Robert Dix v Premium Beverage Solutions Pty Ltd

[2013] FWC 1880

[2013] FWC 1880

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Robert Dix
v
Premium Beverage Solutions Pty Ltd
(U2012/16400)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 28 MARCH 2013

Application for Unfair Dismissal Remedy - person protected from unfair dismissal - extension of time - effective date of dismissal.

[1] On 6 December 2012 Mr Dix lodged an application pursuant to s.394 of the Fair Work Act 2009 (the FW Act), through which he sought relief with respect to what he alleged was the unfair termination of his employment with Premium Beverage Solutions Pty Ltd (PBS). The application was not resolved through the conciliation process and was referred to me for determination.

[2] I convened a determinative conference in Adelaide on 25 March 2013. Before commencing this conference I invited the parties to consider whether the matter might be able to be settled between the parties. No agreement was achieved. At this conference Mr Dix represented himself. Mr Rae, of counsel requested permission to represent PBS. After hearing the parties I declined this request. I did so on the basis that I was not satisfied that Mr Rae’s involvement would enable the matter to be dealt with more efficiently. Additionally, I saw no reason why the director of PBS, Mr Ricci could not outline his position and because Mr Dix was appearing for himself and was not represented. Consequently, PBS was represented by its director, Mr Ricci.

[3] The background to the determinative conference is that I held a directions conference on 21 February 2013. Following the directions conference I issued Directions which required both parties to provide to the Commission and to each other, by 18 March 2013, an outline of their respective positions and witness statements for each and any witnesses to be called. Mr Dix complied with this requirement. PBS provided information on the last working day before the determinative conference. Notwithstanding that Mr Ricci was not able to provide a logical explanation for his delay in this respect, I have taken this information into account.

[4] Before commenting on the evidence in this matter, I observe that I found Mr Dix to be a marginally more credible witness to Mr Ricci and have tended to prefer his evidence to the extent of inconsistencies.

[5] Mr Dix and Mr Ricci each hold a 50% shareholding in PBS. At the time of the inception of the business Mr Dix and Mr Ricci were joint directors. Mr Dix and Mr Ricci were also both employees of PBS. Mr Dix advised that he ceased being a director in mid-2012 and was then referred to as Sales Director. Whilst Mr Dix asserted that he advised the regulatory authorities of this, no evidence to this effect was given to me. Mr Dix asserts that his employment ceased on 23 November 2012 on the basis that he provided formal advice to Mr Ricci on 16 November 2012 to the effect that he had received only 1.5 weeks salary during the period 3 September 2012 to 13 November 2012 and that he had been “locked out” of the business from September. This correspondence concluded on the basis that he requested confirmation of his employment status by 23 November 2012.

[6] The evidence of Mr Dix was that, no response was received to this letter and that, on 26 November 2012, Mr Dix’s work mobile telephone was diverted to a PBS telephone.

[7] Mr Dix’s evidence was that he undertook sales and promotional duties. Mr Dix described the progressive deterioration of his relationship with Mr Ricci. This included the extent to which he was “locked out” of the business premises by Mr Ricci. Mr Dix asserts that he was limited in his capacity to achieve sales in a difficult economic climate and because he was denied access to the PBS premises. Mr Dix’s evidence was that Mr Ricci misused his position as Director and that he misapplied PBS funds to his personal advantage.

[8] Mr Ricci’s position was that around April 2012 he became aware that Mr Dix was not meeting his responsibilities as Sales Director and raised these issues with him. In or around July 2012 Mr Ricci became aware of what he described as unauthorised absences from work. On 5 September 2012 Mr Ricci asserts that he gave Mr Dix an e-mail warning in the following terms: 1

“Due to our current position; car/fuel allowance is now $100p/w and within the coming weeks your wages will also be reduced.

I advise you (Rob) to prepare yourself as I see no positive outlook at this stage unless you for fill your responsibilities in getting new clients as we agreed when starting this partnership. Otherwise I’ll have no choice to terminate you as an employee and employ someone else for which you will only be a silent partner.

15 months has now passed since I first spoke to you about signing up new clients, so no more excuses, finger pointing, smoke and mirror stories.

You have till the end of September!” (sic)

[9] Mr Ricci asserts that in the telephone discussion on 11 September 2012 he sought from Mr Dix an explanation of the poor sales record for which he was responsible. 2

[10] Mr Dix’s salary was subsequently reduced to an annual salary of $20,000 with an hourly rate of $10.1215. Mr Dix was not paid wages or superannuation from 8 October 2012 although wage payments from that date until 21 November 2012 were paid to Mr Dix just before the determination conference, on 23 March 2013.

