Robert Harborne v Imtrade Australia

[2015] FWC 4297

[2015] FWC 4297

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Robert Harborne
v
Imtrade Australia
(U2014/12850)

DEPUTY PRESIDENT KOVACIC CANBERRA, 26 JUNE 2015

Application for relief from unfair dismissal.

[1] Mr Robert Harborne (the Applicant) lodged an application under s.394 of the Fair Work Act 2009 (the Act) which was received by the Fair Work Commission (the Commission) on 25 September 2014 alleging that the termination of his employment by Imtrade Australia T/A Imtrade Australia (Imtrade - the Respondent) on 12 September 2014 was harsh, unjust or unreasonable. The application was heard on 9 February 2015.

[2] For the reasons set out below, I have found that Mr Harborne’s termination was not harsh, unjust or unreasonable and therefore dismiss the application.

Background

[3] Imtrade produces and sells a range of chemicals used in agricultural production. Mr Harborne commenced employment with Imtrade on 16 December 2013 as Imtrade’s New South Wales Sales Manager. In that role, Mr Harborne reported to Mr Andrew Alexander, Imtrade’s National Sales Manager.

[4] A Performance Evaluation Review was conducted by Mr Alexander with Mr Harborne in early May 2014. The Review identified a number of areas where Mr Harborne had not met elements of his job description. Two areas were identified in this regard:

“PERFORMANCE DEFICIT

• Monthly Sales Report requires greater detail in planning and reporting with focus on call plan, product forecasts and sales forecast based on sales history, product forecast backorders



• Production promotion through industry forums, product demonstrations and field trials”

[5] The Review report identified a number of required actions for Mr Harborne, e.g. “Continue to progressively promote innovative product and scale back on commodities” and “Targeted product suite focus required with forward planning to secure ongoing sales/forward orders”. Mr Harborne signed the Review report stating that he accepted the required actions. Mr Harborne’s response stated “Engage & committ to extended trial programme.”

[6] Further feedback was provided to Mr Harborne by Mr Alexander on 16 June 2014 and 5 August 2014 by email.

[7] Mr Harborne received notice of his termination in a letter from Mr Alexander dated 25 August 2014 which stated:

“We consider that your performance is still unsatisfactory and have decided to terminate your employment for the following reasons:

• Failure to meet planning and reporting functions to a required level



• Failure to achieve forecasted sales results”

[8] Mr Harborne’s dismissal took effect on 12 September 2014.

Harborne’s Case

[9] Mr Harborne submitted that his sales forecasts were not achievable due to a number of factors, including:

• product line unavailability - in his application Mr Harborne cited a number of products which were not available, resulting in orders being cancelled or not placed;



• the closure of Imtrade’s Wagga Wagga depot which resulted in increased transport costs for clients and in turn lead customers to source product from alternative suppliers;



• the pricing of products;



• quality issues with some products; and



• drought conditions in northern New South Wales.

[10] With regard to his alleged failure to meet planning and reporting functions, Mr Harborne submitted that reporting was never fully explained to him initially, though he did acknowledge that instruction on how to do it better was provided at the early May 2014 Performance Evaluation Review meeting.

[11] At the hearing Mr Harborne stated that during the period of his employment with Imtrade there were fifty one instances where product was not available. This he contended represented about 30 per cent of total products in his sales forecasts. As a result, Mr Harborne submitted, he was powerless to achieve his sales targets. Mr Harborne further submitted that at no stage was he given any formal warning about his sales performance or that, in the absence of improved sales, his employment was at risk. Mr Harborne contended that the discussion at both the three monthly and six monthly performance reviews focused solely on reporting and in particular what needed to be included in his monthly reports. Mr Harborne maintained that he had attended to these requirements.

[12] As to the issue of remedy, Mr Harborne was seeking financial compensation, submitting that he had lost in the order of $20,000 in commission payments over a three month period due to product unavailability. He advised the Commission that he had commenced in a new job on 20 September 2014 with the remuneration for that position being $10,000 per annum higher than what he was paid at Imtrade, though at Imtrade he was also eligible for sales commission equal to 5 per cent of gross profit.

