Mr Kaine Fulton v PowerMove Distribution Pty Ltd as Trustee for Powermove Unit Trust T/A PowerMove Distribution Pty Ltd

[2014] FWC 3033

[2014] FWC 3033

FAIR WORK COMMISSION

DECISION

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

Mr Kaine Fulton
v
PowerMove Distribution Pty Ltd as Trustee for Powermove Unit Trust T/A PowerMove Distribution Pty Ltd
(U2013/17244)

COMMISSIONER ROE MELBOURNE, 8 MAY 2014

Termination of employment.

[1] The matter arises from an application filed on 10 December 2013 under Section 394 of the Fair Work Act 2009 (Cth) (the Act) by Mr Kaine Fulton (the Applicant) for relief in respect to the termination of his employment from PowerMove Distributions (the Respondent). The Respondent advised that the legal name of the entity is PowerMove Distribution Pty Ltd as Trustee for Powermove Unit Trust. The trading name of the company is PowerMove Distribution Pty Ltd. I am satisfied that this is the correct identity of the Respondent.

[2] The Applicant was employed by the Respondent from 15 November 2010 until 4 December 2013. The Applicant was initially employed on a casual basis but the parties agreed that he was employed on a full time basis from at least November 2011. The Respondent is not a small business employer. The Applicant has the minimum employment period to be protected from unfair dismissal and the Respondent is a national system employer. It is not suggested that the Applicant was terminated for reasons of redundancy and it is accepted that the Applicant was dismissed at the initiative of the employer. The Applicant was paid two weeks in lieu of notice.

[3] The matter proceeded before me by way of determinative conference. I considered the written documents and statements provided by the parties and also the direct evidence of the Applicant and Mr Bagnall and responses to questioning. Mr Bagnall was at the time of the incidents and the termination the Operations Manager of the Respondent.

[4] The reasons for the termination were set out in a termination letter dated 4 December 2013.

[5] The Applicant received a warning letter on 20 June 2013 for failure to follow the correct procedure in regards to customer drop shipments. The warning letter advised: “The correct procedure is not to include the invoice with goods and record the invoice number on the ship log. Both of these actions did not occur.... Further failures will not be tolerated.” The Applicant says that he was absent on the day when there was induction concerning this procedure and that the policy was not in writing. The Applicant accepts that there was an earlier incident in August 2012 when he was warned in relation to an incident when he arrived late for work or was absent from work.

[6] Having considered the evidence I am satisfied that the change which occurred shortly before 20 June 2013 was the introduction of a requirement for documentation by recording the invoice number on the ship log. The parties agreed that it had been and remained the procedure that invoices should not be included with deliveries to certain customers known as drop shipments. The Applicant acknowledged that he was aware that invoices should not be included with deliveries for drop shipments.

[7] I am satisfied that the Applicant did include the invoice with the shipment and that therefore a first warning was justified and appropriate. I am also satisfied that even if I accept that the Applicant was not at the briefing when the requirement for documentation was advised, he was as a result of this warning aware of this requirement for the future.

[8] The Applicant received a second warning letter on 9 August 2013 for failure to follow the correct procedure in regards to customer drop shipments. The warning letter advised: “This is your second warning letter for this reason. Any further warnings will result in your dismissal.”

[9] The Applicant says that it couldn’t be determined if it was the Applicant or a casual employee who sent the invoice along with the package. The Respondent says that there is no doubt that the Applicant was responsible for recording the invoice number on the ship log even if there is doubt (which is not accepted by management) about who included the invoice with the goods.

[10] I am satisfied that even if it was accepted that the responsibility for the breach was a shared one, given the earlier warning in respect to this matter, the second warning was justified and appropriate.

[11] Both the first and the second warning identify in the heading: “reason: failure to follow correct procedure.”

[12] The Applicant received a termination letter on 4 December 2013. That letter referred to the failure to follow the correct procedure of informing the relevant manager by telephone call (not text message) by the required time in the event of absence. The warning said that: “you were informed of this requirement by both Nick Whyntie and Joey Castuera and have failed to do so on the 14th November 2013 and 3rd December 2013.” The letter also referred to previous warnings concerning failure to follow correct procedure on 22 August 2012, 20 June 2013 and 9 August 2013. The letter concluded: “as a result of your own actions your employment with PowerMove Distribution is being terminated immediately as at the 4th December 2013. You will receive your full legal entitlement in regards to termination; hours worked and any outstanding accrued leave.”

