Patrick Ampuero v H+Co Menswear T/A H's Menswear

[2016] FWC 3078

[2016] FWC 3078

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Patrick Ampuero
v
H+Co Menswear T/A H’s Menswear
(U2015/15184)

DEPUTY PRESIDENT BOOTH SYDNEY, 17 MAY 2016

Application for relief from unfair dismissal - s. 386(1)(b) - forced resignation - application dismissed.

[1] Mr Patrick Ampuero was employed by H+Co Menswear (H+Co) as a Salesman from late 2009. The employment relationship ended on 16 November 2015 and on 19 November 2015, Mr Ampuero lodged an application for relief from unfair dismissal in the Fair Work Commission.

[2] H+Co lodged their Form F3 Employer Response to Unfair Dismissal Application on 27 November 2016. In the F3 H+Co made a jurisdictional objection to the application, alleging that Mr Ampuero was not dismissed but rather, that he resigned.

[3] Mr Ampuero agrees that he resigned but says that he was forced to do so, therefore constituting a ‘dismissal’ under s. 386(1)(b) of the Fair Work Act 2009 (the Act).

[4] At the hearing before me on 22 April 2016 it was agreed between the parties at the outset that submissions in relation to whether Mr Ampuero was ‘dismissed’ within the meaning of s. 386 of the Act would be addressed simultaneously with submissions in relation to the merits of his application for relief from unfair dismissal. This decision will address the resignation question as a threshold issue as if I find that Mr Ampuero was not dismissed, it will be incumbent upon me to dismiss his application.

[5] At the hearing Mr Patrick Ampuero was represented by his brother, Mr Claudio Ampuero. Mr Claudio Ampuero is not a lawyer and therefore does not require the permission of the Commission under s.596 of the Act to represent his brother.

[6] H+Co was represented by Mr Greg Christodoulou, solicitor, and permission to appear under s. 596 of the Act was granted with my reasons given orally at the outset of the hearing. 1

[7] Mr Ampuero gave evidence on his own behalf, and Mr Hiten Thakrar, sole director and shareholder gave evidence for H+Co.

Background

[8] H+Co is a menswear retail store operating in Sydney city. Hiten Thakrar has owned and operated the store since 2002 2 and in 2009 he identified a need to hire a salesman.

[9] After a short trial period, Mr Ampuero was presented with a written offer of employment on 27 November 2009, to commence on 4 January 2010. 3 The letter stated his annual salary as $55,000 per annum and his conditions of employment were otherwise as per the New South Wales Retail Services Employees (State) Award. Mr Ampuero signed that letter on 7 December 2009.

[10] At the time Mr Ampuero commenced employment with H+Co, the store did not open on Saturdays. Mr Ampuero suggested that he open the store on a Saturday for reduced hours and for 10% of the sales. Mr Thakrar agreed and the arrangement remained in place for the duration of his employment. 4

[11] Mr Thakrar gave evidence that he began having concerns about Mr Ampuero’s performance in January of 2015 whilst he was on leave. Specifically, he had noticed a considerable drop in sales at the store in his absence. 5 Mr Thakrar says he discussed his concern with Mr Ampuero on 24 February and ‘briefly indicated that a commission structure may have to be introduced to motivate him if there was no improvement in the near future’.6

[12] Mr Thakrar gave evidence that he went on leave again in June, and prior to his departure he had a discussion with Mr Ampuero about the sales targets for that three week period. 7 The targets were based on the average sales for the corresponding weeks in previous years.8 Those targets were not met in his absence and in July Mr Thakrar discussed his concerns with Mr Ampuero.9

[13] Despite the Statutory Declaration of Mr Ampuero which stated “The Respondent had never complained about my sales records for the past 6 years that I have been working with him” 10 he conceded in cross examination that he recalled those conversations on 24 February 201511 and 14 July 2015.12

[14] During September and some of October Mr Ampuero went on leave and during that time, Mr Thakrar noticed an increase of 30 to 40 per cent in sales. 13 This evidence was corroborated with the sales records of the store attached to the Statement of Mr Thakrar.14 Mr Thakrar said he went to see his accountant and together, they established an incentivised remuneration structure for Mr Ampuero.15 Mr Thakrar gave evidence that he sought advice from the Fair Work Ombudsman and established that the minimum weekly wage under the relevant award was $750.20. The new remuneration structure incorporated a minimum base rate of this amount.

