Mr Oliver Peter Sutherland Chalmers v EMO Trans Australia Pty Ltd

[2015] FWC 2048

[2015] FWC 2048

FAIR WORK COMMISSION

DECISION

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

Mr Oliver Peter Sutherland Chalmers
v
EMO Trans Australia Pty Ltd
(U2014/6964)

COMMISSIONER CAMBRIDGE SYDNEY, 27 MARCH 2015

Unfair dismissal - performance based dismissal - inadequate identification of performance requirements - no clear warning about unsatisfactory performance - procedural deficiencies - recognition of employer's commendable support for personal circumstances of applicant - harsh, unjust and unreasonable dismissal - compensation ordered.

[1] This matter involves an application for unfair dismissal remedy made pursuant to section 394 of the Fair Work Act 2009 (the Act). The application was lodged at Sydney on 1 May 2014. The application was made by Oliver Peter Sutherland Chalmers(the applicant) and the respondent employer is EMO Trans Australia Pty Ltd ACN: 003 060 624 (the employer).

[2] The application indicated that the date that the applicant’s dismissal took effect was 9 April 2014. Consequently, the application was made 1 day outside of the 21 day time limit prescribed by subsection 394 (2) of the Act. On 9 July 2014, Senior Deputy President Drake of the Fair Work Commission (the Commission) issued an Order which granted an extension of time for the application to be made on 1 May 2014.

[3] Unfortunately, the matter appears to have escaped any attempts at conciliation and it has proceeded to arbitration in a Hearing conducted in Sydney on 23 January 2015.

[4] At the Hearing, the applicant represented himself and he was the only witness who provided evidence in support of the claim. The employer was represented by its New South Wales Manager, Duncan James Smith, who also gave evidence as the only witness called on behalf of the employer.

Factual Background

[5] The applicant had worked for the employer for almost one year. The applicant was employed in a position referred to as a Key Account Manager. Relevantly, the work of the applicant involved securing sales with customers who engaged the services of the employer.

[6] The employer conducts the Australian arm of a global freight forwarding business which facilitates the import and export of goods using various transport methodologies, and provides assistance with customs, quarantine and other regulatory requirements. The employer has approximately 40 to 50 employees.

[7] From about August 2013, the employer became concerned about the applicant’s work performance. In particular, the employer was concerned that the applicant was not generating new sales and he had also lost some existing customers. These concerns were raised with the applicant and in September 2013, he offered his resignation to the employer in response to his underperformance in securing and retaining sales.

[8] At this time, circa September 2013, the employer discovered that the applicant suffers from a mental illness. The employer considered that the applicant’s resignation was provided at a time when he was not emotionally stable and so it did not accept the resignation. Instead, the employer attempted to manage the under performance of the applicant and it implemented some measures to actively supervise his work.

[9] In November 2013, the employer experienced some office space shortage and the applicant, as the newest member of the Sales staff, was required to give up his workstation. Consequently, the applicant was required to work remotely, from his home or car, or to use the workstations of other staff when they became available.

[10] The applicant’s sales figures continued to deteriorate during the first few months of 2014, and the employer had formed the view that the applicant was not making “...suitable efforts to show he was making progress.” 1 As a result, by the start of April 2014, the employer decided to terminate the employment of the applicant.

[11] Early on the morning of Wednesday 9 April 2014, the employer sent the applicant an email communication which summoned him to attend the office later that morning. The applicant was delayed and he eventually attended the office shortly before noon, whereupon the employer’s NSW Manager, Mr Smith, told the applicant that he was dismissed for poor work performance. The applicant was verbally advised of his dismissal on the steps of the entrance to the employer’s office.

[12] After receiving the verbal advice of his dismissal, the applicant sent an email at 12:09 pm to Mr Smith and in this communication he provided notice of his resignation from employment on the basis of “unfair treatment” from the employer. At 12:29 pm Mr Smith responded in an email which stated that the termination of employment had been the decision of the employer “...based upon the performance level shown.”

[13] The employer did not provide the applicant with any further documentary advice in respect to the termination of his employment. The applicant was paid his accumulated annual leave and other entitlements together with payment for a further two weeks in lieu of notice.

[14] After the dismissal, the applicant experienced a reoccurrence of mental health issues which restricted his capacity to seek other employment for a period of time. However, even after that period of incapacity, he has not been able to secure any alternative employment.

The Case for the Applicant

[15] The applicant submitted that his dismissal was unfair. The applicant submitted that it was harsh to implement his dismissal at lunchtime directly in front of the employer's main office building. The applicant described the termination process as being particularly humiliating.

[16] The applicant further submitted that the termination of his employment was unjust because he had not received any formal or written warnings in respect to his underperformance. The applicant also complained that he was not given an opportunity to bring a support person as his dismissal was implemented verbally on the steps of the employer's office building. In addition, the applicant submitted that he was not provided with a proper performance appraisal which was scheduled to occur one year after the date of the commencement of his employment.

[17] The submissions of the applicant also raised complaint about the requirement for him to give up his desk in the office and to work without an allocated desk or workstation. The applicant submitted that these arrangements, when combined with an absence of formal training, contributed to any underperformance. However, the applicant also stated that it was unreasonable to be dismissed for unsatisfactory performance when he had not been provided with clear sales target figures or a sales plan budget as clear measures that he could work towards.