Imtrade’s Case

[13] Imtrade submitted that it had discussed its concerns regarding poor sales with Mr Harborne over a period exceeding four months. It further submitted that the issue of reporting was explained to Mr Harborne both at his induction and on numerous occasions in the lead up to the May 2014 Performance Evaluation Review.

[14] Imtrade submitted that its decision to terminate Mr Harborne’s employment was as a result of his inability to sell target product lines at a time when Imtrade sales of those target products in every other State was exceeding expectations. Imtrade also stated that any product that was not available for sale was not included in Imtrade sales expectations for Mr Harborne, adding that product supply is never guaranteed. Imtrade acknowledged that drought conditions in northern New South Wales and southern Queensland would have impacted on Mr Harborne’s sales.

[15] Imtrade further stated that it sought to understand why sales of its key target product lines were not being achieved in New South Wales. This saw Mr Alexander invest additional time in understanding Mr Harborne’s inputs, which resulted in Imtrade’s focus on the detail of the monthly reports that Mr Harborne submitted. What became apparent from that process according to Imtrade was a continued lack of focus by Mr Harborne on the promotion and development of Imtrade’s target product lines. Imtrade contended that Mr Harborne put an inordinate amount of time and focus on products that were either not available or of no interest to Imtrade, predominantly due to their financial viability.

[16] Imtrade also submitted that it made many attempts to assist Mr Harborne in achieving the required level of performance. This included a counselling interview, written confirmation of interview, formal and informal reviews before the decision to terminate Mr Harborne’s employment was made. In those circumstances, Imtrade submitted that the application had no reasonable prospect of success.

[17] At the hearing Imtrade reiterated these submissions and:

• emphasised that in its discussions about sales with Mr Harborne the focus was more about his product focus rather than the dollar value of sales;



• reiterated that Mr Harborne spent a lot of time promoting products which had a high volume but low profit margin, adding that this ran counter to Imtrade’s focus on selling innovative products;



• stated that the focus on selling innovative products had been discussed at Imtrade’s national sales conference in December 2013 which was attended by Mr Harborne prior to his commencing employment with Imtrade;



• cited the example of one innovative product, Paratrooper, which had sales of less than 100 litres in New South Wales, whereas over 120,000 litres was sold nationally at the same time;



• stated that as result of the performance feedback it provided to Mr Harborne he would have had a very clear understanding of its expectations of him and that following the May 2014 Performance Evaluation Review there was no misunderstanding that Mr Harborne’s job was at risk unless his performance improved;



• contended that this was subsequently reiterated to Mr Harborne;



• highlighted by way of comparison that Imtrade had exceeded its sales and gross profit targets by 18% nationally at a time when sales in New South Wales were struggling;



• stated that not once in the six months leading up to his dismissal had Mr Harborne achieved his sales targets;



• emphasised that Mr Harborne’s sales targets were largely set by himself, with some regard had to sales history;



• stated that in addition to its inventory system, the weekly sales meetings convened by Mr Alexander discussed what products were on order and had been/were about to be produced.

[18] On the issue of remedy, Imtrade submitted that it was not clear to it what remedy Mr Harborne was seeking given that he had commenced a new job days after his employment with Imtrade ceased. Imtrade further submitted that Mr Harborne had informed it that he was to commence in his new role on 15 September 2014, i.e. the Monday after his employment with Imtrade ceased.

The statutory framework

[19] The Commission exercises its discretion in relation to an application for an unfair dismissal remedy pursuant to Part 3-2 of the Act. In this case there is no contest that Mr Harborne is a person who is protected from unfair dismissal pursuant to s.382 of the Act. In the context of this matter, the relevant provisions of the Act are ss. 385 and 387 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.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388

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.”

[20] There is no dispute that Mr Harborne was dismissed, so s.385(a) of the Act is satisfied. Mr Harborne contends that his termination was harsh, unjust or unreasonable, so s.385(b) is relevant. Imtrade is not a small business employer, therefore s.385(c) is not relevant. The termination was not a case of redundancy, so s.385(d) does not apply. Therefore, in determining whether Mr Harborne was unfairly dismissed, I must consider whether the dismissal was harsh, unjust or unreasonable as per s.385(b).

