Hemade v Maxwell Chemicals Pty Ltd

DECISION NO: 242/96
CATCHWORDS
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - claim of UNLAWFUL TERMINATION - whether VALID REASON for termination - whether HARSH, UNJUST OR UNREASONABLE - APPLICATION DISMISSED.
Industrial Relations Act 1988 ss 170DE(1), 170DE(2), 170EA
Ali Mutlaq HEMADE -v- MAXWELL CHEMICALS PTY LTD
-WI 2568 of 1995

Before:                    BOON JR
Place:            PERTH
Date:                        4 JUNE 1996
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WI 2568 of 1995

B E T W E E N:
Ali Mutlaq HEMADE
Applicant

A N D:
MAXWELL CHEMICALS PTY LTD
           Respondent
MINUTE OF ORDERS
4 JUNE 1996            BOON JR
THE COURT ORDERS THAT:

The application be dismissed.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules
IN THE INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
WI 2568 of 1995
B E T W E E N:
Ali Mutlaq HEMADE
           Applicant
A N D:
MAXWELL CHEMICALS PTY LTD
           Respondent
REASONS FOR DECISION
4 JUNE 1996  BOON JR
This is an application under Section 170EA of the Industrial Relations Act 1988 in relation to the alleged unlawful termination of the applicant's employment by the respondent. The applicant, Mr Hemade, alleges that there was no valid reason for the termination of his employment as required by the provisions of Section 170DE(1). Further, Mr Hemade says that in any event the termination was harsh, unjust or unreasonable within the meaning of those words in Section 170DE(2). The respondent denies that the termination was harsh, unjust or unreasonable and says that there was a valid reason, based upon Mr Hemade's performance, for the termination.

There is a further claim by Mr Hemade in this Court's associated jurisdiction for the non payment of a bonus allegedly agreed to be paid to him by his employer. The respondent's position in relation to the bonus is that it was performance based and because the group in which Mr Hemade was employed did not meet the criteria for the payment of the bonus, it was not payable to Mr Hemade in the course of the period of his employment by the respondent.

