Mr. Matthew Jones v Solarbright Home Improvements T/A Solarbright Country

[2015] FWC 5854

[2015] FWC 5854

FAIR WORK COMMISSION

DECISION

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

Mr. Matthew Jones
v
Solarbright Home Improvements T/A Solarbright Country
(U2014/15596)

COMMISSIONER BULL SYDNEY, 31 AUGUST 2015

Application for relief from unfair dismissal, summary dismissal, dismissal consistent with the Small Business Fair Dismissal Code, application dismissed.

[1] In this application, filed on 1 December 2014 by Mr Matthew Jones (the applicant) a remedy of compensation pursuant to the Unfair Dismissal provisions in the Fair Work Act 2009 (the Act) is sought. The application is opposed by his former employer Solarbright Country Pty Ltd (the respondent). The applicant represented himself and the employer was represented by its Managing Director, Mr Paul Yako.

Background

[2] The applicant was employed by Solarbright Port Macquarie in 2011; the company name of the applicant’s employer has had a number of iterations, with the applicant finally being employed by Solarbright Country Pty Ltd (Solarbright) in July 2014. The application names Solarbright Home Improvements as the respondent employer. Both parties accept that this is not correct and hence the application is amended pursuant to s.586 of the Act to the extent that the true legal employer of the applicant is correctly identified as Solarbright Country Pty Ltd.

[3] Solarbright is a small business employer as per the definition under s.23 (1) of the Act, in that it employs less than 15 employees, taking into consideration associated companies. 1

Applicant’s Submissions

[4] Mr Jones tendered a number of written statements 2, gave evidence and was cross examined by Mr Yako.

[5] Mr Jones stated that he was originally employed in 2011 in Port Macquarie as the Office Manager, having met Mr Yako in 2009. Mr Jones owns a roofing company MCG Roofing Specialists Pty Ltd (MCG Roofing) which is associated with anything to do with roofs, including restoration, replacement, and skylights.

[6] MCG Roofing employs one to two employees. Solarbright was a customer of MCG Roofing which installed all of Solarbright’s skylights and ventilation systems. MCG Roofing purchased products from Solarbright. MCG Roofing turns over approximately $350,000 per annum. 3

[7] The applicant’s employment with the respondent resulted from his own company MCG Roofing purchasing products from the respondent from May 2010. Mr Jones stated that Mr Yako urged him to start selling solar power products. Subsequently, Mr Jones was appointed as Office Manager at the respondent’s Port Macquarie premises on a full time basis, Monday to Friday 09:00 - 17:00 4.

[8] The applicant’s role as Office Manager involved conducting meetings, ordering stock, making appointments, organising contractors and a significant amount of driving. Mr Jones submitted that he performed work for his own company before and after work hours during his employment with the respondent.

[9] Whilst on occasions Mr Jones worked for MCG Roofing during the hours he was engaged by the respondent, he says was this was more than compensated with the additional hours he worked for Solarbright, being outside of the 09:00 to 17:00 hours he was employed to work. Mr Jones stated that his company MCG Roofing has always been a competitor to Solarbright since it opened in Port Macquarie. 5 It was also a fact that some of MCG Roofing clients are also clients of Solarbright.

[10] Mr Jones’s evidence was that Mr Yako would never answer his mobile telephone and that he had obtained Mr Yako’s approval to do what was necessary in the best interests of Solarbright when he could not contact Mr Yako. 6 Mr Jones submitted that difficulties with Mr Yako commenced in 2014 when he raised queries as to why some employees were not being paid correctly, which resulted in a heated argument.7

[11] In late October 2014, Mr Yako visited the Port Macquarie office where Mr Jones sensed that Mr Yako was very short with him. As a result, the applicant phoned Mr Yako that evening. Mr Yako informed the applicant that he was making some enquiries about the business, and as long as he had done nothing wrong, he had nothing to worry about.

[12] On 10 November 2014 Mr Jones commenced a period of one week’s annual leave and was due to return to work the following Monday, 17 November 2014. On Monday morning, while getting ready for work, Mr Jones accessed his emails and discovered that an email had been sent on Friday 14 November 2014, from Mr Yako advising him of his immediate dismissal. Mr Jones subsequently tried contacting Mr Yako over the next few hours and days without success.

[13] The termination email 8 sent by Mr Yako made a number of allegations (all of which are denied by Mr Jones):

“Matt,

Please note that your employment with solar Bright Country has been terminated.

