Mr Ethan Henshaw v Autosports Group Limited T/A Mercedes-Benz Hornsby
[2021] FWC 3760
•1 JULY 2021
| [2021] FWC 3760 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Ethan Henshaw
v
Autosports Group Limited T/A Mercedes-Benz Hornsby
(U2020/15432)
DEPUTY PRESIDENT CROSS | SYDNEY, 1 JULY 2021 |
Application for an unfair dismissal remedy.
[1] An application was filed on 1 December 2020 (the Application) by Mr Ethan Henshaw (the Applicant), pursuant to s.394 of the Fair Work Act 2009 (Cth) (the Act), following his dismissal on 27 November 2020. The Applicant seeks an unfair dismissal remedy of either reinstatement or compensation.
[2] The Applicant commenced employment with Autosports Group Limited T/A Mercedes-Benz Hornsby (the Respondent) on 2 January 2020, and was employed as a sales consultant.
[3] On 22 February 2021, directions were issued to program the manner in which the Application was to proceed to hearing (the Directions). They were as follows:
1. Ethan Henshaw (the Applicant) is directed to file with the Fair Work Commission, and serve on Autosports Group Limited (the Respondent), an outline of submissions, witness statements and other documentary material the Applicant intends to rely on in support of the application in this matter by 4pm on 4 March 2021.
2. The Respondent is directed to file with the Fair Work Commission, and serve on the Applicant, an outline of submissions, witness statements and other documentary material the Respondent intends to rely on in opposition to the application in this matter by 4pm on 18 March 2021.
3. The Applicant is directed to file with the Fair Work Commission, and serve on the Respondent, any reply material, that is, any witness statements and other documentary material in reply to the Respondent's witness statements and documents by 4pm on 25 March 2021.
4. Any party that requests permission to be legally represented at the hearing is directed to file with the Fair Work Commission, and serve on the other party, a brief outline of submissions in support of its request by 4 pm on 18 March 2021.
[4] The parties complied with the Directions, in particular:
(a) On 4 March 2021, the Applicant filed a witness statement, a witness statement of Mr Blake Forbes, a witness statement of Mr Sebastian Sofoulis, as copy of a statement of allegations letter dated 22 October 2020, a copy of the Applicant’s response to that letter dated 22 October 2020, a medical certificate dated 16 October 2020, a copy of a final written warning letter dated 29 October 2020, a copy of a show cause letter dated 23 November 2020, a copy of the Applicant’s response to the show cause letter dated 24 November 2020, a copy of a termination letter dated 27 November 2020, and fifteen pages of emails and other transactional documents from his employment.
(b) On 15 March 2021, the Respondent filed an outline of submissions and its annexures, and a witness statement of Mitch Mulally.
(c) On 25 March 2021, the Applicant filed an outline of submissions in reply with annexures.
[5] The hearing of the matter occurred on 13 April 2021 (the Hearing). The parties were capably represented, Mr Henshaw appearing on his own behalf, and Ms Hume, of the Respondent company, appearing for the Respondent.
[6] At the Hearing, the Applicant further tendered an email exchanged dated 18 November 2020. The Respondent did not object to the admission of this document, and it was marked as an exhibit.
Factual Background
[7] Over the course of the Hearing, the relevant factual background of the matter was refined, and whilst there were not a great deal of relevant factual circumstances, the parties had some significant disagreement as to the factual details of the circumstances surrounding the Applicant’s dismissal.
[8] The Applicant was employed by the Respondent as a sales consultant, after having worked for another Autosports Group dealership as a sales executive. 1 The Applicant’s role required that various tasks were to be undertaken in relation to the sale of vehicles, and these tasks were to be undertaken subject to internal processes. Much of the Respondent’s submissions as to the reason for the Applicant’s termination related to the Applicant’s alleged failure to comply with these processes.
