't keep spending money on Darwin and it wasn't, you know, profitable and this was an effort to try and get it back on track, so to speak.” 47
[32] Mr Smith was not told on either 4 December or 6 December that his dismissal was because of his own performance.
[33] An undated and unsigned letter of termination, containing Mr Jones signature block was received by Mr Smith on Friday, 7 December 2012, 48 which says in part;
“Dear Colin
Termination of your employment
On 4th December 2012 you met with Glenn Brown and me at the Rydges, Darwin. In that meeting, you were advised that we considered that your performance is unsatisfactory and have decided to terminate your employment for the following reasons.
It was the objective when you started with us to get the turnover up to a level that would allow us to employ 3 full-time technicians in Darwin at which point the branch would be able to sustain a full time manager. Unfortunately, this has not been achieved after approximately 3 years with us and the Darwin Branch shows no signs of getting to this critical point leaving us no alternative than to cease to employ you.” 49
[34] Mr Smith’s evidence is that this was the first occasion on which he was told his dismissal had been for performance related reasons.
CONSIDERATION
[35] In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account the legislative factors set out earlier.
(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)
[36] Mr Smith was dismissed from employment with SPM because of concerns by the company about his performance and in particular his ability to develop the market for the company in Darwin and the Northern Territory. Relatedly, the company was critical of Mr Smith about his ability to recruit and retain suitable staff; in this regard, Mr Jones held the view that the recruitment of good new staff would enable SPM’s business development objectives.
[37] The business arrangements of SPM’s Darwin branch were small. Only 4 people worked out of the branch, including Mr Smith (who did not work “on the tools”), an employed technician, a contractor and a part time clerk . Much of the work of the branch, but not all, was obtained through significant national contracts. Mr Smith’s role included supervising staff of the branch; ensuring good relations with the branch’s clients; and significantly, developing new business himself so as to be able to develop the branch to a sustainable level of staff and business.
[38] Mr Jones contended that, at the time Mr Smith was employed, there had been discussions with him about the need to develop the branch to a sustainable level. Notwithstanding this contention, there was no direct evidence provided on what had been said at the time of engagement.
[39] The two visits to Darwin by Mr Glenn Brown, on 24 September and 15 November 2012, were significant, and demonstrate concerns on the part of the company’s central management about the operations of the branch. Mr Smith’s evidence is that management’s contact with him was infrequent and Mr Brown did not visit Darwin regularly.
[40] By September 2012, SPM plainly had concerns about the operation of the branch. Even so, Mr Brown did not articulate the nature of those concerns to Mr Smith; what he should do as a result to improve; or that his job was in jeopardy if an improvement did not occur. Instead, the evidence indicates the meetings between Mr Brown and Mr Smith were brief; discussed matters mainly of a general nature; and did not leave Mr Smith with a strong list of things that had to be done under warning of dismissal if they were not done, or not satisfactorily done.
[41] By 4 December 2012, SPM’s concerns with Mr Smith had developed to the point where the company had formed the view the situation was not going to improve and that Mr Smith had to go. Even so, it was not demonstrated by SPM in these proceedings that there was a valid reason for termination at that point in time.
[42] I find that at 4 December 2012, when SPM dismissed Mr Smith, SPM did not have a valid reason for Mr Smith’s dismissal related to his capacity or conduct.
(b) whether the person was notified of that reason
[43] There was no notification to Mr Smith of a valid reason. While SPM notified Mr Smith of its view that his performance was unsatisfactory, that was not done on 4 December 2012 (the day of termination) or in a subsequent conversation between Mr Smith and Mr Jones on 6 December 2012. Mr Jones was not notified of the company’s reasons for termination until he received a letter from SPM on Friday 7 December 2012.
(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person;
[44] Mr Smith sought an explanation from the company about the reasons for his dismissal in a follow-up meeting he requested that took place on 6 December 2012. He did not receive such an explanation at that time, and did not receive an explanation until a letter of termination was received by him on 7 December 2012. That letter did not give him an opportunity to respond.