BACKGROUND

The applicant, Mr Hemade, is a 37 year old man who is originally from Palestine. He has lived in several countries, including Lebanon, the United States of America and the United Arab Emirates. Mr Hemade graduated from a university in Ohio, in the United States of America, in 1982 as a chemical engineer. Since then he has been employed in the chemical industry, primarily in the sales field. Between October 1986 and April 1994 he was employed by BP Middle East as a sales manager. He resigned from that position in April 1994 and moved to Western Australia.
The respondent, Maxwell Chemicals Pty Ltd, is a specialty chemical company which manufactures and sells water treatment and industrial chemicals. In the process side of its business it has some very large clients such as Alcoa Worsley and BHP. That side of the business was not relevant to the hearing in this matter. The water management group of Maxwell Chemicals Pty Ltd looks after middle market accounts in water treatment and waste water treatment. The work carried out by the water management group includes sales and service relating to medium sized boilers and small to middle market industrial and commercial cooling towers.
In about June of 1995 Maxwell Chemicals Pty Ltd decided to recruit several new employees, both for the process part of its operation and for the water management group. The company contacted Mr Gary Davis, the general manager of Beilby Management Services, a company which provides recruitment services. Mr Davis had previously spent some years working in the chemical industry for one of Maxwell Chemicals Pty Ltd's main rivals and had an extensive knowledge of the type of work performed by the employees of such companies. One of the positions advertised was that of technical sales representative with the water management group of Maxwell Chemicals Pty Ltd. Mr Hemade contacted Mr Davis and an interview was arranged between Mr Davis and Mr Hemade. Mr Hemade's evidence was that he could not remember if Mr Davis told him of the type of work he would be required to carry out with the respondent company if he was successful in his application. The evidence of Mr Davis, which I accept, was that he explained to Mr Hemade as thoroughly as he possibly could what the job would entail. According to Mr Davis, he explained that the position of technical sales representative would require at least a 50% component of service as opposed to sales work.
Mr Davis forwarded a list of names of potential candidates for the positions to Maxwell Chemicals Pty Ltd. Mr Hemade was subsequently interviewed by two employees of Maxwell Chemicals Pty Ltd, Mr Grenville Delfs and Mr Peter Duncan. Mr Delfs is the manager of the process group at Maxwell Chemicals and Mr Duncan is the sales manager for the water management group of Maxwell Chemicals. Mr Delfs gave evidence that when they interviewed Mr Hemade he and Mr Duncan each took about ten to fifteen minutes to explain the type of work available in the different sections of their company. Mr Hemade was then asked to make an election in relation to the position which most interested him. Mr Hemade elected the position as technical sales representative in the water management group. Mr Hemade's evidence was that he elected the position with the water management group as he had been in sales almost all of his working life and he wanted to go for the position with the sales aspects. Mr Delfs and Mr Duncan both gave evidence that the reason given by Mr Hemade for choosing the water management group position was that the level of contact with clients would be much more diverse. This was because the process position involved work only for BP Kwinana. After Mr Hemade made the election, Mr Duncan went into a lot more detail about what the work as technical sales representative would involve. The interview lasted for over an hour. Mr Delfs remembered Mr Duncan saying that the company was looking for someone to take on the role of looking after existing clients so that Mr Patrice Laure, another technical sales representative, would be free to more actively pursue new business. The company had expanded over the previous few years and was hoping to double its business in the next few years. It was thought that as Mr Laure was an excellent salesperson, the company should employ a new technical sales representative to enable Mr Laure to perform more sales work as opposed to service work.
Mr Delfs' evidence was that at the interview it was mentioned that a typical split of sales as to service work for a technical sales representative with the company would be 50% sales and 50% service. Mr Delfs said that it was explained that in the initial stages of Mr Hemade's employment, the service component would consist of approximately 70% and the sales component around 30%. Mr Delfs' evidence was that Mr Hemade was told that he would initially probably be spending more time doing testing or service work as it would take him some time to learn the work. Mr Duncan's evidence was that at the interview he told Mr Hemade that he would initially have a programme of 70% service work and 30% sales work, and that they would expect that as they had more growth in their sales, the job would become 50% sales and 50% service. The company was looking for Patrice Laure to come back to being about 50% sales and 50% service in order to get some new sales growth in the business.
Mr Hemade's evidence in relation to the interview was that although he understood the job to involve some service work, he was not advised by Mr Duncan until approximately three weeks after he was first employed that he was expected to do 70% service work and only 30% sales work.