[11] Mr Ricci asserts that he terminated Mr Dix’s employment on 15 November 2012 when he sent to him a text message in the following terms:

“Great English in messages I will use one of your great terms you have become the cancer that you will bring death to the business. No matter what I say you always gonna fingerprint it on me or someone else and you cannot accept it is you. Time for you to wake up and accept reality.” (sic)

[12] Section 396 requires that I decide various specified initial matters before I consider the merits of Mr Dix’s application. Consistent with this section, I have initially considered whether Mr Dix was a person protected from unfair dismissal.

[13] Section 382 states:

“382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

Note: High income threshold indexed to $123,300 from 1 July 2012”

[14] Mr Dix has provided to me evidence of payments to him by PBS described as wages. These payments may well give rise to questions about compliance with minimum employment standards. However, they indicate that Mr Dix was an employee and that he had accepted the role of Sales Manager with greater managerial authority held by Mr Ricci. I am satisfied that Mr Dix was an employee for the purposes of the FW Act and that he was a person protected from unfair dismissal. I consider it most likely that Mr Dix’s employment was regulated by the Commercial Sales Award 2010, but in any event, he was well beneath the high income threshold.

[15] I have considered whether an extension of time requires consideration in these circumstances. I am satisfied that, notwithstanding the cessation of weekly payments to him in October 2012 Mr Dix continued to regard himself as an employee for some weeks after that. I have concluded that his joint ownership of the business supported such a conclusion. Mr Dix’s evidence was that he continued to take orders and phone calls until late October 2012.

[16] I have considered whether the text message sent to Mr Dix on 15 November 2012 can be taken as advice of termination of his employment. Mr Ricci’s position is that this represented instant dismissal. I cannot agree. The text message is consistent with the robust communications exchanged between Mr Dix and Mr Ricci over some time. It does not say that Mr Dix is dismissed.

[17] On 16 November 2012 Mr Dix sent the following advice to Mr Ricci:

“1) The following has been noted;

(a) I Mr Robert Dix I am a full time employee of Premium Beverage Solutions Pty Ltd.

(B) I have received 1.5 week’s salary from Premium Beverage Solutions Pty Ltd over the period 3/09/2012 up to 13/11/2012 equivalent to ten (10) pay cycles.

(C) On Friday the day of September 2012 in due course of routine activities I became aware that he had been effectively ‘Locked out’ of the business and until this date have not been able to gain access to company resources.

(D) I have not received a notice of termination for my position at Premium Beverage Solutions Pty Ltd.

It is requested you indicate in writing whether I, Mr Robert Dix is still an active employee of Premium Beverage Solutions Pty Ltd. A response is required to be received by close of business Friday 23rd of November to the above stated address or I will have no choice but to consider myself dismissed.” (sic)

[18] Mr Dix received no reply to this advice. His telephone arrangements were cancelled on 26 November 2012. Consistent with the 16 November 2012 letter, I have taken it that the termination of Mr Dix’s employment was confirmed to him by the absence of any advice from PBS by 23 November 2012 and that this is the date from which the dismissal took effect. Accordingly, the application was lodged within the time limit then specified in the FW Act.

[19] I am satisfied that Mr Dix’s employment was terminated at the initiative of the employer and that it was not an initiative of his own making.

[20] There is no dispute that, at the time of the termination of Mr Dix employment, PBS employed fewer than 15 employees. Hence consideration of the Small Business Fair Dismissal Code (the Code) is necessary in this situation. A checklist operates to enable employers to demonstrate compliance with the Code. In this situation the checklist was not completed. Accordingly, I have considered the application of the Code to the circumstances of this matter.

[21] The Code states:

“The Fair Dismissal Code provides a simple explanation of when a dismissal will be deemed to be fair by the Fair Work Commission. The Code applies to businesses that employ less than 15 employees.

Summary dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal.

Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other dismissal

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

The employee must be warned beforehand. This warning can be given verbally or preferably in writing. It must be clear when giving the warning that the employee risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning. The employer must also give the employee a reasonable chance to fix the problem. Fixing the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Employers must be able to prove they followed the Code

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

Employee can have someone present at meetings

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

[22] Mr Ricci regarded his text message of 15 November 2012 as advice of summary dismissal. No basis for summary dismissal consistent with the Code has been made out to me. For a dismissal to be a summary dismissal I consider that an employee must be told this is the case. Absent such advice, the termination of Mr Dix’s employment must fall into the “Other Dismissal” category set out in the Code. I have considered the operation of the Code in this context.

