Ken Goodwin v Hadfield Industries Holdings T/A Avro Steel Roofing

[2013] FWC 4793

[2013] FWC 4793

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Ken Goodwin
v
Hadfield Industries Holdings T/A Avro Steel Roofing
(U2013/346)

DEPUTY PRESIDENT LAWRENCE SYDNEY, 19 JULY 2013

Application for Relief of Unfair Dismissal - dismissal was unfair and a remedy of compensation is appropriate.

Introduction

[1] On 7 February 2013, an application pursuant to s.394 of the Fair Work Act 2009 (the Act) for a remedy for unfair dismissal was lodged by Ken Goodwin (the Applicant).

[2] The matter was the subject of conciliation on 4 March 2013, the matter was not resolved and was consequently listed for hearing. A programming hearing by teleconference was held on 18 June 2013. At this hearing, and the subsequent hearing on the merits, the parties represented themselves. Mr Roy Morgan Simon, CEO appeared for Hadfield Industries Holdings T/A Avro Steel Roofing (the Respondent). The hearing took place on 25 June 2013 in Wodonga.

[3] The Applicant filed written submissions in the Fair Work Commission (the Commission) on 16 May 2013. The Respondent filed written submissions in the Commission on 12 June 2013.

[4] The Applicant and Mr Simon were the only witnesses to give evidence in person.

Background

[5] The Applicant was employed from 18 August 2002 until his dismissal on 17 January 2013 by the Respondent, which traded as Avro Steel Roofing in the Albury/Wodonga area. The Respondent was a roofing contractor to builders in the area.

[6] The Applicant worked as a supervisor until 2010 when he took over as Branch Manager.

[7] The Applicant submits that he was unfairly dismissed and that procedural fairness was not provided to him.

[8] The Applicant stated that on 17 January 2013 Mr Simon, who had come up on a visit from Melbourne, told him he would be put off “due to my lack of getting work through the door”. The Applicant says that this was because of an overall downturn and competitors who were quoting below the Respondent.

[9] The Applicant denied that he had previously been counselled about his performance. There had been general reports and encouragement from Mr Simon but nothing more.

[10] The Applicant conceded that he had received a formal written warning on 10 November 2011 about his failure to return calls on his mobile and bringing in enough work. He denied this and asserted that the phone allegation was probably the result of a difference that he had with one supervisor of one building contractor.

[11] The Applicant finally asserted that the financial difficulties of the local operation were a symptom of the general business difficulties of the Respondent.

[12] Mr Simon submitted that the Applicant was dismissed because of his failure to attract sufficient business. He stated that this was raised with the Applicant from August/September 2011.

[13] The direct oversight of the Applicant was conducted by Mr Jason Melbourne who was Branch Manager until the Applicant took over. Mr Simon tendered, however, the written warning about “reluctance to chase building customers” and mobile phone use given to the Applicant in November 2011.

[14] Mr Simon conceded that he had not kept a “paper trail” of what had been said and done in regard to “Ken’s progressive admonishment and counselling”. He stated “several conversations” took place about the Applicant’s performance, mainly in 2012.

[15] Mr Simon stated that he did not want to dismiss the Applicant prior to Christmas 2012 and therefore acted on 17 January 2013.

[16] Jason Melbourne took over the role as Branch Manager after the Applicant’s dismissal leading to, in Mr Simon’s view, an increase in quotes obtained.

[17] A memo from Jason Melbourne dated 11 March 2013 was tendered in support of the assertion that he had counselled the Applicant about his performance.

Protection from Unfair Dismissal

[18] An order for reinstatement or compensation may only be issued where I am satisfied the Applicant was protected from unfair dismissal at the time of the dismissal.

[19] Section 382 sets out the circumstances that must exist for the Applicant to be protected from unfair dismissal:

“382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

[20] There is no dispute, and I am satisfied, the Applicant has completed the minimum employment period, and is below the high income threshold with an annual salary of $63,686 per annum. Consequently, I am satisfied the Applicant was protected from unfair dismissal.

Was the dismissal unfair?

[21] A dismissal is unfair if I am satisfied, on the evidence before me, that all of the circumstances set out at s.385 of the Act existed. Section 385 provides the following:

“385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

Was the Applicant dismissed?