(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;
[45] There is no evidence either that Mr Smith was offered an opportunity to have a support person present during these meetings; and also there is no evidence that Mr Smith requested to have a support person present.
(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
[46] Mr Jones submissions are that Mr Smith “should have known” that his performance was less than satisfactory. In particular, Mr Jones relies upon the conversations with Mr Smith at the time of his employment about the need for the branch to become sustainable and also points to the meetings between Mr Smith and Mr Brown in September and November 2012 as being occasions on which Mr Smith would have had reinforced to him the need for performance.
[47] Notwithstanding this, the evidence from Mr Smith is that he was never notified of the concerns held by the company or that they were so significant as to warrant his dismissal.
(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
[48] SPM employs nationally around 50 to 55 people. These staff are in up to 12 locations throughout Australia. Many of these branches are quite small, although the company does have several larger branches and a head office function in suburban Brisbane.
[49] Mr Jones’ evidence is that SPM was founded in 1990 and that it has grown appreciably since then.
[50] While the evidence is that SPM is not a small business employer, within the meaning of the Fair Work Act, SPM has not had until recently the benefit of a human resource manager employed within the company. Mr Jones said that SPM had recently employed a human resource manager, in December 2012; however that person did not have any input into the decision to terminate Mr Smith’s employment.
[51] The size of the employer’s enterprise appears to have impacted upon the decision to terminate Mr Smith’s employment, and the way in which it was implemented, firstly in respect of the absence of regular and formal managerial control of the Darwin branch by the SPM head office; and secondly, in respect of the lack of performance management procedures deployed by Mr Jones and other SPM managers.
(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;
[52] The failures of SPM in relation to Mr Smith’s employment go firstly to the lack of a performance management system by which it could be said he was aware of his performance objectives and progress against them; and secondly to the lack of a properly founded system of warnings about the consequences of repeated poor performance.
[53] While these are basic failings, they could have been corrected through accurate and cogent human resource management advice, but were not.
[54] I find the absence of dedicated human resource management specialists or expertise in the enterprise impacted on the decision making by SPM, firstly as to how to assess Mr Smith’s performance; secondly how to warn him of the consequences of his performance; and thirdly as to its decision to dismiss Mr Smith and how that was communicated to him.
(h) any other matters that the FWC considers relevant.
[55] Mr Smith’s evidence is that although he is licensed as a pest control officer he has never worked “on the tools”, and this was known to the person who employed him in 2009, Mr Jones learned of this limitation relatively late, in mid-2012, which knowledge was connected with learning that Mr Smith had some physical limitations that prevented him from undertaking work “on the tools”. 50
[56] As a result of the foregoing analysis, I find that, the dismissal of Mr Smith from his employment with Scientific Pest Management (Australia/Pacific) Pty Ltd was harsh, unjust and unreasonable.
[57] As a result of making this finding, it is necessary that I consider a suitable remedy.
REMEDY
[58] The sections of the Act dealing with remedy once a finding of unfair dismissal has been made are as follows;
390 When the FWC may order remedy for unfair dismissal
(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:
(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and
(b) the person has been unfairly dismissed (see Division 3).
(2) The FWC may make the order only if the person has made an application under section 394.
(3) The FWC must not order the payment of compensation to the person unless:
(a) the FWC is satisfied that reinstatement of the person is inappropriate; and
(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.
Note: Division 5 deals with procedural matters such as applications for remedies.
391 Remedy—reinstatement etc.
Reinstatement
(1) An order for a person’s reinstatement must be an order that the person’s employer at the time of the dismissal reinstate the person
by:
(a) reappointing the person to the position in which the person was employed immediately before the dismissal; or
(b) appointing the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.
(1A) If:
(a) the position in which the person was employed immediately before the dismissal is no longer a position with the person’s employer at the time of the dismissal; and
(b) that position, or an equivalent position, is a position with an associated entity of the employer;
the order under subsection (1) may be an order to the associated entity to:
(c) appoint the person to the position in which the person was employed immediately before the dismissal; or
(d) appoint the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.
