Gary Bermingham v Kings Transport & Logistics (Aust) Pty Ltd
[2010] FWA 1116
•19 FEBRUARY 2010
[2010] FWA 1116 |
|
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
v
Kings Transport & Logistics (Aust) Pty Ltd
(U2009/11549)
SENIOR DEPUTY PRESIDENT O'CALLAGHAN | ADELAIDE, 19 FEBRUARY 2010 |
termination of employment - arbitration.
[1] On 25 August 2009 Mr Bermingham lodged an application for relief with respect to the termination of his employment with Kings Transport and Logistics (Aust) Pty Ltd (Kings). Mr Bermingham's application was made pursuant to section 394 of the Fair Work Act 2009 (the Act).
[2] The application was unable to be settled in conciliation and was subsequently referred to me for arbitration. This arbitration occurred on 3 and 4 February 2010. Mr Bermingham gave evidence as did a number of employees of Kings. In reaching a conclusion relative to this application I have considered all of the material before me.
[3] By way of background, Mr Bermingham was employed by Kings for approximately 4 years. At the time of the termination of his employment Mr Bermingham was responsible for the operational management of a transport and delivery contract which Kings had with a major furniture retailer.
[4] Mr Bermingham was dismissed on 12 August 2009. The written confirmation of this termination of employment stated:
“Gary has been found to be stealing from the business in a fraudulent manner, by overcharging our customers and pocketing the difference between the price Kings charges for a job and the price Gary is quoting the customer.”
[5] The termination of employment occurred after Kings’ management became aware, from another employee that Mr Bermingham was taking money to pay for staff social events. This employee had made allegations of harassment against Mr Bermingham.
[6] Kings management conducted what appear to be cursory interviews with a number of other staff, including employees said to be involved in the fraudulent activities.
[7] Subsequent to these inquiries Mr Bermingham was called to a meeting. He was not told that he could be represented or that he could access a support person. At the commencement of the meeting Mr Bermingham advised that he was aware of the allegation of fraudulent behaviour. He returned $100 in an envelope, which had only just been given to him by a subordinate employee and admitted that it had been wrongly taken from Kings. Mr Bermingham's employment was subsequently terminated.
[8] Some days later, Kings management conducted further interviews with various of the other staff involved in the fraudulent behaviour and issued some form of warning to at least one of these employees. One of these employees was subsequently promoted to the position previously held by Mr Bermingham.
The evidence
[9] Mr Bermingham's evidence was that, in order to generate funds for a single staff social function he had agreed, in concert with two other subordinate employees, to an arrangement whereby $100 in cash was put aside from amounts that were payable to Kings. This amount was collected in two $50 instalments. Mr Bermingham advised that this money was kept in a safe at work and was then utilised to subsidise the cost of a celebration for various Kings staff who generally worked on the retailer contract. Mr Bermingham stressed that the only amount he authorised to be collected was $100. Mr Bermingham conceded that, in retrospect, his actions were inappropriate.
[10] Mr Bermingham’s evidence went to the extent to which, at various times since the commencement of this retailing delivery contract he had been stressed as a result of his work and that this had impaired his decision-making. He asserted that he had raised his concerns about work caused stress with various Kings managers at work and at social functions but that Kings had not properly responded to these concerns.
[11] Alternatively, Mr Bermingham argued that the funding of such a function in this way was within his managerial authority.
[12] Mr Bermingham advised that he was aware of, and had previously followed the acknowledged practice of gaining approval for expenditures at social functions and then seeking reimbursement through a petty cash float.
[13] Finally, Mr Bermingham argued that the process followed to effect the termination of his employment was unfair in that he was not given an opportunity to access a witness and the description of the fraudulent activity was not correct. Further, with respect to the process, Mr Bermingham asserted that following the termination of his employment he sought a meeting with the Kings General Manager Mr N Smith which request was refused.
[14] Mr N Smith, the Kings General Manager gave evidence as to his limited involvement in the investigation and his agreement with the decision to terminate Mr Bermingham's employment. His evidence went to his advice to Mr Bermingham, after the termination of his employment, that he was unable to meet with him at that time but would consider anything that Mr Bermingham put to him in writing. Mr Smith did not subsequently receive any written material from Mr Bermingham.
