Sophie Cohen v Consolidated Insurances Pty Ltd
[2019] FWC 976
•14 FEBRUARY 2019
| [2019] FWC 976 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Sophie Cohen
v
Consolidated Insurances Pty Ltd
(U2018/8953)
COMMISSIONER SIMPSON | BRISBANE, 14 FEBRUARY 2019 |
Application for unfair dismissal – jurisdictional objection – was the business a small business for the purpose of the Small Business Fair Dismissal Code – did the Respondent have associated entities – did failure to adhere to company policy amount to serious misconduct – error did not amount to misconduct – Respondent had valid reason for dismissal – application dismissed.
[1] This matter concerns an application under s.394 of the Fair Work Act 2009 (the Act) by Ms Sophie Cohen who alleges that the termination of her employment with Consolidated Insurances Pty Ltd (the Respondent) was unfair.
[2] Ms Cohen submitted that she commenced employment with the Respondent on 26 July 2017 until her dismissal on 14 August 2018. There is no dispute Ms Cohen satisfied the minimum employment period required to bring the application.
[3] The Respondent said Ms Cohen was terminated for serious misconduct, due to her breach of the Respondent's Australian Financial Services License and her inability to accept the warning provided in relation to the seriousness of this breach. Ms Cohen submitted her dismissal was unfair because the written warning she received contained incorrect facts and because she was treated differently to other employees.
[4] The Respondent raised a jurisdictional objection on the basis it employed less than 15 employees at the time of Ms Cohen’s dismissal, and that the dismissal complied with the Small Business Fair Dismissal Code (the Code). Ms Cohen disputed this and submitted the company employed 16 employees at the time of her dismissal.
[5] The matter was listed for Hearing before me on Monday 3 December 2018 in Brisbane. Ms Cohen was represented by Mr S.A Mackie of Counsel instructed by MJT Law. Mr Jeff Forbes, Account Director, appeared for the Respondent.
Was the Respondent a Small Business?
[6] The first question I must consider is whether the Respondent is a Small Business for the purpose of s.388 of the Act. Under s.23(1) of the Act, a national system employer is a small business employer at a particular time if the employer employs less than 15 employees.
[7] In its outline of argument, the Respondent submitted that at the time of Ms Cohen’s dismissal, it had 9 employees, including two directors. In its submissions, the Respondent provided that the following people were employees:
1. | Sophie Cohen | Full-time |
2. | Reena Karayil | Full-time |
3. | Debbie Blanco | Full-time |
4. | James Allen | Full-time |
5. | Karen Barton | Part-time |
6. | Taidhg Flanagan | Part-time |
7. | Julie Urban | Full-time |
8. | Jeff Forbes | Director |
9. | William Paull | Director |
[8] Ms Cohen submitted that at the time of her dismissal the Respondent had 18 employees. Ms Cohen referred to section 23(3) of the Fair Work Act 2009 (Cth) (“the Act”) that states for the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity. Ms Cohen also referred to section 12 of the Act which provides that ‘associated entities’ has the meaning given by s.50AAA of the Corporations Act 2001 (Cth) (“the Corps Act”).
[9] Section 50AAA(1) of the Corps Act provides that one entity (the associate ) is an associated entity of another entity (the principal ) if subsection (2), (3), (4), (5), (6) or (7) is satisfied. Ms Cohen submitted that subsections (2), (3), (5), (6) and (7) are satisfied in this case. 1
[10] The Respondent later conceded that another entity “may be considered an associated entity” bringing the total number of employees to 13. 2
[11] Under cross-examination, Mr Forbes confirmed the following people as direct employees of the Respondent:
• Reena Karayil
• Debbie Blanco
• Karen Barton
• Sophie Cohen
• James Allen
• Taidgh Flanagan
[12] Mr Forbes gave evidence that he and William Paull were working directors of the Respondent, and did not dispute that they were also considered employees. This brings the total of undisputed employees to 8.
[13] During cross examination when asked about Julie Urban, Mr Forbes said she was “Sort of an employee. I am unsure how to answer that.” Mr Forbes said Ms Urban was the widow of Craig Summerville, who was a long serving employee who had since passed away. He said Ms Urban had been receiving a wage, though did not have any responsibilities. However the Respondent did not directly contest that she was an employee for the purpose of s23(3). I am satisfied that Ms Urban should be classified as an employee, bringing the total number to 9.
Consolidated Insurances Central Queensland Pty Ltd
[14] Mr Forbes gave evidence that the following people were employees of a company called Consolidated Insurances Central Queensland Pty Ltd (QICQ), that could potentially be an associated entity of the Respondent:
• Cyndie Gusdorf
• Matt Ballantyne
• Daniel Roussounis
• Lyn Schumann
[15] Mr Forbes said that QICQ had a 50 per cent ownership by the William Paull Family trust. He said that William Paull also owns 50 per cent of the Respondent. 3
[16] Mr Forbes did not give any direct evidence on whether (2),(4),(5),(6), or (7) applied in this case. Mr Forbes appeared to indicate that (3) could apply as the Respondent could potentially control CICQ due to William Paull having a 50 per cent stake in both companies.
