James Farrelly v Seasonair Pty Ltd

[2015] FWC 2334

[2015] FWC 2334

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

James Farrelly
v
Seasonair Pty Ltd
(U2015/385)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 8 APRIL 2015

Application for relief from unfair dismissal - valid reason - breach of instructions - dishonest advice of expenditure - procedural deficiencies - not harsh, unjust or unreasonable.

[1] On 29 January 2015 Mr Farrelly lodged an application, pursuant to s.394 of the Fair Work Act 2009 (the FW Act) in relation to the termination of his employment with Seasonair Pty Ltd (Seasonair). In this application Mr Farrelly asserted that this employment termination was harsh, unjust or unreasonable.

[2] The application was not resolved through the telephone conciliation process and was consequently the subject of a determinative conference before me on 30 March 2015. At this conference, Mr Farrelly was represented by Ms Victory of counsel. Seasonair was represented by Mr Earls, of counsel. In each case grants of permission were made pursuant to s.596(2)(a) and (c). Both parties agree that none of the initial or jurisdictional issues identified in Part 3-2 of the FW Act are relevant to this application.

[3] Mr Farrelly worked for Seasonair from March 2014 until the termination of his employment which took effect on 16 January 2015. He was the Seasonair Plumbing Manager and it appears to be common ground that his role involved the development of a plumbing function within Seasonair. Prior to his employment Mr Farrelly owned and operated his own business. The operation of that business was effectively taken over by Seasonair which paid Mr Farrelly for the purchase of various assets. I note that the parties disagree over the extent to which there was a merger between Mr Farrelly’s previous plumbing operation, Jaypee Plumbing and Seasonair.

[4] Mr Farrelly was provided with a letter of offer and a contract of employment which he signed. He was inducted into Seasonair’s employment policies and procedures by the Seasonair Managing Director, Mr Beatton shortly after commencing work. In July 2014 he was provided with a Seasonair credit card and with specific instructions in the form of further induction, relative to the operation of that card. I note that the parties disagree over the arrangements that applied for the provision of reconciliation advices provided by Mr Farrelly, relative to expenditures he made using that credit card.

[5] In early December 2014 Mr Farrelly asked Mr Beatton if the plumbing department could have its own Christmas party. Mr Beatton refused that request and confirmed that there would only be one Christmas party for all of the Seasonair employees.

[6] One of the plumbing department employees arranged a private Christmas gathering for the plumbing department. Mr Farrelly was invited to this gathering and, on 14 December 2014 he purchased two cartons of beer, costing $114.98 using his company credit card.

[7] In accordance with his general practices, Mr Farrelly subsequently provided the receipt for this purchase to Ms Burgess, the Seasonair Office Manager. He recorded that the purchase was a “supplier gift”.

[8] On 14 January 2015 Mr Beatton emailed Mr Farrelly with a request for a credit card reconciliation. Mr Farrelly responded by email on 15 January 2015. In this email he acknowledged that he had accidentally used his company credit card for some small private purchases and proposed that he would repay this amount. He also advised that he had purchased some drinks for the plumber’s Christmas lunch.

[9] Mr Beatton requested that Mr Farrelly attend a meeting with him on 16 January 2015. This occurred at 6.00 p.m. that day.

[10] The termination of Mr Farrelly’s employment occurred in the course of this 16 January 2015 discussion. Mr Beatton advised that he requested this discussion as a result of concerns which he had over Mr Farrelly’s use of the Seasonair credit card for unauthorised and inappropriate expenditures. There were four such expenditures. Three of these related to small expenditures which Mr Farrelly advised were the result of his accidental use of the Seasonair credit card. In the meeting, Mr Farrelly apologised for these errors and proposed that he would repay those amounts. There is no dispute that the expenditure which led to the termination of his employment related to the $114.98 beer purchase. Mr Farrelly was paid one week’s pay in lieu of notice.

[11] The parties dispute Mr Farrelly’s behaviour in characterising this expenditure on his credit card reconciliation statement and the extent to which this expenditure constituted an express breach of instructions previously given to him by Mr Beatton.

[12] Mr Farrelly asserts that the termination of his employment lacked a valid reason and was procedurally unfair. He seeks compensation in lieu of reinstatement. In his application and submissions he sought that this compensation should also include recognition of a $10,000 bonus payment which he believed would be payable to him. In the course of the hearing evidence was provided about the extent to which the performance of the plumbing division within Seasonair was significantly below expectations such that the bonus would not have been payable in any event. I do not understand that Mr Farrelly is pursuing this aspect of his claim for compensation.