[15] Mr C Smith was Mr Bermingham's direct manager. His evidence went to how he became aware of allegations that Mr Bermingham was defrauding Kings through his investigation of further harassment claims made against Mr Bermingham. Mr C Smith subsequently spoke to, or telephoned at least three other staff members who acknowledged that monies taken from Kings had been used to subsidise an evening out at a local hotel. On this basis, Mr C Smith concluded that two other employees involved in this activity, being Mr Sheriff and Mr Reid were participants in the fraudulent activity but that they had been acting under Mr Bermingham's instructions.
[16] Mr C Smith sought advice from the interstate Kings Human Resource Management function who drafted the termination of employment advice. He advised Mr N Smith of his intention to terminate Mr Bermingham’s employment.
[17] Mr C Smith called Mr Bermingham to the termination of employment meeting on 12 August 2009. He agrees that Mr Bermingham was not offered the chance to have a witness or a representative but asserts that Mr Bermingham did not request this. Mr C Smith's evidence is that, at the outset, Mr Bermingham conceded that he knew of the purpose of the meeting, that he took out $100, said that he owed it to Kings and offered to pay it back as he agreed that his actions were not appropriate. Mr C Smith subsequently terminated Mr Bermingham's employment and provided him with a copy of the termination of employment advice.
[18] Mr C Smith recalls that Mr Bermingham asked that the decision be reconsidered. Mr C Smith also recalls referring to customer complaints and the harassment issues in this interview but asserts that it was clear that the reason for the employment termination related to Mr Bermingham's fraudulent behaviour.
[19] Mr C Smith also recalls that some time earlier, Mr Bermingham asked for funding assistance for a social function and that he advised Mr Bermingham that he would consider this request.
[20] Mr C Smith acknowledges that Mr Bermingham's behaviour some weeks earlier reflected stress but he considered that this had been properly addressed at that time.
[21] Mr C Smith conceded that, subsequent to the termination of Mr Bermingham's employment he had established the exact method by which the monies were taken and agreed that the written termination of employment advice was incorrect in that whilst funds were misappropriated from Kings, customers were not overcharged.
[22] Mr Turnbull was Mr Bermingham's manager before Mr C Smith; that is in 2008 and early 2009. His evidence went to Mr Bermingham's work function, the extent to which he had previously gained management approval for social function expenditures and had been reimbursed from petty cash for approved costs incurred by him.
[23] Mr Turnbull agreed that some of Mr Bermingham's behaviour in 2008 was out of character.
[24] Mr Muster was for some time responsible for the Kings national retail structure. He recalled discussions with Mr Bermingham at a Christmas 2008 function but did not recall the details of this discussion.
[25] Mr Smaile is another manager within Kings who was present at the 12 August 2009 termination of employment interview. His evidence largely confirmed that of Mr C Smith. Mr Smaile also recalls a discussion with Mr Bermingham at the 2008 Christmas function but does not recall the details of that discussion.
[26] Mr Sherriff reported to Mr Bermingham before 12 August 2009. He has subsequently been promoted to the position previously held by Mr Bermingham. Mr Sherriff’s evidence was that he was involved in the misappropriation of funds and that he was encouraged, but not forced to do so by Mr Bermingham. Mr Sherriff, and presumably Mr Reid, had discussed with Mr Bermingham the method of misappropriation to be utilised and had agreed that the funds were to be retained for entertainment purposes. Mr Sherriff advised that both he and Mr Reid were involved with Mr Bermingham in this activity and that all three persons actively collected the funds which were stored in a safe or Mr Bermingham's desk drawer. Mr Sherriff advised that the misappropriations had occurred on multiple occasions over at least three months and that these monies had been spent on at least two occasions
[27] Mr Sherriff conceded that the matter should have been reported to senior management. He advised that he had subsequently been disciplined by Kings management. I note that the full extent of Mr Sherriff’s involvement in the misappropriation may well have only become apparent to Kings management at the hearing.
