Gundi v Sensis Pty Ltd

Case [2017] FCCA 1438


FEDERAL CIRCUIT COURT OF AUSTRALIA

GUNDI v SENSIS PTY LTD [2017] FCCA 1438
Catchwords:
INDUSTRIAL LAW – Redundancy – alleged breach of Fair WorkAct2009 and Enterprise Agreement – restructure of business – admission on pleading – change of employment responsibilities – whether role rebalanced or substantial change of position – whether employee made redundant – sufficiently substantial changes in employ made position redundant – redeployment – whether employee offered Reasonable alternative position within meaning of enterprise agreement – employee not redeployed – disentitlement or exclusion of entitlement to redundancy – whether employee offered Suitable Position within meaning of enterprise agreement – onus of proof – shifting onus – employee not offered Suitable Position – entitlement to redundancy payments established – motor vehicle allowance paid under policy – whether policy incorporated into or intended to form part of contract – allowance refused – damages – serious breach of contract – repudiation accepted by employee – entitlement to damages established in sum equal to redundancy payments.

Legislation:

Fair Work Act 2009 (Cth), ss.50, 51, 546, 570

Acts Interpretation Act 1901 (Cth), s.2B

Cases cited:
Adelaide Milk Supply Co-operative Ltd (1977) 16 SASR 6
Amcor Ltd v CFMEU (2005) 222 CLR 241
Australian Paper Manufacturers Ltd v American International Underwriters (Australia) Pty Ltd (1994) 2 VR 684
Australasian Meat Industry Employees Union v Golden Cockerel Pty Ltd (2014) 245 IR 394
Bampton v Viterra Ltd (2015) 123 SASR 80
City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (2006) 153 IR 426
CDJ v VAJ (1998) 197 CLR 197
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384
Clothing & Allied Trades Union of Australia v Hot Tuna Pty Ltd (1988) 27 IR 226
Cohen & Co v Ockerby & Co Ltd (1917) 24 CLR 288
Collector of Customs v Agfa Gevaert Ltd (1996) 186 CLR 389
Commonwealth Bank of Australia v Barker [2013] FCAFC 83
Commonwealth Bank of Australia v Barker (2014) 53 CLR 169
Commonwealth Bank of Australia v Finance Sector Union (2002) 125 FCR 9
Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26
Dibb v Commissioner for Taxation (2004) 136 FCR 388
Encyclopaedia Britannica Australia Ltd v Campbell [2009] NSWCA 286
Ex parte Adelaide Milk Supply Co-operative Ltd (1977) 16 SASR 6
Factory 5 Pty Ltd (In Liq) v State of Victoria (No.2) [2012] FCAFC 150
Finance Sector Union of Australia v Commonwealth Bank of Australia [2001] FCA 1613
Fosters Group Ltd v Wing (2005) 148 IR 224
Gamboni v Bendigo and Adelaide Bank Ltd (2013) 39 VR 578
Goldman Sachs JB Were Services Pty Ltd Nikolich [2007] FCFCA 120
Hodgson v Amcor Ltd (2012) 264 IR 1
Independent Commission Against Corruption v Cunneen [2015] HCA 14
Jones v Department of Energy and Minerals (1995) 60 IR 304
Kucks v CSR Ltd (1996) 66 IR 182
Malec v J C Hutton Proprietary Limited (1990) 169 CLR 638
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
Meehan v Jones

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AGLC
Gundi v Sensis Pty Ltd [2017] FCCA 1438
Case
[2017] FCCA 1438
Decision Date

CaseChat Overview and Summary

This matter concerned a dispute between Mr Gundi and Sensis Pty Ltd, heard by Justice Kelly in the Federal Court of Australia. Mr Gundi alleged that Sensis had failed to pay him the full commission entitlements due under his employment contract. The core of the dispute revolved around the interpretation of his sales targets, performance reviews, and the commission structure implemented by Sensis.

The legal issues before the court were whether Mr Gundi had met his sales targets as stipulated by Sensis, the nature and impact of changes to Sensis' commission structure, and whether Sensis had acted in accordance with its own policies and Mr Gundi's employment contract in calculating his commission. Specifically, the court had to determine if Mr Gundi's performance in sales campaigns met the required thresholds for commission eligibility and if the revised commission policy, introduced in February 2015, altered his substantive commission opportunities or merely his incentivisation method.