Reasons:

● Conflict of interests.
● Serious misconduct.
● Competing with the company’s core business through private business.
● Using company’s time & resources for managing and advancing private business.
● Taking company’s stock and reselling it without authority.
● Making transactions below company’s costs for self-interests
● Using company’s leads and customers for self-interests.
● Neglecting the job.
● Under performing.

I am extremely disappointed with your activities in advancing your private business on the expense that the company that has been employing you (sic).

Please note;

● You have already collected your private and your business items/materials from SB office.
● You have no need for access to SB office any longer without clearance from Sydney office.
● Please return all company properties or we can arrange for pick up.

I did not expect this from you at all, very DISAPPOIINTED.

Kind Regards

Paul Yako

Managing Director”

[14] Mr Jones’ evidence was that while he had a ‘competing’ business, he at all times acted with propriety and at no time had he acted against Solarbright’s interests in placing his own business interests above that of his employer. He denied any suggestion of serious misconduct which related to the purchasing of Solarbright products for his own business or using the Solarbright account to purchase items for his personal use.

[15] Mr Jones did not call any witnesses to support his case.

[16] During Mr Jones’s evidence, he alleged that a fellow employee, Mr Galvin; an electrician stole products from Solarbright 9. However, the applicant later attempted to resile from this allegation when Mr Galvin gave his own evidence.10

[17] On 14 August 2014 when Mr Yako attended the Port Macquarie office and saw Mr Jones’ desk covered in MCG Roofing paper work Mr Jones said the reason for this was because he knew Mr Yako was coming to the office, so he stayed behind the night before and wrote out all the outstanding invoices for the respondent.

[18] Mr Jones acknowledged that he had been interested in purchasing Solar Bright Country Pty Ltd but Mr Yako would not sell it at the price he was prepared to pay. Mr Jones also acknowledged that his company was a competitor with the respondent.

[19] Mr Jones said that around a month before he was terminated, Mr Yako asked him what his focus was on and how many hours he spent on MCG Roofing business.

[20] Mr Jones refuted the allegation that he had purchased products for his personal use by using the respondent’s account. Mr Jones tendered a cash tax invoice 11 dated 27 September 2014 for the purchase of 5 LED down lights, which were alleged to have been purchased by him using the Solarbright account.

[21] In respect to the ‘unusual banking transaction’ raised by Mr Yako, Mr Jones stated in his statement (Exhibit A4) that late one night, a customer rang MCG Roofing needing a solar hot water system urgently. He knew they had an old one in stock and tried to contact Mr Yako and ‘Debra’ from the Sydney office before purchasing a hot water system himself under his authority as a manager from the Port Macquarie office. He purchased the unit at the price the office manager Ian McGinty charged him. Mr Jones stated he had nothing to do with determining the price of the unit.

[22] Despite the denial of all allegations made against him, the nub of Mr Jones’s grievance appeared to be that he was treated more harshly than other employees who had misconducted themselves. 12

Respondent’s Submissions

[23] The respondent’s Managing Director, Mr Paul Yako gave evidence and called two witnesses:

1. Mr Ian McGinty, the respondent’s Port Macquarie Administration Officer; and
2. Mr Dean Galvin, a former employee.

[24] Mr Yako stated that the applicant had previously proposed to purchase the Solarbright Port Macquarie business, but a price could not be agreed upon.

[25] He stated that Mr Jones was employed on the basis that his business MCG Roofing would not affect his employment and that the applicant only undertake after hours work and weekend tasks on his own business.

[26] Mr Yako’s evidence was that he had concluded that Mr Jones had engaged in serious misconduct warranting his immediate dismissal, hence the email he sent to the applicant on the evening of 14 November 2014 13set out above.

[27] The serious misconduct involved a number of incidents which included 14:

● Using the company’s time and resources to manage his own private business;
● Removing Solarbright property without authorisation and selling the property to customers of his own business;
● Collecting data and information from Solarbright to set up and advance the applicant’s own business; and
● Taking days off for sick leave from Solarbright while working for the applicant’s own business, MCG Roofing.

[28] In essence, Mr Yako submitted that the applicant was running his own profitable business to the detriment of the respondent. He did this by taking advantage of working unsupervised at the respondent’s Port Macquarie office. Mr Yako worked out of the respondent’s Sydney office and therefore could not closely supervise Mr Jones.

[29] Mr Yako stated he had no option but to terminate Mr Jones for engaging in serious misconduct. He stated that he visited the Port Macquarie office periodically to check on its operation. On a visit in August 2014, he was shocked to see Mr Jones’s desk covered with MCG Roofing material, indicating that he was spending Solarbright time on his own business.

