Warwick Downs v Priestley & Morris Services Pty Ltd

[2013] FWC 1469

[2013] FWC 1469

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Warwick Downs
v
Priestley & Morris Services Pty Ltd
(U2012/11352)

COMMISSIONER MCKENNA SYDNEY, 14 MARCH 2013

Application for unfair dismissal remedy - application dismissed.

[1] Warwick Downs (“the applicant”) has lodged an application pursuant to s.394 of the Fair Work Act (2009) (“the Act”). The applicant considers that his dismissal by Priestly & Morris Services Pty Ltd (“the respondent”) was harsh, unjust or unreasonable; and he seeks an unfair dismissal remedy.

[2] The applicant commenced working for the respondent in May 2008. The respondent is a small chartered accounting practice and the applicant was employed as its Senior Audit Manager. In that role, the applicant’s responsibilities included, among other matters, management of the respondent’s audit team and liaison with the respondent’s clients.

[3] Andrew Cordwell, who is a partner in the respondent firm, came to be dissatisfied with the applicant’s performance. The matters that led Mr Cordwell to become dissatisfied emerged from a complex of reasons. Some of Mr Cordwell’s principal concerns focussed on what had been reported to him by partners, clients and staff concerning interactions with the applicant, as well as his own concerns about the applicant.

[4] There is dispute between the parties concerning the date of the termination of employment, including matters relevant to summary dismissal and notice of termination of employment in circumstances where the Small Business Fair Dismissal Code (“the Code”) applied.

[5] The parties were each represented by counsel in the hearing.

Evidence and submissions

Applicant’s evidence and submissions

[6] The applicant elaborated matters in his witness statement in support of the contentions specified in the applicant’s outline of submissions as to the alleged unfairness. The applicant’s written outline of submissions identified the following principal matters in support of the application for an unfair dismissal remedy:

“The applicant's claim is unfair dismissal against [the respondent] arising from a breach of the following provisions of the applicant's contract of employment:

(a) The respondent failed to provide the applicant with the requisite three months notice in writing:

Cessation of Employment

As you are fulfilling a management position and your role is important to the firm, your employment may be terminated by giving three month's notice in writing by either party. In the event of gross misconduct, your employment may be terminated without notice.

(emphasis added)

At no time did the applicant agree to a termination period or specific termination date. At no time was the applicant requested to tender a letter of resignation by the respondent. At no time did [anyone from the respondent] verbally mention a 3 month notice period nor a specific termination date.

On 26 June, 2012 the respondent sent the applicant an e-mail stating that the applicant's services would not be required after 30 June, 2012. The applicant was ordered out of the workplace on 28 June, 2012 after providing [the respondent] with a medical certificate that allowed sick leave to 4 July, 2012. Mr Cordwell for the respondent stated that, as the applicant had been ill he was not allowed to remain on the premises and was ordered to pack all of his belongings, denied access to his computer (including remote access) and evicted from the premises. Security personnel were not in attendance and Mr Cordwell on behalf of the respondent acted in an extremely aggressive and hostile manner towards the applicant.

The applicant accepts that the email received on 26 June, 2012 may satisfy the "Cessation of Employment" provisions of the employment clause of [his] contract and, therefore, the effective termination date three months hence is 26 September, 2012 not 2 July, 2012 as claimed by [the respondent].

(b) The respondent failed to provide the applicant with written appraisals or warnings in relation the applicant's performance as provided for in the contract of employment:

Performance Management

The management of performance is an important part of our management philosophy. Each member of staff is required to participate in the performance appraisal programme which is held in January and July of each year.”

[7] The matters in the outline of submissions went primarily to notice requirements and performance appraisals contained in the applicant’s contract of employment. The applicant was taken in cross-examination to various matters to which he had otherwise deposed in his witness statement that had been filed pursuant to the directions.

[8] The applicant confirmed that the totality of his case concerning the application for an unfair dismissal remedy turned on the matters outlined in the applicant’s outline of submissions - being submissions, as I have noted, that focussed on contractual notice arrangements and performance appraisals. The applicant explained matters as follows in short form in cross-examination:

“My main criticisms are firstly that Mr Cordwell didn’t have regard to the terms of my contract. There was no adequate communication of a termination date or termination period, and it certainly wasn’t in writing as required by my contract.”

