Mr Ben Madden v Ultra Tune Australia Pty Ltd

[2020] FWC 4036

[2020] FWC 4036

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Mr Ben Madden
v
Ultra Tune Australia Pty Ltd
(U2019/14236)

COMMISSIONER MCKINNON MELBOURNE, 31 JULY 2020

Application for unfair dismissal remedy – whether harsh, unjust or unreasonable.

[1] Ben Madden was employed by Ultra Tune Australia Pty Ltd as Training Manager from 21 August 2017 until 26 November 2019. There is no dispute that Mr Madden was dismissed.

[2] On 17 December 2019, Mr Madden applied within time for a remedy for unfair dismissal, on the basis that he was given no reason and no warning before the dismissal took effect. Ultra Tune denies that the dismissal was unfair and says it was left with no option after Mr Madden refused to do an essential part of his job which was training franchisees.

[3] Mr Madden is protected from unfair dismissal in relation to his employment with Ultra Tune. His period of employment was longer than the minimum employment period and his salary of $115,000 plus superannuation plus car was less than the high income threshold.

[4] At the time of dismissal, Ultra Tune was not a small business employer. 1 In those circumstances, the dismissal could not have been consistent with the Small Business Fair Dismissal Code.2 It was also not a genuine redundancy.

[5] I have decided that the dismissal was unfair and that a compensation amount of $9583.33 is the appropriate remedy. These are my reasons.

Was the dismissal harsh, unjust or unreasonable?

Valid reason for dismissal related to capacity or conduct

[6] Ultra Tune says Mr Madden was essentially “a training manager who did not want to train”. It relies on his lack of interest in providing training to its franchisees as a valid reason for dismissal. To understand the contention, it is necessary to understand the nature of Mr Madden’s role.

[7] Mr Madden was hired to work on the introduction of a new Salesmate for Windows software program for Ultra Tune franchisees, to help them collect information and manage their businesses to the standard required by Ultra Tune. His role was to get the program working by liaising closely with IT and software designers as well as to oversee the writing of program manuals. It was also to train franchisees so they could understand and use the program once it was launched.

[8] The Position Description at Schedule A to Mr Madden’s contract of employment describes his role as follows:

“Managing the Ultra Tune training activities around Australia.

Promoting Ultra Tune brand and products and training.

Creation of Ultra Tune promotional and training program and material

•  Training videos

•  Webinars

•  Training manuals & documentation

•  SM4W (Salesmate 4 Windows) Development and Introduction

General communication with and one-on-one training of franchisees when required.

Training franchises to be compliant to Ultra Tune standards.

General assistance of franchisees.

Implementation of Head Office directives and programs.

Weekly reporting to the National Operations Manager of your activities.

General administrative work.

Such other duties from time to time as directed.”

[9] It is clear from the Position Description that training and assisting franchisees was a part of Mr Madden’s role.

[10] Mr Madden spent a lot of his time working on the development and launch of the Salesmate program. When it launched on 1 July 2019, it was not a success. While Mr Madden says the system was up and running without too many problems within one week, the evidence does not bear that out. Franchisees who had no option but to use the system had great difficulty. Server capacity was identified as an issue, as were the initial costings which were much lower than actual costs.

[11] According to Sean Buckley, Managing Director of Ultra Tune, there were “a lot of problems after this thing got launched. We had dramas everywhere. We still have. Franchisees were sold a pup. It was a dodgy system.” There were many complaints and one State refused to use the new program. Fixing the problems caused additional, unanticipated costs to the business which Mr Buckley estimates at more than $500,000.

[12] A decision was made to transition the program to the Cloud and expert consultant Kevin Toghai was engaged. Once he became Head of Information Technology, Mr Madden was almost solely focused on helping with the transition. He provided some ‘train the trainer’ coaching through video conferencing calls with State Managers and state support staff, designed to allow them to support franchisees directly. He did not conduct face to face training. He continued to build on the training manual, messenger services and additional training videos. He began to create briefs for future work, including a front of house customer interface and online customer portal.

