Phillip Ragan v U Blinds Shutters & Awnings Pty Ltd T/A U Blinds
[2019] FWC 7699
•15 NOVEMBER 2019
| [2019] FWC 7699 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Phillip Ragan
v
U BLINDS SHUTTERS & AWNINGS PTY LTD T/A U Blinds
(U2019/3368)
| COMMISSIONER GREGORY | MELBOURNE, 15 NOVEMBER 2019 |
Application for an unfair dismissal remedy.
Introduction
Mr Phillip Ragan was employed by U Blinds Shutters & Awnings Pty Ltd T/A U Blinds (U Blinds) on 9 April 2018 in what he described as a Sales Representative/Area Manager role. However, he was dismissed from his employment, less than 12 months later, on 14 March 2019 with immediate effect.
Mr Ragan subsequently lodged an unfair dismissal application and the matter was dealt with in a hearing on 1 July 2019. Both parties appeared in the proceedings by telephone. Mr Ragan appeared on his own behalf. Mr Christopher Ralph, a Director of U Blinds, appeared on its behalf.
The Issue to be Determined
Section 385 of the Fair Work Act 2009 (the Act) provides that a person has been unfairly dismissed if the Fair Work Commission (the Commission) is satisfied the dismissal “was harsh, unjust or unreasonable.”[1]
Section 387 continues to require that the Commission must take into account certain 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]
The Commission is accordingly now required to determine whether Mr Ragan’s dismissal was “harsh, unjust or unreasonable” taking into account each of the matters in s.387.
The Evidence and Submissions
The Applicant
Mr Phillip Ragan
Mr Ragan commenced working for U Blinds on 9 April 2018. His job title was Sales Representative/Area Manager and he was paid on the basis of a retainer plus commission. He was required to use his own private vehicle in the course of his work but was reimbursed for his fuel expenses. The role provided him with a degree of autonomy and at busy times in the year he was working a significant number of hours.
However, he was dismissed from his employment on 14 March 2019 by the Victorian State Manager of U Blinds, Mr Darren Hall. The Office Manager, Ms Leeana Green, was also present at the time. In Mr Raglan’s outline of submissions, he stated:
“The reason given to me by State manager Darren Hall was that the company was moving in a ‘different direction’ I had no prior warnings and was not made redundant as U Blinds have since replaced me with another salesperson.”[3]
Mr Hall also told him he would receive a payment equivalent to two weeks’ salary, and a $1,000 sales bonus would be paid to him as well, subject to any mistakes/recharges that needed to be deducted.
Mr Ragan claims his dismissal was harsh and unfair, and he had been performing well at the time of his termination, with no suggestion that his position was in jeopardy. He had not received any warnings of any kind, and no issues had been raised at any time about his conduct or behaviour. He was also not subject to any performance review plan at the time. In addition, in the month prior to his dismissal he had been the best performing Sales Representative in the Victorian branch, achieving over $100,000 in sales, which entitled him to the $1,000 sales bonus. However, this had not been paid to him at the time of his termination.
At the time he was dismissed Mr Ragan was working on several large jobs and was told the business was about to begin advertising again shortly, which would assist in generating additional sales leads. He also attended a sales meeting in the Melbourne office in the week prior to his dismissal, with all of the Melbourne-based staff in attendance. In that meeting Mr Hall discussed ways in which all employees could work to assist the business, and Mr Ragan was not under any impression that his job was in any jeopardy.
He also referred to an incident in early 2019 when he appealed against a recharge passed on to him from a job in June 2018. He was required to pay the costs of around $400 by means of a deduction from his salary. He took issue with this and expressed his disappointment at being required to pay back the recharge costs. However, he eventually concluded that he had no other option but to accept the deduction, despite believing he was not at fault. Mr Hall had supported him on this occasion, as he had also done on a previous occasion.
Mr Ragan was unable to attend a sales meeting 18 February 2019 as he was unwell. However, he denies he had abandoned his employment as a consequence of not attending this meeting, and continued to work as normal after this time. He attached a copy of an email he sent to Mr Chris Ralph, the Director of U Blinds, on the morning of the sales meeting, which stated: “I’ve come down with a cold so won’t be able to attend today’s sales meeting.”[4] It continued to state that he would be working from home for the remainder of the day. He also attached an email received in response from Mr Ralph which stated: “Hi Phil, Cold or No Cold, we have travelled down from Brisbane yesterday to attend this Meeting, you can drag yourself over to Fairfield for a couple of hours. Please Ensure you are here at Midday!!!!!”[5]
Mr Ragan returned to work on the following day and entered sales of $7,000 on that day. He was also the highest performing Sales Representative in the Victorian branch in that month. This included an amount of $14,000 in sales he entered on the last day of February. He was also dealing with customers and installers on a daily basis throughout this time, and the business was aware of this.