Respondent’s evidence and submissions

[9] Mr Cordwell prepared an affidavit for the purposes of the proceedings, which was tendered without objection. Mr Cordwell’s affidavit could be considered to be the principal evidence in the respondent’s case. Mr Cordwell was not required for cross-examination as to the content of his affidavit.

[10] Five further affidavits were tendered in the respondent’s case - four of which were prepared those who now or had previously worked for the respondent and one by the general manager of a client of the respondent. As with Mr Cordwell’s affidavit, the affidavits of these deponents were tendered without objection and none of the deponents was required for cross-examination. There was no indication, at the commencement of the proceedings (and indeed until about the time the respondent was about to commence its case), that all the affidavits in the respondent’s case would be uncontested by the applicant.

[11] The respondent’s outline of submissions summarised the performance and conduct issues relied upon by the respondent, being matters otherwise described in the unchallenged evidence adduced in the respondent’s case. The respondent submitted the applicant's conduct, over an extended period of time, did not meet the standards required of a professional Senior Audit Manager who was responsible for leading and mentoring staff in the audit group, being conduct that had the potential to adversely affect the welfare of the respondent's staff as well as result in the loss of clients.

[12] The respondent submitted the applicant was notified of the reason for his dismissal during the course of a meeting with Mr Cordwell in the last week of March 2012 and was given an opportunity to respond to the allegations made against him during that meeting. The respondent further submitted it is highly relevant for the Commission to have regard to the nature of the respondent's business, concerned as it is with the provision of professional services by qualified accountants, when assessing the performance and conduct of the applicant against the standards expected of him by the respondent. It was untenable, the submissions continued, for the respondent to retain the applicant in his employment in circumstances where his staff members were subjected to inappropriate, abusive and bullying conduct, including the regular use of foul language. Moreover, the conduct occurred on occasion at the premises of the respondent's clients.

[13] In circumstances where all the affidavits in the respondent’s case were tendered without objection and without any requirement for cross-examination of the deponents - which counsel for the respondent described as the “forensic choice” made in the applicant’s case - it appears (although I have considered the submissions by the applicant’s counsel as to why that course was adopted) the usual inferences may be drawn. For his own part, the applicant said in cross-examination that he did not have any opinion to make on the affidavits in the respondent’s case and did not consider the matters in the affidavits in the respondent’s case were relevant. The applicant confirmed in cross-examination that he did not offer any criticism of what was said in the affidavits in the respondent’s case, albeit it should be noted the applicant did give his own different accounts and characterisations of matters put to him in cross-examination by counsel for the respondent concerning some of the contents of the affidavits that had been prepared in support of the respondent’s case.

The dismissal

[14] The applicant was involved in an audit of one of the respondent’s clients, an RSL club, around late February 2012. The General Manager of the club spoke to Mr Cordwell to express her dissatisfaction with the applicant’s conduct and manner at the club. She asked that the applicant not be involved in future audits for reasons including the applicant’s rudeness, abusiveness and swearing at his own staff in the club’s office environment, and for being unreasonably demanding and rude to her own staff.

[15] Mr Cordwell recounted the following version of a conversation in March 2012 in which the dismissal with notice was effected:

“[Cordwell:] You are not appropriately communicating and interacting with partners, clients and staff. There have been significant issues between you and staff that we have previously discussed. You are not communicating with partners. Getting junior staff to put files on my desk is an unacceptable way to hand up the files for review. You need to keep me informed of the critical issues and how they have been solved and which ones remain outstanding. You do everything you can to not sit with me to review the audit files. There are complaints about how you conduct yourself at our client's premises.

[Applicant:] What complaints?

[Cordwell] For example [the RSL club General Manager] rang me towards the end of the field work asking me to take you off the audit due to your overbearing attitude towards her and her staff.

[Applicant:] I know someone who has worked for her and says she is not a nice person.

[Cordwell:] There have been other concerns or complaints about you at clients. You have also lost the respect of your staff and you do not attend in-house staff training. I believe we have reached a cross roads where all things considered it would be better if you were working somewhere else. What do you think about the situation?

[Applicant:] You never support me in staff matters. You employ Asians and Filipinos whose knowledge and experience is not as strong as ours. They all have weaknesses which makes my job more difficult.