[28] Mr Sherriff’s evidence was that he had attended at least one social function at which some of the monies collected in this fashion and held by Mr Bermingham had been spent.
[29] Mr Sherriff’s evidence went to other, earlier instances where monies from Kings customers may have been improperly taken by employees.
[30] On the morning of 12 August 2009, Mr Sherriff handed Mr Bermingham an envelope with $100 in it just as Mr Bermingham was leaving to meet with Mr C Smith.
[31] Mr Sherriff confirmed that at various times, Mr Bermingham appeared stressed at work but was unsure whether this was due to work matters or Mr Bermingham's social activities.
[32] Mr Hallett is an employee of Kings at a different site. He socialises with Mr Reid and Mr Sherriff. His evidence went to his behaviour on earlier contract work and his awareness of the misappropriations involving Mr Bermingham, Mr Sherriff and Mr Reid. Mr Hallett attended at least one function where monies he knew to be misappropriated were spent.
[33] Mr Hallett also confirmed that he had observed Mr Bermingham to be stressed on occasion, but did not know whether this was work caused or due to his social activities.
[34] Mr Hallett was interviewed by Mr C Smith before Mr Bermingham was dismissed. His evidence was that he confirmed his awareness of the misappropriation and his participation in a function where the monies were spent. He understood that around $200 of misappropriated monies were spent at this function.
[35] Mr Hallett agreed that he had discussed this matter with Mr Sherriff but could not recall when he first did so.
[36] After the termination of Mr Bermingham's employment, Mr Hallett had been involved in discussions with the Kings human resource management function and had subsequently been counselled.
Findings
[37] I have considered Mr Bermingham's evidence and have concluded that he was not truthful in a number of respects. I am satisfied that Mr Bermingham knew that substantially more than $100 was collected on multiple occasions. I am satisfied that he was involved in the actual operation of the defrauding system. I am satisfied that the $100 he handed back to Mr C Smith on 12 August 2009 was an amount which was in excess to that collected for one or more earlier functions. In this respect I accept Mr Sherriff’s evidence in respect to the amounts collected, the personnel involved and the collection methodology.
[38] Having considered all the evidence before me I have concluded that Mr Bermingham, Mr Sherriff and Mr Reid were all involved in the planned and ongoing misappropriation of monies due to Kings. I do not consider that Mr Bermingham coerced either Mr Sherriff or, most likely, Mr Reid into acting in this way. I have not directed attention to Mr Hallett’s circumstances.
[39] I have concluded that Mr Bermingham may well have been stressed at various times in 2008 and 2009, and may have said so to various other Kings managers, but I cannot conclude that this stress was due to his work alone. Further, there is no evidence that satisfies me that Mr Bermingham's mental condition was such that it excuses his behaviour as a manager. Finally, in this respect, Mr Bermingham knew that his actions were inappropriate, they exceeded his authority and that there were proper, authorised processes to obtain Kings approval to fund social events.
[40] As I have already indicated, Mr Bermingham's evidence relative to the amounts taken, the circumstances in which these amounts were spent and his responses to Mr C Smith on 12 August 2009 lack credibility.
[41] I have concluded that the investigation approach adopted by Mr C Smith which led to the decision to terminate Mr Bermingham's employment was seriously deficient in that it did not properly assess the conduct of other Kings employees and ultimately resulted in disparate and poorly informed actions being taken with respect to the employees involved in the misappropriations.
[42] I have concluded that the involvement of the Kings human resource management function could, at best, be described as remote and lacking in the professionalism which should be expected from such a function.
[43] Section 387 states:
“387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA 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 FWA considers relevant.”
[44] I have considered these factors in the context of the principal that a fair go round should be accorded to both Mr Bermingham and to Kings.
Valid Reason
[45] I have adopted the concept of a valid reason espoused by North J in Selvechandron v Petersen Plastics 1in the following terms:
“In its context in s.170DE(1), the adjective “valid” should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s.170DE(1). At the same time the reasons must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must “be applied in a practical, commonsense way to ensure that the employer and employee are treated fairly”.
