Nathan Brown v Omni Group Pty Ltd
[2019] FWC 7073
•14 OCTOBER 2019
| [2019] FWC 7073 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Nathan Brown
v
Omni Group Pty Ltd
(U2018/12137)
COMMISSIONER GREGORY | MELBOURNE, 14 OCTOBER 2019 |
Application for an unfair dismissal remedy.
Introduction
[1] Mr Nathan Brown was first employed by the Omni Group Pty Ltd (“the Omni Group”) in June 2016 and worked as a Delivery Driver/Warehouse Hand for most of the time he was employed. The business is involved in providing a range of packaging products and packaging solutions. In October last year Mr Brown took on a new role in the production area. However, he was then dismissed from his employment with immediate effect on 16 November last year on grounds of serious misconduct.
[2] Mr Brown subsequently lodged an unfair dismissal application and the matter was dealt with in hearings on 12 March and 17 April 2019. Mr Brown appeared on his own behalf. Mr Victor Samartzis, the Chief Executive Officer of the Omni Group appeared on its behalf. It is also noted that the witnesses who gave evidence on behalf of the Omni Group, apart from Mr Samartzis and Mr Martin Chance, all appeared by telephone.
The Issue to be Determined
[3] Section 385 of the Fair Work Act 2009 (Cth) (“the Act”) provides that a person has been unfairly dismissed if the Commission is satisfied the dismissal “was harsh, unjust or unreasonable.” 1
[4] Section 387 continues to require that the Commission must take into account the following matters in deciding whether the dismissal was harsh, unjust or unreasonable. It states:
“387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC 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 the FWC considers relevant.” 2
[5] The Commission is accordingly now required to determine whether Mr Brown’s dismissal was “harsh, unjust or unreasonable” taking into account each of the matters in s.387.
The Evidence and Submissions
The Applicant
Mr Nathan Brown
[6] Mr Brown was first employed by the Omni Group on 20 June 2016 and worked as a Delivery Driver/Warehouse Hand. He was employed on a full-time basis and received an hourly rate of $24.90 at the time that he was dismissed. His annual income over the last 12 months was $59,264.00. However, he was dismissed from his employment with immediate effect on 16 November last year on grounds of serious misconduct.
[7] The termination letter given to him at the time states:
“Dear Nathan
Serious Misconduct Termination Letter
I am writing to you about and incident on the 14th November 2018 which and as a result has given Omni no other alternative but to terminate you employment with Omni Group Pty Ltd.
I refer to our discussion meeting on 14/11/2018 where you were present and witnessed by Adrian in the production room. During the meeting we discussed that you were to perform a request to deliver one of our major clients being Playcop, where unacceptable to our values you portrayed
• Wilful or deliberate behaviour that is inconsistent with the continuation of your contract of employment.
• Caused a serious and Imminent risk to the reputation, viability or profitability of Omni in that loss of client being Playcorp a major client due to delivery failure.
• Was conduct in the course of your employment that is considered to be unreasonable.
• Was conduct in the course of your employment engaging in a disrespectful manner and in the circumstances unreasonable.
• You refused to carry out reasonable instructions that were consistent with your contract of employment again considered unreasonable.
This is classified as a serious misconduct incident and now communicated to you that your conduct during that incident is unacceptable. We consider that your actions constitute a serious misconduct warranting dismissal.
Your employment is terminated.
You will be paid your accrued entitlements and any outstanding pay up to and including your last day of employment.
Even in light of the misconduct Omni Group will whilst not required, agree to 2 weeks’ pay on receipt by you of all company equipment and uniforms given.
Yours sincerely,
Martin Chance
National Operations Manager” 3
(N.B. It is also noted in regard to the letter that it was acknowledged by the Omni Group during the course of the proceedings that the references in the letter to 14 November 2018 should in fact have referred to 15 November 2018.)
[8] Mr Brown takes issue with much of the content of this letter and provided a copy of the delivery run sheet for 15 November 2018 showing that the delivery to Playcorp Pty Ltd on that day was “confirmed.” He also takes issue with Playcorp being a major client of the Omni Group, and submits that his actions did not create any risk that Playcorp would be lost to it as a client.
[9] He also submits that his departure from the warehouse to make the delivery to Playcorp was witnessed by two other employees, Mr John Keranis and Mr Adrian White. Another staff member, Mr Glenn Darmain, also witnessed him leave to complete the delivery. He also states that an alleged argument on that day between Mr Keranis and Mr White took place before he had left the warehouse to make the delivery.
[10] Mr Brown said he was dismissed instantly and not provided with any opportunity to respond to the reasons given for his dismissal. He also relies on the content of a letter, dated 19 November 2018, that he wrote to Mr Tim Salisbury of the Omni Group. It is appropriate to set out the content of that letter in full:
“To Tim Salisbury,
OMI Group PTY LTD
15-23 Logistics Street,
Keilor Park, 3042
I refer to your decision to terminate my employment with your company.
1. I commenced employment with your company Omni Group PTY LTD on the 20th of June 2016 and was employed as a Delivery Driver/Warehouse Hand. I believe I fulfilled all of my assigned duties as instructed by various line managers throughout my time of employment.
2. Again, I have worked for your company since 20th of June 2016 until 16th November 2018 when I was told by Martin Chance, your National Operations Manager, I was no longer required. In fact I was told abruptly ‘today is your last day, hand over your work phone and access card immediately’.