[30] On raising the issue with Mr Jones, the respondent was assured that he would be focussing on improving Solarbright’s business. From July 2014 to November 2014 Solarbright has accumulated $31,000 in losses.

[31] In September 2014, Mr Yako found a draft from the local yellow pages showing MCG Roofing developing into full solar operation and promoting images of a competitor’s product.

[32] On 4 September 2014, five lighting dimmers were purchased by the respondent from Rovert Lighting & Electrical at a cost of $232.22. On 5 September 2014 five dimmable LED down light kits valued at $125 were also purchased. Mr Jones approved payment of these accounts. Mr Yako says that these purchases were not related to the respondent and was a fraudulent act by Mr Jones.

[33] After conducting another inspection in November 2014, Mr Yako states that it was beyond doubt that Mr Jones was using his employment to advance his own business. This conclusion was reached as he found further marketing material for MCG Roofing. Mr Yako stated that the applicant ordered products for his personal use through the respondent’s account. Further, the applicant’s calendar was 40% booked with tasks for his MCG Roofing business, and he was selling products to the respondent’s customers though MCG Roofing.

[34] In November 2014, Mr Yako was made aware of an unusual banking transaction where Mr Jones had deposited money into the Solarbright country bank account. On investigation he ascertained that Mr Jones had taken stock from the Port Macquarie warehouse without authorisation and instructed Mr McGinty, the Administration Officer to issue an invoice at a price he nominated, which was $500 under the cost price. 15 At the same time the respondent believed that Mr Jones had also taken valves for a solar hot water system from storage. He raised the issue with Mr McGinty by email and copied in Mr Jones. Mr Jones replied on 11 November 2014 by email. Mr Yako found his explanation unacceptable.16

[35] Mr Yako stated that there was “a line in the middle,” being that Mr Jones was not to purchase products from the respondent for his business without going through him. MCG Roofing does not have an account with the Port Macquarie operation, and therefore should not purchase products through the port Macquarie office. The unit was sold below cost at a loss to the respondent.

Evidence of Mr Galvin

[36] Mr Dean Galvin, who had been formally employed as an electrician for the respondent for a period of 14 months, gave evidence including a witness statement 17. Mr Galvin’s evidence was with respect to the ordering and purchasing of down lights and sockets from an electrical supplier ‘Rovert’ through Solarbright on 5 September 201418. These were products that Mr Yako had alleged that the applicant had purchased for his own use at the expense of Solarbright. It was established that these goods were of no use to Solarbright.

[37] The products were picked up by Mr Jones together with some other orders for Mr Galvin. Mr Galvin’s evidence was that he was not given the down lights and sockets by Mr Jones, and had never installed down lights for Solarbright. He had however installed down lights in Mr Jones’ kitchen when it was being renovated. Mr Galvin rejected Mr Jones’s proposition that the down lights may have been left in the company’s Hilux vehicle used to pick up the products and that they may still be there.

Evidence of Mr McGinty

[38] Mr Ian McGinty, the Office Administrator at Port Macquarie, who had worked closely with Mr Jones, tendered a witness statement, gave evidence and was cross examined. In summary Mr McGinty’ s evidence was that:

● The applicant spent 25% of his paid time with Solarbright whilst performing work for MCG Roofing;
● Removed a solar hot water system from the warehouse without authority from head office in Sydney and asked him to generate an invoice for the same amount the Port Macquarie office is charged by Sydney i.e. without any mark-up;
● Removed 3 hot water valves without approval;
● Removed a ventilation kit from the warehouse without approval from Sydney and used it for his own business; and
● Ordered products from the local electrical supplier for his private use, through the Solarbright account. 19

[39] When Mr McGinty was cross examined by Mr Jones, he maintained that Mr Jones spent 20-25% of his time working on his own business in Solarbright time. Mr McGinty stated that when he saw the account from Rovert which identified electrical lighting products; including dimmer lights not used by Solarbright, he queried Mr Jones. Mr Jones replied that the products were his and he would pay for them at a later date. 20

[40] Mr McGinty confirmed that MCG Roofing did not have an account with Solarbright Port Macquarie, and if MCG Roofing wished to purchase Solarbright products, it was to be done through the Sydney office. Despite this protocol, Mr Jones requested that he purchase a solar hot water system from the Port Macquarie office and that Mr McGinty write up the invoice. The invoice was written up at the cost price, 21 resulting in no profit to Solarbright.22 Mr McGinty confirmed that he did not have the authority to allow Mr Jones to remove stock from Port Macquarie.23

The Legislation

[41] Section 394(1) of the FW Act provides that a person who has been dismissed may apply to the Fair Work Commission for an Order under Division 4 of the Act granting a remedy for unfair dismissal.

