David Pope v Water Dynamics Pty Ltd

[2016] FWC 9262

[2016] FWC 9262

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

David Pope
v
Water Dynamics Pty Ltd
(U2016/6750)

DEPUTY PRESIDENT CLANCY MELBOURNE, 23 DECEMBER 2016

Application for relief from unfair dismissal – valid reason – procedural deficiencies – dismissal unfair – compensation ordered.

[1] Mr David Pope has applied under s.394 of the Fair Work Act 2009 (the Act) for unfair dismissal remedy in relation to his dismissal on 6 May 2016 from his employment with Water Dynamics Pty Ltd (Water Dynamics).

[2] Water Dynamics terminated the employment of Mr Pope on grounds of poor performance. It also relies on findings post-termination that it says amount to serious misconduct, including registering business names while still an employee of Water Dynamics and forwarding emails containing confidential information to his private email address both pre-termination and post-termination.

Protection from unfair dismissal

[3] Section 382 of the Act sets out the circumstances that must exist for Mr Pope to be protected from unfair dismissal:

“382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.”

[4] It was found by Commissioner Lee in an earlier jurisdiction hearing in this matter that Mr Pope worked at Water Dynamics for a continuous period of at least six months and has therefore completed a period of employment of at least the minimum employment period. 1

[5] It is not contested and I am satisfied the sum of Mr Pope’s annual rate of earnings is less than the high income threshold. Consequently, I am satisfied that Mr Pope was protected from unfair dismissal.

[6] Section 396 of the Act requires me to decide four specified matters before the merits of the application may be considered.

Whether the application was made within the period required in subsection 394(2)-s.396(a)

[7] Mr Pope’s employment was terminated on 6 May 2016 and his unfair dismissal application was received by the Commission on the same day. As such, I am satisfied that Mr Pope made his application within the required 21 day period in s.394(2) of the Act.

Whether the person was protected from unfair dismissal – s.396(b)

[8] As outlined in paragraph [5] above, I am satisfied Mr Pope was protected from unfair dismissal.

Whether the dismissal was consistent with the Small Business Fair Dismissal Code – s.396(c)

[9] Water Dynamics is not a small business employer within the meaning of s.23 of the Act. 2 I find that the Small Business Fair Dismissal Code does not apply.

Whether the dismissal was a case of genuine redundancy – s.396(d)

[10] It is not disputed and I find that this is not a case of genuine redundancy.

[11] I must now consider if the dismissal of Mr Pope by Water Dynamics was unfair within the meaning of the Act.

Was the dismissal unfair?

[12] A dismissal is unfair if I am satisfied, on the evidence before me, that all of the circumstances set out at s.385 of the Act existed. Section 385 provides the following:

“385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.”

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 3

Was Mr Pope dismissed?

[13] A person has been unfairly dismissed if the termination of their employment comes within the definition of “dismissed” for the purposes of Part 3–2 of the Act. Section 386 of the Act provides:

“386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.”

[14] As outlined above, on 6 May 2016, Water Dynamics terminated Mr Pope’s employment (s.385(a) of the Act).

[15] As I have found at paragraphs [9] and [10] above, the Small Business Fair Dismissal Code does not apply in this matter and this was not a case of genuine redundancy (s.385(c) and s.385(d) of the Act).

Harsh, unjust or unreasonable

[16] I must consider whether I am satisfied the dismissal was harsh, unjust or unreasonable within the meaning of s.385(b) of the Act.

[17] The criteria I must take into account when assessing whether the dismissal was harsh, unjust or unreasonable are set out at s.387 of the Act:

“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.”

Commission proceedings

[18] Mr Pope gave evidence and relied on written material filed prior to the hearing. Mr Davis gave evidence on behalf of Water Dynamics and also relied on material filed prior to the hearing. Both parties were questioned by each other and me in relation to their evidence.

Employment contracts

[19] Mr Pope commenced employment as a Sales Representative with Water Dynamics on 8 July 2015 with a six month probationary period (the first contract). In a meeting with Mr Adam Wright (Acting Branch Manager) on 4 January 2016, he was offered and accepted a three month, fixed term contract for the period 12 January 2016 - 12 April 2016 (the January contract). On 13 April 2016, Mr Pope was offered and accepted a second three month, fixed term contract (the April contract).

[20] Mr Pope said he was not happy about the January contract and nor was he happy with not being offered on-going employment, but that he did not have a choice. It was submitted for Water Dynamics that Mr Pope was offered the January contract out of fairness because he had told Mr Wright he was making progress and with more time, he would demonstrate his suitability for the role.

[21] Regarding the April contract, Mr Pope said he was offered this further fixed term contract to sign on or about 13 April 2016, after having mentioned his contract was due to expire to Mr David Bell, National Sales Manager, and Mr Daniel Free, the new Branch Manager. Mr Pope said he was surprised at the offer because he believed he had fulfilled his duties and would be offered a permanent position. He said when he questioned how long he would keep getting fixed term contracts, he was told to be happy that he had a contract.

