Shannon Pitts v Delnorth Pty Ltd T/A Delnorth International Roadside Products

[2013] FWC 9818

[2013] FWC 9818

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Shannon Pitts
v
Delnorth Pty Ltd T/A Delnorth International Roadside Products
(U2013/10864)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 16 DECEMBER 2013

Application for unfair dismissal remedy - termination at initiative of employer - dismissal.

[1] On 26 June 2013 Mr Pitts lodged an unfair dismissal application pursuant to s.394 of the Fair Work Act 2009 (the FW Act) through which he sought relief with respect to the termination of his employment with Delnorth Pty Ltd T/A Delnorth International Roadside Products (Delnorth). The application was not settled through the Fair Work Commission (FWC) telephone conciliation process and was referred to me on 14 October 2013, for determination.

[2] The Delnorth position is that it did not dismiss Mr Pitts and, accordingly, Mr Pitts is not able to pursue the application.

[3] The matter was the subject of a Directions Conference on 22 October 2013. It was also the subject of a telephone hearing on 31 October 2013 for the purpose of considering a request for a grant of permission pursuant to s.596 of the FW Act. That request was made by Ms Kenny of National Workplace Lawyers. It was opposed by Mr Pitts. In that hearing I determined that the request for a grant of permission was approved pursuant to s.596(2)(a) on the basis that I was satisfied that legal representation of Delnorth would enable the matter to be dealt with more efficiently given the likelihood that this initial issue would require consideration of matters of some complexity. In reaching this conclusion I also took into account s.596(2)(b) with respect to the small size of the Delnorth business and the expectation that its General Manager would be required to give evidence. I also took into account issues of fairness given that Mr Pitts indicated that he would be unlikely to seek to be legally represented. In this respect I confirmed that Mr Pitts could request a delay in the proceedings in the event that he sought to access legal advice.

[4] The matter was the subject of a further telephone hearing on 27 November 2013 to deal with a dispute over Mr Pitts’ request for the provision of additional information which was sought in preparation for the determination of the initial issue. In the course of that telephone hearing I issued directions requiring the provision of certain of this information to Mr Pitts.

[5] The initial issue was the subject of a determinative conference in Adelaide on 5 December 2013. Mr and Ms Pitts participated in this conference and Delnorth was represented by Mr Donnelly of National Workplace Lawyers.

[6] The background to the initial matter to be determined is that Mr Pitts commenced employment with Delnorth as its Regional Sales Manager NT and SA in April 2011. In July 2012 his contract of employment was confirmed. There were a series of discussions by telephone and on a face-to-face basis between Mr Pitts and various Delnorth personnel in May 2013. The basis for, and content of those discussions are matters in dispute. Mr Pitts asserts that he was given no option other than to resign his employment on 24 May 2013. Delnorth dispute that this was the case.

[7] Mr Pitts’ evidence went to his employment with Delnorth including the events that led to the ending of that employment. His evidence extended to his current employment and the circumstances under which he gained employment with a separate business which has some association with Delnorth and which commenced on 24 June 2013.

[8] Mr Di Pierro’s evidence was unchallenged and went to his understanding from a discussion with Mr Pitts that Mr Pitts had been dismissed and his later receipt of an e-mail from Delnorth advising that Mr Pitts was on leave.

[9] Mr Pagacs is the Delnorth General Manager. His evidence went to reporting arrangements with respect to Mr Pitts, and concerns that he had about Mr Pitts’ commitment to the business. Mr Pagacs’ evidence extended to Delnorth’s intention to dismiss Mr Pitts but the subsequent steps it took to arrange for him to stay with Delnorth for a transition period on the basis that Delnorth understood that Mr Pitts was seeking to leave the business. Mr Pagacs’ evidence extended to his involvement in the events that culminated in Mr Pitts leaving Delnorth.

[10] Mr Baylis is the Delnorth National Sales and Marketing Manager. Mr Pitts reported to him. Mr Baylis’ evidence went to his dealings with Mr Pitts and concerns about his work approach. It also went to the actions he took in May 2013, and particularly on 20 and 21 May 2013 when he engaged in a number of meetings with Mr Pitts.