[13] In respect to the failure to follow correct procedure re informing the manager in case of absence the Respondent relies upon a general advice to employees by email on 28 October 2013 which said that the practice of email or sms notification was no longer acceptable. In response to the failure of the Applicant to follow this procedure on 14 November 2013 Nick Whyntie sent the Applicant an email stating: “please be aware that an sms/email is no longer valid for reporting absence. In future you must as first instance call one of the people below as soon as aware of inability to work. Failure to do so will mean absence is regarded as either unpaid or annual leave.”

[14] On 3 December 2013 the Applicant emailed Mr Bagnall, the Operations Manager, at 8.01am stating: “hey mate not feeling the greatest today, taking today off will be in tomorrow”. Mr Bagnall responded at 8.13am: “Ok you have to call next time mate”.

[15] Notwithstanding the fact that Mr Bagnall had told the Applicant “Ok you have to call next time mate” Mr Bagnall terminated the Applicant the next day, 4 December 2013.

[16] The Applicant gave evidence that he did not receive the emails of 30 October 2013 and 14 November 2013. The Applicant accepts that he had a personal work email address for a considerable period of time. The Applicant gave evidence that there were restrictions on accessing the wifi network using his phone when at work. It was uncontested evidence that there were 5 computers available to the Applicant and other employees where email could be accessed. The Applicant said that he utilised his time for other purposes and did not use the computers at work. The Applicant also said that he could not remember the relevant password. The Applicant did not make any efforts to seek assistance to achieve access to his work emails.

[17] The Applicant agreed that his direct manager had advised him of the changed procedure for notifying absences shortly after 14 November 2013. However, he says that his direct manager did not tell him that failure to follow the new procedure could have disciplinary consequences. The emails of 30 October and 14 November 2013 do not refer to disciplinary consequences for failure to follow the new procedure. However, I am satisfied that the emails are a clear instruction. There is a statement that the previous practice is “no longer valid” and a statement that “you must in the first instance call one of the people below”.

[18] I am satisfied that the Applicant was aware of the changed policy in respect to notification of absences after he received the advice from his direct manager some time shortly after 14 November 2013. I am satisfied that the Applicant’s direct manager in giving this advice would probably have drawn attention to the failure to follow the new policy which had prompted the 14 November email which was also copied to the Applicant’s direct manager. Senior management had earlier on 28 October 2013 emailed the Applicant’s direct manager and advised the direct manager to make sure all warehouse staff are aware of the new procedure and adhered to it going forward. On balance I accept the evidence of the Applicant that he did not access the emails of 30 October and 14 November 2013. I am satisfied that the Applicant did not take great interest in communications from the company and that his failure to make an effort to access communications from the company was indicative of this attitude and his general lack of careful attention to procedures.

[19] Given the Applicant had previously received warnings for failing to follow procedure I am satisfied that the Applicant was aware that failure to follow procedures could have disciplinary consequences. I am therefore satisfied that after his direct manager had told him about the new procedure for notifying absences he understood that disciplinary consequences could follow if there was a failure to follow the practice in future.

[20] It may not be reasonable to assume that the Applicant would understand that the matter is regarded so seriously that a single breach would result in termination. However, in this regard it is relevant to note that the second warning letter stated: “This is your second warning for this reason. Any further warnings will result in your dismissal.” There are two ways of reading this statement. The first sentence could properly be read as referring to the inclusion of invoices with drop shipments given that this was the issue that led to both warnings. However, it could also be read as referring to “failure to follow correct procedure” as stated in the heading of both warnings. The second sentence could be a reference to a further warning concerning this matter or it could be a reference to any further warning. It would not be reasonable to dismiss an employee for a warning in respect to a totally unrelated matter in some circumstances. However, the Respondent argues that the further issue is also about failure to follow procedure even if it is a different procedure in question and that therefore the second warning adequately puts the Applicant on notice.

[21] Having carefully considered this matter, on balance, I am satisfied that the Applicant was on notice as a result of the first two warning letters that a further warning concerning failure to follow procedure would result in dismissal.

[22] The Applicant says that he did not have the telephone numbers of the relevant managers with him at the time on 3 December 2013 and so he tried the office landline which was disconnected which is why he contacted by them email. It is not contested that the number was disconnected, however, the Respondent argues that the Applicant should have had the number of relevant managers accessible. The Applicant did have the number of his immediate manager and the Respondent argues that the Applicant could have rung that manager to get the required numbers if necessary.