[22] Mr Davis said the April contract was offered because Mr Free had only started in the branch on 4 April 2016 and he wanted to give Mr Pope the opportunity to work with Mr Free for a few weeks so that Mr Free could assess his potential as a sales representative.

[23] Mr Pope’s employment was terminated by Mr Free at a meeting on 29 April 2016. Mr Pope said he was told by Mr Free “it’s not going to work out and you’re going to finish up today with one week’s notice.” 3

[24] On 29 April 2016, Mr Pope had sent Mr Davis an email stating:

“Well I guess it’s time to say thank you for the opportunity to work for your Company but it has ended.

You mentioned when I first started that it really was a test role as a representative had never been a part of the Shepparton’s structure. Well I can honestly report that it is something worth perusing [sic] in the future, within the short 9 months I had to physically meet with the small number of account customers allocated to me there was significant growth with sales up 140%+ on the previous year…

Thank you again and I wish you all the very best.” 4

[25] Mr Pope was not required to work during the notice period and said he returned all company property and finished his employment on 6 May 2016.

Performance – July 2015 to December 2015

[26] Mr Pope agreed that in the early stages of his employment, issues were raised with him about his performance not meeting expectations. In a series of emails, he was told he needed to be more vigilant in keeping reports up to date and in topping up the ‘pipeline’ report, which appeared to be the method used to record the business Water Dynamics was seeking to gain. Emails concerning performance issues were sent to Mr Pope on 31 July 2015, 5 23 September 2015,6 3 November 2015,7 11 November 2015,8 1 December 20159 and 18 December 201510 but they did not specifically state his poor performance was placing his employment in jeopardy.

[27] Mr Pope agreed that his failure to meet reporting requirements was discussed at a meeting with Mr Adam Wright on 17 December 2015 and confirmed in a subsequent email. 11 He conceded there were issues with his reporting up until that point, but claimed he addressed them.

[28] Mr Davis said he also had a discussion with Mr Pope on 17 December 2015 12 and made it very clear that his sales results were nowhere near budget and what was in the pipeline did not support his on-going employment. Mr Davis also said it was made very clear to Mr Pope that the lack of reporting on what he was doing made it hard to justify keeping him in the branch. Mr Davis said that Mr Pope responded by saying there were things going on that were not reflected in the reports. Mr Pope received a further email by way of follow up which confirmed he was not recording leads and opportunities in the pipeline and that his sales were significantly below expectations.13 Mr Pope conceded he was given such feedback.14

Performance during the operation of the January and April contracts

[29] Mr Davis tendered emails from Mr Wright dated 28 January 2016 and from Mr David Bell on 6 February 2016. 15 The former was to various employees, including Mr Pope, and asked that the pipeline report be updated as a priority. The latter was to Mr Pope indicating dates for follow ups had passed and that these needed to be done before the week commencing 15 February 2016. Mr Pope said he improved his reporting in response to these emails.

[30] Mr Davis said Mr Free felt it was time to finish Mr Pope’s employment, based on their interaction and the reports he had seen. Mr Davis said Mr Free told him he was frustrated by the lack of information that he was getting and “the couple of meetings they did have and the information that he got from David wasn’t sufficient to keep him employed.” 16 Mr Pope countered by saying Mr Free never mentioned anything to him about poor or inadequate performance.17

Assessment of Mr Pope’s performance

[31] There was no position description for Mr Pope filed by either party. Mr Pope maintained throughout the hearing that he was never given a figure in relation to a sales or revenue target. 18 In response to my comment that “I find it extraordinary that a person who's in a sales role doesn't have sales targets,” Mr Pope said “I absolutely don’t. Yes.”19

[32] Mr Pope said his target was to sell as much as he could but claimed he did not have a budget, never received an individual breakdown and did not review month by month sales figures with Mr Wright.

[33] Mr Pope said he was instructed to “get out in the field and see people that were a little bit discouraged by previous experiences with Water Dynamics and [try] to rebuild relationships” 20 and “to go out and try and generate more business.”21 Mr Pope said he tracked what he was doing via the customer list. While Mr Pope said he could measure his performance through contacts, it was difficult for him to track contacts leading to sales, as people may have come into the shop and made purchases via a cash sale.

[34] Mr Pope annexed an email from Mr Wright of 17 December 2015 to his witness statement which stated:

“…

As discussed this morning whilst we have continuously discussed sales results, I think we are in agreeance that the Sales representative role in Shepparton is a role that would be judged more on contacts and leads rather than actual sales. To that end we have asked you to report on all leads over the value of $5000.00 and in the past few weeks we have lowered that to $2000.00.

…” 22

[35] Water Dynamics submitted there were a number of key performance measures for a competent Sales Representative within the market it operated. It also submitted a budget was constructed for and agreed by Mr Pope in the weeks following his appointment and a number of existing branch customers plus a new business target were allocated to him.

