Harley Logan v Brunel Energy Pty Ltd
[2024] FWC 3143
•9 DECEMBER 2024
| [2024] FWC 3143 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Harley Logan
v
Brunel Energy Pty Ltd
(U2024/3807)
| DEPUTY PRESIDENT LAKE | BRISBANE, 9 DECEMBER 2024 |
Application for an unfair dismissal remedy – remedy determined – assessment of compensation – compensation awarded.
Background
The background to this matter is set out in my decision of 30 September 2024.[1]
On 30 September 2024, I determined that the Applicant’s dismissal was not a genuine redundancy. The matter was listed to be determined on merits and remedy.
On 10 October 2024, the Respondent’s representative contacted my Chambers to advise that the Respondent would not be contesting the issue that the Applicant was unfairly dismissed. The Respondent agreed with the Applicant that reinstatement would not be feasible. The Respondent requested that amended directions be issued to limit the hearing to the issue of compensation. I granted the Respondent’s request and issued amended directions accordingly.
The Applicant was ordered, at the request of the Respondent, to produce any contracts of employment and payslips from after the date of the dismissal. The Applicant complied with this order and produced the contract and payslips from his new employer.
A hearing was held on 4 November 2024. The Applicant was self-represented. The Respondent was represented by Mr Stephen Sasse from Alpheus Advisory Pty Ltd.
Compensation
Section 392 sets out the considerations for awarding 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.”
The established approach to assessing compensation in unfair dismissal cases was set out in Sprigg v Paul Licensed Festival Supermarket,[2] and has been applied and developed by Full Benches of the Commission.[3]
The assessment of compensation involves a four-step process. however, this is not a substitute for the words in the Act:
“Step 1: Estimate the remuneration the employee would have received, or have been likely to have received, if the employer had not terminated the employment (remuneration lost). I am also required to consider the length of service with the employer[4] and the ability to find a new role as a relevant factor in calculating compensation per s392(2).
Step 2: Deduct monies earned since termination.[5]
Step 3: Discount the remaining amount for contingencies.[6]
Step 4: Calculate the impact of taxation to ensure that the employee receives the actual amount they would have received if they had continued in their employment.”
Step 1: Estimate the remuneration the employee would have received, or have been likely to have received, if the employer had not terminated the employment (remuneration lost).
The Applicant worked with the Respondent from 16 May 2022 to 14 March 2024.
There were two main sources of contention between the Applicant and the Respondent regarding compensation. First, the length of time which the Applicant would have remained employed by the Respondent had he not been made redundant, and second, the amount which the Applicant would have received, if any, under the Respondent’s incentive scheme.
Length of Time
The Applicant has submitted that he would have remained in the Respondent’s employ for at least another twelve months had he not been made redundant. The Applicant points to awards he qualified for, including a “Big Shot” award in 2023 for being in the top 10 consultants nationwide.[7]
The Applicant also argues that his replacement, Mr Mercer, has performed “at a level far below that of my own” since taking the role.[8] The Applicant’s logic is that if Mr Mercer has lasted eight months with an allegedly poor performance, then the Applicant could be assumed to have lasted for at least another twelve months, had he not been made redundant. The Applicant based his claims that Mr Mercer was an underperformer on things he has been told by employees who still work for the Respondent. This evidence is unsubstantiated. Even if it were true that Mr Mercer has underperformed the Applicant, it does not necessarily follow that the Applicant would have stayed on for another twelve months. Mr Mercer was headhunted for the role so it makes sense that the Respondent keep him on through the probation period.[9]
The Respondent submits that the Applicant would have remained in the Respondent’s employ for no longer than three months.[10] The Respondent points to statements from the Applicant’s supervisors which were submitted in evidence during the jurisdictional objection hearing. The General Manager of the ICT division for the Respondent, Mr Mark Crow, noted there had been reduced market demand and that the each of the East Coast ICT consultants were being reviewed against the following capabilities:
the identification of potential new clients;
securing job orders or supplier agreements;
filling orders (i.e. placing candidates); and
ongoing client service and support.[11]
Mr Crow noted that the Applicant was the lowest ranked in his cohort “based on his failure to demonstrate sustainable and effective business development capability”.[12] I find that vague statements from the Respondent about business development capability are self-serving and are not clear evidence of performance issues. However, I will accept that the Respondent had some concerns about the Applicant not meeting budgets.
The Respondent also points to the evidence of Mr Chris Dawe. Mr Dawe noted that the Applicant was 45% below budget in securing jobs for the ICT team within his area of responsibility.[13] However, in the same statement Mr Dawe says, “the demand for C&T candidates was on average more than 40% below budget.”[14] It is not clear to me the extent to which the Applicant’s lower job count is due to performance issues or prevailing market conditions.
I am unconvinced by the Respondent’s claim that the Applicant would have lasted only three more months with the Respondent.
However, in consideration that the Applicant had only been with the Respondent for a year and ten months and, as it was uncontested that the Respondent had concerns about the Applicant meeting budgets, I find that the Applicant would have lasted no more than six months before being validly terminated or the employment relationship otherwise ending.