The service component of the work of a technical sales representative includes the routine testing of the water on cooling towers and boilers on a regular basis, either weekly, fortnightly, monthly or bi-monthly, depending on the size of the business and the need of the customer. The company sends a technical representative or technical sales representative to each customer to carry out tests and then reports on the performance of the company's chemicals in the customer's equipment. Mr Laure's evidence in this regard is that the word "service" is a misnomer and it was much more "technical support" which Mr Hemade and he were doing. Mr Laure's evidence was that the service component of the work involved simple testing procedures which did not require dirty manual work.
The Court heard evidence from Mr Duncan that the sales philosophy of Maxwell Chemicals was outlined to Mr Hemade at the interview. Mr Duncan said that he explained that the company sells its products through service of its existing customers. The company has a large number of customers and a lot of its new business comes from selling either new equipment or tower cleans to those existing customers. Through its regular servicing procedures, the company's representatives identify new sales opportunities for its existing clients. This selling philosophy has been very successful for the company in the past.
Mr Hemade said that at the interview the question of salary was discussed. Mr Hemade, however, could not remember telling Mr Duncan and Mr Delfs that he was looking for $42,000 per annum. He did remember that Mr Duncan and Mr Delfs both stated that they were considering something around the $35,000 mark. A bonus scheme was mentioned but Mr Hemade said that he was never told either at the interview stage or within the next few days that the bonus system was performance based. According to Mr Hemade, he was offered an annual salary of $36,000 plus a flat quarterly bonus of $1500 per quarter. According to both Mr Delfs and Mr Duncan, it was made clear to Mr Hemade at the interview that the company was not in a position to offer the $42,000 per annum salary which Mr Hemade was asking for. They both gave evidence that it was said to Mr Hemade that they could offer only a base salary of $36,000 per annum with quarterly performance based bonuses of up to $1500. There was therefore a potential for Mr Hemade to earn $42,000 per year if the targets for the bonuses were reached. According to Mr Duncan, Mr Hemade was made a formal offer of the position as technical sales representative with the company on the basis of a base salary of $36,000 per annum, plus $1500 bonus paid quarterly, based on achieving 90% of gross margin. The bonus payment was based on the group's performance, not on Mr Hemade's personal performance. Mr Hemade was also offered a fully maintained company vehicle and entry into the Gibson Chemical Industry's Superannuation Fund. Mr Hemade accepted the position. It was agreed that Mr Hemade would attend at the office in a few days' time to obtain a medical certificate. At that stage, Mr Duncan met Mr Hemade and once again explained in detail, according to Mr Duncan, the basis upon which the quarterly bonus would be paid. Mr Hemade denies that that conversation took place.
Mr Hemade started work with the respondent company on Wednesday, 14 June. It is common ground that he was introduced to Patrice Laure who provided him with a service schedule, a project list and other documentation. Mr Hemade was then trained on the job for the next 2½ weeks by Mr Laure and two technical representatives. The service schedule given to Mr Hemade listed all of the service work required to be done by Mr Hemade on a monthly basis. It was the evidence of Mr Duncan and Mr Laure that the service schedule was compiled on the basis of the knowledge of the various employees of the respondent, primarily Mr Laure and Mr Duncan, of the nature of the work required to be done for each of the listed clients and the amount of time each job would be likely to take. Mr Laure's evidence was that he had intimate knowledge of these tasks as he had performed them himself. It was the evidence of Mr Laure and Mr Duncan that the service schedule provided to Mr Hemade was devised on the basis that it should take approximately 70% of his time. The remaining 30% of his time was to be devoted to sales work. In respect of this he was provided with a projects list, which was a list of its clients and the nature of the potential sales which could be made in respect of each of them. Mr Hemade was allotted a certain amount of these projects and he was expected to try to achieve sales in relation to the clients set out on the list.
Mr Hemade's main complaint at the hearing was that although the company's attitude was that the service schedule should only take him approximately 70% of his time, in fact he found that the service work was taking all, if not more, of his allotted time. Mr Hemade's evidence was that he was working long hours and never had any time to work on his projects list. He said that he was constantly "crying out for help" in this regard but the company kept adding more and more clients to his service list. Mr Hemade's evidence was that he never had any of his service clients taken away from his schedule. He said that although he accepted that a technical sales representative had to do some service work, he felt his skills as a salesperson were being wasted and that he was not given any opportunity to try to make sales.