[36] Mr Davis said Mr Pope “absolutely” had sales targets which included a revenue and gross profit target. 23 He said Mr Pope’s revenue target for the 2015/2016 calendar year was $330,000,24 and the gross profit target was $106,000.25 Water Dynamics submitted that at the time of Mr Pope’s termination, he had earned $21,288 in gross profit against a year to date budget of $93,557.26

[37] Mr Davis said Month to Date and Year to Date sales by salesperson results were presented at monthly sales meetings so each salesperson was aware of their individual performance. In response to my question as to whether the reports were presented to Mr Pope, Mr Davis said “absolutely, these were presented in the meetings and David had every opportunity to look up his sales numbers at any time.” 27 Mr Davis annexed to his statement an example of such a report for the Year to Date November 2015, which has a breakdown of each sales persons totals and a total for the Shepparton branch.28 He said this report would have been given to Mr Pope in the December 2015 sales meeting.29

[38] Mr Davis rejected Mr Pope’s claims that he did not receive the reports at the sales meetings and that he was not aware of the sales he was achieving against his budget. Mr Davis claims Mr Pope would have been advised of his sales on a regular basis.

[39] Mr Pope said that while he went to monthly sales meetings, he was never given a figure and nor did he receive reports. 30 Mr Pope agreed however that the branch had a target figure,31and that they were all accountable for that.32 Mr Pope said he understood the branch’s budgets and saw some store reports.33 He was also sent emails on 11 November 2015, 1 December 2015 and 18 December 2015 which advised that his sales were well behind budget and significantly below expectations.34

[40] When directed to reports tendered at the hearing, Mr Pope accepted it was possible to break down his figures which would indicate he had targets as an individual. 35 Although Mr Pope maintained he did not receive reports on a monthly basis,36 he agreed he did not achieve his targets during his employment.37

Sending of emails to private email address

[41] Water Dynamics has a routine process that is undertaken on a monthly basis involving surveillance on its ERP (enterprise resource planning) system. Particularly large emails sent from work email addresses and emails that are sent to addresses that contain employees’ Christian or surnames within them are tracked. Mr Davis said this was part of Water Dynamics’ policy and all employees are aware of it.

[42] Mr Davis said he received the routine report for April 2016 on 4 May 2016, five days after Mr Pope had been notified his employment was to terminate. This report identified the top 50 emails sent externally by size for the previous month 38 and indicated Mr Pope had a number of very large emails sent to an unknown email address.39 This prompted further investigation by Mr Davis. He obtained full access to Mr Pope’s email address and found that documents sent to Mr Pope’s home email address included five years trading history for virtually every customer that the Shepparton branch of Water Dynamics dealt with, customer lists, sales information and marketing materials.40 Mr Davis submitted these activities of Mr Pope fell within the meaning of serious misconduct as set out by regulation 1.07 of the Fair Work Regulations 2009.

[43] It became apparent Mr Pope sent the emails to his private email address before and after having been notified that his employment was to terminate, on 13 April and 5 May 2016. 41 The 13 April 201642 email contained numerous attachments, including full customer lists.43 Mr Pope’s explanation for this email was that it was sent home so he could update reports44 and this was a practice he was aware occurred at Water Dynamics. He said that he had been doing this since his employment commenced in July 2015 with authority from Mr Wright. Mr Davis countered this by saying the “whole reason we run the surveillance is to make sure that’s not going on.”45

[44] As to one of the emails sent on 5 May 2016, 46 Mr Davis said Mr Pope had cut and pasted a series of columns outlining historical sales from January 2011 to March 2015 out of a budget document and had emailed it home.47 Mr Davis submitted that a second email Mr Pope sent to his private email on 5 May 201648 attached financial planning documents, including a five year sales history of customers.49 Save for the last page of the attachment to the second email of 5 May 2016, the material filed was illegible. Mr Davis said “[t]hese files contain a significant amount of financial information confidential to Water Dynamics and the customers with whom we deal. He asserted they would provide a significant springboard to a competitor of Water Dynamics or someone seeking to start a new business in the irrigation industry in Shepparton.

[45] Mr Pope said he sent the other emails to his private email address “to go through the sales and hopefully put forward evidence that I could not be terminated for poor performance as a sales excuse.” 50 He said he wanted to get a guide against what was sold in 2014/2015 and what he had actually sold in 2016, and that the other years’ data was included because it was all part of the same document.51 He said he wanted to “prove the actual bottom line in sales generated”52 and that his sales had gone above budget once all the accounts were linked correctly.53 He denied the purpose of sending them to himself was to cause harm to Water Dynamics or promote another business.

[46] Clause 2.8 of the Employment Agreement provides:

“2.8 Company Property on Termination

(a) The Employee must immediately return to the Company all Company property on the termination of their employment.

…

(e) All electronic information received, stored or sent in the course of an Employee’s employment using the Company’s electronic communication system remains the Company’s property at all times and must be returned to the Company and/or destroyed upon termination of the Employee’s employment. Copies of electronic information, including any hard copy, electronic copy or copy stored in any other format, must be similarly returned and/or destroyed prior to termination of the Employee’s employment.