[Cordwell:] You can't go on yelling and screaming at staff and blaming them for everything that happens and not communicating with the partners. We have to bring an end to this and the best for everyone is if you look for another job. We can give you say 2 months to do that and time off to attend interviews. As soon as you find another job you can leave. You don't have to work out your notice.

[Applicant] You never supported me in staff matters."

[16] Mr Cordwell considered, in the circumstances of this conversation, that the applicant seemed to be accepting of the situation and understood why Mr Cordwell considered that the employment relationship was no longer sustainable. The applicant had a different view, as outlined in his evidence:

“[4.] (d) Mr Cordwell then said words to the effect "Why don't we call it quits, you take a couple of months to find a new job and go with our blessing". I was quite stunned and walked out of his office replying words to the effect "whatever". There was no mention of a specific date or time period for my leaving and I certainly didn't agree to any. Mr Cordwell made no reference to the terms of my contract at this meeting.

(e) I realised that the time period Mr Cordwell had given was not in accordance with my contract, and it was obvious that Mr Cordwell had not familiarised himself with its terms.”

[17] Mr Cordwell deposed that he understood the applicant attended a job interview around mid-April 2012. In late-April 2012, Mr Cordwell deposed that he and the applicant had a conversation which was to the following effect:

“[Cordwell:] How is the job hunting going?

[Applicant:] My contract states I have 3 months notice and I am availing myself of the full 3 months.

He pointed to a document on his desk:

[Cordwell:] lf that is what your contract states then 3 months it is and that would take you up to the end of June if you don't leave beforehand.”

[18] To broadly similar effect, the applicant’s evidence as to the conversation was as follows:

“5. (a) Some weeks later in April, Mr Cordwell dropped by my office to discuss the progress on a job. At the end, he asked me how the job hunting was going and stated that I should not take too much longer to leave. I pointed out to Mr Cordwell that I had three months under my contract, which appeared to take Mr Cordwell by surprise with him thinking it was only a month. Again, there was no mention of a specific date nor was any mention made of the fact that notice was to be in writing by either party.

(b) The mention of a 3 month notice period was purely a statement of fact on my part, as Mr Cordwell was unfamiliar with the terms of my contract, and in no way was to be construed as agreeing to a specific termination date, as contended by Mr Cordwell. Mr Cordwell had not requested a resignation letter from me, nor had Mr Cordwell provided a notice of my termination in writing. At no time did [the respondent] issue me with a dismissal notice or termination letter.”

[19] There was evidence of an email from the applicant dated 8 June 2012 concerning certain work-related matters. The applicant’s email concluded:

“Time is now running short if we are to get final draft accounts before I leave.”

[20] The applicant recounted the following as to certain events during June 2012:

“8. It had become apparent that Mr Cordwell had unilaterally decided that 30 June 2012 was to be the date of my termination without actually having advised me personally. In mid-June, a presumptuous email was circulated around the office ... for my farewell lunch. ...This was the first I knew of a definite finishing date. [Others knew the date] before it had been advised to me. I was quite outraged at the [the respondent’s] partners' behaviour and instructed [named employee] to cancel the lunch.”

[21] Mr Cordwell recounted a further conversation that occurred on 26 June 2012 which was to the following effect:

“[Applicant:] I have no problem finishing on 30 June 2012 but I want my termination pay, being accrued leave and travel reimbursement, paid on 1 July to take advantage of the change in tax rates.

[Cordwell:] I will need to think about the July payment of termination pay and discuss the issue with my partner.”

[22] The applicant’s characterisation of the conversation on 26 June 2012 was as follows:

“[9] (c) Since, it had become apparent that Mr Cordwell intended to terminate me on 30 June 2012, notwithstanding my objections to this course, I requested a calculation of my accrued entitlements to date. I requested that when I eventually departed my final payout was to be done in a tax effective manner and not before 30 June 2012.