[18] In summary, the applicant submitted that his dismissal was harsh, unjust and unreasonable and he sought payment of monetary compensation as remedy for his unfair dismissal.

The Case for the Employer

[19] The employer was represented by Mr Smith who submitted that the dismissal of the applicant was not unfair.

[20] Mr Smith commenced his submissions by acknowledging that the factual circumstances surrounding the dismissal of the applicant were largely agreed. Mr Smith advised that the employer had a difficult office space situation which meant that there was no private space in the employer's office. Therefore, according to Mr Smith, it would have been “more humiliating” 2 to have advised the applicant of his dismissal in front of his peers and so the verbal advice of dismissal was given outside the main entrance to the office.

[21] Mr Smith made further submissions which rejected that the applicant was disadvantaged by the absence of a workstation. Mr Smith asserted that the applicant, as an experienced sales person, was comfortable working at home and he had a “hot desk” arrangement in the office if it was needed. Mr Smith said that this “hot desk” arrangement was not an unusual situation for a person in a sales role.

[22] Mr Smith submitted that the applicant was dismissed for a failure to perform to a reasonable standard as would be required and recognised by the applicant himself. Mr Smith referred to the earlier resignation of the applicant and the employer's discovery of the applicant's mental illness. Mr Smith submitted that the employer had worked quite hard to try to support the applicant through what was clearly a series of personal challenges.

[23] Mr Smith said that despite the assistance of the employer, the applicant simply did not reach the required sales targets and he was unable to generate revenue sufficient to cover the cost of his salary package. In these circumstances Mr Smith said that the applicant was not providing evidence of progress and regrettably the employer felt that it had no more time and therefore dismissal was necessary.

Consideration

[24] Section 385 of the Act stipulates that the Commission must be satisfied that four cumulative elements are met in order to establish an unfair dismissal. These elements are:

(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.

[25] In this case, there was no dispute that the matter was confined to a determination of that element contained in subsection 385 (b) of the Act, specifically whether the dismissal of the applicant was harsh, unjust or unreasonable. Section 387 of the Act contains criteria that the Commission must take into account in any determination of whether a dismissal is harsh, unjust or unreasonable. These criteria are:

(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.

387 (a) - Valid Reason for the Dismissal Related to Capacity or Conduct

[26] It has been unfortunate that this matter has progressed through to Hearing and a requirement for determination. The evidence was broadly uncontested. Importantly, the evidence has clearly established that the deteriorating sales performance of the applicant represented the reason for the dismissal of the applicant.

[27] There was little basis upon which it could be argued that the underperformance of the applicant did not represent a valid reason for his dismissal. Indeed, the applicant’s earlier resignation in September 2013 3 provided unequivocal recognition that the ongoing employment of the applicant was contingent upon sales targets/budgets being met.

[28] However, there was an absence of any clear communication regarding the specified sales targets/budgets and the relevant time frames upon which the employer would establish that the identified unsatisfactory performance would provide basis for dismissal. Further, there was acknowledged deficiency in respect to the manner in which the dismissal of the applicant was implemented. Consequently, the determination of this claim for unfair dismissal would logically involve a requirement to examine, evaluate and balance the various procedural deficiencies against the valid reason for dismissal.

387 (b) - Notification of Reason for Dismissal

[29] The employer initially provided merely verbal notification of the reason for the applicant's dismissal. The only written confirmation of the dismissal of the applicant was obtained as an email response to the applicant's attempt to resign after he had been dismissed.

387 (c) - Opportunity to Respond to any Reason Related to Capacity or Conduct

[30] The employer called the applicant into the office on Wednesday 9 April 2014 and told him of its decision to terminate his employment. In such circumstances, the employer did not provide an opportunity for the applicant to respond to the identified inadequacy of his sales figures. Importantly, the applicant was denied an opportunity to advance any prospects, short or long term, which might provide basis to rectify his sales performance.

387 (d) - Unreasonable Refusal to Allow a Support Person to Assist

[31] As a further reflection of the adoption of a highly erroneous procedure, the employer arranged for a discussion at which it would advise of termination of employment, without offering the applicant a support person.

387 (e) - Warning about Unsatisfactory Performance

[32] The employer did not provide fair and reasonable warning to the applicant that if specified sales figures/budgets were not reached within defined periods his employment would be in jeopardy. The applicant would have understandably assumed that the previous rejection of his resignation which was offered in September 2013, provided considerable capacity for the deteriorating state of his sales figures to be accommodated by the employer for some significant period of time.

[33] The evidence from Mr Smith confirmed that the employer's supervision of the applicant which was aimed at improving his performance, did not involve any specific timeframes or clearly identified requirements. There was little documentation involved in the employer's approach to supervising and improving the sales performance of the applicant. Primarily the employer engaged the applicant in discussions about aspects of his performance without clearly defining requirements and the consequences of any failure to meet those requirements. Significantly, Mr Smith described the process as being at times “quite haphazard.” 4

387 (f) - Size of Enterprise Likely to Impact on Procedures

[34] I have been cognisant that the employer’s operation is of a small to medium size. The employer’s business operation may benefit from a review of its employee management practices.