[22] A person has been unfairly dismissed if the termination of their employment comes within the definition of “dismissed” for purposes of Part 3–2 of the Act. Section 386 of the Act provides that:

“386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.”

[23] There is no dispute that the Applicant was dismissed.

[24] The Respondent had 40 employees, so issues relating to the application of the Small Business Fair Dismissal Code do not arise.

[25] Although the evidence was that the Respondent’s financial difficulties had culminated in its closure by the time of the hearing, there was no argument that the Applicant was a case of “genuine redundancy” pursuant to s.385 (d) of the Act.

Harsh, unjust or unreasonable

[26] Having dealt with each of s.385(a),(c)-(d) of the Act, I must consider whether I am satisfied the dismissal was harsh, unjust or unreasonable. The criteria I must take into account when assessing whether the dismissal was harsh, unjust or unreasonable are set out at s.387 of the Act:

“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.”

[27] The ambit of the conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 at 465 by McHugh and Gummow JJ as follows:

.... It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.

[28] The Applicant submits the dismissal was harsh, unjust or unreasonable because:

● He had over ten year’s service and had never been warned or disciplined apart from the November 2011 warning.

● He submitted that this warning, with respect to mobile phone use, came from one client and was incorrect.

● He denies he was warned by Mr Simon. Essentially, his evidence was that there were only generalised “pep talks”.

● Lack of work for the Respondent was not a result of his lack of dedication but rather the economic and market conditions that faced the Respondent. Approximately three months after the Applicant was dismissed the Respondent did in fact cease operating.

● His good performance was recognised by promotion to Branch Manager in 2010.

[29] The Respondent submits the dismissal was not harsh, unjust or unreasonable because:

● Mr Simon and Mr Melbourne had warned the Applicant about his performance which was not good enough.

● Mr Simon tendered sales figures that showed, in his submission, that Mr Melbourne’s sales performance was superior. These were denied and/or differently interpreted by the Applicant.

[30] Mr Simon testified that three months after he dismissed the Applicant, he closed up the company and was talking to administrators. He said that he had an agreement to pay the redundancy entitlements of the other employees over time.

[31] I am under a duty to consider each of these criteria in reaching my conclusion, Sayer v Melsteel[2011] FWAFB 7498.

[32] I will now consider each of the criteria contained in s.387 of the Act separately.

Valid Reason - s.387(a)

[33] The Respondent must have a valid reason for the dismissal which should be “sound, defensible and well founded” and should not be “capricious, fanciful, spiteful or prejudiced” Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371. The Applicant was dismissed because of his alleged inadequate work performance. However, I am not satisfied that the evidence substantiates this for the following reasons:

● The Applicant was employed for over ten years and promoted during that period.

● The Respondent’s overall market and financial difficulties are apparent, as evidenced by its closure, and are as likely an explanation for any difficulties that the Albury operation had than the Applicant’s performance.

● The sales figures comparisons provided by Mr Simon were challenged fairly effectively by the Applicant.

[34] I find that there was not a valid reason for the dismissal.

Notification of the Valid Reason - s.387(b)

[35] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made, Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41] in explicit terms, Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151 and in plain and clear terms, Presvisic v Australian Quarantine Inspection Services Print Q3730. In Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 a Full Bench of the Australian Industrial Relations Commission dealing with similar provision of the Workplace Relations Act 1996 stated the following:

“[73] As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. Much like shutting the stable door after the horse has bolted.”    Ibid at 151.

[36] There was no dispute that the Applicant was simply called into Mr Simon’s office on 17 January 2013 and was told that he would have to go. Mr Simon’s evidence was that he had decided to terminate the Applicant before Christmas but deferred this action because of the time of year. I am satisfied that the Applicant was not notified of the reason for dismissal.

Opportunity to Respond - s.387(c)

[37] An employee protected from unfair dismissal must be provided with an opportunity to respond to any reason for dismissal relating to the conduct or capacity of the person. This criterion is to be applied in a common sense way to ensure the employee is treated fairly and should not be burdened with formality RMIT v Asher (2010) 194 IR 1, 14-15.

[38] The Applicant was given a warning in November 2011 about his mobile phone use and failure to bring in enough work and there were ongoing discussions about the work situation of the Respondent. However, the decision to terminate had already been made on 17 January 2013. I am therefore satisfied that the Applicant had no opportunity to respond to the reason for the dismissal.