[17] Section 50AA of the Corporations Act 2001 (“the Corporations Act”) reads as follows in relation to control:
“(1) For the purposes of this Act, an entity controls a second entity if the first entity has the capacity to determine the outcome of decisions about the second entity’s financial and operating policies.
(2) In determining whether the first entity has this capacity:
(a) The practical influence the first entity can exert (rather than the rights it can enforce) is the issue to be considered; and
(b) Any practice or pattern of behaviour affecting the second entity’s financial or operating policies is to be taken into account (even if it involves a breach of agreement or a breach of trust).
(3) The first entity does not control the second entity merely because the first entity and a third entity jointly have the capacity to determine the outcome of decisions about the second entity’s financial and operating policies.
(4) If the first entity:
(a) has the capacity to influence decisions about the second entity’s financial and operating policies; and
(b) is under a legal obligation to exercise that capacity for the benefit of someone other than the first entity’s members;
the first entity is taken not to control the second entity.”
[18] Key to this matter is whether there was a capacity, in accordance with the definition in section 50AA(1), for William Paull, one of two directors of the Respondent, to determine the outcome of decisions of CICQ. The evidence establishes he had a 50 per cent stake in CICQ.
[19] On the limited evidence before me I am satisfied that Mr Paull was capable of influencing CICQ’s financial and operational policies. Mr Paull is a qualifying shareholder giving him the capacity to exert control over CICQ.
[20] I am satisfied for the reasons above that CICQ is an associated entity of the Respondent. I am satisfied Cyndie Gusdorf, Matt Ballantyne, Daniel Roussounis and Lyn Schumann can be included as employees for the purpose of s23(3) and this brings the total number of employees to 13.
[21] During the Hearing the parties agreed that five names remained that were in contention. 4 The parties agreed that it was these names that had the potential to sway the issue one way or another, if I was mined to accept that the employees from CICQ were in.5 These names included:
• Terry Brown
• Oscar Whittaker
• Ruth Berry
• Sherryl Todd
• Belinda Kelly
[22] Mr Forbes gave evidence during cross examination that Belinda Kelly has not been an employee since December 2017, long before Ms Cohen was terminated. He said she was never an employee of an associated entity. 6 During cross-examination I asked Mr Mackie if there was any contest about the fact Ms Kelly was not an employee at the time of Ms Cohen’s dismissal. Mr Mackie did not directly contest this evidence.7
[23] I accept the Respondent’s evidence that Ms Belinda Kelly was not an employee at the time of Ms Cohen’s dismissal. This leaves Brown, Whittaker, Berry and Todd.
Brown, Whittaker, Berry, and Todd
Graph
[24] Ms Cohen submitted evidence in the form of a graph 8 that shows the number of policies that people have bound in the Respondent’s portal, SVU.9 It was put to Mr Forbes that the purpose of the graph was to let employees know how they were performing. Mr Forbes said it is a graph that was released to employees once to show usage of the system. He said it included expired employees because it's an IT system with legacy users still listed.10 Mr Forbes agreed it was sent to a set number of employees but said it was also sent to other people in the business who were representatives as well.11
[25] It was put to Mr Forbes that the people on the graph were people that were closing policies for the business. Mr Forbes said that it showed people who were closing policies under his licence, which may have been for his business or their own business. 12
[26] It was put to Mr Forbes that he would have an oversight of how people were using his licence. Mr Forbes said he had this in the form of a representative agreement for everyone who is qualified to provide insurance advice. 13 He said there were two levels of contracts entered into. The first is the corporate authorised representative agreement that is made with the corporate entity, that sets out the conditions upon which commission will be paid, the dates and duties on that business to ensure its employees meet the standards set down. Mr Forbes said that direct employees of that corporate entity may also have a subordinated licence where they have direct authority from him to operate and provide advice. This is known as the “standard authorised representative agreement.”14
[27] Mr Forbes agreed that he had the power to terminate representative agreements, and if these contracts were terminated, it would have a significant impact on the businesses, but denied that the power to terminate meant he had significant control over those businesses. 15
[28] Mr Forbes also denied that any business operating under his license was an associated entity, for the reason that each of the businesses operating under his licence could move to a different licensee. 16
[29] Mr Forbes gave evidence that the corporate structure was set up in the following way:
“…we effectively operate, for want of a better term, like a franchise. We have head office-owned stores which is my direct employees and we have other people who I set down the conditions upon which they might act, who can use my name, use my licence to be able to provide financial services legally. I note those are what we refer to as "authorised representatives." Now the people who are in my direct business are also representatives of my licence, being direct employees, but they are also employees, as I have the day-to-day control over how they go about implementing those tasks. The others - like, whether you call them franchisees or subcontractors - are a step removed from the business, where they own their own portfolios and if they wish to, they could move to another licensee...”
[30] Mr Forbes agreed that Sheryl Todd was on the graph, and binds policies under the licence. He said however that that Ms Todd owns the policies that she binds and that that is the distinguishing point. Mr Forbes said that she has her own entity, owns those policies and owns those clients. 17
[31] Mr Forbes agreed that Ms Todd, Oscar Whittaker, Terry Brown and Ruth Berry were shown on the graph. 18 He also agreed that the graph was sent to an email address “CIB all staff” which included Oscar Whittaker, however denied that this meant the people on that list were employees.19
LinkedIn and Website
[32] Ms Cohen submitted into evidence a series of LinkedIn printouts. It was submitted that on Oscar Whittaker’s page it says he is an accountant at Consolidated Insurance Brokers and that on his cover photo it included a picture of CIB staff wearing the same uniform. It was also submitted that Sheryl Todd, the alternative director of the Respondent, had the same photo on LinkedIn as Oscar Whittaker and that her title was listed as director of Consolidated Insurance Brokers.
