Mandy Allford v Gorgeous Cosmetics

[2014] FWC 8314

[2014] FWC 8314

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Mandy Allford
v
Gorgeous Cosmetics
(U2014/8576)

COMMISSIONER BISSETT MELBOURNE, 20 NOVEMBER 2014

Application for relief from unfair dismissal - poor performance.

[1] Ms Mandy Allford (the Applicant) has made an application for relief from unfair dismissal. She was employed by Gorgeous Cosmetics Pty Ltd (the Respondent) from 21 October 2013 until 25 July 2014. Her employment was terminated for poor performance.

[2] The application was heard in Melbourne on 13 November 2014 with a video link to Los Angeles where Ms Liza McConnell the General Manager/Vice President of Sales for the Respondent is now based.

[3] Each party was self represented and appeared as a witness. In addition Mr Peter Lawson and Mr Robert Grant appeared as witnesses for the Applicant.

[4] The Applicant held the position of Business Development Manager with the Respondent. She was responsible for the management and growth of the wholesale division of the Respondent. Specifically her contract stated that she was responsible for:

• Sales development and management including the recruitment of new staff and dismissal of staff as necessary;



• Financial management including ensuring that monthly and annual budgets were met;



• Development including optimal product assortment and pricing;



• Wholesale marketing, training and annual sales and marketing plan;



• Advising on online brand presence and marketing;



• Weekly reports and monthly reports.

[5] These matters are set out in detail the Applicant’s contract of employment (attached to the submissions of the Respondent) and are referred to throughout this decision as her Key Performance Indicators (KPIs).

[6] The Applicant received a letter of termination on 25 July 2014. That letter said that her employment was terminated because:

• she failed to grow the business, whilst sales increased it was not to the level expected given the increase in the number of sales executives;



• she failed to meet budget due to low sales and outstanding aged debtors;



• she failed to provide reports on the competitive landscape, product assortment or pricing, failure to identify new markets and failure to progress new markets;



• she failed to organise training and failure to provide a sales and marketing plan for the current financial year;



• she failed to work with marketing on a digital strategy;



• she failed to provide up to date budget and sales report. 1

Was the Applicant unfairly dismissed?

[7] I am satisfied that the Applicant is protected from unfair dismissal, her dismissal was not a redundancy and the Small Business Fair Dismissal Code does not apply.

[8] To determine if the Applicant was unfairly dismissed it is necessary to determine if her dismissal was harsh, unjust or unreasonable. In doing so it is necessary to consider each of the matters set out in 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.

(a) Was there a valid reason for dismissal?

[9] For a reason for dismissal to be valid it must be ‘sound, defensible and well founded’ and cannot be capricious, fanciful, spiteful or prejudiced. 2

[10] In her evidence the Applicant says she failed to meet her KPIs because there was no brand awareness of the Respondent’s products in the market, the warehouse was constantly out of stock or stock was prioritised for the US market and the sales figures set by the Respondent were unrealistic. She also says that, while she did hire some new staff she was required to terminate the employment of two of them - one for failure to meet sales targets - and she was told not to proceed with any further recruitment. She also says that she raised issues with Ms McConnell with respect to brand awareness and proposed advertising in ‘Beauty Directory’ as a means of attracting more sales. She says that the sales targets for each sales executive was $40,000 per month and her target was $20,000 per month.

[11] Whilst the Applicant raised the unrealistic sales target of $3,000,000 given she had very few sales staff, this was the sales target for the 2014/15 financial year. The sales target in the year the Applicant worked for the Respondent was $1,113,000. 3

[12] The Applicant does not dispute that she failed to meet her sales targets in 2013/14. Further, she says that, while she has no background in marketing, her experience when ringing potential clients was that they did not know the brand and would answer ‘who?’ when she explained which company she worked for. 4 She says she knew stock was low or being prioritised for the US because the warehouse manager told her this was the case.

[13] The Applicant agreed that the sales targets were realistic if there were seven sales staff but there was never that many staff. She also agreed that she was never asked to hold back sales because of low stock levels. Her evidence is that she was aware one of her tasks was to grow the Terry White business but that, Terry White management would not agree to increase the number of stores stocking the Respondent’s products until weekly sales in the existing stores were at $1500 per week. The Applicant agrees that she was responsible for doing what was required to reach these sales figures.

[14] The Applicant says she became oblivious to the performance issues raised with her by Ms McConnell. She says that ‘when you are told every week that you job’s on the line and it doesn’t happen, I think you get a bit oblivious to it.’ 5

[15] Ms McConnell for the Respondent gave evidence of the extensive correspondence with the Applicant on all aspects of her position including advice on the need to deal with staff who were not performing, on the outcome of the recruitment of new staff, and issues with financial reporting. Ms McConnell also produced evidence of the Applicant indicating she thought the budget was achievable (with a full team) and acknowledgement of issues associated with non achievement of sales.