Mr Ragan was also given assurances by Mr Ralph that he would be transferred in his employment with U Blinds to Launceston at some point, and Mr Ralph had arranged for the National Credit Manager, Ms Angela Earley, to provide a letter on his behalf confirming this. This letter, dated 18 December 2018, was attached to his submissions and states:
“To Whom it May Concern.
Phil Ragan commenced employment with U Blinds Australia on 16/4/18 as a Sales Consultant in our Melbourne Branch. He will continue in this position when he moves to our Tasmanian Branch.
Phil’s expected Salary including Commission is $80,000 – $100,000 per annum.”[6]
Mr Ragan and his wife subsequently purchased a property in Launceston in anticipation of relocating to Tasmania at some point in the near future.
Mr Ragan also stated in response to a question from the Commission about the possible relocation to Tasmania that there had been discussions about the business expanding its operations in Tasmania. U Blinds already had a branch in Hobart, and the intention was to expand in the north of the State. Mr Ragan was interested in that role, and was told that at an appropriate time he and an installer would be set up to run an operation from Launceston, which would liaise with the team in Hobart. He and his wife had then purchased a property in Tasmania in February which they intended to rent out until they were relocated. However, these plans changed after he was dismissed.
He also indicated that after returning to work after the day he was off sick, he continued working from the Melbourne office until he was dismissed on 14 March. He had no further contact with Mr Ralph during this time, but continued to work as normal with Mr Darren Hall, the State Sales Manager, and the various installers and customers that he normally dealt with.
Mr Ragan also attached a series of documents to his submissions. They included commission sheets showing commissions earned by him in the periods 31 January – 14 February 29, 15 – 28 February 2019, and up to the middle of March 2019.
Copies of the following payslips from the U Blinds in his name were also attached.
- Payslip dated 19 February 2019 indicating gross earnings of $3,13602 for the period from 4 – 15 February 2019.
- Payslip dated 5 March 2019 indicating gross earnings of $2,269.69 for the period from 18 February – 1 March 2019.
- Payslip dated 18 March 2019 indicating gross earnings of $1,833.29 for the period from 4 – 15 March 2019.
- Payslip dated 18 March where each dealt with a final pay out of annual leave entitlements in the sum of $79.86.
He also provided a copy of an Employment Separation Certificate, which was completed by Ms Angela Earley, U Blinds’ National Credit Manager, and indicated that his employment ceased on 15 March 2019.
Mr Ragan does not wish to be reinstated as he believes he can no longer trust Mr Ralph. He instead seeks compensation up to the maximum allowable amount of 26 weeks’ pay. He also indicated that he has since made a number of attempts to obtain work in the Launceston area, and has a number of job interviews scheduled. He also indicated in response to a question from the Commission that he was starting in a new position on 7 July 2019 as a Trainee Store Manager. He would be receiving casual rates to begin with, and had not otherwise earned any income in the previous 16 weeks since leaving U Blinds.
Mr Reagan also indicated in cross examination that on the day he was unwell he fell asleep in the morning and did not wake up until around 4:00 p.m. that afternoon. He was accordingly unable to respond to the email from Mr Ralph, which was sent to him[7] at 9.22 a.m. that morning. However, he did attend the next sales meeting, and according to U Blinds’ own sales figures recorded a sale of $7,000 on 19 February 2019 after he returned to work following the day of sick leave.
U Blinds
U Blinds confirmed that Mr Ragan commenced employment on 9 April 2018 in the position of full-time Sales Consultant. It stated in its outline of argument that he worked approximately 30 hours in each week and was paid at the rate of $576.90 per week, which represents an annual figure of $30,000. He also received commission payments, and his annual income in the past twelve months was $41,345.32. He was also provided with a mobile phone and fuel card.