[33] Ms Cohen also submitted a print out of the website into evidence and submitted that Ruth Berry and Sheryl Todd were both listed as Branch Managers.
[34] Mr Forbes said that how people present themselves on LinkedIn is not necessarily an accurate reflection of the legal position with Sherryl Todd being the prime example. Mr Forbes said she is an alternative director of Consolidated Insurance Brokers but is the working director and operator of Consolidated Insurances Sunshine Coast Pty Ltd being the actual entity that she owns and operates through. He said she has elected on LinkedIn not to portray herself in that fashion and as representative of the business under its licence, he did not see any reason that she needs to make that distinction for the ordinary course events for retail clients. 20
[35] In relation to the website Mr Forbes said that the reason it was set up was from a marketing perspective to make the Respondent appear “better and bigger” to its clients and also from a compliance perspective because if they had their own websites, he would need to ensure they were adhering to everything. He said that doesn't reflect the fact that there are employees he has no direct control over, a relationship where he can set the targets and tell them what to do versus people who are just simply licensing the use of his name. 21
[36] I am satisfied that Mr Forbes has been able to provide a solid explanation to each of the propositions put by Ms Cohen. Mr Forbes has demonstrated that a difference exists between employees of his business, and those who operate under his license. The key difference being that apart from an ability to terminate a representative agreement, the Respondent does not have any direct control over those representatives. I accept the Respondent’s evidence that the people listed on the graph are not necessarily employees of the Respondent.
[37] Further, I am satisfied Mr Forbes has provided a satisfactory explanation as to why there are “non-employees” of the Respondent that appear to be treated indistinguishably from its employees. It is not uncommon for businesses to market themselves as being larger than they are and this does not always reflect the accurate corporate structure. I accept his evidence that it is not necessary to make the distinction for retail clients.
[38] I am of the view that the evidence in relation to the graph at S07, the website and LinkedIn pages does not in itself demonstrate that Terry Brown, Oscar Whittaker, Sheryl Todd or Ruth Berry are employees of the Respondent.
[39] Mr Forbes gave evidence that Terry Brown was an independent operator, being the only person that works in a solo capacity. Mr Forbes said he works from home and owns his portfolio. Mr Forbes said when Mr Brown retires the Respondent will likely purchase Mr Brown’s portfolio and take over his clients. 22
[40] There was no further evidence put forward by Ms Cohen to show that Mr Brown was an employee of an associated entity. For that reason I am satisfied Mr Brown is not an employee for the purpose of s.23(3).
[41] Mr Forbes said that Ruth Berry and Oscar Whittaker were employees of Consolidated Insurances Sunshine Coast Pty Ltd, which is operated by Sheryl Todd. 23
[42] It was not disputed that Ms Todd was the director of Consolidated Insurances Sunshine Coast Pty Ltd, and also an alternative director for the Respondent. It was also not disputed that Ms Todd was the mother of William Paull or the ex-mother-in-law of Mr Forbes.
[43] Ms Cohen submitted that it was for this reason, Consolidated Insurances Sunshine Coast Pty Ltd should be classified as an associated entity of the Respondent.
[44] Mr Forbes said Ms Todd is appointed as an alternative director to provide continuity for the business in the event of either director becoming incapacitated. He said she does not work for or have access to the Respondent’s clients. 24 He said that although she is a family member, financially and legally, everything she does for her business is completely separate and she has to direct employees.
[45] Ms Cohen argued that Mr Forbes admitted that there is a complex network of companies; that there is a close relationship between some of the people in these companies, including that the director of one company is the mother of the director of the respondent. 25
[46] I asked Mr Mackie during his closing submissions to demonstrate the influence that the Respondent would have over Consolidated Insurances Sunshine Coast Pty Ltd. Mr Mackie responded that it was Ms Cohen’s argument that there is an obvious influence between a parent and their child. 26 It was submitted that Mr Forbes has admitted that there is a relationship and there is a contractual relationship with powers in it. It was submitted there was a level of control, and that there is a question mark, how heavy that control is. It was submitted for Ms Cohen therefore that while that question mark remains, the respondent has not discharged their onus.
[47] I am not satisfied Ms Cohen has provided the Commission with satisfactory evidence to show that the Respondent had control over Consolidated Insurances Sunshine Coast Pty Ltd. There needs to be more evidence than that of a family relationship to show the Respondent had practical influence over CISC for the purpose of s50AA.
[48] For the reasons above I am satisfied the Respondent has satisfied its onus of establishing itself a small business for the purpose of the Code.
Did the Respondent Comply with the Small Business Fair Dismissal Code?
[49] Ms Cohen submitted that in the event the Commission should find the Respondent was a small business that it did not comply with the Small Business Fair Dismissal Code (SBFDC).