Order to maintain continuity
(2) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to maintain the following:
(a) the continuity of the person’s employment;
(b) the period of the person’s continuous service with the employer, or (if subsection
(1A) applies) the associated entity.
Order to restore lost pay
(3) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to cause the employer to pay to the person an amount for the remuneration lost, or likely to have been lost, by the person because of the dismissal.
(4) In determining an amount for the purposes of an order under subsection (3), the FWC must take into account:
(a) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for reinstatement; and
(b) the amount of any remuneration reasonably likely to be so earned by the person during the period between the making of the order for reinstatement and the actual reinstatement.
392 Remedy—compensation
Compensation
(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.
Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the FWC considers relevant.
Misconduct reduces amount
(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.
Shock, distress etc. disregarded
(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.
Compensation cap
(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:
(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the dismissal.
(6) The amount is the total of the following amounts:
(a) the total amount of remuneration:
(i) received by the person; or
(ii) to which the person was entitled;
(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and
(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.
[59] Pursuant to subsection 390 (3) an order for the payment of compensation to a person must not be made unless the Fair Work Commission “is satisfied that reinstatement of a person is inappropriate” and also that the Commission “considers an order for payment of compensation is appropriate in all the circumstances of the case.”
[60] Mr Smith’s evidence and submissions are that he does not seek reinstatement to his former position 51 and that he readily acknowledges his reinstatement to the Darwin branch would require the displacement of a person who has been employed in his stead. Mr Jones argued similarly, indicating that reinstatement in all the circumstances would not be appropriate.
[61] As a consequence of the foregoing views of the parties I am satisfied that, in all the circumstances of the case, the reinstatement of Mr Smith to his former position is inappropriate. I also consider an order for payment of compensation is appropriate in all the circumstances of the case.
[62] As indicated above, subsection 392 (2) sets out the matters which the Fair Work Commission must take into account in determining an amount of compensation to be paid to a person who has been unfairly dismissed, in lieu of reinstatement. The subsection requires that all of the matters indicated are taken into account.
(a) the effect of the order on the viability of the employer’s enterprise
[63] Mr Jones, for SPM, submitted that the future operations of the Darwin branch of his company depended upon it becoming a sustainable concern, which required there be sufficient staff and turnover through the branch. While this submission was at the branch level, there was no evidence to suggest that there would be a deleterious effect of a compensation order on the viability of the employer’s enterprise.
[64] I find the order I propose will not affect the viability of the employer’s enterprise.
(b) the length of the person’s service with the employer
[65] Mr Smith had worked for SPM for a little over 3 years, having commenced in August 2009 and was dismissed from employment in December 2012. In and of itself, the length of his service with the company was neither very short nor very long.
[66] I find Mr Smith’s length of service with SPM does not require an adjustment to be made to the order I propose.
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed
[67] At the time of his dismissal, Mr Smith was earning an annual salary of $75,000 per year 52 and he was entitled to the use of a “fully maintained company car with a greed (sic) level for personal use.”53 In addition to these items, Mr Smith was entitled to a 9% superannuation contribution paid by the company54, and was entitled to the private use of a mobile phone.55
[68] I have considered the evidence and submissions before me, including Mr Smith’s history with the company; their attempts to raise management concerns with him; the efforts he was taking to respond; and the lack of dedicated human resource management expertise at SPM. As a result, I find that had SPM commenced a proper performance management and warning process, drawing to Mr Smith’s attention what the company perceived as his failings and requiring remediation of those things within a reasonable time, it is likely that he would have been dismissed from employment.
[69] The first tangible evidence of concerns held by the company about Mr Smith’s performance was on 24 September 2012 when Mr Brown traveled to Darwin to meet with Mr Smith. While the evidence indicates that Mr Brown did not on that occasion specifically and unambiguously draw to Mr Smith’s attention the concerns were held by the company in a way envisaged by subsection 387 (e) of the Act, (which tests “whether the person had been warned about that unsatisfactory performance before the dismissal”), such a conversation could legitimately have taken place on the basis of the concerns held by the company about the Darwin branch’s performance at that time. The discussion between Mr Brown and Mr Smith on 24 September 2012 could have served as a first warning about Mr Smith’s performance.
