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[2013] FWC 3034
DECISION
Fair Work Act 2009
s.394—Unfair dismissal
James McCarron
v
Commercial Facilities Management Pty Ltd T/A CFM Air Conditioning
Pty Ltd
(U2012/13636)
COMMISSIONER BISSETT MELBOURNE, 17 MAY 2013
Application for unfair dismissal remedy - no valid reason given - no warning of unsatisfactory
performance - dismissal unjust - remedy compensation.
[1] Mr James McCarron (the Applicant) commenced employment with Commercial
Facilities Management Pty Ltd T/A CFM Air Conditioning Pty Ltd (the Respondent) on 6
February 2013. His employment was terminated on 19 September 2013 for poor performance.
Mr McCarron has sought relief from unfair dismissal pursuant to s.394 of the Fair Work Act
2009 (the Act).
[2] Mr McCarron represented himself in the proceedings. He called himself and Mrs
Dianne McCarron as witnesses.
[3] Ms Melanie Aldis, a Director of the Respondent, represented the Respondent. Ms
Aldis, Mr Mark Cowling, Mr Jarrod McDonald, Ms Katie DeKroon, Ms Samantha Cambage,
Mr John Bennett and Mr Rod Taylor gave evidence for the Respondent.
Background
[4] Mrs McCarron is the Applicant’s wife and she worked for the Respondent in an
administrative capacity for approximately 18 months. She resigned from the position in or
around August 2012. She is involved in ongoing litigation with the Respondent (not an
employment related matter).
[5] Both the Applicant and his wife attended a birthday party for Ms Aldis on 20 July
2012. This was a private party although a number of employees of the Respondent were
present. The Applicant and Mr Cowling, Ms Aldis’ partner, were both drinking. Late in the
evening, or very early the next morning, an altercation occurred between the Applicant and
Mr Cowling. On leaving the party immediately after the altercation, the Applicant indicated to
Ms Aldis (in obscene language) that both he and his wife resigned. The next day the
Applicant rang Ms Aldis. Ms Aldis indicated that it was all OK and that the Applicant (and
his wife presumably) should return to work.
AUSTRALIA FAIR WORK COMMISSION
[2013] FWC 3034
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[6] The Applicant was employed by the Respondent as a business development manager.
His role was to develop new business, obtain ongoing maintenance agreements and secure
quoted works for the Respondent.
[7] The Applicant believes that his employment was terminated in retaliation for his wife
resigning from her position with the Respondent.
[8] The Respondent says that it terminated the Applicant’s employment because of his
poor performance. The deterioration of his performance is said to have started just after the
party when he became ‘rude and cocky.’1 Ms Aldis’ evidence is clear that the Applicant’s
employment was not terminated because of the incident of the party.2
Unfair dismissal
[9] In determining if the Applicant has been unfairly dismissed the following provisions
of the Act apply:
385 What is an unfair dismissal
A person has been unfairly dismissed if the FWC is satisfied that:
(a) the person has been dismissed; and
(b) the dismissal was harsh, unjust or unreasonable; and
(c) the dismissal was not consistent with the Small Business Fair Dismissal
Code; and
(d) the dismissal was not a case of genuine redundancy.
[10] A jurisdictional objection of the Respondent to the application, based on the required
minimum employment period, has previously been dismissed.3
[11] I am satisfied that the Applicant was dismissed from his employment. Nothing was put
to me on the applicability of the Small Business Fair Dismissal Code and it is not argued that
the dismissal related to redundancy. I am therefore satisfied that the Applicant is protected
from unfair dismissal in accordance with s.382 of the Act.