3. I have been advised I will receive 2 weeks pay in lieu of notice or any written warnings.
4. In my role as a Delivery Driver/Warehouse Hand, I would commence work at varied times, but most recently commenced at 8.30am and finish at 6pm.
5. As required by your company, I completed Run Sheets and invoices and daily KPI reports.
6. I must state that in my role as Delivery Driver/Warehouse Hand I was also required to undertake tasks such as forklift operation/production and other warehouse duties. I was not only required to drive and deliver but to complete invoices, complete Run Sheets and assist with loading and unloading.
7. My Run Sheets will confirm my driving hours, including the successful delivery you are claiming I did not complete for Playcorp on the 15th November 2018.
8. On the 19th October 2018 I was suddenly told I was no longer required to drive the trucks and was placed on a production line. Your National Operations Manager, Martin Chance, advised the reason for this was ‘deliveries are slowing down and we are now outsourcing the truck driving’.
9. As stated as of, 16th November, 2018 Martin Chance advised me my services were no longer required and I would be given 2 weeks pay in lieu of notice.
10. On Tuesday the 13th of November a group meeting was conducted consisting of Martin Chance, Adrian White and myself, for which the I was clearly advised that under no circumstance was I to take verbal orders from anyone in the warehouse other than Martin Chance himself.
11. Stated in the ‘Serious Misconduct Termination Letter’ I have been provided, it is stated that a discussion meeting occurred on the 14th November 2018 for which you are claiming I was advised I was to deliver to Playcorp. However, this meeting NEVER took place – and as you will certainly confirm via my Run Sheets and invoices, I was only advised to deliver to Playcort on the 15th of November 2018.
12. On Monday the 12th of November 2019, in a group warehouse meeting, I was advised by Martin Chance that I would commence a full-time role in production commencing immediately.
13. On Thursday 15th November 2018 at approximately 12.30pm, I was working in production. I was approached by John Keranis who advised ‘there are five pallets going to Playcorp and Martin wants you to do it’. I must confirm I was verbally advised on the 13th of November 2018, I was not to take verbal orders from anyone other than straight from Martin Chance himself.
14. Mr Keranis proceeded to pick the order and advised that it would be completed within five minutes.
15. Adrian White overheard this comment from Mr Keranis and exclaimed ‘Nathan is not to follow instructions or take any verbal order unless directlyfrom Martin himself’.
16. Mr Keranis became angered by this and exclaimed ‘Martin has told me to tell Nathan that he will be the truck driver and must deliver to Playcorp!’
17. During this altercation between Adrian White and John Keranis I explained to Mr Karanis I had been given strict instructions not to follow any verbal orders from anyone other than Mr Chance himself. At this point, Martin approached the 3 of us and advised myself I needed to take the delivery, which I promptly agreed to, after having heard it directly from Martin himself.
18. Mr Keranis later approached me and apologised for over reacting and in his words ‘I am sorry about before, I was angry, it was a misunderstanding.’ I accepted his apology and we moved on.
19. The order was placed on the truck and the delivery was completed to Playcorp.
20. On Friday the 16th of November, after returning to the warehouse from a delivery run as verbally ordered by Martin Chance to complete, I was given a ‘Serious Misconduct Employment Termination Letter’ which advised that due to my apparent ‘delivery failure to Playcorp – viability or profitability of Omni in that loss of client being Playcorp’
At no point was I given the courtesy of providing my input and what I had been verbally ordered to undertake/
It is now my view that, to avoid being paid any form of redundancy pay due to my long service with Omni Group, you have chosen totally unfair grounds for immediate dismissal.
I am sending this letter to you, to put you on notice, that I will be taking this matter further and contacting the Fair Work Commission of Australia.
Obviously, our working relationship cannot continue, and I no longer wish to work for your company.
Again, I must state I am taking this matter to Fair Work Australia. I cannot fathom the reason for the “Serious Misconduct Termination Letter”. The contents of which I totally dispute.
I totally dispute the contents of your “Serious Misconduct Termination Letter”.
I always performed all of my requested duties in a professional and timely manner.
Yours sincerely,
NATHAN BROWN
Signed and dated 19/11/2018” 4
[11] Mr Brown also indicated in cross-examination that he had met the KPIs set for him in his role, and on those occasions when he had not been able to make deliveries on time he had provided explanations for this in the comment section on his run sheets. He also denied that he had been involved in discussions with Mr Chance in August last year about ways in which his work performance could be improved. He also confirmed that he was told in October last year that he would now be working in the production area, and this change occurred immediately after that discussion took place.
[12] He also stated that on 15 November last year he was asked by Mr Keranis whether he could make an urgent delivery, and he responded by indicating that he would need to check with Mr Chance first as he had been instructed not to take verbal orders from anyone other than Mr Chance. He was given this instruction two days earlier, on 13 November, during the course of a discussion with Mr Chance and Mr White.