[70] The second tangible evidence of concerns held by the company about Mr Smith’s performance was on 15 November 2012, when Mr Brown again met with Mr Smith in Darwin. This meeting may well have been an opportunity, but was not, for SPM to provide Mr Smith with a final warning about inadequate performance (assuming it had formerly broached the subject as a performance management conversation two months earlier in September).
[71] Following this construct, and taking into account there are slightly over ten weeks between the date of the first conversation with Mr Smith in September 2012 and the date of his termination on 4 December 2012 and also taking into account the relatively narrow range of employment factors complained about by the company, I am of the view that had a proper performance management and warning process been undertaken by the company the remuneration that Mr Smith would have received, or would have been likely to receive, if he had not been dismissed is 8 weeks from the time the process commenced.
[72] I find that had Mr Smith not been dismissed on 4 December 2012 and that instead that date was used to commence a proper performance management and warning process, the remuneration that Mr Smith would have received, or would have been likely to receive, if he had not been dismissed, is 8 weeks.
[73] In accordance with his contract of employment, Mr Smith would have been entitled, during that period, to receive the benefit of the private use of a mobile telephone; the private use of a company provided motor vehicle; and the payment of employer superannuation contributions.
[74] There was no evidence before me about the value of the private use of a mobile telephone, and I find there is not a need to compensate Mr Smith for that element of his contract of employment.
[75] I find, however, it is appropriate and necessary to compensate Mr Smith for the motor vehicle element. Since there is not an agreed value for the private use of the motor vehicle, I need to form a view about the remuneration that he would have received, or would have been likely to receive, if he had not been dismissed, from that element of his contract of employment.
[76] I consider it appropriate to seek out a suitable neutral reference for the running costs of a motor vehicle, and have consulted the RACV’s website on the subject. (The NT Automobile Association website does not disclose publicly available running cost information). In the absence of material before me on this subject, I take into account the RACV's 2013 car owning and operating costs guide 56, which shows total weekly operating costs of $214.54 for a Toyota Camry Atara S, which I take to be close in nature to the vehicle driven by Mr Smith.57 Since the vehicle was used for a mix of business and personal use, and in the absence of material about a suitable percentage for private use, I set a rate of 50% for personal use.
[77] I find that in addition to the 8 weeks remuneration referred to above, at his usual rate of salary, Mr Smith would have received, or would have been likely to receive, a benefit from the private use of the SPM motor vehicle, to be assessed as a payment for 8 weeks of 50% of $214.54.
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal
[78] Mr Smith’s evidence is that he has made many and frequent applications for employment after the date on which he was dismissed. He said he had made as many as 5 applications a week, and that the total might be “well over 100” applications, 58 however, none of the applications had been successful as at the date of the hearing.59
I find that Mr Smith has taken efforts to mitigate the loss he suffered because of his dismissal.
(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation
[79] Mr Smith’s evidence is that he has not had any remuneration from employment or other work during the period between the dismissal and the date of hearing, although he had received some compensation from Centrelink. 60
[80] I find there is no amount of remuneration earned by Mr Smith from employment or other work during the period between the dismissal and the making of the order for compensation
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation
[81] There is no evidence before me in this regard, since at the time of the hearing Mr Smith indicated that he was not employed and there has been no information received by me subsequent to the hearing which would indicate his employment circumstances have changed.
[82] I find the compensation I propose does not need to be adjusted to take account of income Mr Smith might receive between the making of the order for compensation and the actual compensation.
(g) any other matter that the FWC considers relevant.
[83] I am not aware of any other considerations which might be relevant to the order of compensation, and have considered all of the circumstances of the case in determining an appropriate remedy.
CONCLUSION AND ORDERS
[84] After consideration of the foregoing issues, I find that the Applicant was dismissed and that it was unfair within the meaning of the Act.