[12] In determining if the dismissal was harsh, unjust or unreasonable I am required to take
into account the provisions of s.387 of the Act:
387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or
unreasonable, the FWC must take into account:
(a) whether there was a valid reason for the dismissal related to the
person’s capacity or conduct (including its effect on the safety and welfare of
other employees); and
[2013] FWC 3034
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(b) whether the person was notified of that reason; and
(c) whether the person was given an opportunity to respond to any reason
related to the capacity or conduct of the person; and
(d) any unreasonable refusal by the employer to allow the person to have a
support person present to assist at any discussions relating to dismissal; and
(e) if the dismissal related to unsatisfactory performance by the person—
whether the person had been warned about that unsatisfactory performance
before the dismissal; and
(f) the degree to which the size of the employer’s enterprise would be
likely to impact on the procedures followed in effecting the dismissal; and
(g) the degree to which the absence of dedicated human resource
management specialists or expertise in the enterprise would be likely to impact
on the procedures followed in effecting the dismissal; and
(h) any other matters that the FWC considers relevant.
[13] I now consider each of these criteria.
Was there a valid reason for the dismissal related to the person’s capacity or conduct
[14] The Director of the Respondent, Ms Aldis says that the behaviour of the Applicant at
the party was not the reason for his dismissal from employment. She says however that it was
from this point that the Applicant’s attitude and work performance deteriorated. After the
party she says the Applicant was very rude, cocky and arrogant.
[15] The Respondent says that the Applicant failed to deliver the sales results necessary for
his position as Business Development Manager. This poor performance was the reason for his
dismissal.
[16] The Applicant and Respondent signed a commission structure arrangement on 14
August 20124 that required the Applicant to achieve:
PMAs (preventative maintenance agreements) - quarterly target of $12,500 with a
commission of 6% and an OTE5 of $3,000;
Quotes - monthly target $50,000, commission of 2% and OTE of $12,000.
[17] The Applicant says that, at the time of his dismissal, he had:
Secured $168,859 of quoted works for the period February - Sept 2012;6
Secured $31,522 of PMAs for the period February - Sept 2012.
$472,260 of works in progress awaiting client approval.
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[18] The Respondent submits that the quoted works provided by the Applicant are incorrect
and not more than 5% of the quotes converted into actual sales.7 Further Ms Aldis says that
the sales list of quotes are for existing clients and the extent of the Applicant’s involvement
was him following up on quotes that had been submitted by technicians and he had not
generated the work himself.
[19] If it were the case that the Applicant’s sales figures were as described by Ms Aldis it
may have provided a valid reason for the termination of the Applicant’s employment.
However, no substantial information was provided by the Respondent that would enable me
to reach a conclusion that the Applicant was not performing at the required level (regardless
of how well the Applicant says he was performing).
[20] The lack of objective evidence from the Respondent as to the actual performance of
the Applicant, analysis of what new work he did bring in to the company, or how his
performance was deficient means that the purported reason for the dismissal does not stand up
to scrutiny.
[21] Much of what was put to me in submissions by the Applicant and for the Respondent
was either contested or not supported by any evidence. Mere conjecture or assertion is not
evidence of any fact on which I could make a sound decision.
[22] In Selvachandran v Peteron Plastics Pty Ltd Northrop J held that ‘the adjective
“valid” should be given the meaning of sound, defensible or well founded. A reason which is
capricious, fanciful, spiteful or prejudiced could never be a valid reason.’8
[23] In Rode v Burwood Mitsubishi a Full Bench of the AIRC held that ‘the reason for
termination must be defensible or justifiable on an objective analysis of the relevant facts. It is
not sufficient for an employer to simply show that he or she acted in the belief that the
termination was for a valid reason.’9
[24] The lack of substantive evidence in this case does not allow me to conclude, based on
an objective analysis of the facts, that there was any ‘sound defensible or well founded’
reason for the dismissal of the Applicant.
[25] For these reasons I find that there was no valid reason for the dismissal of the
Applicant from his employment with the Respondent.