[13] Mr Brown also provided further detail about what occurred on 15 November in response to a question from the Commission. He indicated that he was working in the production area when Mr Keranis told him that he was required to take a delivery to Playcorp. However, two days earlier he had been told by Mr Chance that he was not to take direction from anyone, other than him. He had also been told that he would now be working full-time in the production area and would no longer required to make deliveries. He therefore indicated to Mr Keranis that he would need to confirm with Mr Chance what was to happen before making the delivery. However, he could not find Mr Chance in his office, and as he was working on a priority order for a customer he continued with that work. Mr Keranis then returned shortly after, and indicated that the delivery was now ready to be made. An argument then took place between Mr Keranis and Mr Adrian White, who was also working in the production area. Mr Chance finally overheard this argument, and intervened. He then confirmed that the delivery needed to go to Playcorp and that Mr Brown was to make the delivery. Mr Brown said that he then agreed to make the delivery. He also made another delivery to another client at the same time as it was on the way to Playcorp, and he understood the Playcorp order was not an urgent one. However, he was then told by Mr Chance on the following day “out of the blue” 5 that his employment had been terminated.
The Applicant’s Submissions
[14] Mr Brown indicated in his closing submissions that he was told by Mr Chance in October last year that deliveries were slowing down and the business would be outsourcing its truck driving function. He was therefore to be transferred to the production area.
[15] Mr Brown also highlighted what he claims are a number of discrepancies in the Omni Group’s position. Firstly, the date of the incident referred to in the termination letter was 15 November 2018 and not 14 November. He was also not directly involved in the argument that took place between Mr White and Mr Keranis. He also completed the delivery to the customer following the direction received from Mr Chance, and there was no delivery failure as alleged in the Omni Group’s submissions.
[16] He also submits that he was never placed on a one-month performance evaluation in August last year, as alleged, and no documentation has ever been provided to support this claim. In addition, he was not given any verbal or written warnings during the time that he was employed, and he has not previously sighted the document produced by the Omni Group, dated 8 August 2018. It also does not contain his signature.
[17] He continued to submit, in conclusion, that he was employed primarily as a delivery driver/warehouse person and that position was made redundant. He should therefore have received a redundancy pay entitlement.
The Respondent’s Submissions and Evidence
Mr Adrian White
[18] Mr Adrian White provided a Statutory Declaration indicating that he was employed by the Omni Group as a printer. It continued to state:
“Nathan was performing production duties in the printing section JK made a management request where Nathan refused.
When asked that this was a request from his manager he refused to answer creating an argument between attending staff.” 6
[19] Mr White also confirmed in cross-examination that the argument that occurred was between Mr Keranis and himself, however, he also indicated in re-examination that there would not have been an argument if Mr Brown had acted in accordance with the instruction given to him by Mr Keranis.
Mr John Keranis
[20] Mr John Keranis provided a Statutory Declaration indicating that he is employed by Omni Group as a Storeperson. It continued to state:
“I was advised by my manager to request Nathan to perform a deliver which he refused and subsequently created an issue in the production department where there was heated discussion and the potential of a real flare up.” 7
[21] Mr Keranis also indicated in cross-examination that while he had indicated in his Statutory Declaration that his occupation was Storeperson his role in the warehouse also encompassed the role of Dispatch Manager. He also confirmed that the heated discussion that took place between he and Mr White did not involve Mr Brown. However, he also indicated in re-examination that if Mr Brown had acted on the instruction he had given to him, the argument would not have occurred.
Mr Victor Samartzis
[22] Mr Samartzis did not file a witness statement but indicated that he relied on the content of a letter dated 8 February 2019 that he prepared in response to the letter from Mr Brown to Mr Tim Salisbury, dated 19 November 2018, that has been set out at an earlier point in this decision. Mr Samartzis’ letter states as follows:
“Fair Work Australia.
8th February 25019.
Re: Matter Number U2018/12137
In response to Nathan Browns allegations undated sent to Mr Tim Salisbury.
Point 1 Disagree. Nathans performance was below standard and this is evidenced by him often failing to meet expected targets being delivery times (refer attached #1) which he was aware of as this is a function that is performed by the drivers themselves on a daily basis. The emphasis on the KPI is the minutes per delivery indicating performance.
Point 2 Disagree. Nathan Brown has had meeting with his manager dated the 8th August 2018 where he was advised that due to performance issues in not meeting his KPI’s being delivery runs that he is being place on a 1 month evaluation. (Refer attached #2). At the end of the one month period Nathan agreed to work in the production room where Omni wished to train him as a second printer as Omni are purchasing a second printing machine and we will require having additional staff in this department.
Point 3 Nathan did receive 2 weeks’ notice however this was not in Lieu of the absence of any written warnings. There were both verbal and written warnings and discussion surrounding his behaviour and attitude. Due to further issues created by Nathan in the production room on the 16th November (which again demonstrated no effort from him to improve his behavioural issue) Omni took action with an instant dismissal. This behaviour is contrary to the employee guidelines (refer #3). Nathan was provided with a serious misconduct letter and terminated (refer #4)
Point 4 Agreed.
Point 5 Agreed. However confirms point 1 in that he knew that he did not fulfil his duties.
Point 6 Agreed.
Point 7 Disagree. At no point has Omni ever disputed that he did not deliver the goods to Playcorp.
Point 8 Disagree the move to the production area was one where Nathan and Martin agreed. Martin suggested that with the increase in the custom printing tape if he would like to be part of production. Often I Victor Samartzis as the CEO would check on Nathan and enquire if he is enjoying the role which he would state “it's great and the role is varied” I as the CEO would even take the time and pack the tape boxes with him. At no point were deliveries slowing down and is reflected in the additional 12% revenue growth year on year. Apart from Nathan, Omni have another two drivers in our organisation that we draw on and use for deliveries.