Justice Kelly's reasoning focused on the evidence presented by both parties regarding Mr Gundi's sales performance and Sensis' commission policies. The court considered evidence that Mr Gundi had not consistently met his yearly dollar targets and had failed to achieve an annualised growth target in one sales campaign. Regarding the commission structure, the court noted Sensis' assertion that it had discretion to vary commission structures, but found that the 2015 Sales Commission Policy, which applied to the period in question, provided a regulated framework for commission payments. The policy indicated that changes would be communicated and that Sensis would not reduce the "on target ending opportunity" detailed in an employee's contract. The court found no express term supporting Sensis' claim of unfettered discretion over the commission structure.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Mr Salter challenged Mr Gundi’s evidence that he, Mr Gundi, had consistently met the yearly dollar target set for him by Sensis for its sales year. Mr Salter pointed out that:(a)during issue 35, or I.35, (sales campaign ending 22 February 2015) – Mr Gundi had fallen short in the year to date sales target of $1,248,440. He stated that Mr Gundi had achieved a result of $1,242,203;(b)during issue 36 (sales campaign ending 14 February 2016) – Mr Gundi had achieved the annual dollar return target that had been set for him but he had failed to achieve an annualised growth target set in that year;(c)as he had not carried out more than one annual performance review for Mr Gundi, he also disagreed that his performance reviews were always highly positive. He gave evidence of the results of the performance review which he had conducted, describing it as being “good, but there were areas for improvement” and produced Sensis correspondence with Mr Gundi which suggested that the results of the performance review had been used to determine his remuneration increase – a 1% increase being given on 10 December 2014.Remuneration Mr Gundi gave evidence of his remuneration, superannuation, motor vehicle and commission entitlements. He gave evidence that his annual remuneration was increased in January 2016 to $73,029 plus superannuation and a motor vehicle allowance of $17,420. As to his commission entitlements, Mr Gundi swore that he was “eligible to earn a fortnightly commission of approximately 2% of any account I brought in and managed.” He gave evidence that in February 2015, Sensis implemented a new commission structure which differed from the then existing structure in that “a minimum of 80% of the monthly target had to be met in order to be eligible to earn a monthly commission of $2,500.” Mr Salter also gave evidence as to the basis on which Sensis employees were paid commission including that “the commission structure is at the discretion of Sensis and is varied from time to time to reflect the focus of the business from one sales campaign to the next.” Mr Salter’s evidence was that in February 2015, Sensis changed how an employee’s sales performance was measured but that this change in the method of measuring sales performance “did not impact the overall commission opportunity available to employees.” As Mr Salter characterised this change, it was only a change to the way in which an employee was incentivised. The substantive change was that, instead of being paid a flat commission per sale, employees became eligible for commission “based on revenue growth” and that the method of calculating commission was as a percentage of the revenue growth target so assigned to an employee. The example provided by Mr Salter was as follows:For example, if an employee is set a target of $20,000 in a month and their revenue result is $40,000 their percentage to target is 200%. Mr Salter produced a 2015 Sensis commission policy. The document so produced indicates that the policy was originally established on 17 June 2015 and updated with effect from 30 June 2015 so as to deal with a topic described as bonus payments. Although the policy is described as the Sales Commission Policy 2015, it dealt in express terms with the “2016 sales commission plans” and Appendix B to the policy confirmed that it operated for the period February 2015 to February 2016. While the policy does provide that the payment of commission was to be at the discretion of Sensis in particular circumstances (such as where an employee had been given a warning), other statements in the document indicate that the means of securing payment of commission was highly regulated with the overall expressed object that “measures have been put in place to ensure a consultant does not receive more than the commission amounts that are payable to him or her in accordance with this policy.” Further, the policy provided that Sensis would communicate any changes to the plan prior to implementation and stated further that “Sensis will not reduce the on target ending opportunity as detailed in the employee’s contract of employment.” Beyond this, I could not locate an express term supporting the statement by Mr Salter that Sensis’ “commission structure is at the discretion of Sensis.”