(d) As far as I was concerned, the onus was on Mr Cordwell to provide written notice of my dismissal and proper reasons for my termination. It may be that his email to me of 26 June 2012 satisfies the "Cessation of Employment" clause of my contract. Notwithstanding the validity, or otherwise, of this e-mail as notice of MY termination, I remain entitled to 3 months' notice from 26 June 2012, which would make my effective termination date 26 September, 2012 not 2 July, 2012 as claimed by [the respondent].” (capitalisation in original)

[23] Mr Cordwell explained he was concerned the delay in making the termination payment as proposed by the applicant may be a scheme to avoid taxation and, if that was correct, the respondent would be responsible for any shortfall. Mr Cordwell later sent an email to the applicant confirming that the applicant’s last day in the office would be (Friday) 29 June 2012 and that he would take (Monday) 2 July 2012 as annual leave, with termination payments made on 2 July 2012. Mr Cordwell considered that this arrangement satisfied the applicant’s request as well as taxation requirements. Following some further incidents described in the evidence for the applicant and the respondent, the applicant advised by email that he was going home sick (the applicant obtained a medical certificate for the period 28 June 2012 to 4 July 2012). Mr Cordwell’s interpretation of the email was that the applicant was going to leave the office straight away and be on sick leave until the close of business on 2 July 2012 - which would mean he would not be returning to the office. In those circumstances, Mr Cordwell spoke to the applicant about matters including files and the return of work-related equipment. The applicant subsequently departed the premises, following some events which I have not recounted in the decision.

[24] The submissions by counsel for the applicant seemed to suggest (if I understood the submissions correctly) that the applicant was summarily dismissed, but I do not accept that was the case. I consider that Mr Cordwell informed the applicant of his termination of employment in the discussion in March 2012 and gave the applicant two months’ notice of termination in that respect - with the option of a shorter period if the applicant found alternative employment in the meantime.

[25] I consider that, following a further discussion in April 2012, Mr Cordwell agreed, consequent upon the applicant’s advice to Mr Cordwell about the existence of a notice period of three months under his employment contract, that the notice of termination of employment would be extended so as to continue to late-June 2012.

[26] I consider the applicant was aware that he had been given notice of termination of employment by Mr Cordwell in March 2012, albeit that advice was not given in writing. Mr Cordwell subsequently extended the period of notice from two months to (at least) the contractually-stipulated minimum of three months.

[27] In late-June 2012, the applicant requested arrangements to push the effective date of the termination of employment into the new financial year for reasons that the applicant considered would be of financial advantage to him. The respondent made arrangements to accommodate the applicant’s wishes with the result that the dismissal took effect on 2 July 2012.

[28] I conclude the applicant was notified of the dismissal in March 2012 and given two months’ notice. Mr Cordwell subsequently extended the notice period to three months’ notice, after the applicant raised the issue of the contractual notice period of three months. With that extension, the notice period ran to the end of June 2012. The effective date of the termination of employment was then extended by a further short period into early July 2012 at the applicant’s request for taxation reasons.

The Code

[29] It is common ground there was an employer-initiated termination of employment. I do not accept the contention in the first paragraph of the applicant’s witness statement that the termination of employment occurred on 26 June 2012. I conclude the dismissal, with notice, was notified in March 2012 and took effect in July 2012. The provisions of the Code concerning summary dismissal do not, thereby, arise. The Code relevantly 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 the Fair Work Commission, 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.”

[30] I turn now to the matters addressed in the Code.

[31] 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. On Mr Cordwell’s unchallenged evidence, he had a conversation with the applicant around mid-2011 in relation to what was described in Mr Cordwell’s affidavit as the “Praxa Incident”. Mr Cordwell deposed that a discussion ensued that was to the following effect:

“[Cordwell:] It was totally unacceptable to have a protracted argument in the client's office.

[Applicant:] She [named employee] can't follow simple and basic instructions and continually is trying to justify her lack of knowledge by arguing.

[Cordwell:] Nonetheless you cannot argue in a public space. You do not get the best out of staff by arguing and being aggressive. Take them to a private situation if they need special counselling. I take this behaviour very seriously and if this type of behaviour continues we will have to part company.

[Applicant:] She is a very poor auditor and argues all the time but I understand what you are saying.

[Cordwell:] There had been complaints from some employees in their exit interview about how you speak to them and deal with them.

[Applicant:] I understand.”

[32] Thus, Mr Cordwell gave the applicant a reason why he was at risk of being dismissed. Based on my assessment of the uncontested evidence in the respondent’s case, the reasons were valid reasons based on the applicant’s conduct.