Point 9 Disagree. He was terminated on a serious misconduct. The two week additional payment was one that Omni chose to provide as a good gesture.
Point 10 Disagree. The discussion that Martin had was that he would manage the department and communicate to staff either directly or via the warehouse structure. At no time did Martin state that direction was only to come him personally. Martin being “National” Logistics Manager is not always on site so it is impossible for him to have all direction coming from him personally.
Point 11 Agree. The meeting did occur on the 15th November the date of misconduct letter should have been dated the 15th November. The meeting occurred in the office of Martin Chances office, but in error states the 14th November.
Point 12 Disagree. Nathan had been advised that he was to commence working in the production area during September after his return from annual leave. The communication was one of formal advice as he had been on trial in the department for 4 weeks.
Point 13. Disagree. John Keranis is part of the warehouse team (Despatch Manager) and the request that was given to Nathan was at the direction of Martin Chance. To note that the time of the incident was 11.15 am. (Refer attached #6)
Point 14 Agreed
Point 15 Disagree. On discussion with Adrian this was not the case. Refer statutory declaration.
Point 16 Disagree. John did advise Nathan that the request was from Martin. At any time Nathan if he chose could have confirmed with Martin as Martin was on site in his office 10 metres away. Nathans attitude was typical display again displaying an obstinate and confrontational and failure to take direction and be part of the warehouse team
Point 17 Disagree. Martin had to intervene due to the issue created in the production room and confirmed that the request to deliver was from Martin himself. Nathan still refused to do the delivery saying he would not do so however need to have a break. The timing was altercation at 11.15 am, he left to do the delivery at 12 .36 pm as he requested to have a break prior to delivery. His start time was 9am and had already had morning tea. (Refer. attached # 6)
Point 18 Disagree. John did speak to Nathan as he did not want there to be any issues going forward however he never agreed the issue was not prompted by Nathan himself.
Point 19 Agreed
Point 20 Disagree. At no point did Omni ever question delivery failure or non-delivery to Playcorp. The termination letter is attached. (Refer attached #4)
Nathan termination was due to noncompliance in line to the Omnis Human Resource Handbook. Nathan had been given both written and verbal warning and had run out of opportunities to redeem himself.
Redundancy is not relevant. Redundancy occurs when an employer either decides they no longer need an employee's job to be done by anyone, or the employer becomes insolvent or bankrupt, and terminates their employment.
• The job itself, not the employee, becomes redundant. Redundancy can happen when the business:
• introduces new technology (e.g. the job can be done by a machine)
• slows down due to lower sales or production
• closes down
• relocates interstate or overseas
• restructures or reorganises because a merger or takeover happens.
None of the above has occurred hence the claim of redundancy and seeking payment from Omni Group of such is not relevant. Nathans dismissal was due to behavioral & performance issue. Nathans position has been replaced by Peter Adams who is now a full time employee of Omni.
Nathan has clearly outlined that he no longer wishes to work for Omni and had secured another position as advised within 2 weeks of his termination.
Finally as to the statement “I always perform all my respective duties in a professional and timely manner” is nothing further from the truth. This is confirmed by (a) his KPI reports completed by himself; (b) meeting minute notes that we had with him, (c) warning notice, (d) character of behaviour during his employment with Omni and correspondence to Mr. Salisbury after his termination.
Yours sincerely
Mr Victor Samartzis
CEO Omni Group Pty Ltd.”
[23] Mr Samartzis also indicated in cross-examination that the conduct which amounted to serious misconduct, and warranted Mr Brown’s termination, was his failure to deliver to a customer on time. He acknowledged that the goods were delivered to the customer, but “needed to be done in a more responsive time.” 8 He also indicated that the serious misconduct resulted from Mr Brown’s failure to take direction as an employee.
[24] He also indicated that the decision to move Mr Brown to the production area was a promotion and designed to make him more important within the organisation. He also denied that Mr Brown’s performance had been an issue prior to his termination, although he also stated that there had previously been some poor performance and this had been discussed with Mr Brown. However, he also stated at a later point that Mr Brown was not terminated because of a failure to meet his KPIs but, “You were terminated because of the incident that occurred in the production room.” 9 He also stated at a later point, “You were not – in no case were you ever made redundant. You were dismissed because of serious misconduct that created an argument in the production area. The issue in redundancy is irrelevant. I don't know why you keep asking about redundancy.”10
Mr Martin Chance
[25] Mr Martin Chance provided a Statutory Declaration indicating he is employed by Omni Group as a Warehouse Manager. It continued to state:
“I gave specific direction to fulfil a task via JK to which Nathan refused, created unacceptable behaviour in line with our employee handbook. I have counselled Nathan previously, had him on a 1 month evaluation, moved him into production a newly created role however his behaviour is not acceptable, a lack of discipline, with an opportunity of death, with machinery in the production room. I have a responsibility to my employees to enjoy a safe work environment.