However, he was dismissed from his employment, with immediate effect, on 14 March 2019. U Blinds stated in its written outline of argument that the reason for Mr Ragan’s dismissal was “Abandonment of position.[8]” and he was told at the time that “…we as a business had moved on.[9]”
U Blinds also indicated in its written submissions that Mr Ragan was not told of the reason for his dismissal, prior to being terminated, or provided with an opportunity to respond to the reason for his dismissal. It also noted that the business employed 30 staff and it did not consider that the absence of specialist HR expertise had any impact on the procedures followed in dismissing Mr Ragan.
U Blinds also stated in its written submissions that no remedy should be awarded because: “…the person left the position with out [sic] notice and has since moved inter state [sic].[10]” It continued to state: “No compensation is warranted in this case as the applicant abandoned the position as of Monday February 18th 2019, i [sic] have never heard from this person again.[11]”
A copy of the emails exchanged between Mr Ralph and Mr Ragan on 18 February 2019, which are set out in Mr Ragan’s evidence, were also attached to the submissions provided by U Blinds.
Mr Chris Ralph
Mr Ralph stated in his witness statement:
“On Monday February 18th 2019 a regular Monthly Sales Meeting was to be held in the Melbourne Office commencing 12 Noon.
I received an email at 7.52 am advising the applicant had a cold and won’t be attending the Sales Meeting.
as I had travelled from Brisbane to attend this Meeting the night before and also had a cold I found the excuse to be extremely poor. I sent a return email advising the applicant to make sure he attended the Meeting commencing at 12 Noon.
the applicant did Not attend nor did he make any further contact with me since that date, I instructed the Office to send no further Sales leads until he contacted me personally. after a period of time with no contact I assumed he had abandoned his position and was most surprised to discover he had turned up to the office some weeks later.
At this time I made instructions for his formal termination.”
Mr Ralph also indicated in cross examination that Mr Ragan appeared as the top-selling salesperson at the Melbourne office for the month of February 2019 because he held back sales figures from the previous month. He then presented them in February with the intention of loading his sales figures for that month to make it appear he had achieved a significant number of sales in the month of February.
He also indicated that he was unaware Mr Ragan had been sent further correspondence from U Blinds after 18 February 2019. It was instead his understanding, and consistent with his direction, that Mr Ragan had vacated his position from that point in time. The fact that he continued to be paid up until 14 March was due to an error by the businesses’ administration, and when he became aware of this, he decided to bring matters to a head.
In response to a question from the Commission Mr Ralph indicated that Mr Ragan reported to the Sales Manager in the Melbourne office, Mr Darren Hall. After Mr Ragan’s failure to attend the sales meeting in February Mr Ralph gave clear instructions that until he heard further from Mr Ragan, he was to get no further assistance from the business. As he did not hear anything further he assumed Mr Ragan had abandoned his position. However, it subsequently transpired that this was not the case and he was still being paid a salary and using the company supplied fuel card and mobile phone. When Mr Ralph became aware of this, he gave instructions to Mr Hall to meet with Mr Ragan and terminate his employment immediately.
Mr Ralph also indicated that he agreed with what Mr Ragan had said about the possibility of him relocating to Tasmania, and at the time of this discussion there was every intention that this would occur at some point in the near future. However, it was intended that the position would be remunerated on the basis of commission only, and he would not receive a retainer.
Consideration
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[12] 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.”[13]
The decision of the Full Bench of Fair Work Australia in L. Sayer v Melsteel Pty Ltd[14] 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.”[15]
I turn now to deal with each of the considerations in s.387, having regard to those authorities 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)
Before coming to deal with the particular circumstances involved in this matter it is noted at the outset 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 Selvachandranv Peteron Plastics Pty Ltd[16] is often cited 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…”[17]
In Parmalat Food Products Pty Ltd v Wililo[18] 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.”[19]
The Full Bench majority in B, C and D v Australian Postal Corporation T/A Australia Post[20] (“Australian Postal Corporation”) also 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.”[21]
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[22] at [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.”[23]
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.
Mr Ragan states that there was no valid reason for his dismissal, and at the time he was dismissed he was generally considered to be a good employee. He had also not received any warnings related to his performance or conduct in the time he was employed. He was also not subject to any process of performance review at the time. U Blinds also provided him with a letter in December last year to assist in obtaining a mortgage in anticipation of a relocation with the business to a position in Launceston.
Mr Ragan also points to the payslips he received for the ongoing periods of employment up to 14 March 2019 as evidence of the fact he was continually employed up to this point and had not at any time abandoned his employment.