[85] I find that reinstatement is not an appropriate remedy in this case.
[86] I find that compensation is appropriate.
[87] The approach by the Fair Work Commission in these matters, and which I follow here, is to estimate the remuneration the employee would have received if they had not been dismissed (usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment); deduct any remuneration earned by the employee since their dismissal until the end of the anticipated period of employment; deduct an amount for contingencies; consider the impact of taxation and adjust the figure accordingly; and assess the figure against the compensation cap set by s.392(5). 61
[88] In relation to the matter of contingencies, I find there are none that ought be taken into account in this matter.
[89] Having regard to the considerations established by s.392 of the Act, and the criteria established by the FWC and I find that compensation should comprise a payment by the respondent to the applicant calculated as follows:
Assessment of remuneration lost: | 8 weeks projected lost income at the rate of $1,442.31 per week | $11,538.48 |
Employer superannuation contribution on above | 9% | $1,038.46 |
Compensation for loss of private use of motor vehicle: | 8 weeks at the rate of 50% of $214.54 | $858.16 |
LESS: | Monies earned since dismissal | $0 |
LESS: | Contingencies | $0 |
TOTAL | $13,435.10 |
[90] The above amount does not exceed the compensation cap applying at the time of dismissal.
[91] The compensation payment of $13,435.10 will be taxed by the employer according to law, and is to be made within 14 days of this decision.
[92] An order to the above effect has been issued in conjunction with this decision.
COMMISSIONER
Appearances:
Mr C. Smith on his own behalf
Mr C. Jones and Mr. C. Courtney for Scientific Pest Management (Australia Pacific) Pty Ltd
Hearing details:
2013.
Melbourne:
June, 3
1 Transcript, PN535
2 Transcript, PN 579
3 Transcript, PN 581
4 Transcript, PN 556
5 Transcript, PN 562
6 Colin Smith, witness statement, paragraph 2
7 Colin Smith, witness statement, Attachment A
8 ibid, attachment B
9 A reference to Groote Eylandt
10 Transcript, PN 231 – PN 240
11 Transcript, PN 595
12 Transcript, PN 210
13 Transcript, PN 216 and PN 218
14 Colin Smith, witness statement, paragraph 2
15 Transcript, PN 226
16 Transcript, PN 593
17 Transcript, PN 758, 761, 763, 766
18 Transcript, PN 541
19 Transcript, PN 542
20 Transcript, PN 255
21 Transcript, PN 261
22 Transcript, PN 265
23 Transcript, PN 623
24 Transcript, PN 624 and PN 625
25 Colin Smith, witness statement, attachment C
26 Transcript, PN 278 and PN 279
27 Transcript PN 625
28 Transcript, PN 627
29 Transcript, PN 641
30 Transcript, PN 645
31 Colin Smith, witness statement, paragraph 14
32 Transcript, PN 309
33 Transcript, PN 324
34 Transcript, PN 320
35 Transcript, PN 332
36 Transcript, PN 338
37 Transcript, PN 358
38 ibid
39 Transcript, PN374
40 Colin Smith, witness statement, paragraph 16
41 Transcript, PN 388
42 Transcript, PN 396 and 397
43 Transcript, PN 407
44 Transcript, PN 435
45 Transcript, PN 469
46 Transcript PN 465 and 704
47 Transcript, PN 503
48 Transcript, PN 461
49 Colin Smith, witness statement, Attachment E
50 Transcript, PN 775
51 Transcript, PN 823 - 825
52 Transcript, PN 515
53 Colin Smith, outline of submissions, undated, Attachment A (letter of employment offer dated 7 July 2009)
54 ibid
55 Transcript, PN531
56 Royal Automobile Club of Victoria, RACV's Car Owning And Operating Costs Guide 2013, see “Medium Cars”; website accessed 14 July 2013
57 Transcript PN523
58 Transcript, PN789
59 Transcript, PN794 - 797
60 Transcript, PN 795
61 See Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR 21, 32, and Ellawala v Australian Postal Corporation (unreported, AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000) Print S5109 [33].
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