[9] On 16 October 2020, a vehicle was released to a client of the Respondent by the Applicant. The Respondent alleged that the Applicant had not complied with the internal dealer processes that the transaction was subject to, and specifically, was alleged to have been dishonest in confirming that the Personal Property Securities Register (PPSR) for the vehicle was completed prior to delivery, in circumstances where it was alleged that the PPSR had not been completed.
[10] The incident on 16 October was investigated by the Respondent, and the Applicant was asked questions by Ms Hume and Mr Mulally about the incident on 22 October, when the Applicant was presented with a letter of allegation (the Allegations letter). The Applicant recounted their responses to this investigation in cross examination at the Hearing: 2
Ms Hume | What was your response to not completing a PPSR? |
The Applicant | I said I had completed it. |
Ms Hume | Yes, and can you just elaborate on that for me? What else did you explain? |
The Applicant | I explained that the process doesn't give us access to that, yet we're expected to do it. So the team has a number of work arounds that they need to utilise because their responsibility is to perform the PPSR, but they also don't have access to the PPSR. The vague process understanding was that either the team needed to find a means to do it themselves or get their manager to do it, but the manager was autonomously doing it, as well |
Ms Hume | Well, you did say that you completed a PPSR for that particular vehicle? |
The Applicant | Correct, yes |
Ms Hume | When you were asked to provide a copy of the PPSR, were you able to? |
The Applicant | No, I was not. |
Ms Hume | What was your reason for not being able to provide a PPSR? |
The Applicant | There are multiple portals that I would have access to at the time and now - and some of them override it when you produce a new one, some of them don't. Some of them are more extensive in the report and some of them are more limited in the report than just checking a few particular details. |
… | |
Ms Hume | During the meeting you told Mitch and I that you had completed a PPSR and you would be able to provide us a copy immediately afterwards, and when we asked you to provide a copy what you are saying is you were unable to because the PPSR had been overridden. Is that correct? |
The Applicant | Potentially, yes. |
Ms Hume | Is that a yes? |
The Applicant | Yes. |
Ms Hume | Because that's what we have in our correspondence, that you said a PPSR would be overridden when one has already been conducted. During the course of the investigation we asked you questions. An exercise was performed where we actually went into the same portal and provided a PPSR, and those examples have been added in our submissions along with Mr Mitch Mulally's witness statement which demonstrate that a PPSR was not conducted by yourself and we could show that it wasn't actually overridden when a PPSR was conducted. It shows all the PPSRs which have been conducted on the same vehicle as a vehicle history report? |
The Applicant | I would suggest that that's incorrect. The portal that you have access to is the one utilised by the management team at Mercedes-Benz Hornsby. All the members of the staff utilise different portals. … |
[11] The Applicant further provided a written response to the Allegations letter on 22 October 2020, where he rejected the allegation that he failed to follow internal processes, and was dishonest in his interactions with Mr Mulally. In his response, the Applicant indicated that he was unwell and on sick leave on the day of the transaction of 16 October 2020, and that it was not the sales consultant’s responsibility to ensure the PPSR was completed, but the role of the management team. He stated:
“The current process, as outlined in the attached email from Andrew Finch & Tom Flanagan dated 21 October 2020, shows that responsibility for the PPSR check sits with the management team. Industry best practice dictates two reports should be requested as if a PPSR is not done on the day of hand-over the business can be exposed to significant risk. Ultimately, the responsibility to ensure the vehicle is safe and that there is no risk to the business in performing the hand-over sits with the staff member doing the handover, the business manager regarding the funds and the manager in charge of those staff. In this instance, I fulfilled none of those roles as I was on sick leave.” 3
[12] It is not in dispute between the parties as to whether the Applicant was present at work on 16 October 2020, and a medical certificate was submitted with the Applicant’s evidence to certify this absence, however it is disputed whether the Applicant was responsible for ensuring that the appropriate checks and processes had been followed the day prior to the vehicle handover.