U Blinds submits in response that it had a valid reason to dismiss Mr Ragan because he had abandoned his employment as of 18 February 2019. It appears to base this view on the fact that he did not attend the sales meeting on 18 February 2019, and did not respond to an email sent to him that morning by Mr Ralph insisting he attend the meeting, regardless of whether he was unwell. Mr Ragan states in response that he did not reply to this email because, being unwell, he slept for most of the day.
Mr Ralph indicated that he heard nothing after that time from Mr Ragan and accordingly presumed he had abandoned his employment. However, there is no evidence of any specific request from Mr Ralph to Mr Ragan to get in contact. The available evidence, including the payslips, also indicates that Mr Ragan continued to earn commissions right up to the time he was dismissed, and makes clear he had not abandoned his employment, and this could have been simply confirmed if Mr Ralph had bothered to make relevant enquiries with the Melbourne office.
Mr Ragan also indicated in his evidence that he was dismissed by the Victorian State Manager of U Blinds, Mr Darren Hall, who told him he was being terminated because the business was “… moving in a different direction.” However, it is unclear what that direction was, and, in any case, U Blinds no longer appears to rely on this as the reason for his termination.
I am unable to conclude in all the circumstances that U Blinds had a valid reason to dismiss Mr Reagan in the sense that the reason was sound, defensible and well founded. The evidence also makes clear that Mr Ragan had not abandoned his employment on 18 February 2019, despite what U Blinds claims.
(b) whether the person was notified of that reason
As indicated, Mr Ragan was told that the reason for his dismissal was because the business “was moving in a different direction.”
(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person
The evidence provided by Mr Ragan, and the submissions provided on behalf of U Blinds, both make clear he was not provided with any opportunity to respond to the reason for his dismissal.
(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
The evidence does not point to any unreasonable refusal by U Blinds to allow Mr Ragan to have a support person present at any discussions relating to his dismissal, but it also appears that there were no such discussions, and he was simply dismissed forthwith with immediate effect.
(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal
Regardless of what was the reason for Mr Ragan’s employment being terminated there is no evidence indicating that he was warned about his unsatisfactory performance prior to being dismissed.
(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
It is appropriate to deal with the above matters together. U Blinds indicated that it does not employ a specialist HR person, but does not believe that this impacted on the procedures involved in carrying out Mr Ragan’s dismissal. However, it appears self-evident that if a person with some HR expertise had been involved then his employment would not have been terminated in such a precipitous way.
(h) any other matters that the FWC considers relevant
The evidence of both Mr Ragan and Mr Ralph makes clear that Mr Ragan was given some understanding by the business that at some point in the foreseeable future he would be provided with the opportunity to relocate to Launceston. This is also supported by the evidence of the letter provided to Mr Ragan by the National Credit Manager of U Blinds, Ms Earley, which indicates that it was provided on behalf of Mr Ralph for the purpose of assisting Mr Ragan to obtain mortgage finance for the purchase of a residential property in Launceston. Mr Ragan did purchase a property in Launceston earlier this year, but has now been significantly disadvantaged financially by the unexpected decision to terminate his employment.
Conclusion
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 a person has been unfairly dismissed. I am satisfied, in conclusion, that in all the circumstances the decision by U Blinds to dismiss Mr Ragan 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 Ragan to respond to the reasons for his termination.
Remedy
I am now required to consider what is an appropriate remedy. The statutory framework within which this issue 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).
I am satisfied that reinstatement is not a relevant consideration in all the circumstances. Mr Ragan does not seek to be reinstated, and U Blinds is obviously opposed to any such suggestion. It is also clear that there has been a significant breakdown in the relationship between Mr Ragan and Mr Ralph, the Director of U Blinds. I therefore now turn to consider whether it is appropriate to exercise the discretion available to the Commission to make an order of compensation.
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:
the effect of the order on the viability of the employer’s enterprise; and
(a) the length of the person’s service with the employer; and
(b) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(c) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(d) 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
(e) 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
(f) 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.”[24]
It is evident from previous authorities that it is necessary to take into account all the circumstances involved in the particular matter in considering any order for an amount of compensation. The Commission is also to have specific regard to the matters set out in s.392, as detailed above, and in subsection (2)(a)—(g) and (3), in particular. 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”).[25] 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”).[26] The first, and the long established approach to the assessment of compensation also requires that the formula derived from the Full Bench decision in Sprigg is to be applied as well. This approach was most recently confirmed in the context of the present legislative framework of the Full Bench in the matter of Bowden.