[13] The Seasonair position is that Mr Farrelly’s behaviour in misusing his credit card and then attempting to mischaracterise that expenditure, represented serious misconduct and breached the trust and confidence necessary to sustain the employment relationship and hence were valid reasons for the termination of his employment. Seasonair asserts that Mr Farrelly was given an opportunity to respond in writing and in person and that his responses were taken into account and, further, that he did not request a support person. To the extent that there were procedural defects in the process followed by Seasonair, it asserts that these would not have affected the outcome.

The evidence

[14] Whilst I have considered all of the evidence put to me in this matter I have briefly summarised the witness evidence in the following terms.

[15] Mr Farrelly’s evidence went to his employment history, both before and after he commenced working with Seasonair. He detailed his understanding of the employment and credit card induction processes and his understanding of the credit card reconciliation system. His evidence went to the circumstances under which he decided to purchase the beer and his reasons for characterising that purchase as a “supplier gift”. Mr Farrelly’s evidence was that he intended to discuss the beer purchase directly with Mr Beatton but did not do so because of the Christmas holiday period. Mr Farrelly gave evidence about the difficulties he had with Seasonair’s administrative arrangements. His evidence extended to the steps he had taken to move interstate and gain alternative employment subsequent to his dismissal.

[16] Mr Beatton, the Managing Director of Seasonair gave evidence about the circumstances of Mr Farrelly’s employment, together with his employment and credit card induction. His evidence went to the performance of the plumbing division and to his dealings with Mr Farrelly. Mr Beatton confirmed that he had refused Mr Farrelly’s request for a plumbing division Christmas party and the circumstances under which he became aware of Mr Farrelly’s purchase of the beer using his corporate credit card. He detailed his version of the discussion on 16 January 2015 which resulted in the termination of Mr Farrelly’s employment.

[17] Ms Burgess is the Office Manager of Seasonair. Her evidence went to the Seasonair credit card reconciliation process and to her difficulties in dealing with Mr Farrelly in this, and other respects. She provided evidence about Mr Farrelly’s provision to her of the account for the beer purchase and to her subsequent advice about the matter to Mr Beatton who told her he would address the issue.

[18] Mr Gibbons is the General Manager - Services of Seasonair. His evidence went to his understanding of the difficulties Mr Farrelly had complying with the Seasonair credit card reconciliation requirements and the steps he took to assist him in this respect.

[19] Mr Gibbons was asked by Mr Beatton to attend the meeting at which Mr Farrelly’s employment was terminated. He did so as an observer and recorded his recollections of that meeting.

[20] Mr Gibbons’ evidence was that, subsequent to the termination of Mr Farrelly’s employment, he took steps to contact another licensed plumbing supervisor who had previously been interested in the position held by Mr Farrelly. He did that on 19 January 2015 and a replacement for Mr Farrelly was recruited soon after.

Findings

[21] Before considering the relevant provisions of the FW Act I have set out below my findings on the significant issues in dispute.

[22] I have concluded that Mr Farrelly was clearly made aware of the strict limitations on his use of the Seasonair credit card and was aware that questionable expenditures should have been checked with Mr Beatton. The evidence of Mr Farrelly and Mr Beatton establishes that this information was provided at the time that Mr Farrelly was issued with this credit card.

[23] I have concluded that Mr Farrelly was aware that Mr Beatton refused to authorise a separate Christmas party for the plumbing division and that this logically extended to non-authorisation of expenditure associated with any Christmas party. Notwithstanding this, Mr Farrelly elected to purchase the beer using his corporate credit card. The evidence of both Mr Farrelly and Mr Beatton confirms the discussion between them in early December relative to the proposed plumbing division Christmas party. I do not consider the fact that the plumbing division Christmas function was arranged by someone else apart from Mr Farrelly, changed the instruction to Mr Farrelly to the effect that corporate expenditure on the Christmas gathering was not authorised.