[13] In cross examination of Mr Mulally, evidence was led that the internal deal process required that the finalised documentation was ready prior to the delivery of the vehicle: 4
The Applicant | Would you suggest that it would be inappropriate for Mr Henshaw to submit that deal pack to be processed through admin missing the registration copy? |
Mr Mulally | No, I don't - I would find that it's important to submit all the paperwork on the same day as delivery and notify your manager if there is something that is missing. |
The Applicant | But you acknowledge that that document can - it's not out of the ordinary to come the following day? |
Mr Mulally | Certainly. |
The Applicant | Yes? |
Mr Mulally | There's a requirement of the deal process to have the deal file in the tray within 24 hours, so if someone was having a day off the next day it would be important for them to have that done prior to their day off. |
The Applicant | Are you stating that as best practice or something that you witness happening? |
Mr Mulally | It's part of the process. |
The Applicant | Does that happen within the business regularly or is it something that should be part of the process and best practice? |
Mr Mulally | Regularly. … |
The Applicant | If that registration document was to arrive to be processed on a rostered day off, what would be the appropriate course of action? |
Mr Mulally | I would say the appropriate course of action would be to notify your line manager prior to your day off that they're expecting some paperwork to arrive. |
[14] Additionally, in his reply submission, the Applicant refers to an inexperienced sales consultant who administered the release of the vehicle on 16 October 2020. Mr Mulally gave evidence in relation to this explanation for there being a discrepancy with respect to the correct paperwork for the vehicle delivery:
The Deputy President | The reply submission referred to an inexperienced salesperson being involved in the first of the problematical transfers when Mr Henshaw was sick and you were asked some questions about that today. Had you previously heard that explanation before? |
Mr Mulally | Yes. |
The Deputy President Mr Mulally | The involvement of an experienced sales consultant?--- So are you saying that he is inexperienced or |
The Deputy President Mr Mulally | No, no, there was an involvement of another inexperienced sales consultant, a trainee, in the first of the transfers that was the subject of the dismissal and that that somehow affected the quality of the documentation?--- I was made aware that the sales trainee, James, was the person who handed over the car. After the fact I was made aware of that. With this particular car it was bought by a company. The person collecting the car, from my understanding, wasn't the rightful owner of the trade-in and Ethan was aware that it was a company purchase, and that someone would be coming to collect the car. In those circumstances when it's a company purchase you do your due diligence and make sure you have your paperwork prior, because that would have been a payment that would have been - to make sure that there was - we had the right paperwork signed by the directors of the company and so on. |
[15] The Applicant filed a series of emails with his submissions, being an email thread commencing at 10:15 on 21 October 2020. This thread was brief in detail, with the subject heading “contracts and final contracts.” The thread reads:
From: Text of email: | Tom Flanagan Purchase signature (customer) Witness signature (Harry or Jamil) Trader authorised employee signature (Tom, James, Mitch, Angus) If we are signing of a deal and it has a trade in please show us paper work so we can check it is complete. |
From: Text of email: | Andrew Finch With the trade in paperwork (valuation and PPSR), who will be responsible for printing this off? |
From: Text of email: | Tom Flanagan ME, James, mitch Plus we do ppsr. |
From: Text of email: | Andrew Finch Hey guys, Just as an FYI, James Mitch or Tom will be responsible for printing out the Valuation with the PPSR check as per Tom’s instructions below. |
[16] On 29 October 2020, the Applicant was provided with a final written warning letter which indicated that the Applicant was being warned for misconduct (the Warning letter). In this letter, the Respondent concludes that:
“Ethan, in consideration of all your responses and all other available information to me, two out of three allegations have been substantiated based on the balance of probabilities. These findings indicated that you have breached our Code of Conduct Policy and have breached your confidentiality obligations.
…
Ethan, your behaviour has been deemed misconduct according to our Company Code of Conduct and company values. It is for this reason that you are being issued a Final Written Warning.”
[17] On 23 November 2020, the Respondent provided the Applicant with a show cause letter in relation to further alleged non-compliance with internal deal processes (Show Cause letter). This letter alleged that the Applicant released a vehicle on 16 November 2020 to a client without the required completed documentation.