The Respondent submitted it complied with the code because:
“Employment was terminated summarily based on a belief that the applicant’s conduct was sufficiently serious to justify immediate dismissal.”
[50] Ms Cohen submitted that the issue here was that she was not summarily dismissed, and was in fact paid two weeks’ notice. Ms Cohen submitted that her termination letter expressly refers to clause 5.1.1 of her employment contract, which deals with dismissal on notice, and not 5.1.3 which deals with dismissal “without notice or payment in lieu of notice” in the event of “Serious Misconduct.” 27
[51] It was put to Mr Forbes that the fact the termination letter referred to 5.1.1 and not 5.1.3 was because he did not terminate her for serious misconduct. Mr Forbes disagreed and said he elected to pay notice as an ex gratia payment and phrased it to her in that particular perspective. 28 Mr Forbes maintained throughout cross-examination that although the letter referred to 5.1.1, he was exercising his right under 5.1.3.
[52] In the Respondents Form F3 it provided submissions 29 that stated:
“A decision was made by Jeff Forbes to terminate the applicant’s employment on the above basis, and termination was invoked under clause 5.1.1.
Clause 5.1.3. gave the respondent a right to terminate without any notice period in cases of serious misconduct. The respondent did not invoke this right and instead paid the applicant her full 2 weeks’ notice and did so at a 100% FTE rate, rather than the applicant’s standard 35 hour working week.” 30
[53] It was put to Mr Forbes that Ms Cohen was not dismissed without notice or without pay in lieu of notice. Mr Forbes said she was dismissed without notice and an ex gratia amount was paid. He said the amount paid was different to what is stated on that letter. The amount paid was more than that, and that it was ex gratia. 31
[54] In relation to summary dismissal, the SBFDC sets out as follows:
“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.”
[55] I agree with Applicant’s position on this point. It is clear from both the termination letter and the Respondent’s own submissions that the Respondent was exercising its right under 5.1.1 of the employment contract, and was not exercising its right under 5.1.3 to summarily dismiss Ms Cohen. Further, it is clear that Ms Cohen was not dismissed without notice as she received two weeks’ wages upon her termination. Whether that is classified as notice or an ‘ex gratia’ payment is not relevant.
[56] I am not satisfied that Ms Cohen was summarily dismissed and as such, this section of the SBFDC does not apply.
Other dismissal
[57] In relation to other dismissal, the SBFDC provides as follows:
“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 verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.
The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.
Procedural Matters
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.
A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including 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.”
[58] Ms Cohen submitted that the SBFDC dealing with other dismissals was not satisfied because the reason was not a valid reason, she was not given reason for why she was at risk of being dismissed, the reason was not in relation to her conduct or capacity, she was not warned she was at risk of being dismissed and she was not given an opportunity to respond or an opportunity to improve her performance.
[59] I am satisfied from the evidence, which will be addressed in greater detail below, that the Respondent did not give Ms Cohen the reason she was at risk of being dismissed or warn her that she was at risk of being dismissed without improvement. On that basis the SBFDC does not apply and it is necessary to determine whether the dismissal was unfair in accordance with s.387 of the Act.
Valid Reason
[60] The Respondent submitted that Ms Cohen was terminated for misconduct because of her failure to accept the seriousness of a policy breach identified on 08 August 2018. 32 It submitted that Ms Cohen failed to properly close an insurance policy, meaning that the client was not insured and the Respondent was in breach of its Australian Financial Services License.
[61] The Respondent submitted this was the second instance where Ms Cohen had made an error of this nature, and that a formal warning was issued. The Respondent submitted that it was ultimately Ms Cohen’s response to the written warning that lead to the decision to terminate her employment on the basis it had formed the view that Ms Cohen had no real understanding of her prior error, or the seriousness of the breach.
[62] Ms Cohen submitted that the reason for her dismissal was because of her complaint that the warning she received on 8 August 2018 was inaccurate and unfair. 33 She said it was inherently unfair for the Respondent to invite a response if she did not agree with the warning, and then dismiss her for doing so.34
First Error - 25 January 2018
[63] The Respondent submitted that on 25 January 2018 Mr Forbes identified an error whereby Ms Cohen failed to “close” cover with the insurer for a client. The Respondent submitted that the identification of the error from Jeff Forbes to William Paull showed the perceived importance of this matter between the directors identifying it as a “massive breach” which needed to be addressed. 35
[64] The Respondent submitted that as this was the first error of this nature, Jeff Forbes sat down with Ms Cohen and discussed the magnitude of the error and that although no formal warning would be issued, it could not happen again or it would be dealt with formally. Further training was again provided on this to further outline the importance of closing policies. 36
[65] Ms Cohen submitted that it was apparent that her colleagues were also unintentionally failing to close policies, and that Mr Paull had advised the insurer of the issue. Ms Cohen said she was not the only Account Executive in this position. The Applicant submitted Mr Paull identified that “lots of policies” were “not being closed”. 37
Second Error – 8 August 2018.
[66] The Respondent submitted that on 8 August 2018, Mr Forbes was made aware of an error made by Ms Cohen where she again failed to “close” an insurance policy for a client.