Was the dismissal harsh, unjust or unreasonable?

[21] In considering whether a dismissal was harsh, unjust or unreasonable, the Act requires the Commission to have regard to the criteria set out in s.387. I will address each of those criteria separately.

(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)

[22] In Rode v Burwood Mitsubishi (Rode’s Case) 1a Full Bench of the then Australian Industrial Relations Commission (AIRC) canvassed the meaning of valid reason in the context of the relevant provisions of the Workplace Relations Act 1996 citing Selvachandran v Peteron Plastics Pty Ltd.2 The following is an extract from the Full Bench’s decision in Rode’s Case.

“[17] In relation to the meaning of “valid reason” the following remarks of Northrop J in Selvachandran v Peteron Plastics Pty Ltd are relevant:

“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 wellfounded; a valid reason’.

In its context in s 170DE(1), the adjective `valid’ should be given the meaning of sound, defensible or wellfounded. 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, see what was said by Wilcox CJ in Gibson v Bosmac Pty Ltd, when considering the construction and application of a s 170DC.” ⁴

[18] While Selvachandran was decided under the former statutory scheme the above observations remain relevant in the context of s.170CG(3)(a). A valid reason is one which is sound, defensible or well founded. A reason for termination which is capricious, fanciful, spiteful or prejudiced is not a valid reason for the purpose of s.170CG(3)(a).

[19] We agree with the appellant’s submission that in order to constitute a valid reason within the meaning of s.170CG(3)(a) 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] Based on the material before the Commission it is clear that there were a number of factors which made sales in New South Wales difficult. These included the acknowledged drought conditions in northern New South Wales and product availability issues. These factors are relevant considerations in determining whether or not there was a valid reason for dismissal.

[24] On the other hand, there does appear to have been a disjuncture between Mr Harborne’s focus on high-volume, low margin products and Imtrade’s focus on selling innovative products. Further, the quality of Mr Harborne’s planning and reporting appears to have been an area of ongoing concern to Imtrade. This is reflected not only in the May 2014 Performance Evaluation Review but also in Mr Alexander’s emails to Mr Harborne of 16 June and 5 August 2014. For example, the June 2014 email stated, inter alia:

“I believed following our discussion during the review process that you understood the level of detail required however you continue to submit reports that are considered to be below standard showing a lack of preparation and thought.

On previous occasions I have provided you with example from other states as a benchmark so this time will further clarify the required detail to assist you.”

[25] Mr Harborne’s response was “Andrew understand ... will get the next one to the standard.”

[26] The August 2014 email stated:

“When planning for your weekly teleconference, please ensure you spend time preparing the required input and distribute in advance ... as you are often still underprepared and therefore disorganised for the teleconference, e.g. Late submission of your monthly sales plan last week, no agronomic problem or solution the previous week, July State Sales plan had no forecast etc. these are the basics required each month and are visible to your colleagues and management so need to reflect the level of experience you bring to the role.”

[27] It is also worth noting that Mr Harborne’s sales targets were in part developed from his monthly reports and sales history. In other words, the quality of Mr Harborne’s monthly reports also influenced his sales targets. Further, issues relating to product supply and purchasing were discussed at the weekly sales meetings convened by Mr Alexander. This would have enabled Mr Harborne to assess and identify product availability issues.

[28] Taking into account all of these factors, I am satisfied that there was a valid reason for Mr Harborne’s dismissal. Drawing on the language of the decision in Rode’s Case, I am satisfied that the reasons for Mr Harborne’s termination are defensible or justifiable on an objective analysis of the relevant facts and were not “capricious, fanciful, spiteful or prejudiced.”

(b) Whether the person was notified of that reason

[29] As noted at paragraph [7] above, the reasons for Mr Harborne’s dismissal are set out in the letter providing him with notice of his termination. Importantly, those reasons reflect the performance concerns which were first raised with Mr Harborne in the May 2014 Performance Evaluation Review and which were subsequently reinforced in the mid-June and early August 2014 emails from Mr Alexander. Aspects of those performance concerns as set out in those emails have also been set out above.