It was unfortunate however this disregard and miss conduct gave me no alternative but to dismiss him.” 11
[26] Mr Chance indicated in cross-examination that he is no longer employed by the Omni Group. He also denied he had lied in the termination letter provided to Mr Brown, and that after Mr Brown was given what he described as an everyday direction he acted as though he did not know what was happening. This caused the argument that then took place between Mr Keranis and Mr White. He acknowledged that he gave Mr Brown an earlier direction to not take direction from anyone other than him, but he was referring particularly to the employees from the office administration area. He also indicated that when he referred to Mr Brown’s actions creating an imminent risk to a customer this was due to the delivery being delayed, and he was not suggesting the delivery was not made. He also indicated that he was not able to recall the date on which Mr Brown had been counselled about his work performance, and the discussion was primarily about a change to his start and finish times. He also acknowledged that he had never given Mr Brown a written warning.
[27] Mr Chance also indicated in response to a question from the Commission that he did not believe that the other two employees who were involved in the argument needed to be disciplined over their conduct or behaviour. He also indicated that when he made reference to the possibility of a death occurring he was referring to the potential consequences of an escalating argument in the production area.
The Respondent’s Submissions
[28] The Omni Group submits, in conclusion, that Mr Brown refused to accept a lawful direction, which led to a series of events in the production area. It acknowledges that the delivery to the customer was eventually made, but the issues concerned the process leading up to that point. It continues to submit that Mr Brown’s behaviour breached the code of conduct set out in its employee handbook which refers particularly to, “all employees of Omni Group are expected to observe the highest possible standards of behaviour, ethics and integrity.” 12
[29] It also acknowledged that Mr Brown had recently been promoted in terms of his placement in the production area, but this had come about because it was believed he was not well-suited to his driving/warehouse responsibilities and might be better suited to work in the production area.
Consideration
[30] The circumstances in which an employee’s dismissal can be considered to be “harsh, unjust or unreasonable” have been considered in a number of previous decisions. The decision in Byrne v Australian Airlines Ltd 13 is often cited in this context. The joint judgement of McHugh and Gummow JJ concluded:
“...It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.” 14
[31] The decision of the Full Bench of Fair Work Australia in L. Sayer v Melsteel Pty Ltd 15 also provides guidance about the Commission’s role in regard to each of the matters in s.387 that must be taken into account in determining whether an employee’s dismissal was “harsh unjust or unreasonable.” The Full Bench concluded:
“Where the applicant does present a case, in the ordinary course each of the criteria in s.387 which is capable of being relevant on the facts emerging at the hearing must be taken into account.” 16
[32] I turn now to deal with each of the considerations in s.387, and those authorities that I consider relevant to the determination of this matter.
(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)
[33] Before coming to the particular circumstances involved in this matter it is noted again that previous decisions have had regard to what is required in order to conclude that there was “a valid reason for the dismissal related to the person’s capacity or conduct.” The judgement of Northrop J in Selvachandran v Peteron Plastics Pty Ltd 17 is often referred to in this context. His Honour came to the following conclusions:
“The reasons of an employer for terminating the employment of an employee are solely within the knowledge of the employer. The employer may state a reason but that reason need not be the actual reason nor need it be the only reason. This is the rationale for the onus of proof provisions contained in s 170EDA.
Section 170DE(1) refers to ‘‘a valid reason, or valid reasons’’, but the Act does not give a meaning to those phrases or the adjective ‘‘valid’’. A reference to dictionaries shows that the word ‘‘valid’’ has a number of different meanings depending on the context in which it is used. In the Shorter Oxford Dictionary, the relevant meaning given is: ‘‘2. Of an argument, assertion, objection, etc; well founded and applicable, sound, defensible: Effective, having some force, pertinency, or value.’’ In the Macquarie Dictionary the relevant meaning is ‘‘sound, just, or well founded; a valid reason’’
In its context in s 170DE(1), the adjective ‘valid’ should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s 170DE(1). At the same time the reason must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must ‘be applied in a practical, commonsense way to ensure that’ the employer and employee are each treated fairly…” 18
[34] In Parmalat Food Products Pty Ltd v Wililo 19 the Full Bench also concluded that:
“The existence of a valid reason is a very important consideration in any unfair dismissal case. The absence of a valid reason will almost invariably render the termination unfair. The finding of a valid reason is a very important consideration in establishing the fairness of a termination. Having found a valid reason for termination amounting to serious misconduct and compliance with the statutory requirements for procedural fairness it would only be if significant mitigating factors are present that a conclusion of harshness is open.” 20
[35] The Full Bench majority in B, C and D v Australian Postal Corporation T/A Australia Post (“Australian Postal Corporation”) 21also provides a useful summary of the approach to be taken by the Commission in weighing the factors to be considered:
“Reaching an overall determination of whether a given dismissal was “harsh, unjust or unreasonable” notwithstanding the existence of a “valid reason” involves a weighing process. The Commission is required to consider all of the circumstances of the case, having particular regard to the matters specified in s.387, and then weigh:
(i) the gravity of the misconduct and other circumstances weighing in favour of the dismissal not being harsh, unjust or unreasonable;
against
(ii) the mitigating circumstances and other relevant matters that may properly be brought to account as weighing against a finding that dismissal was a fair and proportionate response to the particular misconduct.” 22
[36] It is also clear that the reason must be valid when viewed objectively. It is not sufficient that the Employer believed it had a valid reason for termination. This was made clear in the Full Bench decision in Rode v Burwood Mitsubishi 23 at paragraph 19 when it stated:
“…the reason for termination must be defensible or justifiable on an objective analysis of the relevant facts. It is not sufficient for an employer to simply show that he or she acted in the belief that the termination was for a valid reason.” 24
[37] These authorities make clear that the existence of a “valid reason” is often the most important consideration of the matters in s.387 that the Commission must have regard to. It is also clear that a “valid reason” must be one that is “sound defensible and well founded” as opposed to one that is capricious, spiteful or prejudiced. It must also be valid in the context of both the employee’s capacity or conduct, and the operational requirements of the business. The test must also be applied in a practical, common sense way to ensure the parties are treated fairly in circumstances where each has rights and privileges, but duties and obligations as well. I have sought to adopt the approach of these authorities in coming to a decision in this matter.