[67] The Respondent submitted that a client informed Mr Forbes that no payments had been drawn on a policy which Ms Cohen had prepared on behalf of the respondent in March 2018. The insurer then advised that the policy had been sent back electronically, and Ms Cohen had not “imported” the policy down the Sunrise system as required to close it. The Respondent submitted that Ms Cohen contended that the policy was made “manual” instead and that she was not aware the policy should have been imported.
[68] The Respondent submitted that regardless of which is correct, if Ms Cohen’s assertion that it was “manual” was her true belief, then she should have sent a manual closing and saved it to file. No such closing was generated or sent, giving the respondent no basis on which to argue with CGU that cover should have been arranged.
[69] The Respondent submitted this meant the client was not insured and the respondent was in breach of their Australian Financial Services License.
[70] The Respondent submitted that Ms Cohen advised she did not know she had to send closings for domestic policies.
[71] The Respondent submitted that on 27 September 2017 Ms Cohen was taught after making a previous error with CGU on a manual home insurance policy (the exact same situation as the current one) to “make a note of what you did or I instructed you to do (e.g. you received manual terms from Jeff who instructed to renew without remarketing as premises unoccupied and closing sent to CGU to bind).” 38
[72] The Respondent submitted that it expects that any person who claims to have a Tier 1
Qualification, is eligible to sign a Representative Agreement and who has been specifically advised on several occasions in the course of her employment as to the importance of sending closings, should be able to keep appropriate records to ensure the clients she represents have the insurance they were advised they held.
[73] The Respondent submitted that it reminded Ms Cohen via email dated 08 August 2018 4:13PM of the prior failure (the 25 January error) and advised that if Ms Cohen did not have any saved records, a formal warning would be issued.
[74] The Respondent submitted Ms Cohen responded saying “Ok sorry. That’s fine.” Ms Cohen did not dispute this.
[75] The Respondent submitted that a warning was prepared for Ms Cohen on Friday 10 August 2018 – however Ms Cohen was attending a work sponsored conference day, and the respondent was aware the warning would not be read until Monday.
[76] On Monday at close of business, Ms Cohen responded to the warning to advise she would not be accepting it on the basis that:
i. She did not accept she did not meet the requirements of her position;
ii. The information in the warning was not correct;
iii. The warning was unfair because it did not line up with the same treatment of other employees received: and
iv. She had been requesting an annual review for several weeks with no response, only to be told that it would be cheaper to offshore the processing, effectively making her job redundant.
[77] In her response to the written warning, Ms Cohen stated that her treatment was unfair in comparison to other employees on the basis that:
1. Another employee had copied and pasted credit card details into ‘Winbeat’ which cannot be removed and there was no repercussion;
2. Fines that were being deducted from her bonuses differ from the fines being imposed on other employees;
3. No new contract had been provided to advise what is expected of her since the change in her role last year;
4. She had been moved to another location due to being bullied by another employee; and
5. NTI policies were not getting closed across the board and that an email had been sent to everyone advising of this to the insurer who agreed closings were hard to see.
[78] The Respondent submitted that Ms Cohen’s response at point 5 was of significant concern. It did not dispute that an email had been sent, however said this was in relation to a different NTI product (marine rather than transport) and was completely unrelated to the major breach identified prior with TRANSRP.
[79] The Respondent said that it was on reading this, that it formed the view that Ms Cohen had no real understanding of her prior error, or the seriousness of her breach if she was able to confuse it with another system wide matter. It argued she appeared to have no recollection of the discussions held in late January regarding this matter, or how it then developed her KPI schedule.
[80] The Respondent submitted that her assertion at point 3 of having “no new contract to advise what is expected of me” lent further evidence to her failure to recall this discussion, despite her direct involvement and request to change to her working hours to a 35 hour working week as part of these same discussions.
[81] Mr Forbes said it was at this point he was no longer comfortable that Ms Cohen was capable of meeting her duties outlined in Section 4 of her Representative Agreement (Attachment 3) and moved to terminate her authority under Section 11.1(b) which occurs where “the Representative commits a breach of any term or provision of this Agreement which could reasonably jeopardise the reputation or goodwill of the Principal or any of its Associates or cause the Principal to be in breach of any of its obligations or responsibilities pursuant to the Regulatory Laws.”
[82] The Respondent submitted this position is consistent with the breaches recorded in the respondent’s ASIC Breach Register.
Evidence
[83] Mr Forbes asked Ms Cohen if she recalled the January error that was made with an NTI policy where the informal warning that was given. Ms Cohen responded that she vaguely recalled this. 39 It was put to Ms Cohen that she seemed to be conflicted in her understanding that the January incident related to an NTI transport package rather than NTI marine policy. Mr Forbes asked Ms Cohen if she was aware of the difference between those two types of policies. Ms Cohen responded “That's because I vaguely remember it.”40
[84] Mr Forbes proceeded to explain to Ms Cohen the nature of her error in January 2018 in relation to an NTI transport policy, and the nature of the email sent referring to problems with closing NTI marine policies. 41 Mr Forbes asked Ms Cohen if she understood that those two are different matters. Ms Cohen responded “Same insurer, same system”42 and that they were “both through Sunrise”.43
[85] It was put to Ms Cohen that it was a different system using a different interface and a different button to hit close. Ms Cohen said she couldn’t recall. 44
[86] Mr Forbes said that upon discovering Ms Cohen’s first error of this nature, he sat down with Ms Cohen and discussed the magnitude of this error, and advised her that if the error happened again it would be dealt with formally. 45 Mr Forbes said Ms Cohen received further training on this issue.