[13] From Mr Buckley’s perspective, Mr Madden was the face of the new program and problems with it were partially his responsibility. He felt Mr Madden should have gone out and started talking to franchisees, giving them competence and confidence in the system so they did not revert to the ‘old’ system or adopt handwritten systems instead. Franchisees wanted in person training rather than someone on the phone.

[14] Mr Buckley was unhappy about costings provided by Mr Madden for the program which he described as about a quarter of actual costs and ‘terrible’. Despite assurances from Mr Madden that it was all covered, Mr Buckley says cables to the building were inadequate to support the new system and trenches had to be dug after the launch.

[15] Mr Buckley says Mr Madden hated interacting with franchisees. They had a number of conversations over a long time, including in September 2019, probably on the phone. After a pre-launch road show in May 2019, Mr Madden told him he didn’t want to do it anymore. Mr Buckley says he then had to get other people to go out on the road because Mr Madden wouldn’t do it. According to Mr Buckley, he told everyone in the company how he felt, and was consistently saying he didn’t like dealing with franchisees. Mr Buckley concedes that “they’re very hard to deal with”. This led to discussion between Mr Buckley and Mr Madden about what other roles in the business he would be interested in, but he was either not qualified for identified roles or he did not have the relevant skills and experience. He says he was left with no option but to terminate Mr Madden. I do not accept this aspect of Mr Buckley’s evidence. I prefer Mr Madden’s evidence that he had very little to do with Mr Buckley and had no discussions of this kind with him, except to the extent that there was a general discussion between Mr Madden, Mr Buckley and Mr Cott about possible alternative roles for Mr Madden within the business.

[16] Having said that, I accept the tenor of Mr Buckley’s evidence that Mr Madden did not like dealing directly with franchisees, which is consistent with the evidence of the other witnesses for Ultra Tune. Mr Madden saw himself as one step removed from the function of delivering face to face training, instead preferring to develop systems and processes through which training could be provided and queries resolved. Mr Madden’s focus was on delivering office-based solutions. He relied on a ‘tickets’ system to address franchisee program inquiries or concerns, delegating responsibility for answering those queries to relevant State Managers. He did not see it as practical to engage directly with franchisees because there were too many. Some were difficult to deal with. I do not accept Mr Madden’s evidence that he enjoyed or had no problem dealing with franchisees directly and that he never complained about it.

[17] I accept the evidence of Tony Cott, National Operations Manager, to whom Mr Madden reported. He says Mr Madden was expected to go around the country training new franchisees about how to use the Salesmate program once it was ready and that he did not perform this part of his role after the launch on 1 July 2019. I find that Mr Madden resisted efforts from Mr Cott and other members of the Ultra Tune business to encourage him to engage more directly with franchisees, both because it was a part of his role he did not relish and because he was too busy working on the program. Eventually, his resistance led to the engagement of Shaun Johnston to conduct incoming franchisee training.

[18] I find that there were two reasons for dismissal – firstly, Mr Madden’s reluctance to engage directly with franchisees by training them in the use of the Salesmate for Windows program and secondly, his contribution as National Training Manager to the failed launch of the program. These were both valid reasons for dismissal related to Mr Madden’s capacity and conduct. They weigh against a finding of unfair dismissal.

Were the reasons notified to the employee?

[19] Mr Madden was not told the reasons for his dismissal. Mr Buckley told Mr Cott to finish him up and he followed the instruction straight away, despite feeling rattled about it. He told Mr Madden he had to “finish him up” as a “cost reduction measure.” This weighs in favour of a finding of unfair dismissal.

Was there an opportunity to respond to any capacity or conduct related reason, or any warnings?

[20] Mr Madden had discussed the importance of the success of the program with Mr Cott including that “heads could roll” if it failed. There was pressure on them both to get the program working correctly. Mr Cott spoke to Mr Madden a few times after the launch about the need to “get this done because there are so many issues”, saying things like “all our jobs are on the line here mate”. This weighs against a finding of unfair dismissal.