…”

[47] Mr Davis advised that legal action was taken to recover Water Dynamics’ information and Mr Pope subsequently attended the offices of Water Dynamics’ solicitors with confidential information in his possession. He also made two undertakings in respect to the Water Dynamics information that was in his possession prior to its deletion. 54

Emails to manufacturers and/or suppliers and registration of business names

[48] Mr Davis said he also found numerous communications between Mr Pope and companies both in Australia and China that either manufactured or supplied crop netting materials, which are not products Water Dynamics sells. Mr Davis claimed that in using his Water Dynamics email address and signature block, Mr Pope represented himself as an employee of Water Dynamics while intending to set up a supply chain and gather prices for products Water Dynamics never intended to sell.

[49] Emails were tendered covering the period from 19 November 2015 to 19 April 2016 and they detailed communications between Mr Pope and suppliers and/or manufacturers, or were emails he forwarded to himself containing contact details of suppliers and/or manufacturers. 55

[50] Mr Pope responded by saying that staff had been asked by Mr Wright to come up with some ideas to increase sales following hail experienced in Shepparton during November 2015. He said he had the idea of importing hail netting and while Mr Wright was aware of this, he had subsequently told Mr Pope that it was not something Water Dynamics was interested in and to cease his work on it. 56

[51] Mr Davis said he had discussed his findings with Mr Wright and asked if he knew why Mr Pope would have made so many enquiries about hail netting. He said Mr Wright told him that just prior to leaving on his final day, Mr Pope had told another member of staff in the Shepparton branch that he had planned to set up his own business selling hail netting. 57 Mr Pope denied speaking to Mr Wright about setting up a hail netting business.58

[52] Mr Davis said his investigations also revealed that in December 2015, Mr Pope set himself up as a sole trader with two business names; ‘Fruit Guard Australia’ and ‘Drape Netting Australia.’ 59 Mr Davis also discovered a website in the name ‘Fruit Guard Australia’ and the contact information on that site included Mr Pope’s mobile phone number although he could not identify when that website had been launched.

[53] Mr Pope said he has registered about 30 business names and he registered these particular names because he thought it might have been a good idea and was something to look at “down the track.” 60

[54] Mr Davis said had he known about the registered business names earlier than when he found out in early May 2016, he could “guarantee [Mr Pope would] have been out the door,” 61 and that as a result of what was discovered through the email surveillance, Mr Pope’s termination would have resulted within a very short timeframe of the actual termination date.

[55] Clauses pertaining to duties are contained within clause three of the employment agreement between Mr Pope and Water Dynamics and relevantly provide:

3. DUTIES

…

3.2 General Duties

In the performance of the Employee’s duties the Employee shall:

(a) Follow the Company’s directions to the Employee regarding the Employee’s work;
(b) Not compete against the Company’s business interests;

…

3.5 Other Employment

Without the prior consent of the Company, the Employee will not during employment with the Company act as an employee of any other employer and shall not act as a consultant, advisor or in any other capacity to any company, firm or person.

3.6 Confidentiality During Employment

For the duration of this employment contract and the employment relationship between the Employee and the Company, the Employee will keep secret any confidential information of the Company.

3.7 Confidentiality After Employment

After termination of this employment contract and the employment relationship between the Employee and the Company, the Employee will keep secret any confidential information of the Company

In clauses 3.6 and 3.7 above ‘confidential information’ means information of every kind:

(a) concerning or in any way connected with the Company and the clients with whom the Company deals with, trade secrets and other industry information of a sufficiently high degree of confidentiality as to amount to a trade secret;
(b) relating to the Company including, but not limited to, all technical data, business plans and reports, marketing information and research, marketing strategies, business methods and systems, business records, statements, formula, calculations, unpublished financial accounts and reports, relating to the business of the Company and its clients recorded in any form including documents, software, writings, forms, videos, audio recordings, drawings, computer tapes and discs, photographs or any other form of recording or reproduction or storage.
(c) which is the property of the Company or any of its affiliates; and which
(i) is disclosed in writing, orally or by another means by the Company or by any person on the Company’s behalf to the Employee; or
(ii) comes to the Employee’s knowledge by any means;
(iii) but does not include information which is publicly available without breach of any obligation of confidentiality.

[56] Mr Davis submitted Mr Pope was in direct breach of his employment agreement because he set up a business as a sole trader without approval, which was inconsistent with the continuation of the contract of employment.

[57] Mr Pope said Drape Netting Australia never traded and he denied acting as a sole trader while employed by Water Dynamics. He said he never shared any confidential information, did not use company information to springboard a business and denied breaching clauses 3.5, 3.6 and 3.7 of his employment agreement.

Was the dismissal harsh, unjust or unreasonable?