Both Mr Duncan and Mr Laure, however, gave evidence that they could not understand why Mr Hemade said that he had no time to work on his projects. Although they admitted that a few extra clients were added to his service list, they said that at least one client, that is a Royal Perth Hospital service on a Wednesday which took six to seven hours, was taken away from Mr Hemade and allocated to another person after his complaints. Both Mr Duncan and Mr Laure spoke to Mr Hemade frequently and, according to Mr Duncan, Mr Hemade was always very positive to him about his job. Mr Duncan does not recall any complaints about there being no time for selling until his spoke to Mr Hemade in September 1995. Mr Laure was aware of Mr Hemade's attitude and recalled how Mr Hemade at one stage said to him that it was ridiculous that they were spending so much time servicing the clients when they should both be using their time to sell, not service. Mr Laure said that he told Mr Hemade that at this stage the company could not justify employing two full time sales people although that position might change in the future. Further, Mr Allenby, the general manager of the company, and Mr Duncan, both recall a meeting at which Mr Hemade questioned the sales philosophy of the company. It was explained to Mr Hemade that the company had been very successful in the past with its philosophy of selling through service and that it did not intend to change this philosophy for the time being.
Mr Laure gave evidence that he and Mr Duncan looked at the service schedule given to Mr Hemade several times. They were still of the view that the service work should only take 70% of Mr Hemade's time. Mr Laure said that in the 2½ weeks during Mr Hemade's training, when he was shown how to do each of the service jobs by his co-workers, they had no trouble completing the tasks in the allotted time. Mr Laure's evidence was that the tasks during this training period took longer than usual to complete as some extra time was taken up in teaching Mr Hemade about each job. Because of this, Mr Laure could not understand why Mr Hemade was complaining that he had no time to sell. Mr Hemade said at one point in his evidence that during the first two weeks when he was shown how to do the service, he could tell that this was not the service that he would be doing. Mr Hemade said that "A service that would require one hour was being done in 10 to 15 minutes. The way I do my service - and I hope tomorrow our colleagues from Maxwell Chemicals can tell you that - I always made the full service up to the maximum. I never really left anything. ... I have done everything to the maximum and I don't think - there were some people who performed probably 10 to 15 jobs per day. I wouldn't do that because I think a service - especially if you understand the chemical industry and how crucial the dosing is - either a service is done properly or I think you should stay home". The respondent company's witnesses said that they spoke to Mr Hemade several times about the way in which he was doing the service work and the amount of time he was taking but the situation did not improve.
Mr Laure said that he became concerned after some time that Mr Hemade had a negative attitude towards the service part of his work. Further, it was apparent that Mr Hemade's performance in the field of sales was falling far short of expectations. Mr Hemade said that he had made a number of significant sales. These sales were gone into in some detail at the hearing but they are not necessary to enumerate here. The evidence of the company's witnesses contradicted the claims made by Mr Hemade in this regard. Even if Mr Hemade's evidence in relation to the sales he allegedly made is accepted, these still fell far short of the company's requirements of Mr Hemade in the area of sales.
THE TRANSFER TO THE SERVICE DEPARTMENT
There was a meeting in September 1995 at which Mr Hemade explained to Mr Duncan the problems he was having with the service work. According to Mr Duncan, some of Mr Hemade's service commitments were taken away from him at that time. Mr Hemade denies this. It is the company's position that Mr Hemade's work performance still did not improve after that September meeting and after the first quarter of the financial year, the company's sales figures were down significantly on the expectations for that period.
Mr Duncan's evidence was that he met Mr Hemade in November 1995 and advised him that the company was going to give him 100% service time to try to free up Patrice Laure more to enable him to sell more. Mr Hemade was to go from working for Mr Duncan to working for Jim McCarthy, the service manager with the water treatment group, because "We thought that Ali didn't have a good enough grasp of our business at that stage to enable him to sell it, so for that reason, we thought that if we gave Ali the opportunity to settle in and service more, that he would then build the background to become a - get the confidence to sell our water treatment". Mr Duncan explained that the service people who were reporting to Jim McCarthy had a lot less contact with people on site. They were not required to deal with the plant engineers and ask for order numbers, but were to turn up on site on a regular basis, according to the service schedules, and do the water treatment and provide a report either to someone on site or the reports were sent to a sub-contractor.
It was made clear by all of the witnesses that although the people working for the service department did not have a projects list, they would still try to sell as many of the company's products as possible. The main difference seemed to be that there was a lesser expectation upon those people to make sales. Mr Hemade gave evidence that he was extremely surprised when he moved to the service section that his workload did not change at all. He was still expected to work under the same service schedule as before, even though he had complained that there was too much service work for him to do. The company's position was that as Mr Hemade had been finding it difficult to make sales, it was thought best to move him to the service section to enable him to train further in service and have the expectation of making sales taken away from him for the time being. There would be an opportunity for Mr Hemade to return to the sales department at some unspecified time in the future.