[38] A number of matters need to be considered in determining whether the Omni Group had a valid reason to dismiss Mr Brown on grounds of serious misconduct against the background of the authorities referred to above. The termination letter needs to be considered at the outset. It has been noted already that it incorrectly refers to events that occurred on 14 November last year, and the reference should instead be to the following day, being 15 November.
[39] The reason relied on for Mr Brown’s termination is contained in the second paragraph of the letter. Its meaning is not entirely clear but it appears to concern his refusal to comply with a request to carry out a delivery to a customer. The letter continues to indicate that this was “wilful or deliberate behaviour that is inconsistent with the continuation of your contract of employment.” It also claims that a risk was created to the viability, reputation and profitability of the business, and Mr Brown’s failure to follow a reasonable direction was accordingly unreasonable.
[40] Mr Brown makes a number of points in response to the content of the letter. Firstly, he had only been working in the production area for approximately four weeks at the time, and he was uncertain about whether he was still required to be involved in his previous role as a delivery driver. He also states that he was told two days earlier by the Warehouse Manager, Mr Martin Chance, that he was only to take instruction from him in his new role. The direction to carry out the delivery came from Mr John Keranis, someone Mr Brown understood to be employed as a Storeperson in the warehouse. It is noted in this context that Mr Keranis provided a statutory declaration which indicated that his job title was Storeperson, although he also suggested in his oral evidence that he had the job title of Dispatch Manager as well. It is unclear why he did not make reference to this job title in his statutory declaration.
[41] Mr Brown indicated that the previous direction he had been given by Mr Chance led him to seek confirmation from him after receiving the request from Mr Keranis, however, he was unable to locate Mr Chance at that point in time. It is again noted in this context that Mr Chance confirmed in his evidence that he had previously told Mr Brown to only take instructions from him, although he also indicated that his intention in doing so was to let Mr Brown know that he was not to take instruction or direction from anyone in the office/administration area.
[42] The upshot of Mr Brown not agreeing to the request to make the delivery was a resulting argument between Mr Keranis and another employee, Mr White. This apparently attracted the attention of Mr Chance and led him to intervene. He then confirmed that Mr Brown was required to carry out the delivery to the customer and Mr Brown then proceeded to load the truck and leave the warehouse. He also states that Mr Keranis later apologised to him for overreacting and explained that it was all a misunderstanding.
[43] In summary, it is difficult to conclude that these circumstances constituted a valid reason for dismissal, let alone one that was sufficiently serious to constitute serious misconduct warranting instant dismissal. For example, Mr Brown was arguably entitled to seek confirmation of the request made by Mr Keranis, given the earlier direction given to him by Mr Chance. Mr Brown was also not directly involved in the ensuing argument that took place between Mr Keranis and Mr White. In addition, no action was taken in regard to the conduct or behaviour of those employees. In addition, the delivery was made to the customer and there is no evidence of the customer expressing any dissatisfaction with what occurred, or of the Omni Group being adversely affected in any way.
[44] Further confusion arises from the evidence provided by Mr Samartzis. He variously indicated that the conduct, which amounted to serious misconduct and warranted termination, was Mr Brown’s failure to deliver to the customer on time, although he later acknowledged that the goods were delivered, but should have been “done in a more responsive time.” However, he also indicated at a later point in his evidence that Mr Brown was dismissed because his conduct created an argument in the production area.
[45] I am not satisfied, in conclusion, that the Omni Group had a valid reason to dismiss Mr Brown in the sense that the reason can be said to have been “sound, defensible or well founded,” particularly given that it was considered to be sufficient to constitute serious misconduct justifying instant dismissal. It would appear instead from the available evidence that the circumstances involved a misunderstanding on Mr Brown’s part in the context of the earlier instruction given to him by Mr Chance, which resulted in an argument between two other employees for which Mr Brown cannot be held directly responsible.
(b) whether the person was notified of that reason
[46] As indicated, Mr Brown was notified of the reason for his termination in the letter from Mr Chance, dated 16 November 2018.
(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person
[47] Mr Brown was not provided with any opportunity to respond to the reasons for his termination, and indicated in his evidence that he was told, “out of the blue” by Mr Chance that “today is your last day, hand over your work phone and access card immediately.” He was then given the termination letter, dated 16 November 2018 which confirmed that his employment had been terminated with immediate effect.
(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
[48] There were no discussions involving Mr Brown concerning the circumstances that led to his dismissal.