387 (g) - Absence of Management Specialists or Expertise Likely to Impact on Procedures

[35] It appeared that the employer did not have dedicated employee relations management specialists and regard has been made for the consequential impact that the absence of such personnel would have in respect to the poor procedures that were adopted by the employer.

387 (h) - Other Relevant Matters

[36] It is appropriate to acknowledge that for some period of time, particularly following the discovery of the applicant's mental illness, the employer acted quite benevolently towards him. The employer should be commended on its approach to rejecting the earlier resignation which was offered by the applicant during a period of emotional instability.

[37] It is perhaps unfortunate that because it had attempted to assist the applicant during periods of his emotional difficulties, the employer may have felt it unnecessary to follow a careful and measured approach to the performance management of the applicant. Further, it appeared that perhaps as a result of what it believed to be its extensive assistance to the applicant, the employer felt that it could dispense with any fundamentally reasonable arrangements in respect to the manner in which the dismissal of the applicant was implemented.

Conclusion

[38] The applicant was dismissed because of unsatisfactory work performance specifically involving a failure to meet sales targets/budgets. Evidence presented during the Hearing has established that the unsatisfactory work performance of the applicant represented valid reason for dismissal.

[39] However, notwithstanding the underperformance of the applicant by way of deteriorating sales figures, the applicant was not provided with adequate warning that such underperformance would result in dismissal. Further, the applicant was not provided with an opportunity to respond to the unsatisfactory performance so that he may have offered explanation and provide prospect for rectification.

[40] The procedures that the employer adopted in dealing with the employment issues which arose from the unsatisfactory work performance of the applicant were, regrettably, severely deficient. The particular manner in which the employer implemented the dismissal of the applicant was unreasonable and unnecessarily harsh.

[41] In summary, the dismissal of the applicant was for valid reason involving unsatisfactory work performance. The dismissal arose following an entirely unreasonable and unjust process which did not properly identify the level of performance required of the applicant within a specified time frame, and which if not achieved, would result in dismissal. Further, the manner in which the dismissal was implemented was unacceptable. Consequently, when these various factors have been carefully evaluated and balanced, the dismissal of the applicant has been found to have been harsh, unjust and unreasonable.

Remedy

[42] The applicant has not sought reinstatement as remedy for his unfair dismissal. Instead he has sought remedy in the form of payment of an amount of monetary compensation.

[43] I have decided that compensation would be an appropriate remedy for the applicant’s unfair dismissal and I turn to the factors which involve the quantification of any amount of compensation.

[44] Section 392 of the Act prescribes certain matters that deal with compensation as a remedy for unfair dismissal. I have approached the question of compensation having regard for the guidelines that were established in the Full Bench Decision in Sprigg v Paul’s Licensed Festival Supermarket 5 and as commented upon in the subsequent Full Bench Decision in Smith and Ors v Moore Paragon Australia Ltd 6.

[45] Firstly, I confirm that an Order of payment of compensation to the applicant will be made against the employer in lieu of reinstatement of the applicant.

[46] Secondly, in determining the amount of compensation that I Order I have taken into account all of the circumstances of the matter including the factors set out in paragraphs (a) to (g) of subsection 392 (2) of the Act.

[47] There was no evidence that an Order of compensation would impact on the viability of the employer’s enterprise.

[48] The applicant had almost one year of service. The applicant would have been likely to have received remuneration of approximately $1,875 per week if he had not been dismissed. There was some significant prospect that the employment of the applicant may not have endured beyond a further few months even if he had been given proper opportunity to improve his sales performance.

[49] Immediately following the dismissal, the applicant did not make efforts to mitigate the loss suffered because of the dismissal. This particular failure to mitigate his loss was in large part because of the exacerbation of his mental condition caused by the dismissal and in particular, the manner of its implementation. The applicant has not secured any further alternative employment.

[50] Thirdly, in this instance there was no misconduct of the applicant which contributed to the employer's decision to dismiss.

[51] Fourthly, I confirm that any amount Ordered does not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt caused to the applicant by the manner of the dismissal.

[52] There are no other relevant matters in this instance.

[53] Consequently for the reasons outlined above I have decided that an amount approximating with six weeks remuneration should be Ordered as compensation to the applicant. That amount is $11,250.00. Accordingly separate Orders [PR562396] providing for remedy in these terms will be issued.

COMMISSIONER

Appearances:

Oliver Peter Sutherland Chalmers representing himself.

Duncan James Smith for the respondent.

Hearing details:

2015.

Sydney:

January 23.

 1   Exhibit 3 @ paragraph 20.

 2   Transcript @ PN170.

 3   Exhibit 3 - Attachment E.

 4   Transcript @ PN400.

 5 Sprigg v Paul’s Licensed Festival Supermarket, (Munro J, Duncan DP and Jones C), (1998) 88IR 21.

 6   Smith and Ors v Moore Paragon Australia Ltd, (Lawler VP, Kaufman SDP and Mansfield C), (2004) PR942856.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR562395>