There is no doubt that Mr Hemade did not like doing service work and was not pleased at being moved to the service department. All along he hoped to be doing more sales work and less service work. The company's position was that as they made their sales through the service work, it was not until Mr Hemade had a better understanding of the service work that he could expect to make sales. This was why he would be expected to devote his time entirely to service work for the time being so that he could gain more confidence in that area.
It is the company's position that once Mr Hemade was transferred to the service section, his attitude to his work deteriorated. This is denied by Mr Hemade. It is common ground that the nature of Mr Hemade's work in the service section did not change significantly from the nature of the work he was carrying out in the sales department. It was the nature of the employer's expectations of Mr Hemade which changed. It appears that Mr Hemade thought of his transfer to the service section as a demotion. His vehicle was exchanged for a van, which would carry larger amounts of chemicals. It did not contain a mobile phone, although his previous vehicle had contained a telephone.
Mr McCarthy gave evidence that on some occasions when concerns were raised he accompanied Mr Hemade to the premises of some clients. Mr McCarthy's evidence was that once Mr Hemade was transferred to his section, complaints started coming in from customers. The three complaints identified by the respondent are as follows:
(1) Foodland, Canning Vale
Mr McCarthy said that he received a telephone call from the engineer looking after the FAL plant regarding water problems in their plant room. Maxwell Chemicals had the responsibility of regularly back flushing a filter to remove suspended solids at that plant. There was a problem with the water flow through a drain line. The volume of water discharged during the back flush was not being handled properly by the drain and it required the individual who was conducting the service to monitor the rate of discharge. This was done by turning off the power at various stages of the back flushing operation, much as one would turn off a tap on a temporary basis. Mr Hemade had attended at this site and had apparently failed to properly monitor the rate of discharge. On this occasion the water had overflown into an area of the plant room which contained electrical equipment. This could have damaged the electrical equipment and could have been dangerous.
Upon receiving the complaint, Mr McCarthy attended the site to verify the problem. He and another employee cleaned and washed out the plant room on the site. There were water stains on the plant room floor covering an area of 10 to 15 metres. Mr McCarthy conceded that there had been a problem with the equipment for a considerable period of time but said that everyone, including Mr Hemade, was aware of this problem and knew that whoever was carrying out the back flushing operation had to take care and monitor the rate of discharge. Mr McCarthy said that he spoke to Mr Hemade about this matter once he had checked out the site. Mr McCarthy said that he also wrote a note to Mr Hemade to explain the problem and the possible ramifications to the client.
Mr Hemade's evidence was that at one point he was back flushing the filter when he was in the company of Mr Allenby and Mr Duncan who saw water spill on the ground and did not say anything. He said he never assumed that there could be a danger and that the filter was always back flushed in the same way which was witnessed by Mr Duncan and Mr Allenby. Mr Hemade denied that there was ever any indication made to him that there was a problem with water on the floor. He denied ever having been spoken to or written to by Mr McCarthy in relation to that matter. A document was tendered on behalf of the respondent setting out the basis of the complaints from Mr McCarthy. Mr Hemade denies ever having received that memorandum. Mr McCarthy, however, gave evidence that the original of that document was retrieved from Mr Hemade's house and was amongst papers given back to the company by Mr Hemade himself after his employment was terminated.
(2)Direct Engineering Services, Bunbury
Mr McCarthy said that he received a telephone call from the service manager of Direct Engineering Services, Bunbury, regarding a job serviced by Maxwell Chemicals Pty Ltd at the Bunbury Tower, which is an office block. Direct Engineering Services was the subcontractor to which Maxwell Chemicals was responsible. The client raised several concerns relating to service work carried out by Mr Hemade at that site. His main concern was that Mr Hemade had not called in at the office personally to advise him of a faulty pump at the tower. Instead, Mr Hemade had telephoned him as he was leaving Bunbury. There was a further complaint in relation to the service by Mr Hemade on that occasion in that he left empty chemical containers, gloves and some hosing lying around on the floor. Mr McCarthy explained that it is part of company policy to remove empty containers and to leave the service sites in a neat and tidy condition. The customer had also raised concerns regarding some product spillage in the plant room at the Bunbury Tower. Mr McCarthy went to the site to inspect it. He found the hose, gloves and empty containers and a small satchel there. According to Mr McCarthy, this did not meet the standards that the company tries to maintain to make sure that premises are left in a tidy condition. According to Mr McCarthy, he raised the matter with Mr Hemade who said that the stains had already been on the floor for a long time. According to Mr McCarthy, when he spoke to Mr Hemade highlighting the client's dissatisfaction, Mr Hemade's response was that "It was not such a big deal". Mr McCarthy, after speaking to Mr Hemade, made a note in writing.
Mr Hemade's evidence in relation to this incident was that the stains on the ground at the site were not his responsibility and were about two years old. He said that he provided the service report to the client on every service trip and it was clearly mentioned in the report that the pumps were not working and needed attention. Mr Hemade's view was that he could not be expected to know that the client would require him to personally attend at the office to explain the problem. Before leaving Bunbury he had made sure that he contacted the engineer who was looking after the site. He mentioned this on the telephone and it was also mentioned in the service reports which went to him about two days later. Mr Hemade admitted leaving the gloves, the hose and the empty containers on the site. He said that it was something that he should not have done but that it was not a big problem. The two or three empty packs which he had left, he was unable to fit into his vehicle. It was illegal to put them into the rubbish bin. He was planning to pick them up on his next service trip and he did not think that it was a problem as the floor of the Bunbury Tower "is a place where nobody goes".