(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal
[49] The reasons relied on for Mr Brown’s termination concerned his conduct on 15 November last year, rather than anything related to unsatisfactory performance. However, there was some suggestion that he had been provided with a written warning in August of last year, although the evidence provided by Mr Chance appeared to step away from this suggestion. Mr Brown also appears to have been promoted in October last year, which would appear to be ‘at odds’ with the suggestion that he had been warned about his work performance shortly prior to that time.
(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
(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
[50] It is appropriate to deal with each of the above two considerations at the same time. It is evident that the Omni Group is not a large organisation, although it did employ 35 employees at the time Mr Brown was dismissed. It also appears that it does not employ anyone with dedicated human resources expertise. These circumstances undoubtedly impacted on the process involved in Mr Brown’s termination. However, the Omni Group is a well-established and long-standing business and as a consequence should be expected to have a reasonable understanding of the processes involved in disciplining and terminating employees.
(h) any other matters that the FWC considers relevant
[51] I am not aware of anything that needs to be considered in this context
Conclusion
[52] I have had regard to all of the submissions and evidence provided by the parties in this matter. I have also had regard to each of the matters in s.387 that the Commission must take into account in considering whether someone has been unfairly dismissed. I am satisfied, in conclusion, that in all the circumstances the decision by the Omni Group to dismiss Mr Brown was at least “unjust” and “unreasonable,” and therefore he was unfairly dismissed. In coming to this decision I have had particular regard to the conclusions reached in regard to “valid reason,” and the lack of any opportunity provided to Mr Brown to respond to the reasons for his termination.
Remedy
[53] I am now required to consider what is an appropriate remedy. The statutory framework within which the question of remedy must be determined is clear. Section 390 provides that the Commission may order a person’s reinstatement, or the payment of compensation, subject to the jurisdictional conditions in s.390(1) being satisfied. However, the Commission must not order the payment of compensation to a person unless it is satisfied that reinstatement is inappropriate, and that payment of compensation is appropriate in all the circumstances, as provided for in s.390(3).
[54] I am satisfied that reinstatement is not a relevant consideration in all the circumstances of this matter. Firstly, Mr Brown does not seek to be reinstated, and the Omni Group is obviously opposed to any such suggestion. It is also clear that there has been a significant breakdown in the relationship between Mr Brown and Mr Samartzis, and Mr Brown and his immediate manager, Mr Chance, even though it now appears that Mr Chance is no longer employed by the Omni Group. I now turn to consider the relevant provisions in the Act relating to orders of compensation.
[55] Section 392 of the Act states:
“Compensation
(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.
Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the FWC considers relevant.
Misconduct reduces amount
(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.
Shock, distress etc disregarded
(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.
Compensation cap
(5) The amount ordered by the FWC to be paid to a person under subsection (1 must not exceed the lesser of:
(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the dismissal.
(6) The amount is the total of the following amounts:
(a) the total amount of remuneration:
(i) received by the person; or
(ii) to which the person was entitled;
(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and
(b) if the employee was on leave without pay or without full pay while so employed during any part of that period – the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.” 25
[56] In addition, previous Commission decisions have made clear that it is necessary to take into account all of the circumstances of the case in considering any award of compensation, including the specific matters identified in s.392(2)(a) to (g), and to consider the other relevant requirements in s.392. The long established approach to the assessment of compensation is to apply the formula derived from the Full Bench decision in Sprigg v Paul’s Licensed Festival Supermarket (“Sprigg”). 26 This approach was most recently confirmed in the context of the present legislative framework by the Full Bench in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge (“Bowden”).27 The first, and perhaps most important step to be taken is to determine what the employee would have received by way of remuneration, or would have been likely to receive, if they had not been dismissed. This was described in Bowden, citing Ellawala v Australian Postal Corporation,28 in the following terms:
“[33] The first step in this process - the assessment of remuneration lost - is a necessary element in determining an amount to be ordered in lieu of reinstatement. Such an assessment is often difficult, but it must be done. As the Full Bench observed in Sprigg:
‘... we acknowledge that there is a speculative element involved in all such assessments. We believe it is a necessary step by virtue of the requirement of s.170CH(7)(c). We accept that assessment of relative likelihoods is integral to most assessments of compensation or damages in courts of law.’
[34] Lost remuneration is usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment. We refer to this period as the ‘anticipated period of employment’. This amount is then reduced by deducting monies earned since termination. Only monies earned during the period from termination until the end of the ‘anticipated period of employment’ are deducted.” 29
[57] There is no evidence, firstly, to suggest that an order of compensation would have any effect on the viability of the Omni Group. Mr Brown had also been employed for almost two and a half years at the time that his employment was terminated. This is not an insignificant period of service, although many employees have obviously been employed for much longer periods of time.
Remuneration that would have been received if the dismissal had not occurred
[58] I now turn to consider the amount of remuneration Mr Brown would have received, or would have been likely to receive, if his employment had not been terminated. The identification of this amount obviously involves assessments about future events that will often be problematic, but as the Full Bench observed in McCulloch v Calvary Health Care Adelaide, 30 “while the task of determining an anticipated period of employment can be difficult, it must be done.”31
[59] As indicated, Mr Brown had been employed by the Omni Group for almost two and a half years at the time he was dismissed. He also appears to have had a reasonable employment record during the time he was employed. There was a suggestion in the evidence provided by Mr Samartzis that Mr Brown had been provided with a written warning in August last year, but Mr Brown denies having ever seen the document referred to. Mr Chance’s evidence also indicated that the discussion was about changes to Mr Brown’s start and finish times, rather than anything else. Mr Brown’s move to the production area in October last year also appears to have been by way of promotion, so presumably the business was relatively satisfied with his performance at that time.