[23] Mr Ricci’s advice to Mr Dix of 5 September 2012 3 makes it clear that he is concerned about Mr Dix performance in the sales function. However, the evidence of both Mr Dix and Mr Ricci establishes that at around this same time Mr Dix was denied entry to the PBS work facility. I am unclear as to the extent to which this limited Mr Dix’s capacity to obtain additional sales but accept his evidence that this may have been the case. Further, it is clear that the parties engaged in a sometimes acrimonious telephone discussion on 11 September 2012 which included reference to Mr Dix’s work performance. In this discussion Mr Dix detailed his position to the effect that he had substantially met any reasonable requirement of him. In terms of Mr Dix’s work performance in the sales function I have concluded that he was warned of the risk of dismissal. I am not satisfied that he was provided with a realistic opportunity to respond to that warning or a reasonable chance to rectify the problem given Mr Ricci’s refusal to let him access the PBS building.

[24] I have considered other possible reasons for the termination of Mr Dix’s employment. These include the inappropriate language used in various discussions between Mr Dix and Mr Ricci. In this respect I am satisfied that both men used language of this nature such that reliance on it to terminate Mr Dix’s employment would be fundamentally inconsistent. I have considered the extent to which Mr Dix undertook travel to Port Augusta in July 2012 but, as this issue was subsequently discussed between he and Mr Ricci I am not satisfied that it formed a basis for the termination of his employment some months later.

[25] I have considered whether the termination of Mr Dix’s employment should reasonably be regarded as a case of genuine redundancy notwithstanding that Mr Ricci asserted this was not the case. Mr Ricci advises that the reason for the cessation of payments, including superannuation to Mr Dix was that PBS did not have funds sufficient to make those payments. This gives rise to questions about the capacity of PBS to continue to trade. However, leaving aside those issues I have concluded that Mr Dix’s dismissal occurred because the relationship between he and Mr Ricci completely broke down and Mr Ricci concluded that Mr Dix was not meeting reasonable performance expectations.

[26] Had those performance expectations been clearly established and agreed with Mr Dix and had the process of review of them been demonstrably fair, the Code requirements could have been met and the application may have been dismissed. However, this is not the case.

[27] I have concluded that the termination of Mr Dix’s employment has not been shown to be consistent with the Code. Of itself, this does not make the termination of Mr Dix employment unfair but it requires that I have regard to the factors set out in s.387 of the FW Act. This section 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.”

[28] I have considered each of these criteria.

Valid Reason

[29] I have applied the general principle set out by Northrop J in Selvechandron v Petersen Plastics Pty Ltd, 4 notwithstanding changes in the legislation since that time, in the following terms:

“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 reasons 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 treated fairly.”

[30] I am not satisfied that PBS has established a valid reason for the termination of Mr Dix’s employment. It is clear that a failure to reach reasonable sales targets could form a valid reason for termination of employment. In this case, I am not satisfied that reasonable sales targets were specified or that Mr Dix was able to achieve those targets given the extent to which he was subsequently denied access to the employer’s premises.

[31] In other, more normal workplace environments, Mr Dix’s behaviour may have represented a valid reason for the termination of his employment. For example, his language in referring to Mr Ricci in derogatory terms could, but for Mr Ricci’s similar approach, be regarded as a valid reason for the termination of his employment.

[32] Equally, Mr Dix’s undertaking of other work without PBS approval may have formed the basis for a valid reason for the termination of his employment if it were not for the fact that this event occurred some months earlier.

Notification of the reason

[33] I am not satisfied that Mr Dix was properly notified of the reason for the termination of his employment. Further, the decision to cease payments to Mr Dix without advising him of this must be regarded as an unfair and inappropriate business practice.

Opportunity to respond

[34] I am not satisfied that Mr Dix was given an opportunity to respond to the proposition that his employment should be terminated. This issue was compounded by the unexplained absence of wage payments to Mr Dix after 8 October 2012.

Any unreasonable refusal to allow a support person

[35] Mr Dix did not request a support person but his capacity to do so was impacted by the absence of a proper opportunity to respond.

Warnings about unsatisfactory performance

[36] I am satisfied that Mr Dix was warned that his performance was below Mr Ricci’s expectations but, as I have already indicated, I am not satisfied that he was given a fair opportunity to improve that performance.