(3)Shenton Park Hospital
Mr McCarthy's evidence was that he received a telephone call from a plant engineer at the Shenton Park Hospital regarding product stains on a freshly painted wall, and also identification marks in felt pen put on doors at the hospital. The client had concerns that after Mr Hemade had carried out a service at the hospital, some water containing tannin splashed onto and stained a wall which had been freshly painted. This was not reported to the hospital at the time. Mr McCarthy went to the hospital to view the areas. The water which had splashed on to the white wall had a purplish or reddish tinge. It had sprayed from the opening of a valve from a distance of about two or three metres. According to Mr McCarthy, the stain covered an area of about two feet, from where it had run down to the ground. Mr McCarthy's evidence was that it would have been impossible for Mr Hemade to have failed to notice it as it was in his direct line of vision from where he would have been working. Further, Mr Hemade had marked numbers about two inches in diameter onto the doors of the plant rooms. They were very visible to the eye. When Mr McCarthy raised these matters with Mr Hemade, Mr McCarthy felt that Mr Hemade did not feel the gravity of the client's concern.
In his evidence, Mr Hemade said that he was not aware that there was a splash on the wall. He did not think of it as a "big deal" but it turned out to be when he left. Mr Hemade admits that it should not have happened. He also admitted that he made some marks on the doors and says that it was not smart but 90% of clients would not have complained. He returned some time later to remove the marks from the doors.
There were further complaints raised by Mr McCarthy relating to Mr Hemade's attitude and performance. Mr McCarthy's evidence was that he had cause to speak to Mr Hemade and write him a memo relating to the content of his written reports. He pointed out spelling mistakes and further inadequacies in the completion of the reports. Mr Hemade admitted that he may have made some spelling mistakes but said that this related to words he had not previously used before. Once he received the memo from Mr McCarthy in relation to this, he made an effort to improve and by all accounts there was no further cause for concern in relation to this. I therefore do not consider it reasonable for the company to now complain about this.
Several of the respondent's witnesses also complained that once Mr Hemade was transferred to the service section, his standard of dress deteriorated markedly. Mr Hemade admitted that he may not have dressed as well as before but he said that the job did not call for the smart kind of clothing he was wearing when he was a technical sales representative. Mr McCarthy said that the company issued a uniform to its technical representatives consisting of King Gee trousers and shirts. None had been made available yet to Mr Hemade. As it appears that nobody from the respondent company ever raised the question of standard of dress with Mr Hemade, this is not something that I would view as a serious ground for concern.
Another matter complained of by the respondent is the fact that Mr Hemade did not telephone in to the company three times per day when he was out on the road as he was required to do. On several occasions, according to Mr McCarthy, attempts were made to get hold of Mr Hemade urgently because clients were seeking information from him and he was unable to be contacted. Mr Hemade's evidence in this regard was that everybody else in the company except one other person was provided with a mobile telephone, and if the company thought it was so important for him to be able to be reached then the company should have provided him with a mobile phone. Mr McCarthy's evidence was that an order had been placed for a mobile telephone but it had not arrived yet. In the meantime, Mr Hemade was provided with telephone cards and was expected to use them three times a day. Mr Hemade admitted that when he was in the southwest, he once did not telephone the company for a period of three whole days. He said, however, that it was not easy for him to telephone the company when he was in the southwest if he did not have a mobile telephone. By way of illustration, he said that on the day after he first took the van it broke down on the Mitchell Freeway "and it took me two hours for somebody to stop so that I can use his telephone to call the RAC to tow the car away for me. This is how easy to phone".
The respondent company further alleges that Mr Hemade avoided such tasks as tower cleans and delivering chemicals. Mr Hemade denies this.
THE TERMINATION
On 8 December 1995 Mr Hemade was summoned to a meeting at the Kwinana office of the respondent. Mr McCarthy and Mr Allenby were present at the meeting. According to Mr Hemade, Mr McCarthy said "Ali, I'm not pleased with your services. There have been some complaints from clients, and we think it best for you and for Maxwell Chemicals that your services would be terminated". Mr Hemade's evidence was that he then said to Mr Allenby that he did not think that he had been treated fairly because they were judging him on work for which he had not been employed. He said to Mr Allenby that he was never employed to do service work and that he was being judged on his service work. He also told Mr Allenby that he was never given any time to do sales. When Mr Allenby asked him why he was not given any free time, Mr Hemade had replied that Peter Duncan and Patrice Laure had kept adding more service work to his schedule instead of giving him free time to sell. Mr Allenby then called in Peter Duncan and Patrice Laure who outlined what they perceived the problems to be in relation to Mr Hemade's work performance. According to Mr Hemade, after Mr Laure and Mr Duncan had left the office, Mr Allenby said "Ali, I am very sorry, there has been a mistake done here, and this mistake was done by Peter Duncan and Patrice. They should have listened to you". Mr Allenby denies that this was said.
According to Mr McCarthy, the termination interview was amicable and Mr Hemade seemed relieved that a decision had been made, as he was clearly unhappy with the service work he had been doing. Mr Allenby gave evidence that at the end of this termination meeting, he believed that they had agreed that it was in the best interests of both parties that they parted company. Mr Allenby said that the parties agreed to pay another three weeks' wages to Mr Hemade and Mr Hemade had given him the understanding that that would be the end of the matter. Some time later he received a telephone call from Mr Hemade to the effect that he had had advice that the company owed him a month's notice. Mr Allenby asked Mr Hemade if that would be the end of it and Mr Hemade said yes. Mr Allenby accordingly agreed to pay a month in lieu of notice, which was done.