[21] However, Mr Madden was never given any actual counselling or warnings about his performance in the role of National Training Manager. No allegations were formally put to him and there was no discussion or opportunity to respond to the allegations before the dismissal took effect. This weighs in favour of a finding of unfair dismissal.

Was there any unreasonable refusal to allow a support person to be present to assist at any discussions relating to dismissal?

[22] There was no unreasonable refusal to allow Mr Madden to have a support person assist in discussions about the dismissal. It is not a relevant consideration.

Degree to which the size of the employer’s business and any absence of dedicated human resources management specialists or expertise in the business would be likely to impact on procedures followed in effecting the dismissal

[23] The business is a national company based in Glen Iris in Victoria and operating, mainly through its franchisees, in every State. There are approximately 20 employees in Head Office and around Australia, approximately 260 franchisees. Neither the size of the business nor the absence of dedicated human resources staff are likely to have impacted on the procedures followed in effecting the dismissal, because the business is run deliberately in the way it is. I am not satisfied that any different approach or outcome would have eventuated if the business was larger or had dedicated human resources expertise. It employs three in-house lawyers and seven or eight accountants. It could easily have acquired information that is readily available in the public domain about fair procedures for termination of employment had it turned its collective mind to the question. The size of the business and its access to human resources expertise does not weigh against a finding of unfair dismissal.

Other relevant matters

[24] Mr Madden says he was performing well in his role, pointing to the fact that he received both a pay rise and payment of bonus shortly after launch of the Salesmate program in 2019. Mr Buckley disagrees. He says that at the time these measures were agreed upon, he was not aware of how ineffective the program actually was. I accept his evidence in this regard. Mr Cott attests to a meeting with Mr Buckley where Mr Cott expressed the view that Mr Madden did not deserve a bonus as the launch had not been successful. Mr Buckley approved the raise and bonus anyway. I find that he did so in circumstances where he was not fully apprised of the difficulties with the program or the likely costs to the business of fixing them. It is a neutral consideration.

[25] Mr Madden also relies on the timing of the dismissal, one month prior to Christmas and the deteriorating position in the job market because of the COVID-19 pandemic that has made it very difficult for him to find alternative employment. I do not accept that the timing of the dismissal in this case contributed to being harsh in all the circumstances. Nor is the pandemic relevant to the fairness or otherwise of the dismissal. The dismissal occurred in November 2019, approximately four months before the economic and social effects of the pandemic first began to emerge in Australia. It is relevant to the question of remedy, which I deal with below.

Conclusion on merits

[26] On balance, I am satisfied that even though there were valid reasons for his dismissal, the process adopted by Ultra Tune rendered the dismissal of Mr Madden unreasonable in the circumstances. It was an unfair dismissal.

Remedy

[27] Reinstatement is not an appropriate remedy in this case, in large part due to my findings in relation to valid reasons for dismissal. I am not satisfied that the necessary confidence as between Mr Buckley and Mr Madden is likely to be restored in the context of what was intended to be a senior managerial role. If he were reinstated, Mr Madden is unlikely to change his approach in relation to dealing with Ultra Tune’s franchisees. The significance of this cannot be understated because Ultra Tune’s business model relies on the success of its franchisees.

[28] Compensation is the appropriate remedy in this case. There is no apparent reason why Ultra Tune could not have adopted a fairer process in giving effect to its decision to dismiss, which would have allowed Mr Madden the opportunity either to address the concerns or commence the process of seeking alternative employment.

[29] There is no evidence that a compensation order would effect the viability of Ultra Tune’s business. Mr Madden was employed for approximately 2 years and 3 months. It is neither a short or long period of service.

[30] Had a fairer process been adopted, Mr Madden is only likely to have remained in employment for one month. Over this period, he would have earned additional salary of $9583.33 gross.