[24] I have concluded that Mr Farrelly submitted the account for the beer purchase to Ms Burgess and identified this as a “supplier gift” so as to avoid identification, by Ms Burgess, of this expenditure as drinks for the plumber’s department Christmas gathering. In this respect the evidence of Mr Farrelly was that:

“I placed the receipt on the desk of Karen Burgess within a week of the purchase. On it I indicated that it was a ‘supplier gift’, as I thought that was the closest accounting description to what it was, although of course it was more so a gift/gesture for employees rather than a supplier. I wanted to explain the nature of the purchase to Mark rather than to Karen because I had been bullied by Karen for the entire time that I worked at Seasonair (and Mark was aware of this) and I wanted to avoid dealing with her.” 1

[25] Had Mr Farrelly then acted to promptly raise the matter with Mr Beatton, I may have concluded that his description of the purchase as a “supplier gift” was not intended to mislead Mr Beatton. However, Mr Farrelly conceded that he did not raise the matter with Mr Beatton until prompted to do so by the request that he complete the credit card reconciliation on 15 January 2015. 2 Accordingly, I consider that Mr Farrelly simply hoped that he would not have to account for the beer expenditure.

[26] I have concluded that Mr Beatton was aware of the expenditure and the extent to which Ms Burgess doubted that it was a “supplier gift” before he sought clarification of this issue with Mr Farrelly. The evidence of Ms Burgess was that she raised this issue with Mr Beatton before she went on annual leave on 9 January 2015. 3

[27] Mr Farrelly was not advised of the reason for the meeting on 16 January 2015 which resulted in the termination of his employment. At that meeting I am satisfied that he offered to repay, not just the three minor inadvertent personal purchases, but also the beer purchase. 4 I have concluded that Mr Farrelly did not request a support person but that this was a consequence of the way in which the meeting was convened such that he had no opportunity to make such a request.

[28] Mr Farrelly was provided with a letter confirming the termination of his employment. 5 That letter confirmed that the reason for the termination of Mr Farrelly’s employment went to the extent to which Mr Beatton no longer had trust or confidence in Mr Farrelly as a senior employee.

[29] Section 387 states:

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.”

[30] I have considered each of these factors individually and collectively.

Valid reason

[31] Notwithstanding that it was first articulated under a different legislative regime, I have applied the approach set out by Northrop J in Selvachandran v Peterson Plastics Pty Ltd. 6

[32] I have concluded that Mr Farrelly’s actions in effectively ignoring Mr Beatton’s instruction that he was not prepared to fund a Christmas function for the plumbing department when he used his corporate credit card, in breach of the requirement that he obtain authorisation for questionable expenses, and purchased beer for that Christmas gathering, represented a valid reason for the termination of his employment. In reaching this conclusion I have noted that Mr Farrelly offered to repay the relatively small amount of $114.98 at the meeting which resulted in the termination of his employment. However, I consider that he did so on the basis that he did not regard the matter as serious or of significant moment. Consequently, his actions and approach substantially undermined the confidence which Seasonair could have in him in the future.

[33] I do not consider that the three minor and inadvertent domestic purchases made by Mr Farrelly were taken into account in the termination of employment decision. It was only the beer purchase that was relevant to this decision.

[34] Further, Mr Farrelly’s attempt to characterise the beer purchase as a “supplier gift” further demonstrates the extent to which he was both aware that the purchase was inappropriate and set about to camouflage it. In this respect I have accepted the evidence of Mr Beatton about this aspect of the discussion on 16 January 2015 in the following terms:

“After I had given Mr Farrelly an opportunity to respond about the beer purchase, I made a series of statements about the concerns of the use of the company credit card. At the end of this, I recall saying:

I said I consider this to be serious misconduct. Do you see what the problem is?

He replied No I don’t. It’s not that much money and I’ve offered to pay it back.

I said You’ve tried to cover it up by calling it a supplier gift

He replied It was just easier to do that than to try to explain it” 7

[35] This evidence is consistent with that of Mr Gibbons who stated:

“Mark then reminded James that on the back of the receipt for this purchase he had written on it ‘customer Christmas gift”, and asked James why he had written this when clearly this was not was the purchase was for?

James said he thought it would be easier just to write that and cover it up because he knew that Mark would not be happy with the matter.” 8

[36] Mr Farrelly was aware of the obligations on him relative to the use of the corporate credit card. He elected not to comply with those obligations.

[37] I have concluded that Mr Farrelly’s conduct and subsequent attempts to hide the purchase represented a valid reason for the termination of his employment. It was open to Seasonair to take action other than the termination of his employment. In other circumstances such as a longer employment duration, an incident of this nature may not have represented a valid reason for termination of employment.

Notification of the reason

[38] Mr Farrelly was advised of the reason for the termination of his employment in the meeting on 16 January 2015 and was also given written advice to this effect.

Opportunity to respond

[39] Mr Farrelly had the opportunity to respond to the allegation that he had misused the corporate credit card. Notwithstanding this, I am not satisfied that this allegation was put to him in the context that Seasonair was proposing to terminate his employment over this incident. This is a factor somewhat indicative of an element of unfairness associated with the termination of employment process.