[18] In the Show Cause letter, the Respondent indicated that the file for the vehicle delivery was removed from the Applicant’s desk on the date of delivery as he was on a rostered day off, and that the documentation was incomplete. The Respondent stated in the Warning letter: “This indicated that the deal process which had been discussed in detail with you when your final written warning was issued to you on 29 October 2020 had not been adhered to.”
[19] The Applicant attended a meeting with the Respondent on 23 November 2020, where he was handed the Show Cause letter whilst his support person Mr Finch was present, and was invited to provide a written response. The Applicant responded to this letter on 24 November 2020. The Applicant did not deny that the deal paperwork was not in the folder on his desk, but the Applicant’s primary contention is that he ought to have been provided with the opportunity to collect the documents that were outstanding as he was waiting on certain documents to be actioned by other staff.
[20] On 27 November 2020, the Respondent provided the Applicant with a letter effecting the termination of the Applicant’s employment on the basis of non-compliance (the Termination letter). The Termination Letter indicated the reason for termination as:
“Ethan, in consideration of your written responses and all other information to me, the business has decided to termination your employment effective immediately, as of 27 November 2020. The business has made this difficult decision on the basis that of your attitude towards documentation needed to meet compliance requirements is not acceptable. Ethan, we do not require you to work out your notice period, so we will pay you out in lieu of notice. You will be paid out any outstanding leave entitlements in your termination pay.”
[21] The Applicant was paid one week’s salary in lieu of notice. 5
CONSIDERATION
Preliminary findings
[22] I am satisfied that:
(a) The Applicant was dismissed at the initiative of the employer (ss 385(a) and 386(1)(a)).
(b) His unfair dismissal application was lodged within the 21-day statutory time limitation found at s 394(2) of the Act;
(c) The Applicant is a person protected from unfair dismissal in that he had completed the minimum employment period set out in ss 382 and 383 of the Act; and
(d) His dismissal was not a case involving the Small Business Fair Dismissal Code (s 385(c)).
Was the dismissal Harsh, Unjust or Unreasonable
[23] Section 387 of the Act identifies the matters that the Commission must take into account in deciding whether a dismissal was ‘harsh, unjust or unreasonable:’
(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) Valid reason
[24] As the Full Bench found in Sydney Trains v Hilder: 6
‘The principles applicable to the consideration required under s 387(a) are well established, but they require reiteration here:
(1) A valid reason is one which is sound, defensible and well-founded, and not capricious, fanciful, spiteful or prejudiced.
(2) When the reason for termination is based on the misconduct of the employee the Commission must, if it is in issue in the proceedings, determine whether the conduct occurred and what it involved.
(3) A reason would be valid because the conduct occurred and it justified termination. There would not be a valid reason for termination because the conduct did not occur or it did occur but did not justify termination (because, for example, it involved a trivial misdemeanour).
(4) For the purposes of s 387(a) it is not necessary to demonstrate misconduct sufficiently serious to justify summary dismissal on the part of the employee in order to demonstrate that there was a valid reason for the employee’s dismissal (although established misconduct of this nature would undoubtedly be sufficient to constitute a valid reason).
(5) Whether an employee’s conduct amounted to misconduct serious enough to give rise to the right to summary dismissal under the terms of the employee’s contract of employment is not relevant to the determination of whether there was a valid reason for dismissal pursuant to s 387(a).
(6) The existence of a valid reason to dismiss is not assessed by reference to a legal right to terminate a contract of employment.
(7) The criterion for a valid reason is not whether serious misconduct as defined in reg 1.07 has occurred, since reg 1.07 has no application to s 387(a).
(8) An assessment of the degree of seriousness of misconduct which is found to constitute a valid reason for dismissal for the purposes of s 387(a) will be a relevant matter under s 387(h). In that context the issue is whether dismissal was a proportionate response to the conduct in question.