[11] Mr Hilton is the Delnorth Aboriginal Sales Manager Victoria and Tasmania. His evidence went to his conversation with Mr Pitts at a conference in late January or early February 2013.

[12] I have considered all of the evidence put to me in this matter, including various e-mails and documents.

Findings

[13] Section 386 states:

“386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

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

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

(b) the person was an employee:

(i) to whom a training arrangement applied; and

(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;

and the employment has terminated at the end of the training arrangement; or

(c) the person was demoted in employment but:

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and

(ii) he or she remains employed with the employer that effected the demotion.

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

[14] Mr Pitts can only pursue this application for unfair dismissal if the FWC is satisfied that he has been dismissed. 1 In order to reach a conclusion about whether Mr Pitts was dismissed consistent with s.386 I have reached a number of conclusions on the evidence before me.

[15] I have concluded that Mr Pitts was unhappy working with Delnorth. This is consistent with Mr Pitts’ evidence that he had applied for other jobs and the evidence of Mr Baylis. I have concluded that Mr Pitts was endeavouring to obtain alternative employment and that he was seeking employment with a business associated with Delnorth in early 2013. Whilst Mr Pitts denies this, my finding is consistent with the evidence of Mr Hilton and Mr Baylis. 2 I note in passing that this business was not an associated entity but was instead a customer and a part competitor with Delnorth.

[16] Mr Pitts’ evidence is that he obtained his current position with the business associated with Delnorth through a letter of offer made on 20 June 2013. His evidence was that:

“Mr Donnelly: you say, “I did not have a job or any work lined up prior to the end of my employment on 21 June 2013 despite Delnorth claiming so” ..... now that’s not true is it sir?

Mr Pitts: Like I said, there was a letter of offer made on the 20th of June.

Mr Donnelly: Now sir, I am not interested in when there was a letter of offer, because we all know in this room that contracts of employment can be made verbally and offers can be made before they are accepted. You are saying in that paragraph that you did not have a job or any work lined up. Now you are suggesting by that, aren’t you, that you hadn’t had an offer. If you hadn’t had any work lined up, you hadn’t had an offer. That’s correct, that is your position isn’t it?

Mr Pitts: That is correct.” 3

[17] I have concluded that Mr Pitts may have arranged his current job after he left the employment of Delnorth but I have accepted the evidence of Mr Baylis 4 to the effect that Mr Pitts agreed that he was negotiating with that business as at 20 May 2013. In this respect I have noted that Mr Pitts could have called the manager of that business to give evidence but did not do so. I have accepted Mr Baylis’ evidence that Mr Pitts agreed he was negotiating a position with this company in May.5

[18] Delnorth became concerned about Mr Pitts’ performance and commitment to his job in early May 2013. The evidence indicates that Delnorth decided to dismiss Mr Pitts but that it then adopted an alternative position based on establishing a transition arrangement given that it understood that Mr Pitts would be joining the business associated with it.

[19] Mr Baylis visited Adelaide on 20 May 2013 and met with Mr Pitts. He showed Mr Pitts an envelope and I have concluded that he conveyed the impression that this was a termination of employment advice. Mr Baylis’ evidence was that:

“At the commencement of the First Meeting I did have an envelope in my hand when I indicated to Mr Pitts that the Company was initially considering the termination of his employment. This might have suggested to Mr Pitts that a termination letter may have been in the envelope. In fact the envelope was empty. I had planned to do this in advance as from my years working with Mr Pitts, I thought that if I did not use the employ envelope approach - he would not have taken our discussion seriously. I wanted him to understand the seriousness of the situation and that the Company had genuinely initially considered terminating his employment.”

[20] Later that day Mr Baylis reported to Mr Pagacs by email in the following terms:

“I advised Shannon verbally that I was here to assist with his exit plan from the company.