The effect of the order on the viability of U Blinds
U Blinds did not address this issue in its submissions, and there is no suggestion that any order made by the Commission would be likely to impact on the viability of U Blinds.
The length of service
Mr Ragan was employed by U Blinds for a period of just under twelve months. This is obviously not a lengthy period of employment and suggests it is appropriate for a lesser amount of compensation to be ordered.
Remuneration that would have been received or would likely to have been received if the dismissal had not occurred
One of the most important matters to be determined in dealing with orders for compensation concerns 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,[27] 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.”[28]
The identification of this amount obviously also involves assessments about future events that will often be problematic, but as the Full Bench observed in McCulloch v Calvary Health Care Adelaide,[29] “…while the task of determining an anticipated period of employment can be difficult, it must be done.”[30]
As indicated, Mr Ragan had been employed by U Blinds for less than the twelve months at the time he was dismissed. He claims to have had a good employment record during that time and had not received warnings about his performance or behaviour, or been subject to any performance improvement processes in that time. He also claims to have been the best performing Salesperson, in terms of commission earnings in the Melbourne office in the month prior to his termination. In addition, in December last year the business provided him with a letter designed to support him obtaining mortgage finance in anticipation of a relocation with the business to Tasmania, and it can be presumed at that point it considered he was going to have on an ongoing involvement with the business for at least the foreseeable future. However, it is also noted that Mr Ralph indicated in his evidence that the position was not going to involve payment of a retainer, and payment would be on the basis of commission only.
Mr Ralph also appears to have a different view about Mr Ragan’s abilities. He was unhappy about the fact he did not attend the sales meeting in January, and his failure to respond to the email sent to him that morning urging him to attend. He also claimed that Mr Ragan had manipulated his sales figures for the month of February by inflating them with sales from the previous month. He also claims that his sales figures after that time were poor.
Mr Ragan also provided a list of recharge invoices, and it appears that on several occasions amounts were deducted from the salary otherwise due to him on account of these recharges. However, it is also noted that Mr Ragan contested these deductions and claimed they should not have been made because he was not at fault.
In summary, it is difficult to be precise about how much longer Mr Ragan would have been employed if not for the fact of his dismissal. However, I am satisfied that it is reasonable to conclude, based on his relatively short period of employment, and the issues that appear to have emerged during the time he was employed, that he was not likely to have been employed for an extensive period of time. I have therefore concluded that if his employment had not been terminated he would likely have remained in employment for a further period of approximately six months. U Blinds indicated in its submissions that Mr Ragan’s annual income, based on the payment of salary and commission was $41,345.00. This amounts to a figure of $20,672.50 over a period of six months. This figure is accordingly the starting point for any assessment of compensation.
The efforts made to mitigate the loss suffered
Mr Ragan indicated that he has moved to Tasmania after being dismissed and found it difficult to obtain other employment. He also indicated that he was to commence work as a Trainee Store Manager on 7 July 2019 but was out of work for a period of 16 weeks prior to obtaining that employment.
However, it is apparent that Mr Ragan’s attempts to find other work were complicated by his relocation to Tasmania and if this had not occurred it might have been expected that he could have found other work more easily. I am accordingly satisfied that it is appropriate to make a deduction of 25 % on account of these circumstances. This amount of $5,168.12 should be deducted from the figure indicated earlier, leaving an amount of $15,504.38.
Contingencies
The decision in Sprigg also requires that consideration be given to a percentage deduction on account of contingencies. These principles were summarised in Roos v Winnaa Pty Ltd[31] .
“[36] The principles applicable to the application of a percentage deduction for contingencies and the vicissitudes of life were summarised in the High Court in Wynn v NSW Insurance Ministerial Corporation36 (Wynn) as follows:
“It is necessary to say something as to contingencies or `vicissitudes'. Calculation of future economic loss must take account of the various possibilities which might otherwise have affected earning capacity. The principle and the relevant considerations were identified by Barwick CJ in Arthur Robinson (Grafton) Pty Ltd v Carter as follows:
‘Ill health, unemployment, road or rail accidents, wars, changes in industrial emphasis, so that industries move their location, or are superseded by new and different techniques, the onset and effect of automation and the mere daily vicissitudes of life are not adequately reflected by merely - and blindly – taking some percentage reduction of a sum which ignores them.’ [(1968) 122 CLR 649 at 659].