[46] Mr Bermingham was in a position of substantial responsibility. His actions were deliberately dishonest. He knowingly set about and conspired to defraud Kings of monies. He did, or should have known that this behaviour was entirely inappropriate. His admissions at the interview on 12 August 2009 were only partial.
[47] In itself, his behaviour represented a valid reason for the termination of his employment.
[48] The only significant element of unfairness such that there is real doubt about whether Mr Bermingham's actions warranted termination of employment at that time relates to the fact that the other two employees involved in this behaviour were only warned, one was subsequently promoted, and the circumstances relating to why this employee handed Mr Birmingham $100 of misappropriated monies just as he was leaving for his termination of employment interview, were not explained.
[49] The evidence before me indicates that Kings has demonstrated an entirely inconsistent approach to the employees involved in this behaviour. This could only be described as managerial incompetence.
[50] Mr Bermingham's behaviour represented conduct which was a valid reason for the termination of his employment. However, the Kings approach to this matter means that the existence of a valid reason for the dismissal does not establish that Mr Bermingham's dismissal was treated fairly in the context of a fair go all round.
Notification of the reason for termination of employment
[51] The termination of employment advice provided to Mr Bermingham at the interview on 12 August 2009 wrongly described the form which the misappropriation of monies took. I have concluded that this reflected the poor investigation process and the limited or remote involvement of human resource management expertise.
[52] However, I do not consider this to be fundamental in this matter, as Mr Bermingham admitted that his behaviour was wrong and that there was no dispute that involved misappropriation.
[53] In these circumstances I do not consider that Mr Bermingham can rely on the errors in the termination of employment advice as the basis upon which to argue that the termination of his employment was harsh, unjust or unreasonable. The first sentence in the termination advice, namely that he was found to be stealing from the business is correct. The advice was wrong in terms of how Mr Bermingham stole the money, but there is no dispute he took the money.
[54] I am satisfied that, notwithstanding the reference in the termination of employment interview to customer complaints directed toward Mr Bermingham and to the harassment allegations against him, the reason for the termination was clearly related to the misappropriation.
Opportunity to respond
[55] I have concluded that the decision to terminate Mr Bermingham's employment was made before he was called in to the meeting on 12 August 2009. In this further respect, the Kings process was flawed. Given the admission made by Mr Bermingham at the start of the meeting, this may not support the contention that the termination of his employment was harsh, unjust or unreasonable but, at the very least, Mr Bermingham was not asked to respond to specific allegations which may have put Kings on clear notice of the involvement of other staff in inappropriate behaviours.
Unreasonable refusal to allow Mr Bermingham access to a support person
[56] I consider that this factor presupposes that an employee seeks a support person to be involved in the disciplinary process. While the application of sound defensible and fair human resource management processes mitigates in favour of extending the offer of a support person, I do not consider this factor necessarily requires that this happen.
[57] There is no evidence that Mr Bermingham asked for access to a support person and that such a request was refused.
Unsatisfactory Performance
[58] Notwithstanding other concerns about Mr Bermingham’s work performance and behaviour, I do not consider that these matters resulted in the termination of his employment. Accordingly, I do not consider that the issue of a warning is relevant except to again note the apparent inconsistency in the Kings management approach to the overall incident.
Employer Size
[59] The evidence before me is that Kings is a substantial business and that it has a correspondingly comprehensive range of policies and procedures.
Human Resource Management expertise
[60] Kings management had access to human resource management specialist expertise. As I have already observed, the manner of involvement of this expertise and/or its competence were factors that contributed to an inconsistent approach to the situation.
Other matters considered relevant
[61] I have already remarked on the appropriateness of the Kings management approach to this matter.
Conclusion-Harsh, Unjust or Unreasonable
[62] The term “harsh, unjust or unreasonable” was considered by Brennan CJ, Dawson, Toohey, McHugh and Gummow JJ in Byrne and Frew v Australian Airlines Pty Ltd 2 in the following terms:
“….. 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.”