Incentive Scheme
The Applicant had been in the consultant incentive scheme for the duration of his employment with the Respondent. It was uncontested that the Applicant was likely to have remained in the incentive scheme had his employment continued.[15]
I note clause 5 of the Applicant’s employment contract reads:
“Except as required by legislation, incentives do not form part of the Employee’s total
remuneration package for the purpose of calculating payment in lieu of notice or any other entitlement.The Employee may be eligible to participate in the Employer’s incentive scheme. Any
award or payment provided by the Employer is at the discretion of the Employer, and is
not a contractual entitlement. The employer may suspend, amend, replace or withdraw
the incentive scheme at any time. Payment of an incentive in one year does not indicate
any entitlement in any subsequent year.The Employer will not be liable to compensate the Employee for any loss of entitlement
under the incentive scheme caused by, or related to, the termination of the Employee’s
employment or the giving of notice of termination of employment, for any reason whatsoever”[16]
At the time of the Applicant’s dismissal, the total fixed remuneration (TFR) for consultants with the Respondent was $100,000.00.[17] There were some discrepancies in the parties’ material as to this figure. The Applicant stated that this figure was variously $95,000.00 and $97,500.00.[18] In the Form F3, the Respondent noted the Applicant’s base salary was $97,750.00.[19] I have used the $100,000.00 figure from the Respondent, as I note it is indicated in the Respondent’s redundancy letter that the Applicant had a “new TFR”.[20]
Prior to his dismissal, the Applicant’s commission threshold was set at TFR × 2, meaning using the $100,000 TFR, he had to generate $200,000.00 before he started earning commission.[21] The Commission was paid at a rate of 20% once the threshold was reached.[22]
There was a dispute between the Applicant and Respondent about whether the Applicant’s commission threshold would be increased in March 2024.
Ms Natalie Morton, HR Manager for the Respondent gave evidence during the hearing. She stated that the incentive program was reviewed yearly in January and by February or March, consultants are sent letters inviting them to join the commission scheme. Ms Morton’s evidence was that the letters had been prepared in March 2024 and had been sent to the Australian and New Zealand coordinator for approval. Ms Morton stated that the Applicant’s new commission threshold had been set at TFR × 4, and a letter confirming this has been sent to the Australian and New Zealand coordinator.
The Applicant accused Ms Morton of lying under oath, stating that his threshold would not have been increased to more than TFR × 3. The Applicant points to the fact that a consultant he knows in Western Australia, who was billing at a similar rate to him, was on a commission threshold of TFR × 3.
Ms Morton stated that there are a multitude of factors at play when selecting the commission thresholds such as volume and margin considerations, the skillset and experience of the consultant, whether there is stagnation, and whether the Respondent is trying to drive up sales. The decision is a discretionary one made by senior managers. I accept Ms Morton’s evidence that there are many factors involved in the decision, which means that the consultant in Western Australia was given a lower commission threshold than the Applicant.
I accept that the Applicant’s commission threshold for 2024 had been set at TFR × 4, and the letter confirming the new threshold had not yet been sent out.
Given I have found the Applicant’s Commission threshold from approximately March 2024 would have been set at TFR × 4, this means the Applicant would have to generate $400,000 before he started earning commission. The Respondent gave evidence that the threshold was assessed each quarter,[23] meaning the Applicant would have to generate $100,000 in three months to be eligible for commission.
The Respondent submitted that, because there was no evidence of the Applicant’s job count improving, “the Applicant’s future entitlements to payments from the incentive scheme were significantly reduced, possibly to zero.”[24] I am not convinced that it was necessary for the Applicant’s performance to improve for the Applicant to meet the new commission threshold.
In 2023, the Applicant generated “over $650,000” in revenue.[25] The Applicant estimated that his annual billings in 2024 would be $724,420, based on the fact that he was billing $15,748.00 weekly to his contractors at the time of dismissal.[26]
The Applicant’s calculations of what he would have earned under the incentive scheme are on the assumption that all his current contracts would continue. The Respondent argued in this regard: “To treat the past as a guide to the future in respect of such schemes is foolhardy.”[27] I accept this statement. However, I am satisfied that if the Applicant had stayed for another six months, based on his performance in the past, he would have met the Commission threshold of $100,000 per quarter. The Applicant gave evidence that he generated $200,000 in revenue in the six months prior to his dismissal and he was generating $15,748.00 weekly prior to his dismissal.[28]
Taking into consideration the market downturn, which has been evidenced on the facts, and the fact that the scheme was entirely discretionary, I consider that a reasonable figure which represents how much the Applicant would be likely to have earned under the Commission scheme in six months is $18,000.00, which would represent an average weekly billing of approximately $11,100.00.
I calculate the amount the Applicant would have been remunerated $43,834.05 gross in TFR for six months. The Applicant’s weekly pay rate (excluding commission) at the time of his dismissal was $1,685.93.[29]
The Applicant would likely have earned $18,000.00 in commission in six months.