[31] I am satisfied that Mr Madden has taken reasonable steps since December 2019 to mitigate his loss. He has applied for approximately 90 roles, attended multiple interviews and contacted his own networks to identify potential opportunities. The last few months have been a challenging time to be looking for work for many and it is not for lack of trying that Mr Madden had not found alternative employment at the time of the hearing. No adjustment to the amount of compensation is made on this account.

[32] There is no evidence that Mr Madden earned any remuneration in the period after his dismissal or that he is likely to earn any remuneration in the period. On the evidence before me, he remains unemployed. The period of time that has elapsed between the dismissal and this decision renders the question of any deduction from the compensation amount for contingencies moot. I will leave the question of taxation to the parties and the Australian Taxation Office.

Other relevant matters

[33] I accept that the prospects for employment are challenging in the current labour market. However, it is not a reason to adjust the amount of compensation. It is a circumstance affecting the economy generally rather than one that is personal to, or within the capacity to control of, either party.

[34] I have calculated the amount of compensation as follows:

Consideration	Outcome	Gross amount
Remuneration likely to have been received but for termination	1 months’ salary	$9583.33
Monies earned since termination	Nil	$0.00
Discount for contingencies	Nil	$0.00
Impact of taxation	Nil	$0.00
Adjustment for misconduct	Nil	$0.00
Total compensation amount		$9583.33

[35] I am satisfied that the level of compensation is appropriate having regard to all the circumstances of the case. It reflects my estimate of Mr Madden’s likely loss had the dismissal process adopted been a fair one. It does not include any amount for shock, distress or the like, and none was claimed by Mr Madden. No adjustment is made on account of misconduct. Concerns in relation to Mr Madden’s performance have already been taken into account in the context of valid reason and anticipated period of employment. The compensation amount does not exceed the statutory cap.

[36] I will order Ultra Tune to pay $9583.33 gross less taxation as required by law, plus superannuation. The amount will be payable to Mr Madden within 14 days of the date of this decision.

Costs

[37] Mr Madden has applied for a costs order related to an adjournment of the initial hearing scheduled for 18 May 2020 at the request of Counsel for Ultra Tune. The adjournment request was made because of difficulties in the use of technology to participate in the hearing.

[38] The hearing was conducted over videoconference instead of in person as a necessary consequence of measures introduced in response to the COVID-19 pandemic. The request to accommodate a remote hearing was made by the Commission. At the time, the technology and its widespread use for the conduct of contested hearings was also relatively new to the Commission.

[39] Counsel for Ultra Tune took reasonable and appropriate steps to accommodate the request. This included participation in a pre-trial test of the software and suggesting that the matter might proceed by phone instead when difficulties were encountered. These were made known both to the Commission and the parties ahead of the hearing and ultimately the decision to adjourn the proceeding was made by the Commission.

[40] I do not hold Ultra Tune responsible for failing to ensure the seamless operation of technology on the part of its Counsel, particularly where the issue was due to system incompatibility in the context of a phasing out of the ‘Skype for Business’ program at or around that time. The reality with technology issues is that they may be absent one day and apparent the next, depending as much as anything on the particular equipment being used on a given day.

[41] In my experience, it is common for parties from time to time to have difficulties participating remotely in hearings and conferences. The difficulties are not insurmountable but they can affect the timing and associated cost of a particular proceeding. The delay was unfortunate but unexceptional. It was not the result of any unreasonable act or omission.

[42] The application for costs is refused.

COMMISSIONER

Appearances:

M Isobel of Counsel for the Applicant.
J Hooper of Counsel for the Respondent.

Hearing details:

2020.
Melbourne (video hearing):
June 1.

Final written submissions:

Applicant, 19 June 2020
Respondent, 29 June 2020
Applicant, 2 July 2020 (in reply)

Printed by authority of the Commonwealth Government Printer

<PR721469>

 1   Form F3.

 2   Fair Work Act 2009 (Cth), s.388.