Whether the person was notified of that reason
[26] In Crozier v Palazzo Corporation Pty Limited t/as Noble Park Storage and Transport
a Full Bench of the AIRC found that:
As a matter of logic procedural fairness would require that an employee be notified of
a valid reason for their termination before any decision is taken to terminate their
employment in order to provide them with an opportunity to respond to the reason
identified. Section 170CG(3)(b) and (c) would have very little (if any) practical effect
if it was sufficient to notify employees and give them an opportunity to respond after a
decision had been taken to terminate their employment.10
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[27] I am satisfied that the Applicant was advised that his employment was terminated
because of a failure to meet sales targets. I am not satisfied that he was advised of this prior to
the meeting where he was dismissed.
[28] I find that the Applicant was not notified of the reason for his dismissal before the
decision to terminate his employment was made.
Whether the person was given an opportunity to respond to any reason related to the capacity
or conduct of the person
[29] No evidence was given as to what occurred at the meeting at which the Applicant’s
employment was terminated. As such it is difficult to know if the Applicant was given an
opportunity to respond.
[30] My finding that the Applicant was not notified of the reason for the termination of his
employment prior to the meeting at which his employment was terminated however, requires
me to conclude that he was not given an opportunity to respond to the reason for his
dismissal.
Any unreasonable refusal by the employer to allow the person to have a support person
present
[31] Nothing was put to me on this matter such that I can make a finding. I consider this
matter neutral in making my determination on the question.
Whether the person had been warned about that unsatisfactory performance before the
dismissal
[32] The purpose of a warning about unsatisfactory performance must be to identify the
performance that is of concern and must make it clear that a failure to heed the warning places
the Applicant’s employment at risk.11 Such a warning gives an employee an opportunity to
improve in those areas identified as requiring improvement. An integral part of such a
warning must be to clearly identify the areas of deficiency, the assistance or training that
might be provided, the standards required and a reasonable timeframe within which the
employee is required to meet such standards.
[33] Mr McDonald, in his evidence, says that the mechanism by which issues of the
Applicant’s performance was raised, were attempts to define the role of business development
manager, as he did not think the Applicant was focussed on what was required of him.12 Mr
McDonald says that initially he discussed the Applicant’s sales performance with him and as
the Applicant’s performance deteriorated, Mr McDonald asked for sales reports in writing,
although he never received any such reports.13 Further, Mr McDonald says that he assisted the
Applicant by reviewing quotes, discussing maintenance needs of specific contracts, discussing
pricing and so on with the Applicant.
[34] In its written submissions14 the Respondent says that the Applicant was advised of his
unsatisfactory performance on 12 July,15 3 August,16 8 August17 and 14 August 2012.18
[35] I have carefully considered this material and find that it does not support the
submissions made.
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[36] The 12 July 2012 document is an email from Mr McDonald to Ms Aldis setting out Mr
McDonald’s views on a potential commission structure for Mr McCarron. It is not evidence
of performance matters being raised with Mr McCarron.
[37] The correspondence of 3 August 2012 is a document reflecting a commission
structure. Its origin and whether or not it was agreed or implemented is not clear. It is not
evidence of performance matters being raised with Mr McCarron.
[38] The correspondence of 8 August 2012 is an email from Mr McDonald to the Applicant
in which Mr McDonald reiterates the sales role with the Applicant. He confirms the outcome
of a discussion with the Applicant that day on the commission structure under which the
Applicant was paid and the division of work between Mr McDonald and the Applicant.
[39] The correspondence of 14 August 2012 is a business development manager position
description and a commission structure. Both pages were signed by the Applicant and by Mr
McDonald. It is not evidence of performance matters being raised with Mr McCarron.
[40] Save for the correspondence of 8 August 2012, the other three documents are not
warnings about unsatisfactory performance. The 8 August document suggests that some
clarity around the role and the expectations of the Applicant were raised with him. There is
however no evidence that he was advised of the consequences should he not perform at a
particular level.
[41] Mr McDonald’s evidence is that he attempted to provide warnings to the Applicant by
defining his role more clearly and by tracking his sales performance. This is not enough. The
purpose of the warning of unsatisfactory performance is both to advise the Applicant clearly
of the performance standards required of him and to clearly let him know of the consequences
(i.e. dismissal) should his performance not improve. The so called warnings of the
Respondent to the Applicant do not meet these basic requirements.