The total the Applicant would have likely received had he not been unfairly dismissed is $61,834.05.
Step 2: Deduct monies earned since termination.
The Applicant obtained new employment as a Senior Consultant with a recruitment firm on 7 May 2024.
The Applicant’s monthly earnings from his new employment up to 15 September 2024,[30] six months after the dismissal, were as follows:
| May | $6,254.33 |
| June | $7,132.13 |
| July | $7,132.14 |
| August | $7,132.13 |
| September | $3,566.07 (up to 15 September 2024) |
| Total | $31,216.80 |
The Applicant was paid $25,792.40 on termination of employment by the Respondent. This figure was made up of the following amounts (less tax):
4 weeks’ notice period - $6,743.70
4 weeks’ statutory redundancy pay - $6,743.70
Annual leave balance - $923.89
Normal wages up to date of redundancy - $3,478.91
Commission for the months of January and February 2024 - $12,305.00[31]
The Applicant submitted that the “true figure” of his redundancy payment was only $6,743.70.[32]
The Applicant submitted, erroneously, that the 4 weeks’ notice should not be included in the calculations for compensation because he was not given the chance to work those weeks.[33] This is incorrect. The notice was paid in lieu of service.
The Applicant also submitted that the commission payment should not be included in the calculations because he would have been paid this amount regardless of whether he was made redundant.[34] The Respondent argued that this amount was paid ex gratia.[35] It is clear in clause 5 that it is entirely up to the employer’s discretion whether to make a payment under the incentive program. Therefore, I reject the Applicant’s submission that this amount should not be included in the calculations of compensation as the Applicant was entitled to it anyway.
The Respondent suggested that the Applicant was in an incentive scheme with his new employer, and that those incentive payments should be counted. When questioned on this point during the hearing, the Applicant said that he was a part of an incentive program with his new employer, but that he had not received any commission payments yet because he had not met the commission threshold.
After deducting the amounts earned since the dismissal, $31,216.80 and $25,792.40, the total amount remaining is $4,824.85 gross.
Step 3: Discount the remaining amount for contingencies.
I do not exercise my discretion to make a discount under this step, but I note I have balanced various factors when considering the amount the Applicant would have earned under the incentive program.
Step 4: Calculate the impact of taxation to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.”
In Bowden v Ottrey Homes Cobram and District Retirement Villages,[36] the Full Bench noted that in relation to the fourth step, the usual practice is to settle a gross amount and leave taxation for determination. I will leave the issue of taxation for determination by the Respondent.
Viability
No issues of viability were raised by the Respondent.
Order
The Respondent is ordered to pay the sum of $4,824.85 gross within 21 days upon issuing this Order to the Applicant’s nominated bank account that was on payroll.
I Order accordingly.
DEPUTY PRESIDENT
Appearances:
H. Logan appearing for himself as the Applicant.
S. Sasse appearing on behalf of the Respondent from Alpheus Advisory Pty Ltd
Hearing details:
4 November 2024
Brisbane.
Hearing via Microsoft Teams
[1] Harley Logan v Brunel Energy Pty Ltd[2024] FWC 2600
[2] (1998) 88 IR 21.
[3] Bank of Sydney Ltd T/A Bank of Sydney v Repici [2015] FWCFB 7939.
[4] Fair Work Act 2009 (Cth) s392(2)(b) -(c) and s392(2)(g).
[5] Ibid s392(2)(e).
[6] Ibid s392(2)(a), (d) and (f).
[7] Applicant Submissions on Compensation [3].
[8] Ibid.
[9] Natalie Morton First Witness Statement [8].
[10] Respondent Submissions [14].
[11] Witness Statement of Mark Crow [6].
[12] Ibid [7].
[13] Witness Statement of Chris Dawe [7].
[14] Ibid [6].
[15] See Respondent Submissions at [25].
[16] Annexure NM-1 to First Natalie Morton Witness Statement
[17] Natalie Morton Second Statement [4]; Annexure NM-3 Incentive Scheme Invitations.
[18] Applicant Submissions on Compensation [2], [9].
[19] Form F3 page 4.
[20] Redundancy letter dated 14 March 2024.
[21] Respondent Submissions [4].
[22] Ibid.
[23] Second Statement of Natalie Morton [4]
[24] Respondent Submissions on Compensation [25]
[25] Applicant Initial Submissions from Jurisdictional objection hearing
[26] Applicant Submissions on Compensation [9].
[27] Respondent Submissions on Compensation [21]
[28] Respondent Submissions on Compensation [21]
[29] Redundancy Letter showing 4 weeks’ pay is $6,743.70 gross.
[30] Payslips from Applicant from Order to Produce
[31] Redundancy letter dated 14 March 2024.
[32] Applicant Submissions on Compensation [1].
[33] Ibid.
[34] Ibid.
[35] Applicant Submissions on Compensation [4].
[36] [2013] FWCFB 431.
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