[15] The remuneration structure was outlined as follows:

● “As of 12October 2015, new hourly rate at $19.74 for 40 hours a week plus Super contribution.
● A 12% commission will be added to any personal turnover over $6580 per week. Plus Super Contributions.
● Commission will be paid in a week in lieu with base rate and Super.
● This pay structure will be reviewed on 16^th Feb 2016.” 16

[16] Both Mr Ampuero and Mr Thakrar agree that they discussed the new structure on 12 October 2015 upon Mr Ampuero’s return from holidays. 17 It is uncontroversial that Mr Ampuero was not happy with the new remuneration structure.

[17] On 13 October Mr Ampuero sought another discussion with Mr Thakrar about the new structure. During that discussion he asked if he could work on Mondays, which he took off in lieu of his Saturday work, as he was concerned about reaching his targets. Mr Thakrar agreed. 18 Mr Ampuero then asked for the new remuneration structure in writing. Mr Thakrar did so and gave it to him later that same day.19

[18] Mr Ampuero worked under the new remuneration structure from 12 to 30 October and then went on sick leave on 1 November. 20 On 5 November, Mr Ampuero phoned Mr Thakrar and gave notice of his resignation. He remained on sick leave until his return to work on 16 November. Upon his return to the store, there was an exchange of words which lead to Mr Thakrar asking Mr Ampuero to leave the store and Mr Thakrar paid Mr Ampuero in lieu for the remainder of his notice period.21

[19] At the time of Mr Ampuero’s resignation, Mr Ampuero and Mr Thakrar were the only employees at the store.

Rectified inaccuracies

[20] There were some inaccuracies in the Statutory Declaration of Mr Ampuero that were rectified in cross-examination.

[21] In Mr Ampuero’s Statutory Declaration, he stated:

i. “…The Respondent was on leave on holidays, from the 26/10/2015 to 30/10/2015 I could not contact him…” 22 and

ii. “I dispute his findings about my new employer paying me $35.00 p/h for 7 hours from Monday to Friday on my new job, it is intrusive, misleading and illegal from the Respondent part to get involved in my new job.” 23

[22] In cross-examination, Mr Ampuero agreed that he could in fact contact Mr Thakrar during that time period, but chose not to 24 and secondly, that he was in fact earning the amount disclosed by Mr Thakrar.25

The relevant statutory framework

[23] The Commission exercises its discretion in relation to an application for an unfair dismissal remedy pursuant to Part 3-2 Unfair Dismissal of the Act. In this matter there is a threshold issue concerning whether Mr Ampuero was dismissed in accordance with s.385 and s.386 of the Act which read as follows:

“385 What is an unfair dismissal

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.


386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

(2) However, a person has not been dismissed if:

(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or
(b) the person was an employee:

(i) to whom a training arrangement applied; and
(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;
and the employment has terminated at the end of the training arrangement; or

(c) the person was demoted in employment but:

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and
(ii) he or she remains employed with the employer that effected the demotion.

(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.

[24] The law in relation to termination of employment at the initiative of the employee in circumstances where the employee claims to have been forced to do so because of conduct, or a course of conduct, engaged in by his or her employer has been considered in a number of cases.

[25] In the case of Mohazab v Dick Smith Electronics Pty Ltd (No 2) 26 (Mohazab) the Full Court of the Federal Court of Australia said:

“… It accords with the purpose of the Convention to treat the expression ‘termination at the initiative of the employer’ as a reference to a termination that is brought about by an employer and which is not agreed to by the employee. Consistent with the ordinary meaning of the expression in the Convention, a termination of employment at the initiative of the employer may be treated as a termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship.