[63] Having taken all of the evidence into account, I consider that the termination of Mr Bermingham's employment cannot be regarded as harsh. I do not consider Mr Bermingham's dismissal to be unjust. He admitted to taking money which warranted the termination of his employment. However, the substantial inadequacies associated with the investigation and the inequities which this invited, mean that I regard the termination of employment as it occurred on 12 August 2009 as unreasonable in that it:
- was heavily reliant on limited information from other employees who Kings knew were also involved in the misappropriation;
- was made without a comprehensive and equitable investigation of what actually occurred, and
- was partly based on Mr Bermingham’s admission that the $100 he had been given by Mr Sherriff as he was leaving for the interview, was wrongly taken from Kings, when Mr Sherriff was similarly implicated in this event and was apparently aware of the possibility of the termination of Mr Bermingham’s employment.
[64] Mr Bermingham conspired to participate in the misappropriation of funds and hence conducted himself in a manner fundamentally inconsistent with the basic expectations of an employee.
[65] Consequently, on the information before me, the termination of Mr Bermingham's employment was inevitable, but the manner in which it occurred was unreasonable. Accordingly, I find that whilst the termination of employment was not harsh or unjust, it was unreasonable.
Remedy
[66] Section 390 states:
“390 When FWA may order remedy for unfair dismissal
(1) Subject to subsection (3), FWA may order a person’s reinstatement or the payment of compensation to a person, if:
(a) FWA 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) FWA may make the order only if the person has made an application under section 394.
(3) FWA must not order the payment of compensation to the person unless:
(a) FWA is satisfied that reinstatement of the person is inappropriate; and
(b) FWA 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.”
[67] This section provides a discretion for Fair Work Australia to order a remedy if it is satisfied that certain preconditions have been met. A remedy may be reinstatement or compensation in lieu of reinstatement. These provisions are discretionary in that there is no obligation to award either form of remedy.
[68] Little material was put to me with respect to remedy.
[69] Nevertheless I consider reinstatement to be entirely inappropriate. Mr Bermingham's conduct has clearly destroyed the necessary trust which is a prerequisite for any employment relationship. The behaviour which resulted in the termination of his employment was entirely inappropriate. In addition, I have concluded that Mr Bermingham's relationship with other employees, including, but not necessarily limited to Mr Sherriff, is severely strained so as to be unworkable.
[70] I have considered the extent to which an order for payment of compensation is appropriate given that I consider that the termination of Mr Bermingham's employment was justified but, in effect very poorly implemented.
[71] In this respect, section 392(2) specifies a number of factors to which I have had regard. I am satisfied that any amount which I may consider will not affect the viability of Kings business. Mr Bermingham was employed for some four years. This is a reasonable period but by no means a long period.
[72] Had Mr Bermingham not been dismissed on 12 August 2009, I consider that it is most likely that the termination of his employment would nevertheless have occurred within a matter of days, following an appropriate investigation. Further, that this termination of employment would be most likely to be without notice on the basis that it reflected serious misconduct.
[73] Mr Bermingham has advised that he gained alternative employment in November 2009 but at a lower rate of pay. In this regard I have concluded that his employment endeavours were reasonable.
[74] On this basis, the maximum amount that could be countenanced would be one week's pay. However, section 392(3) states:
“Misconduct reduces amount
(3) If FWA is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, FWA must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.”
[75] This provision represents a mandatory requirement that any compensation be reduced by an appropriate amount in the event that I am satisfied that Mr Bermingham's conduct contributed to the King's decision to dismiss him. It is patently clear that this is the case.
[76] As a consequence, I have decided against awarding any amount to Mr Bermingham in lieu of reinstatement.
SENIOR DEPUTY PRESIDENT
Appearances:
G Bermingham on his own behalf.
N Smith on behalf of Kings Transport & Logistics (Aust) PtyLtd.
Hearing details:
2010.
Adelaide:
February 3 and 4.
1 (1995) 62 IR 371 at 373
2 (1995) 61 IR 32 at 72
Printed by authority of the Commonwealth Government Printer
<Price code C, PR993702>
2
2
0