Unreasonable refusal by the employer to allow a support person - s.387(d)

[39] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, the employer should not unreasonably refuse that person being present.

[40] There was no evidence that the Applicant sought to have a support person in attendance at discussions relating to the dismissal. I find also that the Respondent did not unreasonably refuse to allow the Applicant to have a support person in attendance.

Warnings regarding unsatisfactory performance - s.387(e)

[41] Where an employee protected from unfair dismissal is dismissed for the reason of unsatisfactory performance, the employer should warn the employer about the unsatisfactory performance before the dismissal. Unsatisfactory performance is more likely to relate to an employee’s capacity than their conduct, Annetta v Ansett Australia Ltd (2000) 98 IR 233, 237.

[42] The warning of 10 November 2011 was in evidence. This was contested by the Applicant who stated that subsequent discussions with Mr Simon were general in nature. These were not clear or definite enough, in my view, to satisfy the requirements of the sub-section. Certainly, there was no clear articulation of the consequences being likely dismissal. I therefore find the Respondent did not warn the Applicant about the unsatisfactory performance before the dismissal.

Impact of the size of the Respondent on procedures followed - s.387(f)

[43] There is no doubt that the size of the Respondent’s enterprise did impact on the procedures followed to effect the dismissal.

[44] Mr Simon conceded the lack of a “paper trail”. It is clear that there was not a structured process of supervision and of recording.

[45] I found Mr Simon to be well meaning and honest. Both he and the Applicant are victims of the commercial and market difficulties of the business.

[46] I find the size of the Respondent’s enterprise did impact on the procedures followed in effecting the dismissal.

Absence of dedicated human resources management specialist/expertise on procedures followed - s.387(g)

[47] There is no doubt that the absence of dedicated human resource management or expertise in the Respondent’s enterprise impacted on the procedures followed in effecting the dismissal. Of course, this issue is closely related to the size of the business.

[48] Proper human resource management would have identified any problems with the Applicant’s work, counselled him, provided additional training if necessary and recorded the whole process.

[49] I find the absence of any such management or expertise did impact on the procedures followed by the Respondent in effecting the dismissal.

Conclusion

[50] Having considered each of the matters specified in s.387, I am satisfied the dismissal of the Applicant was harsh, unjust or unreasonable. Accordingly, I find the Applicant’s dismissal was unfair.

Remedy

[51] Section 390 of the Act sets out the circumstances in which I may make an order for reinstatement or compensation:

“390 When the FWC may order remedy for unfair dismissal

(1) Subject to subsection (3), the FWC may order a person’s reinstatement or the payment of compensation to a person, if:

(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and

(b) the person has been unfairly dismissed (see Division 3).

(2) The FWC may make the order only if the person has made an application under section 394.

(3) The FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.

[52] I have already dealt with the issues at s.390(1)(a)–(b) above. I am satisfied the Applicant was protected from unfair dismissal pursuant to s.382 of the Act and the Applicant was dismissed unfairly. Accordingly, I am required to determine whether to order the reinstatement of the Applicant or, in circumstances where reinstatement is inappropriate, an order for compensation if I am satisfied such an order is appropriate in all the circumstances.

[53] The Applicant seeks compensation of 12 weeks pay. This is based on the redundancy pay that he would have received under the National Employment Standards (NES) if he had continued in employment and been made redundant like the other employees.

[54] Clearly reinstatement is not appropriate in this case because, apart from anything else, the business has ceased operating.

Compensation

[55] Section 390(3)(b) provides that I may only issue an order for compensation to the Applicant if it is appropriate in all the circumstances.

[56] I have found that the Applicant has been unfairly dismissed. He is a man in his fifties who had over ten years service with the Respondent. He has been unable to find employment, despite repeated attempts, in a rather depressed construction industry in a regional area, for six months.

[57] I am satisfied that an order for compensation is appropriate in all the circumstances of this case.

[58] Section 392 of the Act sets out the circumstances that must be taken into consideration when determining an amount of compensation, the effect of any findings of misconduct on that compensation amount and the upper limit of compensation that may be ordered provides:

“392 Remedy—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.”