[23] I am satisfied that the Applicant did breach the changed procedure re notification of absences on 3 December 2013. I am satisfied that the Applicant should have and could have made greater efforts to comply with the procedure.

[24] The Applicant did make sure that the Respondent was aware of his absence in a timely manner but did not do so using the correct procedure. Mr Bagnall responded to the emailed advice of the Applicant “ok you have to call next time mate.” I agree with the Respondent that the use of “ok’ does not in context mean that Mr Bagnall is approving the action, rather he is acknowledging receipt of the message. However, I consider that it was reasonable for the Applicant to understand the response “you have to call next time mate” as a reminder and a warning to follow the proper procedure. The email does not suggest that Mr Bagnall considered that a written warning let alone termination was an appropriate response. Nor would it have been reasonable for the Applicant to expect such a consequence after having received the email response.

[25] I accept that upon review the Respondent decided that further action was necessary and took that action the next morning, 4 December 2013. I accept that it may have been reasonable in the circumstances to not rely upon the email response and to provide the Applicant with further written reinforcement including written notice reminding the Applicant that further failure to follow procedures could result in termination.

[26] Shortly after arriving at work on 4 December 2013 the Applicant was called to Mr Bagnall’s office. He was not told why he was being asked to attend a meeting. He was not told that he might wish to bring a support person. At the start of the meeting Mr Bagnall handed the Applicant the letter of termination. Mr Bagnall asked the Applicant to sign the letter. Mr Bagnall did not ask the Applicant to respond to the matters raised or ask for his explanation for the matters alleged. Mr Bagnall told the Applicant that he would be paid his entitlements.

[27] The legislation provides as follows:

“s387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA 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 FWA considers relevant.”

Was there a valid reason for termination? (S 387(a))

[28] I am satisfied that the failure to follow procedures can be a valid reason for termination. In a situation when there had been two previous warnings for failure to follow procedure a further failure in respect to the same procedure would be a valid reason for termination. In this case the further failure was a failure to follow a different procedure, however, I am satisfied that the failure to follow that procedure when considered in the context of the earlier warnings does constitute a valid reason for termination.

[29] I am satisfied that the instruction about directly notifying the appropriate manager about an absence is a reasonable instruction. Of course in particular cases there may be extenuating circumstances which an employer should take into account - for example if an employee was seriously injured they might not be able to make the notification or if the employee did not have access to reasonable means of communication they might not reasonably be able to comply. I am not satisfied that there were particular extenuating circumstances in this case.

[30] I am satisfied that the failure to properly notify absence on 3 December 2013 in breach of a clear procedure advised to the Applicant sometime after 14 November 2013 did constitute a valid reason for termination when considered in the context of earlier warnings for failure to follow procedure.

Procedural matters. S387(b)-(g)

[31] The Applicant was notified of the reason for the termination.

[32] The Applicant was not provided with an opportunity to respond. The reasons for termination related to the capacity or conduct of the Applicant. The Applicant was given the termination letter and asked to sign it at the beginning of the termination meeting and the Applicant was not asked to respond or given any realistic opportunity to respond to the grounds for termination. As is now obvious if the Respondent had made proper investigation and had given the Applicant an opportunity to respond they would have realised that the Applicant had not received the advice about the procedure given on 30 October and 14 November. The fact that there had been no prior counselling about failure to follow the revised procedure concerning absences and therefore no clear notice of the serious consequences which might follow from a breach might reasonably have affected the decision making process of the Respondent. The failure in this respect is a serious procedural unfairness and it stands in favour of a finding that the termination was harsh and unjust. This is particularly the case in light of the fact that Mr Bagnall who conducted the termination meeting had led the Applicant to believe the day before that the consequence of failure to notify correctly was an emailed advice “you have to call next time mate.”

[33] The Applicant was not refused the opportunity to have a support person but the Applicant was given no practical opportunity to make such a request given that he was not informed of the reason for the meeting in advance, although he guessed what it might be about, and he was dismissed before he had any opportunity to respond or request a support person.

[34] The failure to follow procedures is in the circumstances of this case a matter of both unsatisfactory performance and misconduct. The Applicant had been warned about the failure to follow procedures but not about the failure to follow this particular procedure. The Respondent proceeded to terminate the Applicant in the belief that he had received earlier counselling about failure to follow the procedure concerning notification of absence by email on 14 November 2013. I am satisfied that he did not receive that counselling. In part it was the Applicant’s own lack of diligence in seeking access to work emails that led to this occurring.