Size of the Employees Enterprise - likely impact on dismissal procedures

[37] PBS is a very small employer and I am satisfied that its size mitigates against any sophisticated approach to termination of employment. Further, the disintegration of the relationship between Mr Dix and Mr Ricci as owners of the business compounded this issue.

Absence of dedicated human resource management specialists or expertise

[38] I am satisfied that PBS did not have access to dedicated human resource management expertise as a source of advice about the termination of Mr Dix’s employment and have taken this issue into account.

Other factors

[39] I have noted allegations made by Mr Dix relative to Mr Ricci’s misuse of PBS funds and his position. It is not necessary that I reach a conclusion relative to these allegations in this matter.

[40] I have also noted the extent of the acrimony between Mr Dix and Mr Ricci about ownership of the PBS business and various propositions that Mr Dix might be bought out by Mr Ricci as this relationship further soured. It is quite possible that some of these issues impact on the termination of employment decision but it is not necessary that I have regard to this at this time.

Conclusion - harsh, unjust or unreasonable

[41] I have concluded that the termination of Mr Dix’s employment was harsh in that the process followed was inherently unfair, it was unjust in that actions taken by PBS to restrict him from access to the PBS workplace were not taken into account and it was unreasonable in that before Mr Dix was made aware of the termination of his employment, payments to him were stopped. For these reasons, I have concluded that the termination of Mr Dix’s employment was harsh unjust and unreasonable and hence, for the purposes of s.395, Mr Dix was unfairly dismissed.

Remedy

[42] Mr Dix has not sought reinstatement and it is clear that the poisoned relationship between he and Mr Ricci is such that reinstatement, which is the primary remedy available in the circumstances, would be inappropriate.

[43] Mr Dix has devoted considerable effort in his submissions to me in arguing for six months pay as compensation for the termination of his employment. However the FW Act does not commence from the premise that the maximum amount of compensation in lieu of reinstatement should be considered in circumstances such as this.

[44] Whilst I am satisfied that an order for compensation in lieu of reinstatement should be made in these circumstances, section 392 sets out the criteria to which I must have regard for the purposes of consideration of such an order. This section states:

“392 Remedy—compensation

Compensation

....

(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.”

[45] The evidence of Mr Ricci is that the PBS business is currently solvent but that it is progressively paying off a substantial Australian Taxation Office tax account. Further, the circumstances which led to the cessation of payments to Mr Dix in October 2012 give rise to concerns about the financial viability of the business. I have taken these concerns into account in reaching a conclusion about any amount due to Mr Dix.

[46] Mr Dix has been an employee of PBS since its inception. I have taken this into account in considering and assessing any amount due to him.

[47] Had Mr Dix not been dismissed in November 2012 I consider that the duration of his employment could only have been relatively short lived. The relationship between Mr Dix and Mr Ricci had seriously disintegrated. At that stage Mr Dix was still “locked out” of the PBS premises, he communicated only sporadically with Mr Ricci and the two men demonstrated substantial distrust of each other. At most, I would have thought the relationship might continue for a further two months.

[48] Mr Dix advised that since the termination of his employment he had applied for some seven jobs and had one interview. He has also registered with an online recruitment agency. I do not consider this to represent a significant effort at obtaining alternative employment and have discounted the amount due to Mr Dix accordingly.

[49] On the working day before the determinative conference in this matter PBS paid Mr Dix his wages for the period from 8 October 2012 to 24 November 2012. Mr Ricci advised that further payments of superannuation monies due to Mr Dix were yet to be made. I have taken these wage amounts into account. I have not taken any superannuation payments into account.

[50] I do not consider there is any reasonable likelihood of further earnings between the date of the determinative conference and the issuing of any order in this matter.

[51] Finally I have noted that Mr Dix is a 50% shareholder in PBS and that accordingly he will share in the financial fortunes of that business.

[52] I am not satisfied that the amount which I consider should be paid to Mr Dix should be reduced as a result of misconduct on his part.

[53] I have applied the approach set out in Sprigg v Pauls Licensed Festival Supermarkets 5 and have concluded that an amount of four week’s pay is appropriate in lieu of reinstatement. An Order [PR535194] to this effect will be issued.

SENIOR DEPUTY PRESIDENT

Appearances:

R Dix on his own behalf.

P Ricci for the Respondent.

Hearing details:

2013.

Adelaide:

March 25.

 1   Exhibit PB1, PRR2

 2   Ibid, PRR3

 3   Ibid, PRR2

 4 (1995) 62 IR 371 at 373

 5   AIRC, Print R0235, (24 December 1998).

Printed by authority of the Commonwealth Government Printer

<Price code C, PR535192>