[87] Mr Forbes said that Ms Cohen’s complete lack of understanding of the different classes was one of the bases upon which he formed his opinion to dismiss. Mr Forbes said the NTI policy he had referred in his informal warning was for a transport operators' package, and he said there was no scope for that being a problem across the board. Mr Forbes said Ms Cohen didn't understand that she had made the mistakes previously and didn't understand the mistakes now. 46
[88] Ms Cohen conceded she was not well versed with the NTI systems. 47 It was put to Ms Cohen that if this was the case, then she should not have sent it directly to a client without any checking or without cc'ing in the account manager that was in charge of that particular policy. When asked if she recalled that it was standing instructions on renewals to cc the account manager, Ms Cohen appeared to give vague answers and inferred that she could not recall this.48
[89] Ms Cohen agreed that closing a policy, is something that everyone should know to do as an experienced insurance broker 49 and that there are different ways of closing policies depending on the different systems that are used.50 Ms Cohen also agreed that for a manual policy a closing must be sent.51
[90] It was put to Ms Cohen that she had received emails from Mr Forbes across the course of her employment asking her to save closings emphasising that it was critical to save closings and identifying errors where she had not closed policies where they have been noted on audit. Ms Cohen said recalled “a couple to save my closings to files and sending closings, that's it.” 52
[91] Ms Cohen made references to closing policies over the phone. 53 Mr Forbes asked Ms Cohen if she recalled the compliance manual that was on the intranet. Ms Cohen said “To be honest, I – it's not like something I'd look at every day.”54
[92] Mr Forbes referred to page 20 of the compliance manual where it is noted there that you must always send closings for all non-Sunrise policies this includes SVU policies, and that once the closing has been sent save to hard drive. He also referred to highlighted text within the original that says “This is non-negotiable and failure to do this is a breach of compliance.”
[93] Mr Forbes asked Ms Cohen whether she recalled that this would be the standard practice across the business for everything to do with closing a policy:
PN 403 Do you recall that that would be the standard practice across the business for everything to do with closing a policy?---No.
PN 404 But you do recall that the staff user guide was something which was printed out for you during the induction?---Yes.
PN 405 And which you were expected to familiarise yourself with?---Yes.
PN 406 And to operate in accordance with that as you would within any brokerage trying to preserve their professional indemnity insurance?---Yes.
[94] It was put to Ms Cohen that she had conceded in her email dated 10 August, and her submissions dated 25 September that she had made a mistake and not closed the policy. In Ms Cohen’s updated sworn statement however, she now says, “I do not believe I would have left it not bound.” The discrepancy was put to Ms Cohen
PN 409 How is it that you have changed your position on this matter?---I haven't. I told you that before was after the fact when you put your submission in.
PN 410 But this is subsequent, so we had a - - -?---I'm talking about that moment in time.
PN 411 On 8 August you accepted that you had made a mistake and apologised on an email and it was agreed a warning would be provided?---Mm-hm.
PN 412 To which you responded, "Okay, sorry", something to that effect. On 25 September you accepted in your submissions in reply a concession that you had not closed the policy, and that it had resulted in a breach for our AFSL?---Correct.
PN 413 Subsequent to that now in Friday you are contending that you do not believe you would have left it not bound?---I don't.
PN 414 So why did we have a concession at the time and a month subsequent to your leaving employment where you were conceding that?---That's my statement of what happened and I don't believe that I've left it not bound. I was replying to your submission.
[95] It was put to Mr Forbes that sending and saving a closing was a separate action to closing a policy. 55 Ms Cohen’s representative put it to Mr Forbes that it was the act of communicating to the insurer, orally or otherwise, that closed the policy.56 Mr Forbes disagreed and said the act of sending the email was what closed the policy, and saving the email was for evidentiary purposes.
[96] It was also put to Ms Cohen that the representative agreement that she signed included a termination clause where a breach occurs which could reasonably jeopardise the reputation or goodwill of the principal or breach its obligations or responsibilities pursuant to the regulatory laws. Ms Cohen conceded that the breach she had admitted to, was a breach of one of the regulatory laws to which the representative agreement could lead to termination. 57
[97] Mr Forbes referred to Ms Cohen’s submission in her initiating application that the reasons for her dismissal put forward by Consolidated Insurances were not the real reasons for her dismissal, but rather that she was terminated to reduce the costs of operations. 58 Ms Cohen said she did not recall this submission.59 When provided with a physical copy of her submissions, Ms Cohen still could not recall that this was her original argument in relation to her unfair dismissal application.60
[98] Mr Forbes referred to point 1 in Ms Cohen’s response to the written warning where she referred to another employee who had copied and pasted credit card details into Winbeat, and asked Ms Cohen how she thought this related to her written warning. Ms Cohen responded “It was a comparison. So I was getting a warning and other people weren't getting warnings for serious breaches of data” and that this was “quite serious.” 61
[99] Mr Forbes also put it to Ms Cohen that in relation to the different penalty structure, another employee was fined differently because they had only been there for half a year as opposed to 15 years. Ms Cohen said this should not matter and penalties should be the same. 62
Incentive Structure
[100] Ms Cohen referred to the “Key Performance Indicators” (KPIs) document established by the Respondent. She submitted that it was for establishing benchmarks and punishments for Ms Cohen’s behaviour regarding closings. Ms Cohen made submissions that the document provided that unclosed policies would result in a total loss of bonus, however said nothing about disciplinary action. 63 Ms Cohen submitted that by suddenly adding disciplinary action over and above the monetary penalties, the Respondent was “shifting the goal posts in an unfair way.