It is to be remembered that a discount for contingencies or `vicissitudes' is to take account of matters which might otherwise adversely affect earning capacity and as Professor Luntz notes, death apart, `sickness, accident, unemployment and industrial disputes are the four major contingencies which expose employees to the risk of loss of income'. Positive considerations which might have resulted in advancement and increased earnings are also to be taken into account for, as Windeyer J pointed out in Bresatz v Przibilla, [(1962) 108 CLR 541 at 544] ‘(a)ll "contingencies" are not adverse: all "vicissitudes" are not harmful’. Finally, contingencies are to be considered in terms of their likely impact on the earning capacity of the person who has been injured, not by reference to the workforce generally. Even so, the practice in New South Wales is to proceed on the basis that a 15 per cent discount is generally appropriate, subject to adjustment up or down to take account of the plaintiff's particular circumstances.”
[37] In short, the purpose of a deduction for contingencies is to apply a discount to an assessment of future economic loss in order to account for future unknown matters which might detrimentally affect that earning capacity. In the employment context, where it is necessary to compensate an employee for the wrongful or unfair deprivation of employment, a deduction for contingencies is usually applied after an assessment has been made of the period the employee would have remained employed but for the termination of employment and that has been applied to an estimate of future earnings over that period. Importantly, the deduction for contingencies is applied to any future estimate of loss of employment earnings –that is, earnings that would be lost after the date of hearing – consistent with the principles stated in Wynn. If the assessment is that the employment, but for the termination, would only have endured for a short period ending before the date of the hearing, then a deduction for contingencies becomes irrelevant because the earning capacity of the employee over that part period is a known fact, not a hypothetical.”
A deduction for contingencies applies a discount to an assessment of future economic loss to account for future unknown matters, which might adversely impact on the anticipated future earning capacity. The deduction is usually applied after the assessment of the period for which the employee would otherwise have remained employed. It applies to any future estimate of loss of earnings. As indicated earlier there will always be some degree of significant speculation about any future estimate of lost earnings. This certainly applies in the present case, given the random nature of some of the behaviour involved. I accordingly consider that a reduction for contingencies should be made, and that a figure of 20% is appropriate in this case. This amount of $3,100.87 is to be deducted from the amount of $15,504.38, leaving an amount of $12,403.51.
Taxation
The amount of compensation awarded will be specified as a gross amount and it will be left to U Blinds to deduct any amount of taxation required by law.
Misconduct
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
The amount of $12,403.51 gross is less than the compensation cap of 26 weeks’ pay and no further adjustment of the amount is therefore necessary.
Conclusion
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 $12,403.51 is to be paid by U Blinds to Mr Ragan within 28 days of the date of this decision. An order giving effect to this decision is now separately issued.
COMMISSIONER
Appearances:
P Ragan, Applicant.
C Ralph for the Respondent.
Hearing details:
2019.
Melbourne:
July 1.
<PR714129>
[1] Fair Work Act 2009 (Cth) s 385.
[2] Fair Work Act 2009 (Cth) s 387.
[3] Applicant’s Outline of argument: merits, filed on 14 May 2019 at 3c.
[4] Email from Phillip Ragan to Chris Ralph, dated 18 February 2019.
[5] Email from Chris Ralph to Phillip Ragan, dated 18 February 2019.
[6] Letter from Angela Earley to Phillip Ragan, dated 18 December 2018.
[7]
[8] Respondent’s submissions at question 3c.
[9] Ibid question 3d.
[10] Ibid question 6a.
[11] Ibid question 6c.
[12] (1995) 185 CLR 410.
[13] Ibid, 465.
[14] [2011] FWAFB 7498.
[15] Ibid at [20].
[16] (1995) 62 IR 371.
[17] Ibid, 373.
[18] [2011] FWAFB 1166.
[19] Ibid at [24].
[20] [2013] FWCFB 6191.
[21] Ibid at [58].
[22] Print R4471 (AIRCFB, Ross VP, Polites SDP, Foggo C, 11 May 1999).
[23] Ibid at [19].
[24] Fair Work Act 2009 (Cth) s 392.
[25] Print R0235 (AIRCFB, Munro J, Duncan DP, Jones C, 24 December 1998) [(1998) 88 IR 21].
[26] [2013] FWCFB 431.
[27] Print S5109.
[28] Ibid.
[29] [2015] FWCFB 873.
[30] Ibid at [27].
[31] [2018] FWCFB 7394 at para [36] and [37].
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