[30] This supports a finding that Mr Harborne was notified of the reasons for his dismissal.

(c) Whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person

[31] Mr Harborne’s capacity or conduct was not a factor in his dismissal. I therefore consider this factor not to be a relevant consideration.

(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

[32] There was no termination meeting as Mr Harborne was informed of Imtrade’s decision to dismiss him by letter. In those circumstances, this factor is not a relevant consideration.

(e) If the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal

[33] As previously noted Imtrade first raised its performance concerns with Mr Harborne in the May 2014 Performance Evaluation Review. The material before the Commission suggests that the purpose of the Performance Evaluation Review discussion was to try and assist Mr Harborne to improve his sales performance and the quality of his planning and reporting. Despite the market difficulties existing in New South Wales, I accept that Mr Harborne was given sufficient opportunity and guidance on how he might improve his performance in these areas. The mid-June 2014 email in particular sets out in some detail Mr Alexander’s expectations as to the required content for Mr Harborne’s monthly reports (see paragraph [24] above).

[34] While it is disputed whether Imtrade made it clear to Mr Harborne that unless his performance improved that his employment was at risk, the above supports a finding that Mr Harborne had been advised of Imtrade’s concerns regarding his performance and was given both assistance and an opportunity to address those concerns. Further, Mr Harborne’s response to the feedback he received in the May 2014 Performance Evaluation Review and the mid-June 2014 email indicates that he acknowledged Imtrade’s concerns.

[35] This weighs against a finding that Mr Harborne’s dismissal was harsh, unjust or unreasonable.

(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

[36] Imtrade has less than 30 employees. However, no submissions were made by either Imtrade or Mr Harborne on this factor. Against that background, it is not a relevant consideration.

(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

[37] Again no submissions were made by either Imtrade or Mr Harborne on this factor. As such, it is not a relevant consideration.

(h) Any other matters that FWC considers relevant

[38] Mr Harborne submitted that he had been misled by Mr Alexander in a number of respects during the recruitment process for his job with Imtrade. Specifically, Mr Harborne submitted that Mr Alexander had advised him in response to a number of questions that he put to him that the expectation of Imtrade’s gross profit in New South Wales for 2014 was a minimum of $1.2 million and that in December 2013 there was already around $800,000 of orders in the system. To the extent that this was not the case, one can understand Mr Harborne’s displeasure. However, these factors did not, have any direct relevance to Imtrade’s decision to dismiss Mr Harborne.

[39] Accordingly, I find that there are no other relevant considerations.

Conclusion

[40] Drawing on the above analysis, I find that despite the difficult market conditions in New South Wales, there was a valid reason for Mr Harborne’s dismissal related to his performance, that Mr Harborne was notified of Imtrade’s concerns about his performance, that he was given an opportunity and assistance to improve his performance, and that there are no other relevant considerations.

[41] For all these reasons I do not consider that Mr Harborne’s dismissal was harsh, unjust or unreasonable. Accordingly, I dismiss the application. An order to this effect is attached at PR568750.

[42] Finally, I would mention that on 18 June 2015 Mr Harborne emailed the Commission’s Canberra office inquiring as to the status of his application. In the ensuing email exchange, Mr Harborne advised the Commission on 19 June 2015 that he forgot to mention that “Imtrade negated due process and actually advertised my position before I was terminated.” This was clearly not an issue raised in the hearing on 9 February 2015 and was not an issue on which Imtrade had an opportunity to respond to. For reasons of completeness, I would indicate that in those circumstances and in view of the fact that the issue was raised after the application had been heard and a decision reserved, the Commission has not had any regard to that allegation. For the Commission to have regard to the allegation would be completely inappropriate in those circumstances.

Appearances:

The Applicant on his own behalf.

Mr Andrew Alexander for the Respondent.

Hearing details:

2015.

Canberra:

February 9.

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