[42] Section 385 of the Act provides as follows:

S.385. A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

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

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

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

(My emphasis)

[43] Then at s.396 of the Act the Commission is required to decide a number of threshold issues before considering the merits of an application for an unfair dismissal remedy:

S.396 Initial matters to be considered before merits

The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:

(a) whether the application was made within the period required in subsection 394(2);

(b) whether the person was protected from unfair dismissal;

(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;

(d) whether the dismissal was a case of genuine redundancy.

(My underline)

[44] Thus in accordance with s.396(c), before considering the merits of the application in this matter the Commission must decide whether the dismissal was consistent with the Small Business Fair Dismissal Code (the Code). If the dismissal is consistent with theCode, then it cannot be held to be unfair.

[45] The Code is contained at s.388(2) of the Act in the following terms:

“Summary dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee's conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee's response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer's job expectations.

Procedural matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to the Fair Work Commission, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.”

[46] In this matter, Solarbright alleges that Mr Jones engaged in serious misconduct and the termination was affected summarily, thus the summary dismissal procedure of the Code is relevant.

Case Law

[47] The approach by this Commission in relation to the Code was discussed in the Full Bench decision of John Pinawin T/A RoseVi.Hair.Face.Body v Mr Edward Domingo  24(Pinawin). In Pinawin, the Full Bench stated thatthe Code does not require a determination by the Commission whether summary dismissal was warranted. Rather, the test is whether at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal and whether that belief was based on reasonable grounds. This is explained at paragraphs 29 and 30 of the decision in relation to summary termination:

“[29] ... There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.

[30] Acting reasonably does not require a single course of action. Different employers may approach the matter differently and form different conclusions, perhaps giving more benefit of any doubt, but still be acting reasonably. The legislation requires a consideration of whether the particular employer, in determining its course of action in relation to the employee at the time of dismissal, carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. Those circumstances include the experience and resources of the small business employer concerned.”

Conclusion

[48] The evidence presented to the Commission during the course of this matter by the parties and their witnesses demonstrates to my satisfaction that Mr Yako was of the belief that the applicant had:

● misappropriated stock from the respondent;
● made private purchases through the Solarbright account; and
● conducted his own business not only in competition with the respondent; but during the hours he was employed to work for the respondent.

[49] Based on this conclusion by Mr Yako, he concluded that the applicant’s conduct was sufficiently serious to justify immediate dismissal. As held in Pinawin, 25in order to hold a belief on reasonable grounds; it will normally be necessary to have a discussion with the employee about the alleged serious misconduct and have regard to the explanations and views given by the employee. I note at this juncture, that the Full Court of the Federal Court in Toms v Harbour City Ferries Pty Ltd26 held that while it is not an error for a Full Bench to adopt guidelines on matters of principle they must not act as a fetter or binding rule on the exercise of a discretion conferred under the Act. Mr Jones was advised by email of his dismissal whilst on leave and he did not subsequently return to the employer’s office

[50] Mr Yako states that he had previously discussed with Mr Jones on a number of occasions the amount of time he spent on his own business MCG Roofing. Mr Jones subsequently assured him that Solarbright was Mr Jones’s priority.

[51] In respect of the ‘unauthorised’ purchased of the solar hot water performance system, Mr Yako did not directly put the accusation to Mr Jones but rather relied on Mr Jones’s email response and then concluded that his explanation was unacceptable. However it does not appear that the allegations regarding the purchase of electrical lighting products were raised with Mr Jones prior to his termination.

[52] The Code provides small business employers with a less stringent requirement in respect to the basis and procedure upon which to initiate a summary dismissal than may otherwise apply. It is not necessary for the Commission to determine whether Mr Yako was correct in the belief that he held, but whether that belief was held on reasonable grounds. If so, the decision to dismiss would be consistent with the Code and thus not unfair.