CREDIBILITY OF THE WITNESSES

In many respects the evidence of the witnesses for the respondent differed markedly from the evidence given by Mr Hemade. Although these questions are not to be decided by weight of numbers, I prefer the evidence of the witnesses for the respondent over that of Mr Hemade. In the first place, there was nothing about the demeanour of any of the witnesses for the respondent which caused me any concern. The overall impression I gained from the respondent company was that it was a well run and efficient concern. The witnesses for the respondent appeared to me to take great pride in their work and their achievements. They each gave evidence in a forthright manner.
Mr Hemade appeared to me to be a pleasant and likeable person. Several aspects of his evidence, however, gave me some cause for concern. He seemed to dismiss any evidence adverse to him as being of little consequence. Further, other aspects of his evidence were simply not credible because of the weight of evidence against him. One example is Mr Hemade's evidence in relation to a memorandum sent to him regarding the incident relating to the Bunbury Tower site. Mr McCarthy's evidence in relation to this memorandum was that he addressed it to Mr Hemade and the other servicemen in his section. The memorandum was photocopied and sent to Mr Hemade and the three other men. Although the memorandum addressed the problem in general terms, the copy sent to Mr Hemade had a handwritten notation from Mr McCarthy at the top saying "This is Bunbury Tower your account". When he was cross examined, Mr Hemade denied that the memorandum related to the Bunbury Tower problem because a similar copy of the memorandum had gone to the other three men which meant that "These problems could be any one of us or it means that Mr McCarthy is sending us some notes which we should all adhere to". This is despite the handwritten notation from Mr McCarthy at the top of the page which was sent to Mr Hemade. Mr Hemade's evidence in relation to this memorandum is just not credible. To the extent that there are any inconsistencies in the evidence, therefore, I prefer the evidence of the respondent's witnesses over that of Mr Hemade.