(9) Matters raised in mitigation of misconduct which has been found to have occurred are not to be brought into account in relation to the specific consideration of valid reason under s 387(a) but rather under s 387(h) as part of the overall consideration of whether the dismissal is harsh, unjust or unreasonable.’
[25] In order to be a valid reason, the reason for the dismissal should be ‘sound, defensible or well founded’ 7 and should not be ‘capricious, fanciful, spiteful or prejudiced.’8 However, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer.9
[26] There is no mandate for giving the ‘valid reason’ criterion any greater emphasis or weight than any of the other criteria in s 387. It is well settled that the statutory requirement to ‘have regard to’ or ‘take into account’ requires the Commission to give the matter(s) weight as a fundamental element in the decision-making process. Even if it is found that there was a valid reason for the dismissal, an overall assessment must be made as to whether the dismissal was harsh, unjust or unreasonable.
[27] The reason relied upon by the Respondent for termination is articulated as being “… on the basis that of your attitude towards documentation needed to meet compliance requirements is not acceptable…”
[28] The Respondent’s submission was that the repeated failure of the Applicant to undertake correct internal deal processes was in conflict with the Code of Conduct of the Respondent, and created unacceptable risk for the Respondent. Evidence was heard that the Applicant did not deny that there were deficiencies in the paperwork required for the first incident, however due to his unplanned absence from work, and the incorrect processes being followed by the consultant who had attended the delivery of the vehicle, that the responsibility for the deficiencies did not lie with the Applicant.
[29] In relation to the second incident, being the vehicle delivery of 16 November 2020, the Applicant submitted that the deal process was followed, however he was waiting for other documents to be provided by another staff member, and in any case, it was the responsibility of the sales staff on shift to ensure that all of the documentation was in place before the transaction.
[30] Evidence was heard in relation to the deal process, and whether the Applicant’s non-compliance could be substantiated. Mr Mulally was a forthright witness, and gave evidence on the usual process of the dealership in delivering vehicles for sale. Mr Mulally’s evidence indicated that there were regular processes which ought be complied with, including that the paperwork for these transactions are required to be completed prior to the delivery of the vehicle.
[31] The Applicant submitted that the responsibility for the PPSR check ultimately rested with the sales executive, and particularly in relation to the two incidents to which his termination related, if there are deficiencies they are to be identified by the staff members processing the vehicle delivery. In support of this submission, the Applicant referred to the email thread between Mr Finch and Mr Flanagan, his inability to conduct the requisite checks and collate the relevant documents due to his absence, and some apparent confusion as to the internal deal processes. The email thread between Mr Finch and Mr Flanagan indicates that, post the initial incident on 16 October 2020, there was some lack of clarity as to responsibilities in relation to the PPSR check, which is the documentation that the Applicant was primarily disciplined for not having completed.
[32] I prefer the evidence of Mr Mulally. The Respondent has significant obligations, particularly involving the Personal Property Securities Register and relevant registration of vehicles prior to their release. It is apparent that the Applicant took a somewhat cavalier approach to such obligations inconsistent with the requirements of the Respondent. I find that the evidence supports a finding that there were valid reasons for the Applicant’s dismissal.
(b) Notification of the valid reason and opportunity to respond - s.387(b) and (c)
[33] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made, 10 in explicit terms,11 and in plain and clear terms.12
[34] An employee protected from unfair dismissal must also be provided with an opportunity to respond to any reason for dismissal relating to the conduct or capacity of the person. Such requirement will be satisfied where the employee is aware of the precise nature of the employer’s concern about his or her conduct or performance and has a full opportunity to respond to this concern. 13 This criterion is to be applied in a common sense manner to ensure the employee is treated fairly and should not be burdened with formality.14 The requirement to notify of the reason, together with the requirement to provide an opportunity to respond to the reason, involves consideration of whether procedural fairness was afforded to the Applicant before her dismissal was effected.