In these proceedings it is unnecessary and undesirable to endeavour to formulate an exhaustive description of what is termination at the initiative of the employer but plainly an important feature is that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship” 27

[26] In Rheinberger v Huxley Marketing Pty Ltd 28 (Rheinberger), Moore J said, after referring to extracts from Mohazab:

“… it is not sufficient to demonstrate that the employee did not voluntarily leave his or her employment to establish that there had been a termination of the employment at the initiative of the employer. Such a termination must result from some action on the part of the employer intended to bring the employment to an end and perhaps action which would, on any reasonable view, probably have that effect. I leave open the question of whether a termination of employment at the initiative of the employer requires the employer to intend by its action that the employment will conclude. I am prepared to assume, for present purposes, that there can be a termination at the initiative of the employer if the cessation of the employment relationship is the probable result of the employer’s conduct.” 29

[27] In the Full Bench decision of ABB Engineering Construction Pty Ltd v Doumit 30 (ABB Engineering) it was said:

“Often it will only be a narrow line that distinguishes conduct that leaves an employee no real choice but to resign employment, from conduct that cannot be held to cause a resultant resignation to be a termination at the initiative of the employer. But narrow though it be, it is important that that line be closely drawn and rigorously observed. Otherwise, the remedy against unfair termination of employment at the initiative of the employer may be too readily invoked in circumstances where it is the discretion of a resigning employee, rather than that of the employer, that gives rise to the termination. The remedies provided in the Act are directed to the provision of remedies against unlawful termination of employment. Where it is the immediate action of the employee that causes the employment relationship to cease, it is necessary to ensure that the employer’s conduct, said to have been the principal contributing factor in the resultant termination of employment, is weighed objectively. The employer’s conduct may be shown to be a sufficiently operative factor in the resignation for it to be tantamount to a reason for dismissal. In such circumstances, a resignation may fairly readily be conceived to be a termination at the initiative of the employer. The validity of any associated reason for the termination by resignation is tested. Where the conduct of the employer is ambiguous, and the bearing it has on the decision to resign is based largely on the perceptions and subjective response of the employee made unilaterally, considerable caution should be exercised in treating the resignation as other than voluntary.”

[28] O’Meara v Stanley Works Pty Ltd  ,31 (O’Meara) after summarising these and other decisions, the Full Bench of the Australian Industrial Relations Commission, as it then was, said:

“19. The circumstances in which a resignation, while apparently a termination of employment by the employee, nevertheless constitutes a termination at the initiative of the employer, have been considered in a number of cases.

23. In our view the full statement of reasons in Mohazab which we have set out together with the further explanation by Moore J in Rheinberger and the decisions of Full Benches of this Commission in Pawel and ABB Engineering require that there to be some action on the part of the employer which is either intended to bring the employment to an end or has the probable result of bringing the employment relationship to an end. It is not simply a question of whether “the act of the employer [resulted] directly or consequentially in the termination of the employment.” Decisions which adopt the shorter formulation of the reasons for decision should be treated with some caution as they may not give full weight to the decision in Mohazab. In determining whether a termination was at the initiative of the employer an objective analysis of the employer’s conduct is required to determine whether it was of such a nature that resignation was the probable result or that the appellant had no effective or real choice but to resign.”

[29] As I said inan earlier decision of Hana v Aboriginal Medical Service Western Sydney Coop Ltd, 32 “It is clear that the test is an objective one. It is not a question of what the applicant perceived to be the conduct engaged in by the respondent but whether that conduct could, in the terms expressed in O’Meara, be reasonably considered to be action on the part of the employer which is either intended to bring the employment to an end or has the probable result of bringing the employment relationship to an end. It follows that I must first make a finding as to whether the conduct complained of actually happened and if so whether it is conduct of the character described in O’Meara.”

Consideration

[30] Having summarised the relevant authorities on forced resignation, I ask myself two questions:

i. What was the conduct and did the conduct actually happen?
ii. If so, was it conduct that could be reasonably considered to be action on the part of the employer which is either intended to bring the employment to an end or has the probable result of bringing the employment relationship to an end?

What was the conduct and did the conduct actually happen?

[31] Mr Ampuero submitted that his sales were dropping but that was because there was limited stock in the store for him to sell. 33 Mr Thakrar disagreed with that proposition.34

[32] If I found that Mr Thakrar had sabotaged Mr Ampuero from early in 2015 by reducing stock levels so that he was unable to achieve sales targets I would include this as part of the conduct. I do not consider that this occurred.