[101] Mr Forbes said that Ms Cohen’s description of the KPIs document that was the only penalty that would apply to an employee was “ludicrous.” 64 He said the document was specifically designed to incentivise and provide a bonus for an employee. He said if certain elements of that were not met then that bonus would be discounted. He said it was something designed for Ms Cohen to enhance her performance and try and encourage good behaviour.
[102] Mr Forbes said the KPI document was for the purpose of awarding the bonus only, and that the deduction of such a bonus was not the extent of action that could be taken. He said the KPI document doesn't state that she will not have other penalties or things imposed upon her. He said the issue of her employment was a separate issue.
[103] I accept the Respondent’s submission that the KPI document was for the purpose of awarding bonuses only. I accept that the issue of Ms Cohen’s employment was a separate matter and that the Respondent was entitled to take further action for any serious breach.
Consideration – Valid Reason
[104] For the reasons explained above, I accept Ms Cohen’s error did not amount to serious misconduct. However, I am satisfied on the evidence that it provided the Respondent with a valid reason for dismissal.
[105] I found Ms Cohen’s recollection of the events to be vague and it appeared that when direct propositions were put to Ms Cohen about her error, she advised she only vaguely remembered or could not recall.
[106] Ms Cohen said she only vaguely remembered the first error and the informal warning that she was given. When asked if she understood the difference between an NTI transport package and an NTI marine policy, Ms Cohen said she vaguely remembered. After further explanation by Mr Forbes that it was a different system using a different interface and a different button to close policies, Ms Cohen said she could not recall.
[107] Mr Forbes’ evidence that he sat down with Ms Cohen and explained the nature of her error, and provided her with further training, was not contested.
[108] I prefer the evidence of Mr Forbes that Ms Cohen was warned about the first error and the gravity of the situation was explained to her. It appears Ms Cohen deliberately avoided giving direct evidence on this so to avoid making any admission that she had previously been warned. I also accept that she was provided with further training.
[109] Ms Cohen’s vague answers as to whether she understands the difference between the NTI systems leads me to form the view that either Ms Cohen was aware of the difference and was attempting to avoid any admission or acceptance that she made a mistake, or, that she still does not understand the difference between the systems.
[110] Either way, the evidence is concerning that either Ms Cohen does not seem to accept her error, or does not understand the difference between the systems after 15 years’ experience using these systems and further training from the Respondent.
[111] In relation to the issue of whether Ms Cohen properly closed the policy in relation to the second error, I prefer the evidence of the Respondent.
[112] Mr Forbes’ evidence that in order to properly close an insurance policy, it must be sent in writing to the insurer is consistent with the compliance manual.
[113] It is not entirely clear to me whether Ms Cohen accepts she failed to close the policy or not. She provided conflicting evidence on this point.
[114] In any event, I do not accept Ms Cohen’s argument that closing an insurance policy can be done by the act of orally communicating the closing to the insurer. The compliance clearly states the communication must be in writing. By her own admission, she had not familiarised herself with the compliance manual, and perhaps if she had done this, she would have been aware that written communication was required.
[115] I accept the Respondent’s evidence that an email must be sent in order for a policy to be closed. I am satisfied on the evidence, that in relation to the error that was discovered on 8 August, that Ms Cohen had failed to properly close the insurance policy for the client.
[116] I accept the Respondent’s submission that failing to close an insurance policy for a client is an error that could result in dire consequences for the business. It means clients who believe they are insured, are not in fact covered, and are left exposed to the possibility of drastic financial consequences. It is simply not acceptable for employees to be making repeated errors of this kind.
[117] Ms Cohen, someone with 15 years’ experience in this industry has made this error twice. What is more concerning is that Ms Cohen still does not appear to understand or accept the gravity of the errors she has made. The Respondent was given no indication from Ms Cohen that she would not make this same error again in the future.
[118] I accept the Respondent had a valid reason for dismissing Ms Cohen.
Notified of the Reason
[119] Ms Cohen submitted she was not notified of the reasons for her dismissal until after these proceedings commenced. She submitted her termination letter did not provide a reason. The Respondent submitted Ms Cohen was advised she was no longer required due to her breach of the Respondent’s AFSL and her inability to accept the warning provided in relation to the seriousness of the breach.
[120] I accept that Ms Cohen was not adequately notified of the reason for her dismissal. It is clear that the termination letter does not provide the reason as put forward by the Respondent.