[35] The Respondent is not a large company and it does not have dedicated human resource specialists. However, the breach of procedural fairness and lack of proper inquiry in this is a serious and an obvious failure of fairness and natural justice. I do not consider that the size of the firm or the absence of human resource specialists is a factor that stands in favour of a finding that the termination was fair in this case.

Other matters. S387(h)

[36] There are no other matters. I do not consider that there are particular matters regarding the length of service or the impact on the Applicant which affect my decision in this case.

Conclusion concerning harsh, unjust and unreasonable.

[37] It is reasonable to consider the seriousness of the consequences which should follow from a particular action in light of the overall conduct and performance of an employee.

[38] The performance failures which led to the warnings in June and August were not trivial. The failure to follow the appropriate process had a potential negative impact on the business. Termination would have been a proportionate response to further performance failures of this sort if they occurred within a reasonable time period after the last warning.

[39] I am satisfied that the Applicant was on notice that his employment was at risk and he needed to make special efforts to conduct himself appropriately at work. The Respondent was of the view that the Applicant did not demonstrate the required level of attention and diligence when he failed to follow the procedure concerning notification of absence. I agree with the Respondent. I also agree that the Applicant had not demonstrated he was making special efforts to conduct himself appropriately at work. His failure to access his work email was an illustration of this.

[40] I am satisfied that there was only one failure by the Applicant to follow the new procedure about notification of absences after he had been made aware of the new procedure by his immediate manager. I am not satisfied that termination was a proportionate response to that failure. I make this judgment taking into account the fact that the failure to receive the emailed advice about the procedures and his earlier breach was, at least in part, due to his lack of appropriate diligence and initiative. I also take into account that the Applicant had two previous warnings for failure to follow procedure and was on notice that further warning for failure to follow procedure would result in termination. I am not satisfied that the further written warning resulting in termination was justified given that the breach of policy was not very serious and did not result in serious consequences and the lack of earlier verbal warning or counselling in response to an initial breach of a new policy. I am therefore not satisfied that the Applicant was aware that the new procedure concerning absences was seen as a serious matter and the Applicant was not fully aware of the potential seriousness of the consequences of a breach of that procedure.

[41] The circumstances of this case demonstrate the dangers of managers relying purely on email communications to advise employees of procedures and to counsel employees in case of breach.

[42] I am not satisfied that the Applicant was afforded procedural fairness. The failure to provide the Applicant with an opportunity to respond in circumstances where that response would have raised doubts about some significant facts and assumptions upon which the Respondent had decided that termination was appropriate is a significant factor in favour of a finding that the termination was harsh and unjust.

[43] After weighing up all of the factors I am satisfied that on balance the termination was harsh and unjust.

Remedy

[44] The Applicant does not seek reinstatement. The Applicant believes that his employment would not last long if he was reinstated. I agree with the Applicant. However, I consider that the reasons why employment would not last long after reinstatement include factors related to the behaviour of the Applicant. I do not consider reinstatement would be appropriate. I must consider whether compensation is appropriate. In the circumstances of this case I consider that the harshness and unjustness of the termination process means that compensation is appropriate.

[45] I estimate that the Applicant would only have remained in employment for a period of a further four weeks had the termination not occurred. I make this estimation having regard to the length of service, the warnings already received by the Applicant and the lack of initiative and diligence demonstrated by the Applicant.

[46] The Applicant has not been successful in finding employment since the dismissal. The Applicant has met the job search requirements imposed by Centrelink. I am satisfied that the Applicant has not earned anything from employment or other work since the termination and has made adequate efforts to mitigate his loss. Given that I have estimated that the employment would not have continued beyond January 2014 I do not need to take into account potential earnings between the hearing and the making of an order nor between the making of the order and the payment of any compensation.

[47] There was nothing before me which suggests that any order which I might make would effect the viability of the employer’s enterprise.

[48] The length of the Applicant’s service is a neutral factor in this case.

[49] I accept that the misconduct of the Applicant contributed to the decision to terminate the Applicant. I will reduce the amount of compensation by 25% as a consequence.

[50] The total compensation which I will award is therefore three weeks’ pay at the rate which was applicable at the time of the termination. I will order that compensation of three weeks’ pay with appropriate taxation deducted be made within 14 days. The parties are at liberty to apply for variation of the Order if there is dispute about the amount which represents three weeks pay.

COMMISSIONER

Hearing details:

2014

Melbourne

May 7

Printed by authority of the Commonwealth Government Printer

<Price code C, PR550389>