[16] Ms McConnell says that she put substantial effort into assisting the Applicant through providing advice, guidance and mentoring the Applicant. This was not disputed by the Applicant.

[17] The majority of the material submitted by Ms McConnell was not disputed by the Applicant.

[18] Whilst I acknowledge (and have taken into account) that there were not enough staff engaged in the sales area to meet the overall sales target, the evidence shows that the Applicant failed to meet her personal target of $20,000 per month.

[19] I do not accept that lack of stock or prioritising of stock to the US market explains the failure by the Applicant to meet her KPIs. Much of this evidence was hearsay and not reliable. I do accept some evidence of problems in the warehouse but do not accept this as an explanation for the Applicant’s failure to meet her KPIs.

[20] In all of the circumstances and, taking into account all of the evidence and materials before me, I am satisfied that there was a valid reason for the termination of the Applicant’s employment. This reason went to the failure of the Applicant to meet sales targets and other KPIs set for her by the Respondent.

(b) Was the Applicant notified of that reason?

[21] In Crozier v Palazzo Corporation Pty Ltd, 6 the Full Bench said:

[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 170CG (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.

[22] In this case the Applicant employment was terminated at a meeting on 25 July 2014.

[23] The Applicant’s evidence is that Ms McConnell advised her that her employment was to be terminated and then asked her if there was anything she wanted to say. She did agree however that, during the phone conversation where this occurred (Ms McConnell being based in the US) she was packing up her office as she was pretty sure before the meeting that she was going to be dismissed. 7

[24] Ms McConnell’s evidence is that she had the letter of termination written prior to the meeting but asked the Applicant if there was anything she wanted to say as to why she had not met her KPIs before the decision was finally made.

[25] Both witnesses on this matter are adamant as to what occurred in the meeting.

[26] I prefer the evidence of Ms McConnell as to what occurred at this meeting.

[27] The Applicant agrees that she was expecting to have her employment terminated during that phone call and was, in fact, packing up her office while the conversation took place. It is not unusual in my experience for employees, in stressful situations, to hear what they expect to hear and not what is actually said. I consider in this case that it is likely the Applicant believes she heard what she expected to hear, that is that her employment was terminated.

[28] Ms McConnell’s evidence on the other hand is consistent with material that she provided to the Commission on her interactions with the Applicant.

[29] I am satisfied that the Applicant was advised of the reason for the dismissal.

(c) Did the Applicant have an opportunity to respond?

[30] Given my acceptance of the evidence of Ms McConnell as to what occurred at the meeting I am satisfied that the Applicant was given an opportunity to respond. The Applicant says that she did not provide any response because she considered that her employment had been terminated.

(d) Was the Applicant unreasonably denied a support person?

[31] Neither party addressed me on this issue. On this basis I accept that the Applicant was not unreasonably denied a support person. On her evidence the Applicant knew what the meeting was most likely to be about. She does not appear to have sought a support person or been denied the right to have one with her during the meeting.

(e) Was the Applicant warned of unsatisfactory performance?

[32] On the basis of the evidence, in particular the extensive material filed by the Respondent, I am satisfied that the Applicant was aware of her unsatisfactory performance. 8

[33] Ms McConnell, in her evidence, says that in an email on 3 February 2014 the Applicant was made aware that a failure to improve performance could result in the termination of her employment.

[34] The email Ms McConnell sent to the Applicant on 3 February 2014 says:

Hi Mandy,

...Your own personal work report is a little sparse, and I would like to see more substantial business dealings form you...With the team so far under budget, be careful not to get bogged down in Admin work - sales are more important.

...I am really concerned at the number of leads. There’s been little progress adding any more since last week. All up, you are all averaging 10 leads, and are due to open only $25K in opening orders for Feb. I feel the team (and maybe you) don’t realize how bad this is and how it’s going to lead to lay offs...

[35] This in the only correspondence Ms McConnell could point me to where she says the Applicant was advised that her employment might be at risk.

[36] I do not accept that this correspondence warns the Applicant that her employment might be at risk should her performance not improve. That part of the email dealing with potential ‘lay offs’ was general in nature and appears to be a message to all of the relevant sales staff. It is not specific to the Applicant.