[35] Regarding s.387(b), the notification provided to the Applicant was unambiguous, and articulated in the Termination letter provided to the Applicant. The Applicant had a prior opportunity to respond to the Respondent in the provision of a Show Cause letter which included an invitation for the Applicant to respond, and the Applicant made a submission in writing pursuant to that invitation.
[36] The “non-compliance” that termination was based upon was not articulated in great detail in the Termination letter, however was indicated clearly in the Show Cause letter, and I am satisfied that the Applicant was notified of the reason for termination.
(c) Unreasonable refusal by the employer to allow a support person - s.387(d)
[37] 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.
[38] The Applicant had a support person present for the meeting of 24 November 2020 where he was provided with the Show Cause letter.
(d) Warnings regarding unsatisfactory performance - s.387(e)
[39] While the Applicant had previously sustained a final warning in relation to unsatisfactory performance, that is not a relevant consideration under s.387(e). As the Full Bench observed in Larcombe v Bis Industries Limited: 15
“Thirdly, s.387(e) of the Act relates to warnings for unsatisfactory performance. The Decision appears to conclude that it was not appropriate to take into account under this head, the severity of past disciplinary action (the demotion). That appears manifestly correct. Moreover, we are not persuaded that there is an arguable case of error arising from the Commissioner’s apparent decision not to take the severity of past disciplinary action into account. The Commissioner’s reasons for so doing were that the disciplinary action was not challenged at the time and it was now not appropriate for him to try to “balance the ledger” by taking a matter not previously challenged into account. No arguable appellable error from that reasoning is disclosed. The scope of the consideration under s.387(e) is well settled and does not require further clarification by this Full Bench. The Appellant’s prior disciplinary history is a matter the Commissioner was entitled to take into account under s.387(h). That the Commissioner may have taken prior warnings about conduct into account under s.387(e) instead of (h) does not enliven the public interest nor do the other matters raised by the Appellant as to s. 387(e) of the Act attract the public interest.”
(e) Impact of the size of the Respondent on procedures followed (s.387(f)), and the absence of dedicated human resources management specialist/expertise on procedures followed (s.387(g))
[40] These are not relevant considerations as the Respondent is a relatively large company and has ample human resources staff.
(f) Other relevant matters - s.387(h)
[41] Section 387(h) of the Act provides the Commission with a broad scope to consider any other matters it considers relevant. In this matter neither the Applicant nor the Respondent submitted that any factors warranted consideration under this factor.
[42] Section 387(h) is, however, the relevant provision for consideration of:
(a) An assessment of the degree of seriousness of misconduct which is found to constitute a valid reason for dismissal; and
(b) Matters raised in mitigation of misconduct.
[43] I consider the degree of misconduct of the Applicant to be significant. The deficiencies in relation to paperwork for the vehicle delivery were not small and procedural in nature, and the Respondent may have been exposed to significant business risk where relevant processes are not completed and checked.
Conclusion on Dismissal
[44] Taking into account the matters referred to above, I find that the dismissal of the Applicant was not harsh, unjust or unreasonable. The Application is dismissed.
DEPUTY PRESIDENT
Appearances:
E Henshaw, on his own behalf
M Hume, of the Respondent.
Hearing details:
2021.
Sydney.
April 13.
Printed by authority of the Commonwealth Government Printer
<PR731175>
1 Transcript PN 105.
2 Transcript PN 114 – 124.
3 Response to Allegations letter dated 22 October 2020.
4 Transcript PN 498 – 506.
5 Transcript PN 615 – 616.
6 [2020] FWCFB 1373, at [26].
7 Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371, at 373.
8 Ibid.
9 Walton v Mermaid Dry Cleaners Pty Ltd (1996) 142 ALR 681, at 685.
10 Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41].
11 Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, at 151.
12 Previsic v Australian Quarantine Inspection Services Print Q3730.
13 Gibson v Bosmac Pty Ltd (1995) 60 IR 1, at 7.
14 RMIT v Asher (2010) 194 IR 1, at 14-15.
15 [2017] FWCFB 4545, at [34].
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