WAS THERE A VALID REASON FOR THE TERMINATION?

The respondent says that there was a valid reason for the termination relating to Mr Hemade's conduct or performance. It says that whilst Mr Hemade was employed in the sales department of the business, he did not make any sales. Further, once he was transferred to the service section so that he could gain more confidence and experience in the service side of the business which would later help him to make sales, his attitude towards the job deteriorated to the point where the business was receiving complaints from its customers. Mr Hemade said that he was not employed as a serviceman but was employed as a salesperson. It is my view that the evidence establishes that Mr Hemade was told before he started work that the position of technical sales representative involved a substantial amount of service work and that the company's philosophy was to sell its business through its service. Mr Hemade did not agree with this philosophy but he was clearly advised of it before he accepted the position. I consider it most unlikely that in the lengthy interviews he had with both the company and with Mr Davis that he was not made aware of this fact. Further, I accept the evidence of the respondent's witnesses that the service schedule devised for Mr Hemade allowed for about 30% of his time to be spent in sales work. It is unclear to me why Mr Hemade was unable to find the time to do the sales work but I suspect that it was because he was much slower at doing the service work than the company's other employees. Whatever the reason, Mr Hemade was not performing according to the company's standards, which were complied with by the other technical sales representatives employed by the company. Once Mr Hemade was transferred to the service section of the company because he was not performing in the sales section, it is apparent that his attitude to his work deteriorated. This led to a number of complaints from customers which I consider, despite Mr Hemade's protests to the contrary, to be reasonably serious. In these circumstances, I consider that there was a valid reason for the termination of Mr Hemade's employment.

WAS THE TERMINATION HARSH, UNJUST OR UNREASONABLE?

Mr Hemade's evidence was that he was not employed to do service but to make sales. He considers that he should not have been transferred to the service section but that more time should have been made available for him to sell. The weight of the evidence was that in the respondent's business, sales and service are inextricably linked. The primary method of obtaining sales is through service and the company's employees have to understand the service aspect in order to make sales. Because Mr Hemade was not performing well on the sales side of the business, it was in my view not unreasonable for the company to transfer him to the service section, thereby releasing him from any obligation to perform in the sales area, in order to gain more confidence. The transfer occurred on the basis that Mr Hemade could in the future be transferred back to the sales section once he had improved his performance on the service side. Although he had only spent three weeks in the service section before his employment was terminated, I accept the evidence of the respondent's witnesses that there was a deterioration in Mr Hemade's attitude to his work. Mr Hemade was spoken to about this on a number of occasions but the situation did not improve. There was a real risk to the company that it could lose some of its customers if any more incidents involving Mr Hemade occurred. In these circumstances, I do not consider that the termination of Mr Hemade's employment was harsh, unjust or unreasonable.

THE PAYMENT OF A BONUS

Mr Hemade's evidence is that he was never told that the quarterly bonus of $1500 was a performance based bonus. I have already indicated that I accept the evidence of the respondent's witnesses to the extent of any inconsistency between the applicant and the respondent. It is my view that Mr Hemade was clearly told that the bonus was to be performance based.
The order made will be that the application is dismissed.
I certify that this and the preceding twenty-one pages (21) pages
are a true copy of the reasons for decision of
Judicial Registrar Boon as recorded in the transcript
and revised by the Judicial Registrar
Associate:
Dated:
APPEARANCES
Counsel for the applicant:  Ms D Peters
Solicitors for the applicant:  Peter J Griffin & Co
Representative for the respondent:  Ms E Mackie
  Chamber of Commerce &
  Industry of WA
Dates of Hearing:                3 & 4 April 1996 & 13 & 14 May 1996
Date of Judgment:               4 June 1996

[1996] IRCA 242

04 June 1996