He has told me last Wednesday 15th in general discussion that he was actively looking for another job and would “grab it with both hands” when a suitable one came up. His decision relates mainly to travel but he does struggle with being managed and accountability. He assured me that he “was not about to jump ship” and would “continue to give 100%.” He was not told anything about our decision to finish him up.

I advised him that as a result of his clear intention to leave the company supported by recent job applications on the company lap top, and his continued unacceptable personal use of the company lap top, the relationship was now unworkable. He was advised that our original decision for immediate dismissal had been reviewed after reconsidering the effect this may have on his family but that we would be advertising the role to prepare for his replacement.

Shannon advised that we had forced his hand on a recent job offer that was in negotiation but he that he would be seeking advice to find out if his actions constituted a sackable offence. They advised him not to resign but to accept a termination notice with all entitlements covered including any bonus due and to “leave the rest to them”. (sic)

Shannon’s wife Brooke was heavily involved which increased the emotive level against Delnorth but that is likely to settle down overnight.

Shannon advised that he had been in discussion with Craig Woods some time ago and that he was expecting a job offer “any day now”.

That has since occurred and Craig Woods called me concerned about how this may look and hoping that we could continue our business association and if anything, build on it in SA and NT with Shannon’s involvement. The position is internal sales, warehousing and distribution. No travel. Craig also stated that he would not want Shannon taking any action against Delnorth that could jeopardise our relationship. (They had talked earlier in the day)

I won’t document my discussion with you here George regarding the value of the SA business and the growth opportunities (Direct V Roadside) but will lodge the SEEK advert tomorrow as requested.

At this stage, Shannon has advised me that he will accept a termination notice and finish up tomorrow. Proposed letter follows.” 6

[21] I have concluded that the discussions between Mr Pitts and Mr Baylis subsequently became somewhat acrimonious and that Mr Pitts sought a payment from Delnorth which was rejected on 21 May 2013. 7

[22] On 21 May 2013 Mr Baylis advised Mr Pitts that Delnorth was not terminating his employment. Again, there followed acrimonious discussions. Mr Pitts handed in his company credit card. After some discussions he retained his company vehicle, telephone and computer. Mr Baylis wrote to Mr Pitts on that same day. 8

[23] Mr Pitts did not return to work. On 22 May 2013 he wrote to Mr Pagacs and expressed his concern about the approach adopted by Mr Baylis and requested further consideration of the termination payment of 12 weeks pay plus the bonuses he would have been entitled to for the months of May and June. Mr Pagacs responded to this matter on the same day expressing concern at Mr Pitts’ behaviour and actions. Mr Pitts provided a letter of resignation dated 24 May 2013. This stated:

“Dear George

Unfortunately given the recent events and the choice to either resign or be terminated, I hereby submit my resignation from my position as a Regional Sales Manager, effective four weeks from today.

Because I don’t understand why I have been forced to resign, I feel upset and betrayed. It was verbally indicated to me that I was in breach of my employment contract ‘by using my work laptop for personal use, and applying for a position with another company’. However I was given no right of reply in regards to this ‘breech’ or any written warning to this effect that a ‘breech’ had occurred. I feel that I have been targeted by management by voicing my concerns and unhappiness regarding recent events and the treatment of my colleagues and at times myself. In my view, this is unfair and wrongful termination and I will consult further with a lawyer.

After three years of service I am disappointed it has come to this and I wish I had been given the proper due process that I think I deserve. Please feel assured that when a replacement is hire, I will gladly explain what this position entails and how to fulfil each obligation properly.

George on a more personal note I appreciate your support over the last few days and understand that this isn’t your own doing or opinion and that you have been directed by the Directors accordingly.”

[24] Mr Pitts was provided with a deed of release prepared by Delnorth, dated 24 May 2013 but declined to sign this. Notwithstanding this, Mr Pitts was paid to 21 June 2013.

[25] I have concluded that Delnorth prepared a position advertisement for the job held by Mr Pitts on or around 21 May 2013 although this advertisement may not have been placed for some time after that date.