[53] The procedural aspects of the termination of Mr Jones were far from ideal, however; having witnessed first-hand the explanations of Mr Jones during his submissions and evidence in response to the allegations, it was abundantly clear that the responses were not satisfactory to Mr Yako. Mr Yako relied on the statement from his Office Administrator that Mr Jones had indicated that electrical products purchased through the Solarbright account were for his private use and that he would pay for them at a later date. In his evidence, Mr Jones denied any knowledge of the electrical products. His cross examination of Mr McGinty on this point was brief and did not seriously raise doubts about Mr McGinty’s evidence. Further, the purchase of the hot water system and valves by Mr Jones through the Port Macquarie office was outside Mr Jones’s authority and contrary to the established procedures.

[54] Mr Yako explained in his evidence the reasons for holding the belief that Mr Jones had seriously misconducted himself:

“All right?---Which was in the – on 3 November where an amount was picked on our branch bank statements, and I did question the people that should have given me the answer, including Mr Jones, “Why is this amount in our banking accounts?” He came back with an answer, which it means I gave him the opportunity to explain it, and his answer was not consistent with his care of duty and with the information that I was given by the office. His answer was, in the email dated 11 November, from his private email address, and he’s saying it was for an urgent job, a customer called him, and it was a strange set up. It doesn’t tell me much, and he’s saying, “I asked Ian for costing and purchased the product. I didn’t think it was a problem.” To me it was a big problem because he was never allowed to take stock from Port Macquarie branch, and based on that, and based on him not paying for the valve and taking advantage of his position as a manager, taking product, according to him, at the cost, and then it claims it was a recommended retail price, which is clearly not, where the company actually lost a few hundred dollars on that transaction. To me that was a serious misconduct. It was clearly directed that if you want a product it must be shipped from Sydney, nothing from Port Macquarie, and he crossed that line. And he crossed the line and he did not say the truth, and he tried to blame everyone but himself. So the reason the company terminated him, it was simply for breaching the employment contract that we had for the misconduct, taking product on the company’s account, where he admitted it to our office personnel. He authorised it for Sydney to pay for it, and not telling the truth. It is disappointing for me because I had full trust and faith in Mr Jones. As a busy man working in Sydney running two – three companies, I thought I’ve got Port Macquarie covered and I had a person looking after the interests of the company. I wasn’t aware that the resources, the time, the pay time by the company were used for his own interests. To me to be told that he was getting sick leave while working on the roof of his own customers that shows that - - -

When did you find out that?---I did find out that while I was doing the auditing in November, Commissioner, when I saw a couple of discrepancies there and I went through the whole thing. We did a stocktake. We went through transactions, how much was sold, where was the time used. I did full interviews with the guys there, and the more questions I asked, it showed that I was taken as an idiot.” 27

[55] The basis for the employment relationship was in my view doomed to fail. In this case, the employee is permitted to carry on a business in his own time on the understanding that while virtually unsupervised, the employee would direct his attention to the business of his employer. The fact that the working relationship remained on foot since 2011 was fortunate for the applicant. The situation however became untenable when Mr Yako concluded that not only was Mr Jones not directing his attention to the business of Solarbright but that he was engaging in activities that deprived Solarbright of making a profit on sales and using the Solarbright account to purchase products for his private use.

[56] I find that Mr Yako had reasonable grounds for holding the view that Mr Jones’s conduct was sufficiently serious to justify immediate dismissal. On this basis the termination was consistent with the Small Business Fair Dismissal Code; the application for an unfair dismissal remedy is dismissed.

COMMISSIONER

Appearances:

Mr Matthew Jones on his own behalf

Mr Paul Yako Managing Director, for the respondent

Hearing details:

2015

Coffs Harbour

10 June

Port Macquarie

31 July

 1   Transcript PN2013, PN2016 and PN2017

 2   Exhibits A1-A4

 3   Transcript PN1266

 4   The respondent states the applicant was to commence at 08:30 hours

 5   Exhibit A3 at (10a)

 6   See for example PN743

 7   Exhibit A4 at (8)

 8   Exhibit R6

 9   Transcript PN980

 10   Transcript PN1571

 11   Exhibit A6

 12   Transcript PN1811, PN1829, PN2526

 13   Exhibit R6

 14   See Employer Response F3

 15   Exhibit R5

 16   Exhibit R7 at (f)

 17   Exhibit R2

 18   Exhibit A6

 19   Exhibit R4

 20   PN1637

 21   Mr. Yako’s evidence was that this was an old price and resulted in a loss to Solarbright.

 22   PN1649

 23   PN1929

 24   [2012] FWAFB 1359

 25   At [38]

 26 [2015] FCAFC 35

 27   PN2005/06, see also PN2552

Printed by authority of the Commonwealth Government Printer

<Price code G, PR571166>