[58] The ambit of the conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd 62 by McHugh and Gummow JJ as follows:

“.... It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”

[59] As outlined above, the criteria I must take into account when assessing whether the dismissal was harsh, unjust or unreasonable are set out in s.387 of the Act. I am under a duty to consider each of these criteria in reaching my conclusion. 63

[60] I will now consider each of the criteria at s.387 of the Act separately.

Valid reason - s.387(a)

[61] Water Dynamics must have a valid reason for the dismissal of Mr Pope, although it need not be the reason given to him at the time of the dismissal. 64 The reasons should be “sound, defensible and well founded”65 and should not be “capricious, fanciful, spiteful or prejudiced.”66

[62] The Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer. 67 The question the Commission must address is whether there was a valid reason for the dismissal related to the employee’s capacity or conduct (including its effect on the safety and welfare of other employees).68

Capacity - Dismissal for poor performance

[63] On 29 April 2016, Water Dynamics dismissed Mr Pope on the ground of unsatisfactory performance. Unsatisfactory performance is more likely to relate to an employee’s capacity than their conduct. 69

[64] Despite not having a position description before me, I am satisfied that in his role as Sales Representative, Mr Pope was not performing to an acceptable standard.

[65] Mr Davis provided direct evidence that he told Mr Pope on 17 December 2015 he was not performing in accordance with his budget and the lack of reporting and visibility on what he was doing made it hard to justify keeping him in the branch.

[66] As referred to in paragraph [29] above, emails were tendered by Mr Davis from 28 January 2016 and 6 February 2016 where Mr Pope was asked that the pipeline report be updated as a priority, and that dates for follow ups were past due. These emails demonstrate a continuing failure to perform duties to the required standard, even after the discussion Mr Pope had with Mr Davis on 17 December 2015.

[67] Mr Pope did not give convincing evidence regarding whether he knew about or met sales and revenue targets. I found him disingenuous in this regard. Although employed as a Sales Representative, he claimed he was never set a budget nor given a sales or revenue target. He also claimed he was not given sales reports and said that throughout his employment he was unaware whether he met his individual targets, but that he “would say no” 70 before ultimately agreeing he did not achieve his targets during his employment.71 He was certainly made aware that his store was well behind budget. He then claimed he sent the emails to his home address on 5 May 2016 in order to establish that his sales results exceeded budget.

[68] A review of Mr Pope’s year to date results to November 2015 indicated he had only achieved 26% of his gross profit budget, and that his actual results were materially behind all other sales people and territories in the branch. 72 Mr Pope’s sales results continued to be poor, and by the year to date results to April 2016, indicated he had delivered only 21% of his budgeted gross profit.73

[69] Mr Pope conceded that he failed to meet his reporting requirements and his deficiencies in this regard persisted at least until mid-February 2016. Frustration at the quality of information provided by Mr Pope was also an ongoing issue for his managers.

[70] On the basis of the results applicable to Mr Pope during the course of his employment and the quality of his reporting, I am satisfied that Water Dynamics had a valid reason for dismissing Mr Pope for poor performance.

Conduct - Reliance on conduct discovered post-termination

[71] Water Dynamics also said there was a valid reason for dismissing Mr Pope based on serious misconduct; including setting himself up as a sole trader and breaching his employment contract by forwarding confidential information to his private email address.

[72] Water Dynamics took issue with Mr Pope forwarding emails to his private email address both pre and post notification of the termination of his employment because of their content. Water Dynamics claims this activity was in breach of its Email usage policy, which provides that Company email must not be used to promote personal, business or commercial gain or distribute confidential company information. 74 The policy also stipulates that disciplinary action that may result in termination of employment will be taken against an employee in breach of the email usage policy. During his induction to Water Dynamics, Mr Pope was referred to the email usage policy within the Operations Manual and acknowledged he was given sufficient time to review it.75

[73] The email of 13 April 2016 contained numerous attachments, including customer lists. Mr Pope said he sent this home as he was updating reports and this was an authorised practice in the business which he had been doing since July 2015. I have difficulty accepting this. Mr Pope claimed he had done this as a matter of practice during his employment, but his 13 April 2016 email he sent for this purpose appears to have been the only one that was detected by the monthly surveillance of email communications. Further, he sent this email on a day he was not particularly happy because he had been advised he would be offered a further fixed term contract instead of an offer of ongoing employment.

[74] My deliberation on whether the sending of the email on 13 April 2016 constituted either misconduct or serious misconduct might have been assisted by testimony from Mr Wright as to whether or not it was authorised by him. Ultimately, I do not consider it necessary to determine this question as I am satisfied the poor performance of Mr Pope was a valid reason for his dismissal.

[75] The two emails sent on 5 May 2016 contained information including sales data and financial planning documents of Water Dynamics. I am not satisfied these emails can be relied on by Water Dynamics as amounting to serious misconduct so as to form the basis of a valid reason to dismiss Mr Pope as he sent them after being notified his employment had been terminated. The Federal Court, in Lane v Arrowcrest Group Pty Ltd, found:

“…it is still open to an employer to justify a dismissal by reference to facts not known to the employer at the time of the dismissal, but discovered subsequently, so long as those facts concern circumstances in existence when the decision was made. Whether the decision can be so justified will depend on all the circumstances.” 76

[76] The forwarding of the emails on 5 May 2016 was not a circumstance in existence when the decision to terminate Mr Pope’s employment was made and I have not taken it into account.