[26] None of the exclusions set out in ss.396(2) and (3) are relevant to this matter. Consequently the question of whether Mr Pitts was dismissed turns on whether his employment was terminated on the employer’s initiative including whether his resignation was forced because of the conduct engaged in by Delnorth.

[27] The concept of termination at the initiative of the employer was addressed by a Full Bench of the Commission at some length in O’Meara v Stanley Works Pty Ltd 9 in the following terms:

“[19] The circumstances in which a resignation, while apparently a termination of employment by the employee, nevertheless constitutes a termination at the initiative of the employer, have been considered in a number of cases. A prominent authority is the decision of a Full Court of the Federal Court of Australia in Mohazab v Dick Smith Electronics Pty Ltd (Mohazab). In that case, the employer made a threat that unless the employee resigned the employer would ask the police to charge the employee with an offence. The analysis of the concept of termination at the initiative of the employer by the Court in that case has not always been quoted in full. It is desirable that we do so in this case. After referring to dictionary definitions of the term “initiative” and the convention giving rise to the statutory provisions, the Full Court said:

“These definitions reflect the ordinary meaning of the word ‘initiative’. Viewed as a whole, the Convention is plainly intended to protect workers from termination by the employer unless there is a valid reason for termination. It addresses the termination of the employment relationship by the employer. It accords with the purpose of the Convention to treat the expression ‘termination at the initiative of the employer’ as a reference to a termination that is brought about by an employer and which is not agreed to by the employee. Consistent with the ordinary meaning of the expression in the Convention, a termination of employment at the initiative of the employer may be treated as a termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship. We proceed on the basis that the termination of the employment relationship is what is comprehended by the expression ‘termination of employment’: Siagian v Sanel (1994) 1 IRCR 1 at 19; 54 IR 185 at 201. In many, if not most, situations the act of the employer that terminates the employment relationship is not only the act that puts in train the process leading to its termination but is, in substance, the entire process. An example would be a situation where the employer decided to dismiss an employee and did so orally or in writing with immediate effect. Other situations may be more complex as exemplified by the circumstances considered by Moore J in Grout v Gunnedah Shire Council (1994) 1 IRCR 143; 57 IR 243 where an employee had given written notice purporting to terminate the employment relationship. The notice was not reasonable but was accepted by the employer which later refused to allow the employee to withdraw the notice. A question arose as to whether that was a termination of the employment at the initiative of the employer and his Honour held it was. His Honour said at 160-161; 259:

‘I have already said that Div 3 concerns termination at the initiative of the employer. The respondent submits that “initiate” means “to begin, commence, enter upon; to introduce, set going, or initiate”: see Shorter Oxford English Dictionary. In this matter, it is submitted, it was the applicant and not the respondent that initiated the termination by writing the letter of 18 May. This, in my opinion, gives the expression “termination” in the Act, read in conjunction with Art 3 of the Convention which speaks of “termination … at the initiative of the employer”, a narrow meaning that was not intended. A principal purpose, if not the sole purpose, of Div 3 is to provide an employee with a right to seek a remedy in circumstances where the employee did not voluntarily leave the employment. An employee may do some act which is the first in a chain of events that leads to termination. An example would be an employee who engaged in misconduct at work which ultimately led to the employer dismissing the employee. However, that situation and the present are not situations where the termination was at the initiative of the employee. In both instances the step or steps that effectively terminated the employment or purported to do so were taken by the employer.’

In these proceedings it is unnecessary and undesirable to endeavour to formulate an exhaustive description of what is termination at the initiative of the employer but plainly an important feature is that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship. This issue was addressed by Wilcox CJ in APESMA v David Graphics Pty Ltd (unreported, Industrial Relations Court of Australia, 12 July 1995, Wilcox CJ). His Honour, at p 3, referred to the situation of an employee who resigned because ‘he felt he had no other option’. His Honour described those circumstances as:

‘… a termination of employment at the instance [of] the employer rather than of the employee.’

And at p 5:

‘I agree with the proposition that termination may involve more than one action. But I think it is necessary to ask oneself what was the critical action, or what were the critical actions, that constituted a termination of the employment.’”