[33] It is clear that Mr Thakrar consistently achieved higher sales than Mr Ampuero when they were both in the store together, drawing from the same stock. 35 Mr Ampuero said that was because Mr Thakrar had abilities that Mr Ampuero did not have because he was the boss. However when asked, Mr Ampuero could not point to any examples of those abilities nor to any restrictions on him to order the stock that he required. 36 Mr Thakrar also gave evidence that there were no restrictions on Mr Ampuero ordering stock.37 For these reasons, I find on the balance of probabilities that his poor sales results were not attributable to any stock level issues.

[34] The ‘conduct’ in this matter, is simply the implementation of the new remuneration structure. There is no dispute between the parties that Mr Thakrar introduced a new remuneration structure to Mr Ampuero on 12 October 2015. That is, it is clear on the material before me that the conduct did occur.

Could that conduct be reasonably considered to be action on the part of the employer which is either intended to bring the employment to an end or has the probable result of bringing the employment relationship to an end?

[35] This question can be broken down into two parts. Firstly, was the conduct intended to force Mr Ampuero to resign and secondly, if not intentional, would that conduct have the probable result of bringing the employment relationship to an end?

Was the conduct intended to force Mr Ampuero to resign?

[36] In his statutory declaration, Mr Ampuero states:

“On the same day the Respondent imposed on me a new agreement with a new remuneration structure 28% lower than the remuneration structure that we both signed under the original contract in 2009…” 38

[37] Mr Ampuero determined that the loss equated to a 28% reduction by comparing his annual earnings in 2015, assessed at $56,792.32 against his annual base rate under the new structure which was $41,059.20. 39 He submitted that the significant loss in wages meant that he had no real choice but to resign for financial reasons. 40

[38] Mr Thakrar disagreed with the proposition that the new remuneration structure was introduced to force Mr Ampuero to resign.

[39] His evidence was that after noticing a trend in poor sales by Mr Ampuero throughout 2015, and raising those concerns with Mr Ampuero on two occasions, he decided to restructure his remuneration with his intent being to encourage him to achieve better sales. I accept this evidence.

[40] On 12 October 2015 he introduced that structure to Mr Ampuero. At Mr Ampuero’s request, he again explained the new structure to him on 13 October and gave it to him in writing as requested on that same day. 41

[41] Mr Thakrar gave evidence that he specifically designed the remuneration structure so that Mr Ampuero would not have suffered any financial loss as long as he maintained his average sales over the past two years:

“His normal sales over the last two years was an average of $9,500.00, so we calculated [the new remuneration structure] so Patrick wouldn’t be hard done by financially”. 42

[42] It is clear from the evidence that during the three weeks from 12 to 30 October 2015 the new structure applied to Mr Ampuero resulted in earnings of $17.18 more than he would have earned under the old remuneration structure. 43

[43] Mr Ampuero said the new remuneration structure was not motivated by his poor sales results but rather, because of a restructure of the business which was a significant cost to H+Co and his wages were a casualty of that restructure. 44

[44] If I were minded to agree with the submission that the new remuneration structure was because of a business restructure rather than to motivate Mr Ampuero, it does not necessarily follow that Mr Thakrar introduced the new structure with the intent of forcing Mr Ampuero to resign. I make no finding on this point as nothing turns on it.

[45] I find the reasons given by H+Co for the new remuneration structure were genuine. I find that the conduct was not conduct that was intended to force Mr Ampuero to resign, but rather, to motivate him to improve his sales. The discussions with Mr Ampuero throughout 2015 and the figures presented to support the concern are supportive of this.

Would that conduct have the probable result of bringing the employment relationship to an end?

[46] The two meetings between Mr Thakrar and Mr Ampuero on 12 and 13 October to discuss and explain the new remuneration structure made it clear that he should not suffer any loss in his wages, as long as he could maintain his average sales. It is clear on the evidence that Mr Ampuero earned slightly more throughout October 2015 than he would have on his old remuneration structure and this was apparent to Mr Ampuero at the time of his resignation.