[59] The method for calculating compensation under s.392 of the Act was recently dealt with by a Full Bench of the Commission in Bowden, G v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge,[2013] FWCFB 431 (Bowden). In that decision the Full Bench set out the order in which the criteria and other factors should be applied, taking into account authority under the Workplace Relations Act 1996 in Sprigg v Paul’s Licensed Festival Supermarket, (1998) 88 IR 21 and Ellawala v Australian Postal Corporation, Print S5109 (Ellawala). I have adopted the methodology utilised in Bowden in determining the amount of a payment of compensation.

[60] I will now consider each of the criteria in s.392 of the Act.

Remuneration that would have been received: s.392(2)(c)

[61] The Applicant’s remuneration with the Respondent was $63,686 per annum.

[62] I now determine the period of time the Applicant would have remained employed by the Respondent, or would have likely remained employed with the Respondent, had he not been dismissed.

[63] Mr Simon’s evidence was that he “closed up the company” three months after the dismissal. The Applicant would therefore have been employed until mid April 2013, had he not been dismissed. Then he would have been entitled to redundancy pay like other employees.

[64] The amount the Applicant would have received is therefore $14,700 for the three month period.

Remuneration earned - s.392(2)(e)

[65] The uncontested evidence was that the Applicant had not had employment since the dismissal and therefore there has been no remuneration earned during the period since the dismissal.

Income likely to be earned

[66] Based on the Applicant’s age and the economic conditions in a regional area, I find that it is not reasonably likely the Applicant will earn income during the period between the making of the order for compensation and the actual compensation.

Other matters - s.392(2)(g)

[67] A broad discretion is given to the Commission to consider other matters.

[68] As I noted above, the payment of 12 weeks redundancy pay would have been made to the Applicant if he had continued in employment until the closure of the business. This is the basis of his claim for compensation. Coincidentally, I have found that the period of time the Applicant would have remained employed, had he not been dismissed, was also 12 weeks.

[69] The Applicant did not seek payment on both counts.

Viability - s.392(2)(a)

[70] Clearly, given the Respondent is in administration, any order for compensation will affect the viability of the enterprise. It will be another liability that has to be met. I therefore do not intend to include the redundancy as a factor in the compensation order. A proposed order of $14,700 compensation is based on income that would have been earned for the period the Applicant was likely to be employed by the Respondent.

Length of Service - s.392(2)(b)

[71] The Applicant had over 10 years service with the Respondent.

[72] I find that the Applicant’s period of service with the Respondent should not affect the amount of compensation that would be otherwise ordered.

Mitigating efforts: s.392(2)(b)

[73] In considering whether the Applicant has taken steps to mitigate the loss suffered as a result of the dismissal I should take into account whether the Applicant acted reasonably in the circumstances, (Ellawala).

[74] The Applicant testified that he had made every effort to seek alternative employment. This was not challenged.

[75] I find that the Applicant has made efforts to mitigate his loss suffered as a result of the dismissal.

Misconduct: s.392(3)

[76] I have not found any misconduct by the Applicant that contributed to the dismissal.

Shock, Distress: s.392(4)

[77] I note that the amount of compensation calculated does not include a component for shock, humiliation or distress.

Compensation cap: s.392(5)

[78] I must reduce the amount of compensation to be ordered if it exceeds the lesser of the total amount of remuneration received by the Applicant, or to which the Applicant was entitled, for any period of employment with the employer during the 26 weeks immediately before the dismissal, or half the amount of the high income threshold immediately prior to the dismissal.

[79] The high income threshold component immediately prior to the dismissal was $61,650.

[80] The amount the Applicant would have earned, or to which the Applicant was entitled, for the 26 week period immediately prior to the dismissal was approximately $31,843.

[81] The amount of compensation I will order does not exceed the compensation cap.

Payment by instalments: s.393

[82] I have taken into account the fact that the company is in administration and is paying out redundancy pay, to other employees, on a weekly basis.

[83] I will order the Respondent to pay to the Applicant an amount of $14,700 over four weeks, which is $3,675 per week.

Conclusion

[84] I am satisfied that the Applicant was protected from unfair dismissal, and that the dismissal was unfair and a remedy of compensation is appropriate.

[85] An order will be issued with this decision.

DEPUTY PRESIDENT

Appearances:

K. Goodwin, Applicant, on his own behalf.

R. Simon, Respondent, on his own behalf.

Hearing details:

2013

Wodonga:

June 25.

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