[20] Moore J, one of the members of the Full Court in Mohazab, addressed the question further in Rheinberger v Huxley Marketing Pty Limited (Rheinberger). His Honour said, after referring to extracts from Mohazab:

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

[21] In this Commission the concepts have been addressed on numerous occasions and by a number of Full Benches. In Pawel v Advanced Precast Pty Ltd (Pawel) a Full Bench said:

“[13] It is plain that the Full Court in Mohazab considered that an important feature in the question of whether termination is at the initiative of the employer is whether the act of an employer results directly or consequentially in the termination of the employment and that the employment relationship is not voluntarily left by the employee. However, it is to be noted that the Full Court described it as an important feature. It plainly cannot be the only feature. An example will serve to illustrate this point. Suppose an employee wants a pay rise and makes such a request of his or her employer. If the employer declines and the employee, feeling dissatisfied resigns, can the resignation be said to be a termination at the initiative of the employer? We do not think it can and yet it can be said that the act of the employer i.e. refusing the pay rise, has at least consequentially resulted in the termination of the employment. This situation may be contrasted with the position where an employee is told to resign or he or she will be terminated. We think that all of the circumstances and not only the act of the employer must be examined. These in our view, will include the circumstances giving rise to the termination, the seriousness of the issues involved and the respective conduct of the employer and the employee. In the instant case the uncontested factual findings are that the applicant had for almost the whole of his employment performed welding duties; that there was no objective threat to his health and safety involved in the requirement that he undertake welding duties so long as it was not on a continuous basis and that the welding he was required to do was not continuous.”

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

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

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

(references removed)

[28] I have concluded that Delnorth engaged in a course of conduct which forced Mr Pitts to resign his employment earlier than he would have otherwise intended. That conduct included showing him a letter which purported to be a termination of employment advice, telling him that the relationship was unworkable and commencing what turned out to be an unsuccessful negotiation process about a termination payment. That process was not reversed on 21 May 2013 in that I have concluded that the fundamental premise of the discussions between Mr Pitts and Mr Baylis was still based on a cessation of Mr Pitts’ employment.

[29] As the Full Bench indicated in ABB Engineering it may only be a narrow line that distinguishes conduct properly described as leaving an employee with no real choice but to resign from actions taken by the employee. In this matter the material before me indicates that Mr Pitts was likely to resign in any event. Notwithstanding this, Delnorth effectively took that decision out of his hands by its conduct on 20 and 21 May 2013.

[30] Accordingly, I have concluded that, for the purposes of s.386 Mr Pitts was dismissed and accordingly is able to pursue his unfair dismissal application. The application will accordingly be listed for arbitration.

[31] Is appropriate however that I indicate a degree of caution about future proceedings in support of this application. The evidence indicates that Mr Pitts was paid until 21 June 2013 and that he obtained alternative employment, albeit at a lower rate of pay from 24 June 2013. The evidence also gives rise to questions about the extent to which Mr Pitts’ behaviour may have represented a valid reason for the termination of his employment. This evidence gives rise to questions about the utility of further proceedings. Whilst I have no concluded view on any of these issues I am particularly concerned that the parties should recognise the potential for settlement of this application without the need for arbitration on the merits. To this end, I have referred the application to an alternative member of the Commission on the basis that the parties will be given an opportunity to participate in further conciliation with a view to resolving the matter. Participation in these proceedings will remain entirely voluntary but I urge the parties to objectively assess their respective positions.

Appearances:

S Pitts on his own behalf.

J Donnelly counsel for the respondent.

Hearing details:

2013.

Adelaide:

December 5.

 1 See s.385 of the Fair Work Act 2009

 2   Exhibit D2, para 10

 3   Transcript (sound file), 5 December 2013, 11:09:40

 4   Exhibit D2, para 20

 5   Exibit D2, para 20

 6   Exhibit P3 paras 2- 9

 7   Exhibit D2, para 38

 8   Exhibit D2, attachment JB4

 9   PR973462

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