[47] Even if, after having the two discussions and observing the outcome of the new remuneration structure, Mr Ampuero still believed that he would suffer a 28% reduction in his pay, the conduct must be assessed objectively. I draw particular attention to ABB, quoted above:

“Where the conduct of the employer is ambiguous, and the bearing it has on the decision to resign is based largely on the perceptions and subjective response of the employee made unilaterally, considerable caution should be exercised in treating the resignation as other than voluntary.”

[48] I accept that Mr Ampuero was unhappy about the new remuneration structure. There was a factual conflict between the evidence of Mr Thakrar and Mr Ampuero about whether Mr Ampuero agreed to trial the new remuneration structure. I don’t make a finding about that because whether he did or did not agree to a trial, it is uncontroversial that he did work under the new remuneration structure for three weeks and his pay did not suffer.

[49] I find that that the conduct of H+Co in introducing the new remuneration structure was not intended to, nor would have had the probable result of, bringing the employment relationship to an end.

[50] I find that Mr Ampuero resigned from his employment with H+Co and was not forced to do so because of H+Co’s conduct. That is, he was not dismissed within the meaning of the Act. His application is dismissed.

[51] An order dismissing the application will issue with this decision.

DEPUTY PRESIDENT

Appearances:

P Ampuero, The Applicant.

G Christodoulou, Fair Work Centre, for the Applicant.

Hearing details:

2016

Sydney:

22 April.

 1   PN23 to PN27 Transcript 22 April 2016.

 2 Statement of Hiten Thakrar at [2].

 3   Exhibit C4 - Statement of Hiten Thakrar, Attachment HT-1.

 4   PN1010 Transcript 22 April 2016.

 5   PN950 Transcript 22 April 2016.

 6 Exhibit C4 - Statement of Hiten Thakrar at [6].

 7   PN950 Transcript 22 April 2016.

 8 Exhibit C4 - Statement of Hiten Thakrar at [7].

 9   PN947 Transcript 22 April 2016.

 10 Statutory Declaration of Patrick Ampuero at [2].

 11   PN646 Transcript 22 April 2016.

 12   PN680 to PN681 Transcript 22 April 2016.

 13   PN947 Transcript 22 April 2016.

 14   Exhibit C4 - Statement of Hiten Thakrar, Attachment HT – 2.

 15   PN947 Transcript 22 April 2016.

 16   Exhibit C4 - Statement of Hiten Thakrar, Attachment HT – 6.

 17   PN688 Transcript 22 April 2016.

 18   PN504 and PN1018 Transcript 22 April 2016.

 19   PN955 Transcript 22 April 2016.

 20 Exhibit C4 - Statement of Hiten Thakrar at [21].

 21   Exhibit A1 - Statutory Declaration of Patrick Ampuero at [9]; Exhibit C4 - Statement of Hiten Thakrar at [21] to [29].

 22 Exhibit A1 - Statutory Declaration of Patrick Ampuero at [8].

 23 Exhibit A1 - Statutory Declaration of Patrick Ampuero at [13].

 24   PN855 to PN865 Transcript 22 April 2016.

 25   PN866 to PN878 Transcript 22 April 2016.

 26 (1995) 62 IR 200.

 27 (1995) 62 IR 200 at 205.

 28 (1996) 67 IR 154.

 29 (1996) 67 IR 154 at 160.

 30   Print N6999 (9 December 1996).

 31   Print PR973462 (11 August 2006).

 32   [2013] FWC 1517.

 33   PN962 Transcript 22 April 2016.

 34   PN957 Transcript 22 April 2016.

 35   Exhibit C4 - Statement of Hiten Thakrar, Attachment HT – 2.

 36   PN703 Transcript 22 April 2016.

 37   PN957 Transcript 22 April 2016.

 38 Exhibit A1 - Statutory Declaration of Patrick Ampuero at [3].

 39 Applicant Outline of Submissions dated 12 February 2016 at page [1].

 40 Applicant Outline of Submissions dated 12 February 2016 at page [1].

 41   Exhibit C4 - Statement of Hiten Thakrar at [14] to [17].

 42   PN949 Transcript 22 April 2016.

 43   Exhibit C4 - Statement of Hiten Thakrar at [20]; and Exhibit C4 - Statement of Hiten Thakrar Attachment HT – 2.

 44 Applicant Outline of Submissions dated 12 February 2016 at page [1].

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