Full decision here: https://www.fwc.gov.au/documents/decisionssigned/html/2019fwc7842.htm

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Background

  • The applicant (ie ex-employee) was employed by a South Australian wine company as a Sales Manager from 6 October 2015 to his dismissal 17 June 2019. This is on the back of his having 36 years’ experience in the wine industry. At the time of his dismissal he was paid five weeks’ in lieu notice.
  • The contentious issue was that the company argued that the applicant failed to follow it business plan.

Meetings

  • There were a number of meetings held with the applicant present, but these amounted to little more than sales strategy discussions.
  • The company subsequently hired a new person to whom the applicant would report. This was seen by the Commissioner as a plan to manage the applicant out of the business.
  • The applicant signed a contract of employment and understood his duties as selling wine to general retail, restaurants, hotels, function centres and whoever he could sell the product to.
  • Whilst the issue of KPI’s (Key Performance Indicators) were a feature of the contract of employment. In practice he was provided with any KPI’s during the course of his employment with company.
  • At one such meeting, it was suggested that the applicant concentrate on selling the more premium wines to restaurants and requested that he obtain 50 new restaurant accounts within 2 weeks. The applicant advised that he would attempt to do so, but this task would be difficult and that restaurants were often bad debt risks; and despite trying, the applicant was unable to obtain additional restaurant clients.

Complaint of age discrimination and bullying

  • Most telling was the discussion held at the end of the meeting, where his manager said that the applicant was past retirement age and it was about time he retired. The applicant advised he did not wish to retire.
  • On 5 April 2019, the applicant made a complaint to the company’s HR Manager, about his manager’s comment concerning his age. The HR Manager undertook to follow up the matter.
[Ed: Any HR Manager worth their salt would have been concerned the risk profile of such a complaint].

  • On 10 May 2019 met with the HR manager and complained he felt bullied by his manager. The HR Manager’s response was to advice the applicant to try and get along better with his manager.

The dismissal

  • On Monday 17 June 2019 the applicant was called into a meeting with his (new) manager without warning. Another manager was also present.
  • The applicant was presented an undated letter which had been signed by the company’s management.
  • The letter advised that the company was looking to adopt a different strategy and that the applicant did not have the experience, aptitude and qualifications to support the future strategy.
  • The letter further advised that ‘due to these and other reconcilable differences in business focus & principles and therefore the consequential unacceptable sales performance’ … ‘your employment with the company has reached an endpoint.’ The letter advised the applicant would be paid 4 weeks’ notice plus accrued entitlements.
  • The applicant contended that the manager advised ‘the applicant and the company has reached a use by date.’

The Commissioner’s findings

  • Despite the express references in Mr Harley’s contract of employment, there was no formal business plan or KPI’s. The only criteria capable of measurement was the gross sales volume.
  • There was some discussions around product mix, they are so imprecise as to allow measurement.
  • That the applicant’s new manager was engaged to manage the applicant out of the business, and/or reach a basis for mutual separation.
  • That the applicant’s age was a factor as early as 19 March 2019 and that it influenced the company’s decision to dismiss him. It appears that the company’s manager was hoping that Mr Harley would retire in 6 months or so rather than dismiss him.
  • That that there was no valid reason to the dismissal that related to capacity and/or conduct.
  • Whilst the applicant’s sales performance was the subject of discussion on a number of occasions prior to his dismissal, he was not given detailed facts about the alleged deficiencies. The applicant was not notified of the reason for his dismissal in explicit and plain and clear terms prior to the decision to dismiss being made and appears to have been dismissed after refusing to agree a basis to voluntarily cease employment.

Support person

  • As mentioned in my previous blogs, there is no positive obligation on an employer to offer an employee the opportunity to have a support person:

“This factor will only be a relevant consideration when an employee asks to have a support person present in a discussion relating to dismissal and the employer unreasonably refuses. It does not impose a positive obligation on employers to offer an employee the opportunity to have a support person present when they are considering dismissing them.”

Was the Applicant warned about unsatisfactory performance before the dismissal?

  • In the Commissioner’s words:

“A mere exhortation for an employee to improve their performance would not be a sufficient warning. A warning must:

  • identify the relevant aspect of the employee’s performance which is of concern to the employer; and

  • make it clear that the employee’s employment is at risk unless the performance issue identified is addressed”.

  • It is clear that Mr Harley was not appropriately warned about his unsatisfactory performance prior to dismissal or that his employment was at risk.

HR supported by an external consultant

HR in the firing line again (and I hope the external consultant has insurance), given the Commissioner’s finding that:

“The Company had internal HR support and engaged external assistance.

“It appears to me that that the expertise of the external assistance had an adverse impact on the procedures followed in effecting the dismissal”.

What other matters are relevant?

The Commissioner took into account the applicant’s personal attributes and their impact on potential re-employment, noting that:

“On the evidence before me it appears that the applicant’s age factored into the reason for dismissal. This may have been a breach of the General Protections provision of the Act”. [Federal Court = no upper limit to penalty].

The remedy

The applicant did not seek reinstatement and considering the breakdown of the employment relationship, the Commissioner agreed.

The Commissioner adding:

“Having found that reinstatement is inappropriate, it does not automatically follow that a payment for compensation is appropriate. As noted by the Full Bench, “[t]he question whether to order a remedy in a case where a dismissal has been found to be unfair remains a discretionary one…”

“In all the circumstances, I consider that an order for payment of compensation is appropriate”.

In coming to a $figure, the Commissioner needs to follow a formula, part of this is determining how long the applicant would have been employed if he wasn’t dismissed quoting a decision of the Federal Court, which found:

“[i]n determining the remuneration that the Applicant would have received, or would have been likely to receive… the Commission must address itself to the question whether, if the actual termination had not occurred, the employment would have been likely to continue, or would have been terminated at some time by another means. It is necessary for the Commission to make a finding of fact as to the likelihood of a further termination, in order to be able to assess the amount of remuneration the employee would have received, or would have been likely to receive, if there had not been the actual termination.”

How much then?

  • The applicant submitted that his employment would have been likely to continue for a further period of 5 years.
  • There was ample evidence of tension between management and the applicant over sales strategy.
  • It was possible that the applicant’s current sales would have recovered his employment costs and made an acceptable profit for the employer. The Commissioner noting that that the applicant’s gross sales increased year on year.
  • It is also possible that the Company may sought some professional HR advice and imposed appropriate ‘S.M.A.R.T.’ (Specific, Measurable, Achievable, Realistic, and Timely) sales targets which if not achieved and a proper performance process had occurred would have resulted in the applicant’s dismissal.
  • The Commissioner determined that the applicant would have lasted another 20 weeks. A deduction was made for future earnings that the applicant would make for from future earnings from setting up his own wine sales company, plus $300.00 he had already made.
  • Interestingly, the Commissioner did not make any deduction for the five weeks’ notice already paid, the logic being that the applicant was entitled to this regardless.
  • $5,000 was also added for lost earning between the dismissal and the hearing.
  • An employee has a duty to mitigate their loss, what is reasonable depends on the circumstances of the case:

“[The applicant] has provided evidence that he did not believe he would be able to secure employment and as a result had started a business selling wine. In my view taking into account the applicant’s personal experience and attributes, self-employment is a reasonable strategy to mitigate the loss as a result of the dismissal”.

The Commissioner settling on the figure of $15,995 gross less taxation as required by law to the Applicant in lieu of reinstatement within 28 days of the date of this decision. The payment time was extended by two weeks to account for the cash flow issues indicated by the Company at the hearing.