[77] I am not persuaded that Mr Pope’s registering of business names is itself evidence of breaching clause 3.5 of the employment contract, although it is indicative of a lack of focus on his employment duties. It is difficult to reach a conclusion on Mr Pope’s activities relating to the communications regarding the manufacture or supply of crop netting materials. At best, I am asked to accept that Mr Pope was a curious fellow, attempting to increase the sales of Water Dynamics in new areas. At worst, Mr Pope was seeking to establish his own business on the back of his employer’s time and credentials. While on the whole I found Mr Pope’s evidence implausible, the absence of any evidence from Mr Wright leaves me with only Mr Pope’s explanations regarding the material uncovered by Mr Davis. Again, even if Mr Pope’s version is accepted, these actions are indicative of his lack of focus achieving sales for the business in its established product lines.

Notification of the valid reason - s.387(b)

[78] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made, 77 in explicit terms78 and in plain and clear terms.79 In Crozier v Palazzo Corporation Pty Ltd80 a Full Bench of the Australian Industrial Relations Commission dealing with a similar provision of the Workplace Relations Act 1996 stated the following:

“[73] As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. Much like shutting the stable door after the horse has bolted.”

[79] Mr Pope said he was called on 28 April 2016 by Mr Free and asked to come into the office the following morning to catch up. He said he was told by Mr Free on 29 April 2016; “I just wanted to let you know that it’s not going to work out and you’re going to finish up today, with one week’s notice.” Mr Pope said he said “well, you can’t, there has to be a reason” 81 and Mr Free said “well that is the reason.” Mr Pope said he was not given a letter of termination. There was no evidence from Mr Free as to the details of this conversation.

[80] Accordingly, on the basis of the evidence before me, I am satisfied Mr Pope was not notified of the reason for the termination of his employment before the decision was made. This is a factor indicative of unfairness.

Opportunity to respond to any reason related to capacity or conduct - s.387(c)

[81] Ordinarily, an employee protected from unfair dismissal must be provided with an opportunity to respond to any reason for dismissal relating to the conduct or capacity of the person. This criterion is to be applied in a common sense way to ensure the employee is treated fairly and should not be burdened with formality. 82

[82] I do not doubt that Mr Pope’s performance and suitability for the role was the subject of contemplation and discussion amongst the managers of Water Dynamics. The issue for Water Dynamics is that the discussions amongst them did not include Mr Pope himself. On the evidence before me, there was no discussion with Mr Pope after December 2015 that would have suggested to him that there were serious reservations regarding his performance that placed his continuing employment under threat. While it might be said that the reluctance of Water Dynamics to offer him permanent employment should have placed him on notice, the proposition is, in my view, cancelled out by the offering of the April contract without the suggestion that he was on his last chance.

[83] Mr Pope said he was not given any opportunity to respond to any reason of capacity or conduct at the time of his dismissal. In the absence of evidence to the contrary, I accept Mr Pope’s evidence and find this is also a factor indicative of unfairness.

Unreasonable refusal by the employer to allow a support person - s.387(d)

[84] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, the employer should not unreasonably refuse that person being present.

[85] There is no positive obligation on an employer to offer an employee the opportunity to have a support person:

“This factor will only be a relevant consideration when an employee asks to have a support person present in a discussion relating to dismissal and the employer unreasonably refuses. It does not impose a positive obligation on employers to offer an employee the opportunity to have a support person present when they are considering dismissing them.” 83

[86] Mr Pope did not request a support person. Therefore, I consider this to be a neutral consideration.

Warnings regarding unsatisfactory performance - s.387(e)

[87] Where an employee protected from unfair dismissal is dismissed for the reason of unsatisfactory performance, the employer should warn the employee about the unsatisfactory performance before the dismissal. As indicated above, unsatisfactory performance is more likely to relate to an employee’s capacity than their conduct. 84

[88] As referred to above, there is no written material before me, nor was there any direct evidence given at the hearing, that after December 2015, Mr Pope was warned his performance was sufficiently poor such that his employment was at risk. I consider the effect of the January contract and the April contract having been offered was to neutralise the notifications of poor performance Mr Pope had received up to the end of December 2015.

[89] Mr Pope said conversations around the January contract and April contract were that they were extensions and nothing was said about poor performance. There was no direct evidence to the contrary.

[90] Despite the existence of some communications that requested Mr Pope perform tasks after December 2015, they were not in the nature of a warning that his employment was at risk and I therefore consider this failure to warn Mr Pope about his unsatisfactory performance as an indicator of unfairness.