[37] Whilst I agree with submissions of the Respondent that there is no requirement to give a warning in writing to an employee, a warning must identify those aspect of the employee’s performance of concern to the employer and make it clear that the employee’s employment is at risk unless the performance improves. A mere exhortation to improve is not sufficient. 9

[38] In this case I find the ‘warnings’ given by the Respondent to be unclear. The warnings did not clearly specify the areas of deficiency in the Applicant employment nor state the level of improvement required nor make clear the consequences of a failure to improve performance.

[39] For these reason I find that the Applicant was not warned of the unsatisfactory performance prior to dismissal as required.

(f) & (g) Is the size of the employer’s enterprise relevant?

[40] Nothing was put to me of the impact of the size of the employer’s enterprise on the procedures followed in effecting the dismissal of the absence of access to human resource management expertise.

[41] I do note however that the Respondent employed about 25 staff at the time the Applicant’s employment was terminated. There was no evidence of any human resource management expertise. Ms McConnell as the General Manager undertook all the correspondence with the Applicant and, along with the CEO effected the termination of employment.

(h) Any other matters

[42] I am aware that the Applicant has been subject to the management and direction of Ms McConnell during her employment and that Ms McConnell is based permanently in the US. I understand that Ms McConnell has been in the US not long after the Applicant commenced her employment.

[43] The move by Ms O’Connell and the CEO of the business to the US seems to have left a leadership vacuum in the Australian operations of the business. While this was the role the Applicant was intended to fill it is unclear how she was expected to do so without the benefit of more experienced senior staff in Australia. In effect it appears that the Applicant was expected to build the sales team from little or nothing.

[44] The Applicant says that she was entitled to receive three written warnings with respect to her performance. She says that, in her role as Business Development Manager she was told that she needed to provide her subordinate staff with written warnings about their performance while she received none.

[45] The Applicant also says she was subject to on-going bullying and constantly feared for her job.

Conclusion

[46] I have considered all of the matters put to me by the parties in reaching my decision. In particular I have been mindful that, while the sales target for the wholesale business seems high (particularly the increase in the target over three years), the failure to meet the sales target was not the only reason for the dismissal of the Applicant. In any event, she failed to meet her individual sales target of $20,000 per month. I have also taken into account the Applicant’s own admission that her performance was raised with her ‘every week.’

[47] I consider that the process used by the Respondent in dealing with the Applicant’s performance leaves it wanting in a number of areas. In particular the Respondent did not, once it had identified performance issues, clearly set out its expectations of the Applicant or advise her as to the consequences to her of a failure to improve. Much of the information provided to the Applicant in respect to her performance was in the midst of email dealing with a number of matters. None of these emails was clearly identified as being about the Applicant’s performance and the need to improve.

[48] I am satisfied however that the Applicant was aware that her performance was not at the standard required of her. She was aware of and signed up to a contract which set out clearly the expectations of her. She was aware, through very regular communication with Ms McConnell from the US where she needed to improve and the things she needed to concentrate on.

[49] Communications with the Applicant from Ms McConnell do not demonstrate any bullying of her but rather appears to be reasonably structured to provide guidance to the Applicant. Despite this there is little evidence of overall improvement in the Applicant’s performance. In fact, at times, the Applicant admitted that she knew her performance was not up to the standard required.

[50] Despite the deficiencies in clear advice being given to the Applicant with respect to her performance and the consequences if she did not improve I consider that she was well aware of problems in this area.

[51] There is nothing in the communications between Ms McConnell and the Applicant over six months leading up to the termination of her employment that justifies the Applicant fearing for her job and the Applicant provided no tangible evidence as to why she felt this way. To some extent that she was in fear for her job suggests that she was aware that she was not performing at the level expected of her.

[52] Taking all of these matters into account I find that the decision to dismiss the Applicant was not harsh, unjust or unreasonable.

The application for unfair dismissal is therefore dismissed

COMMISSIONER

Appearances:

M. Allford for herself.

L. McConnell for the Respondent.

Hearing details:

2014.

Melbourne:

13 November.

 1   Exhibit A3, attachment 2.

 2   Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371, 373.

 3   Exhibit A3, paragraph 3(iii). These figures were not disputed by the Respondent.

 4   Transcript PN131.

 5   Transcript PN205.

 6 (2009) 98 IR 137.

 7   Transcript PN213.

 8   See, for example, emails from Ms McConnell to the Applicant dated 28 January 2014, 3 February 2014 16 February 2014, 11 May 2014, 13 June 2014 etc as well as various file notes of Ms McConnell of discussions with the Applicant.

 9   Fastidia Pty Ltd v Goodwin (unreported, AIRCFB, Ross VP, Williams SDP, Blair C, 21 August 2000) Print S9280 .

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