[33] The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement: Mr Cordwell informed the applicant that he took matters related to the applicant’s conduct very seriously and had warned him that if there was a continuation “we will have to part company”. That is, the applicant was warned by Mr Cordwell he was at risk of being dismissed if there was a continuation of this type of behaviour. On one view of it, a warning given in mid-2011 was somewhat stale by the time of the dismissal in March 2012. Viewed another way, the applicant was given an extended period in which to improve and, as a subsequent complaint from a client of the respondent indicated, there was no improvement over that period of time.

[34] 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: The applicant had the opportunity to respond to the warning and to rectify the problem. When the warning was given, the applicant’s initial response was to criticise another employee. Nonetheless, the applicant also indicated that he understood what had been said to him by Mr Cordwell. The respondent did not provide anything in the nature of additional training, but Mr Cordwell stated his expectations of the applicant in relation to his future interactions with other employees and at clients’ premises.

[35] 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: There is nothing to indicate that the respondent gave the applicant the opportunity to have another person to assist in the discussions. Nor was there any evidence that the applicant sought or was denied that opportunity.

[36] A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal ... Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements: The specification in the Code as to evidence would appear to comprehend Mr Cordwell’s unchallenged evidence by way of affidavit in the proceedings. It is common ground there were no written warnings or the like.

Consideration

[37] Mr Cordwell had a range of concerns about the applicant. The full extent of those concerns was not articulated to the applicant before Mr Cordwell determined to terminate the applicant’s employment. Nonetheless, Mr Cordwell spoke to the applicant around mid-2011 about the Praxa incident as outlined in the transcript extracted earlier in the decision. The applicant was on notice about the matters of concern raised by Mr Cordwell concerning conduct towards staff and at clients’ premises.

[38] Around late February 2012, a client contacted Mr Cordwell about the applicant’s conduct, being conduct including inappropriate conduct in her presence toward staff of the respondent as well as her own staff. The applicant’s conduct in a similar respect had been the subject of the prior warning around mid-2011.The applicant did not deny to Mr Cordwell the matters which formed the subject of the complaint made by the client in 2012 (and the evidence of the client as to such matters was unchallenged inasmuch as her affidavit was admitted without objection and she was not required for cross-examination).

[39] It would have been consistent with the applicant’s contract of employment for the respondent to have given written notice of termination of employment, whereas the notice of termination of employment was given verbally. Mr Cordwell extended the initial two months’ notice to three months’ notice; and then further extended the date of the termination of employment at the applicant’s request to take the final date into the new financial year. The applicant’s case relied substantially on the failure of the respondent to confirm matters as to the termination of employment in writing in accordance with the employment contract. I accept it would have been appropriate or better practice, considering the contract, if this had occurred. That being said, I have concluded the applicant was otherwise aware that he was being dismissed with notice in March 2012.

[40] This dismissal was not effected in a typical way and aspects of the matter were, in fact, quite atypical when considering the usual style of circumstances that comes before the Commission in applications for an unfair dismissal remedy. Moreover, some aspects of the way in which the respondent dealt with the dismissal may be considered to be procedurally defective or potentially not Code-compliant. For example, Mr Cordwell had a range of emerging concerns about the applicant - but only the Praxa incident appears to have been specifically articulated to him prior to March 2012. Nonetheless, given the nature of what was said to the applicant about the Praxa incident and the evidence about the subsequent, post-warning complaint from the RSL club client, it seems to me that, on balance (and without anything more as to the other matters on which the respondent relied), the dismissal was Code-complaint - even though there were other considerations that had not been the subject of prior warnings that led Mr Cordwell to the decision to dismiss the applicant.

[41] I think that when all matters are considered the circumstances of this atypical dismissal could be considered to be Code-compliant, particularly considering the uncontested evidence in the respondent’s case. Following from the approach in John Pinawin T/A RoseVi.Hair.Face.Body v Edwin Domingo[2012] FWAFB 1359 (albeit that decision concerned summary dismissal), the termination of the applicant’s employment was consistent with the Code and the termination thereby was not an unfair dismissal. As such, it is unnecessary to consider the other elements as to unfair dismissal.

[42] An order dismissing the applicant’s application for an unfair dismissal remedy has been issued in conjunction with this decision.

COMMISSIONER

Appearances:

CP Locke of counsel for the applicant.

R. Meehan of counsel for the respondent.

Hearing details:

Sydney.

2013.

7 February.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR534648>