Impact of the size of the Respondent on procedures followed - s.387(f)

[91] Water Dynamics made no submissions on the size of its enterprise and its impact on procedures followed. The Form F3-Employer Response records that at the time of Mr Pope’s dismissal, Water Dynamics had approximately 66 employees.

[92] In the circumstances of this case, I consider this criterion to be neutral.

Absence of dedicated human resources management specialist/expertise on procedures followed - s.387(g)

[93] Water Dynamics made no submissions concerning the absence of dedicated human resource management specialists or expertise and any impact that may have had on procedures followed. On the evidence, Mr Davis, Acting Chief Executive Officer, engaged in discussions with Mr Free about the termination of Mr Pope’s employment. Mr Davis said he has the authority for recruitment, termination and other matters relating to personnel. If Water Dynamics had a dedicated human resources management specialist or HR expertise, it did not appear to use either. This may have impacted on the procedures followed. I have taken this into account.

Other relevant matters - s.387(h)

[94] Section 387(h) of the Act provides the Commission with a broad scope to consider any other matters it considers relevant.

[95] I have noted that Mr Pope’s employment with Water Dynamics was of short duration, approximately 10 months and as outlined above I am not persuaded that his performance was satisfactory during that period. I have also noted that Mr Pope was employed in a regional area but there was no evidence before me regarding his capacity to find alternate work.

Conclusion – harsh, unjust or unreasonable

[96] Taking into account all material before me, I consider that the termination of Mr Pope’s employment was unreasonable because he was not notified of the reason nor afforded an opportunity to discuss the termination before it was put into effect and it is not open to me to find on the evidence that he had been appropriately warned about his unsatisfactory performance in a way that would have suggested to him that his employment was in jeopardy.

[97] I am satisfied, on balance, the procedural defects in effecting Mr Pope’s dismissal weigh in favour of finding he was unfairly dismissed, despite there being a valid reason for his termination.

Remedy

[98] In circumstances where I have found that Mr Pope was protected from unfair dismissal at the time of being dismissed and he has been unfairly dismissed, s.390 of the Act prescribes that a remedy is available. Accordingly, I am required to determine whether to order the reinstatement of Mr Pope or, in circumstances where reinstatement is inappropriate, an order for compensation if I am satisfied such an order is appropriate in all the circumstances.

[99] The primary remedy is reinstatement, however Mr Pope has not sought reinstatement and Water Dynamics submitted that reinstatement is inappropriate. In any event, the April contract has expired. In these circumstances, I am satisfied it is not appropriate to order reinstatement (s.390(3)(a)).

[100] I must therefore consider whether it is appropriate in all the circumstances to make an order for payment of compensation (s.390(3)(b)).

[101] Section 392 of the Act sets out the circumstances that must be taken into consideration when determining an amount of compensation, the effect of any findings of misconduct on that compensation amount and the upper limit of compensation that may be ordered.

[102] I will now consider each of the criteria in s.392 of the Act.

Remuneration that would have been received: s.392(2)(c)

[103] Mr Pope’s remuneration with the Respondent was $70,000 per annum. 85

[104] As at 29 April 2016, there were approximately 10 weeks until the April contract terminated. On 29 April 2016, Mr Pope had been employed for approximately 10 months and Mr Free had been his manager for 4 weeks. By then, his results and reporting had been so consistently poor that I do not consider that he would have improved his performance so as to complete the term of his contract. I am also of the view that Mr Free would have been in a position to assess Mr Pope’s capability by then. I consider that had Mr Pope not been notified of his dismissal on 29 April 2016 and had instead been notified of the reason for the termination and given an opportunity to respond by way of a fair process, his employment would have lasted at most for one week longer than it did.

[105] I therefore find that Mr Pope would have continued to be employed by Water Dynamics for one week longer had he not been dismissed and then provided with the one week’s notice that he in fact received on termination. The amount the Applicant would have received in addition to the notice he has already been paid is $1,346.15.

Remuneration earned: s.392(2)(e)

[106] There was no evidence as to what remuneration, if any, Mr Pope has earned from employment or other work since he was dismissed.

Income likely to be earned: s.392(2)(f)

[107] There was no evidence as to what income if any Mr Pope is reasonably likely to earn during the period between the making of the order for compensation and the actual compensation.

Other matters: s.392(2)(g)

[108] I find it is not appropriate in the circumstances of this case that a contingency should be applied.

Viability: s.392(2)(a)

[109] I find an order for compensation in the amount proposed will not affect the viability of the Water Dynamics’ enterprise.

Length of service: section s.392(2)(b)

[110] I find that the Mr Pope’s period of service with Water Dynamics, being approximately 10 months, should not affect the amount of compensation to be ordered.

Mitigating efforts: s.392(2)(d)

[111] In considering whether Mr Pope has taken steps to mitigate the loss suffered as a result of the dismissal I should take into account whether he acted reasonably in the circumstances. 86

[112] There was no evidence as to what efforts Mr Pope has or has not made to mitigate his loss suffered as a result of the dismissal.