[60] Mr Brown also submits that he was terminated on work performance grounds so that the business could avoid making redundancy payments that would otherwise be due to him. However, Mr Samartzis in his evidence rejected any suggestion that Mr Brown’s position was made redundant, or that any redundancies were in prospect, and indicated instead that the business was performing well. This appears to put paid to any suggestion that the business was likely to be in a position of making employees redundant. I am accordingly satisfied in all the circumstances that it is reasonable to conclude that Mr Brown would have been employed for a further period of at least 12 months if his employment had not been terminated. He would therefore have received an amount of $58,479.20 over that 12 month period, based on the weekly rate of $1,124.60 that he was receiving at the time he was dismissed. This figure is therefore the starting point for any assessment of compensation.
The efforts made to mitigate the loss suffered
[61] The termination letter provided to Mr Brown confirms that he was paid an amount equivalent to two weeks’ pay at the time that he was terminated, even though the business was not required to make this payment. Mr Brown also indicates that an amount of $150 was deducted from this amount, apparently due to the failure to return a locker key. Two weeks’ pay less $150 amounts to $2,099.20.
[62] Mr Brown also indicated in the written materials that he filed that he has been able to find other employment after being dismissed, although he did not want to divulge the name of his new employer. He commenced that employment on 4 December 2018, being around three weeks after he was dismissed from his employment with the Omni Group. He also indicated in his oral evidence that the amount of available work in his new role fluctuated, and his gross weekly earnings were in the order of $800.00 per week. The Omni Group did not take issue with these submissions on future earnings, and they represent annual earnings of $41,600.00. The figure of $2,099.20 should also be added to this amount. This comes to a total of $43, 699.20 This amount is to be deducted from the figure of $58,479.20 indicated above, leaving an amount of $14,780.00.
Contingencies
[63] The decision in Sprigg also requires that consideration be given to a percentage deduction for contingencies. These principles were summarised in Roos v Winnaa Pty Ltd 32 at [36] and [37]. A deduction for contingencies applies a discount to an assessment of future economic loss so as to account for future unknown matters which might adversely affect earning capacity. Such a deduction is usually applied after the assessment of the period for which the employee would have remained employed. It applies to any future estimate of loss of earnings. I consider that a reduction for contingencies should be made and that a figure of 15% is appropriate in this case. This amounts to a figure of $2,217.00. This is to be deducted from the amount of $14,780.00, leaving an amount of $12,563.00.
Taxation
[64] The amount of compensation awarded will be specified as a gross amount and it will be left to the Respondent to deduct any amount of taxation required by law.
Misconduct
[65] This requirement makes clear that if the Commission is satisfied that the employee’s misconduct contributed to the decision to dismiss the employee then the amount that might otherwise be ordered is to be reduced. I am not aware of any evidence that suggests that a deduction should be considered in this context.
Compensation cap
[66] The amount of $12,563.00 gross is less than the compensation cap of 26 weeks’ pay and no further adjustment of the amount is therefore necessary.
Conclusion
[67] I am satisfied, in conclusion that an order for compensation should be made. I am also satisfied that the amount of compensation that is to be ordered is appropriate in all the circumstances of this matter. I accordingly order that a gross amount of compensation in the sum of $12,563.00 is to be paid by the Omni Group to Mr Brown within 28 days of the date of this decision. An order giving effect to this decision is now separately issued.
COMMISSIONER
Appearances:
N Brown, Applicant.
V Samartzis for the Respondent.
Hearing details:
2019.
Melbourne:
March 12, April 17.
Printed by authority of the Commonwealth Government Printer
<PR713293>
1 Fair Work Act 2009 (Cth) s 385.
2 Fair Work Act 2009 (Cth) s 387.
3 Applicant’s outline of argument: Merits received on 16 January 2019, at Annexure B.
4 Ibid at Annexure E.
5 Transcript at PN116.
6 Statutory Declaration of Adrian White dated 11 February 2019.
7 Statutory Declaration of John Keranis dated 8 February 2019.
8 Transcript at PN306.
9 Ibid at PN352.
10 Ibid at PN359.
11 Statutory Declaration of Martin Chance dated 8 February 2019.
12 Transcript at PN225.
13 (1995) 185 CLR 410.
14 Ibid, 465.
15 [2011] FWAFB 7498.
16 Ibid at [20].
17 (1995) 62 IR 371.
18 Ibid, 373.
19 [2011] FWAFB 1166.
20 Ibid at [24].
21 [2013] FWCFB 6191.
22 Ibid at [58].
23 Print R4471 (AIRCFB, Ross VP, Polites SDP, Foggo C, 11 May 1999).
24 Ibid at [19].
25 Fair Work Act 2009 (Cth)s 392.
26 Print R0235 (AIRCFB, Munro J, Duncan DP, Jones C, 24 December 1998) [(1998) 88 IR 21].
27 [2013] FWCFB 431.
28 Print S5109.
29 Ibid.
30 [2015] FWCFB 873.
31 Ibid at [27].
32 [2018] FWCFB 7394.
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