Opportunity to respond
[121] Ms Cohen submitted that she was given no opportunity to respond to the Respondent’s concerns that arose from her email in reply to her written warning. The Respondent submitted Ms Cohen chose not to respond to the matters raised in her warning letter, and instead listed her grievances with other staff as her response.
[122] I accept that Ms Cohen was not provided with an opportunity to respond to the reason for her dismissal. Ms Cohen was given a chance to respond to the warning letter, however was not given a chance to respond to the reason that the Respondent decided to dismiss her. The proper course for the Respondent would have been to provide Ms Cohen with a further letter setting out the concerns her response had raised, and invite her to provide a response.
[123] However I am of the view that had the Respondent taken this course of action, it would not have ultimately changed the outcome of its decision to terminate Ms Cohen. It is clear, for the reasons provided above, that Ms Cohen did not, and still does not, understand the gravity of her error and the implications for the Respondent. As such, it is unlikely that Ms Cohen would have provided the Respondent with a reason not to terminate her employment, had she been given an opportunity to respond.
Support Person
[124] There was no evidence of a refusal for Ms Cohen to have a support person present for the discussion about the matters that became the subject of the warning. However there was no meeting as such to discuss the decision to move to dismissal following Ms Cohen’s refusal to accept wrongdoing as described in the warning.
Unsatisfactory Performance
[125] Ms Cohen had previously been warned about the first error as set out above.
Size of the Respondent’s enterprise & absence of Human Recourses
[126] Ms Cohen submitted that although the size of the Respondent is difficult to determine, regardless of its size it is apparent the Respondent has access to sophisticated HR assistance considering the comprehensive nature of its employment contracts.
[127] The Respondent did not make any submissions on whether the size of the business impacted the procedures it followed. It also did not directly address whether the absence of HR specialists impacted the process it followed in dismissing the employee.
[128] For reasons above I am satisfied the Respondent is a small business, and if it had the means to employ HR specialists it is likely the process of dismissing Ms Cohen would have been less flawed.
Conclusion
[129] I have taken into account all of the matters that I am required to in accordance with s.387. After weighing all the evidence and for reasons set out above, I have concluded that Ms Cohen’s dismissal was not harsh, unjust or unreasonable. On that basis the application is dismissed.
COMMISSIONER
Appearances:
Mr S.A Mackie of Counsel instructed by MJT Law for the Applicant
Mr J. Forbes appearing for the Respondent
Hearing details:
2018.
Brisbane:
December 3
Printed by authority of the Commonwealth Government Printer
<PR704964>
1 Submissions for the Applicant to Jurisdictional Objection dated 19 October 2018.
2 Respondent’s Statement of Evidence dated 31 October 2018 at page 5; Transcript PN 1001.
3 Transcript PN 1167.
4 Transcript PN1042.
5 Transcript PN 1157-1158.
6 Transcript PN1107, 1109..
7 Transcript 1145-1147.
8 Statement Sophie Cohen 30 November 2018, attachment S07.
9 Statement of Sophie Cohen SC07; Transcript PN 1408.
10 Transcript PN 1054.
11 Transcript PN 1056.
12 Transcript PN 1057-1060.
13 Transcript PN 1062.
14 Transcript PN 1067.
15 Transcript PN 1069.
16 Transcript PN 1070.
17 Transcript PN 1072.
18 Transcript PN 1083 – 1087.
19 Transcript PN 1095-1098.
20 Transcript PN 1131.
21 Transcript PN 1132.
22 Transcript PN 1158.
23 Transcript PN 1159.
24 Transcript PN 1036.
25 Transcript PN 1290.
26 Transcript PN 1320.
27 Applicant’s Closing Submissions – Jurisdictional Objection at paragraph 7.
28 Transcript PN 630.
29 Form F3 Employer Response – Particulars of the Respondent.
30 Ibid at paragraph 22(t)-(u).
31 Transcript PN 645-646.
32 Form F3 Employer Response – Particulars of the Respondent at paragraph 22.
33 Applicant’s Closing Submissions – Jurisdictional Objection at paragraph 11(b).
34 Applicant’s Closing Submissions – Substantive Matter at paragraph 5 (a).
35 Form F3 Employer Response – Attachment 5.
36 Form F3 Employer Response – Particulars of the Respondent at paragraph 12.
37 Attachment “SC 01” to the Applicant’s Outline of Argument (Merits) and paragraph 12.
38 Form F3 Employer Response – Attachment 5.
39 Transcript PN 229.
40 Transcript PN 230.
41 Transcript PN 231.
42 Transcript PN 232.
43 Transcript PN 233.
44 Transcript PN 234.
45 Form F3 Employer Response – Particulars of the Respondent at paragraph 12.
46 Transcript PN 837.
47 Transcript PN 237.
48 Transcript PN 240-242.
49 Transcript PN 369.
50 Transcript PN 370.
51 Transcript PN 371.
52 Transcript PN 372.
53 Transcript PN 373.
54 Transcript PN 380.
55 Transcript PN 701-705.
56 Transcript PN 712.
57 Transcript PN 449.
58 Outline of submissions or the applicant dated 2 September 2018.
59 Transcript PN 248.
60 Transcript PN 279.
61 Transcript PN 317-318.
62 Transcript PN 325.
63 Transcript PN 843.
64 Transcript PN 1360.
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