Misconduct: s.392(3)

[113] I have not found any misconduct by Mr Pope that contributed to the dismissal.

Shock, Distress: s.392(4)

[114] I note that the amount of compensation calculated does not include a component for shock, humiliation or distress.

Compensation cap: s.392(5)

[115] The amount of compensation I will order does not exceed the compensation cap.

Conclusion

[116] I am satisfied that the Applicant was protected from unfair dismissal, that the dismissal was unfair and a remedy of $1,346.15 plus 9.5% superannuation, less taxation as required by law is appropriate.

[117] An order will be issued with this decision.

DEPUTY PRESIDENT

Appearances:

Mr D Pope on his own behalf

Mr S Davis for Water Dynamics Pty Ltd.

Hearing details:

2016.

Shepparton:

November 15.

 1   [2016] FWC 6451.

 2   Form F3 – Employer response to Unfair Dismissal Application, question 1.7.

 3   Transcript PN 1104.

 4   Exhibit R1 at SD-16.

 5   Exhibit R1 at SD-3(a).

 6   Exhibit R1 at SD-3(b).

 7   Exhibit R1 at SD-3(c).

 8   Exhibit R1 at SD-3(d).

 9   Exhibit R1 at SD-3(e).

 10   Exhibit R1 at SD 9.

 11   Exhibit R1 at SD-6.

 12   Exhibit R1 at [25] and Transcript PN 508.

 13   Exhibit R1 at SD-9.

 14   Transcript PN 391-394

 15   Exhibit R1 at SD-13(a) and SD-13(b).

 16   Transcript PN 488.

 17   Transcript PN 487.

 18   Transcript PN 123, PN 132-133, PN 136-137, PN 228-229, PN 240-245, PN 299, PN 456-457.

 19   Transcript PN 294-295.

 20   Transcript PN 139.

 21   Transcript PN 135.

 22   Exhibit A1 at DP-7.

 23   Transcript PN 152-154.

 24   Transcript PN 195-197 and Exhibit R1 at SD-2.

 25   Transcript PN 199 and Exhibit R1 at SD-2.

 26 Exhibit R2 at [51].

 27   Transcript PN 565.

 28   Exhibit R1 at SD-5.

 29   Transcript PN 307.

 30   Transcript PN 230-235.

 31   Transcript PN 318, PN 328 and PN 344.

 32   Transcript PN 347-348.

 33   Transcript PN 554.

 34   Exhibit R1 at SD-3(d), SD-3(e) and SD-9.

 35   Transcript PN 543-544.

 36   Transcript PN 553-554.

 37   Transcript PN 551-552.

 38   Exhibit R1 at SD 17.

 39   Transcript PN 584.

 40   Transcript PN 587-588.

 41   Exhibit R1 at SD-20A, SD-20B and SD-20C.

 42   Exhibit R1 at SD-20(c).

 43   Transcript PN 732-735.

 44   Transcript PN 790-792.

 45   Transcript PN 736.

 46   Exhibit R1 at SD-20(a).

 47   Transcript PN 268.

 48   Exhibit R1 at SD-20(b).

 49   Transcript PN 287.

 50   Transcript PN 725.

 51   Transcript PN 739-743 and PN 786.

 52   Transcript PN 819.

 53   Transcript PN 911.

 54   Exhibit R6.

 55   Exhibit R1 at SD-23.

 56   Transcript PN 664.

 57 Exhibit R1 at [57].

 58   Transcript PN 809.

 59   Transcript PN 589 and Exhibit R1 at SD-25.

 60   Transcript PN 721.

 61   Transcript PN 621.

 62 [1995] HCA 24; (1995) 185 CLR 410 at 465.

 63   Sayer v Melsteel[2011] FWAFB 7498.

 64   Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 373, 377-378.

 65   Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371, 373.

 66   Ibid.

 67   Walton v Mermaid Dry Cleaners Pty Ltd (1996) 142 ALR 681 at 685.

 68   Ibid.

 69   Annetta v Ansett Australia Ltd (2000) 98 IR 233, 237.

 70   Transcript PN 550.

 71   Transcript PN 551-552.

 72   Exhibit R1 at [18] and SD-5.

 73   Exhibit R1 at [42] and SD-13.

 74   Exhibit R1 at SD-21.

 75   Exhibit R1 at SD-22, pages 4 and 9.

 76 (1990) 27 FCR 427 at 456.

 77   Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151.

 78   Previsic v Australian Quarantine Inspection Services Print Q3730.

 79   Ibid.

 80 (2000) 98 IR 137 at 151.

 81   Transcript PN 1104.

 82 RMIT v Asher (2010) 194 IR 1, 14-15.

 83 Explanatory Memorandum, Fair Work Bill 2008 (Cth) [1542].

 84   Annetta v Ansett Australia Ltd (2000) 98 IR 233, 237.

 85   Exhibit R1 at SD-14.

 86   Biviano v Suji Kim Collection PR915963 at [34].

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