Any unreasonable refusal to allow a support person

[40] Whilst Mr Farrelly did not request a support person, I have concluded that the manner of the conduct of the meeting on 16 January 2015 was such that he had no realistic opportunity to request such a person. He was not made aware that that meeting could result in the termination of his employment. In contrast, Mr Beatton had taken steps to arrange for Mr Gibbons to participate in the meeting as an effective employer-based witness.

[41] Whilst this too is indicative of a level of unfairness, the advice provided by Mr Farrelly about his actions in purchasing the beer and then attempting to cover-up that purchase indicated substantial disregard for the instructions given to him and his comprehensive and recent induction relative to the corporate credit card use such that I think it unlikely that the involvement of a support person would have changed the outcome in this situation.

Warnings about unsatisfactory performance

[42] I do not consider that the termination of Mr Farrelly’s employment was related to unsatisfactory performance and accordingly, whilst I note that there were no warnings in this regard, this factor is not relevant to this situation.

Size of the employer’s enterprise - likely impact on procedures

[43] Seasonair is a relatively small employer with some 30 employees. I have concluded that it is likely that this relatively small size means that its procedures with respect to the employment termination arrangements are not particularly sophisticated. I have taken this into account in reaching a conclusion in this matter.

Absence of dedicated human resource management expertise

[44] The information before me clearly indicates that Seasonair does not have immediate access to dedicated human resource management expertise. I have taken this into account in reaching a conclusion in this matter.

Other matters considered relevant

[45] In reaching a conclusion in this matter I have noted Mr Farrelly’s relatively short service and the extent to which his employment was commenced with a comprehensive induction meeting and his use of the corporate credit card was the subject of a further comprehensive discussion. These discussions should have made the importance of compliance with the credit card requirements patently clear to Mr Farrelly.

[46] Furthermore, I have noted that Mr Farrelly’s employment contract dealt with the possibility that he might be provided with a credit card and indicated that unauthorised expenditure may be deducted from his pay. I have already indicated that I do not consider that the minor inadvertent domestic purchases were relevant to this situation but I have concluded that the provisions of the employment contract relative to use of the credit card must logically be taken to refer to inadvertent purchases of this nature. Those credit card contract arrangements make clear the following arrangements:

“19.2 This card is only to be used solely for authorised company expenditure and specifically company vehicle repair and maintenance costs and minor project specific purchase where company accounts are not available.

19.3 Personal purchases are not permitted, will be deemed as ‘Serious Misconduct’ and dealt with under clause 22. ‘Termination’ of this agreement.” 9

[47] In this respect I do not consider that the employment contract applicable to Mr Farrelly can be taken as a broad and unlimited authorisation of expenses such that inappropriate expenses simply needed to be repaid.

[48] I have already addressed the relatively small magnitude of the beer expenditure. Were it not for the particular circumstances of this matter, including the comprehensive and relatively recent credit card induction briefing and the clear instruction that expenditure on a plumbers department Christmas function was not approved by Mr Beatton, I may have reached a different conclusion.

Conclusion

[49] I have concluded that there was a valid reason for the termination of Mr Farrelly’s employment. The process followed and manner in which that termination occurred give rise to some fairness concerns but, on balance, I do not consider that Mr Farrelly has established that the termination of his employment was harsh, unjust or unreasonable. In terms of harshness, the termination of Mr Farrelly’s employment was a consequence of his credit card misuse and, as such, that consequence had been outlined to him. The termination of his employment was not unjust because Mr Farrelly breached the clear instructions relative to the credit card use and then attempted to cover-up his actions. It was not unreasonable because the facts of the situation were clear and were effectively admitted.

[50] The application must be dismissed on this basis. An order (PR562765) giving effect to this decision will be issued.

Appearances:

C Victory counsel for the applicant.

T Earls counsel for the respondent.

Hearing (Determinative Conference) details:

2015.

Adelaide:

March 30.

 1   Exhibit F2, para 12

 2   Exhibit F2, para 13 and Transcript (Sound Recording), 30 March 2015, 10.35 a.m.

 3   Exhibit S6, para 20

 4   Exhibit F2, paras 17 and 18

 5   Exhibit S5, MB9

 6 (1995) 62 IR 371 at 373

 7   Exhibit S5, para 35

 8   Exhibit S7, MG1, 2nd and 3rd dot points on page 2

 9   Exhibit F3, page 5, clauses 19.2 and 19.3

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<Price code C, PR562764>