[42] I find that the Applicant was not warned of the unsatisfactory performance prior to his
dismissal.
The degree to which the size of the employer’s enterprise and the absence of dedicated human
resource management specialists or expertise would be likely to impact on the procedures
followed in effecting the dismissal
[43] Nothing was put to me on these matters.
[44] I do note that the Respondent is small enterprise. There is no evidence of access to any
human resource management specialists or expertise. I accept that this may well have affected
the procedures followed. Overall however I find this to be a relatively neutral matter in
reaching my conclusion.
Other matters
[45] Much of this matter can be traced back to two things. Firstly an incident at a private
party in July 2012 when the Applicant is said to have been abusive to Ms Aldis’ partner and
second to the decision of the Applicant’s wife to resign her employment with the Respondent.
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[46] I do not intend to make any findings with respect to the conduct at the party. It was a
private event. While the behaviour was poor and the language obscene, behaviour at a private
event that has no relationship to work (except that it was attended by a number of people from
work) is not a relevant consideration in this case in determining if the termination of
employment was harsh, unjust or unreasonable. It is, in any event, not the reason given for the
dismissal of the Applicant.
[47] I do accept the evidence of Mr McDonald and Ms Aldis that around the time of the
party the Applicant’s attitude deteriorated. It does appear from the evidence that this was
around the same time that the Respondent moved the Applicant onto a commission based pay
structure. There is some indication that there was not unanimity of agreement on the role of
the Applicant, how the work should be undertaken, what the emphasis of the role should be
and how the commission should be structured.
[48] I also accept the evidence of Ms De Kroon and Ms Cambage gave that tension in the
office also increased following the resignation of the Applicant’s wife.
[49] Whilst there may well be some relationship between Mrs McCarron leaving
employment with the Respondent and the Applicant’s attitude, nothing has been put to me
that would allow me to conclude that the reason for the dismissal of the Applicant was related
in any way to his wife’s decision to resign her employment. This is not to say it is not the
case, but it is not a matter I can determine.
Was the dismissal harsh, unjust or unreasonable?
[50] In Bryne & Anor v Australian Airlines the High Court found that:
It may be that the termination is harsh but not unjust or unreasonable, unjust
but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many
cases the concepts will overlap. Thus, the one termination of employment may
be unjust because the employee was not guilty of the misconduct on which the
employer acted, may be unreasonable because it was decided upon inferences
which could not reasonably have been drawn from the material before the
employer, and may be harsh in its consequences for the personal and economic
situation of the employee or because it is disproportionate to the gravity of the
misconduct in respect of which the employer acted.19
[51] In this case I find that the termination of the Applicant’s employment was unjust as
there is no valid reason for the dismissal of the Applicant. There is no objective basis on
which the Respondent can justify the decision it took. There is no evidence of the poor
performance (and little reliable evidence of performance at all) on which the Respondent
based its decision.
Conclusion
[52] On the basis of my findings I find that the Applicant was unfairly dismissed from his
employment with the Respondent.
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Remedy
[53] As to remedy, the Act provides that an order of payment for compensation should not
be made unless the Commission considers that reinstatement is not appropriate and that an
order for payment of compensation is appropriate in all of the circumstances of the case.20
[54] In this case the Applicant does not seek reinstatement. Given the breakdown in the
relationship between the Applicant and the Respondent and the small size of the enterprise I
do not consider reinstatement to be appropriate. I shall therefore consider if an order for
compensation is appropriate in the circumstances.
[55] In considering an order for compensation the Act states:
392 Remedy—compensation
Compensation
(1) An order for the payment of compensation to a person must be an order that
the person’s employer at the time of the dismissal pay compensation to the person in
lieu of reinstatement.
Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1),
the FWC must take into account all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have
been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the
person because of the dismissal; and
(e) the amount of any remuneration earned by the person from
employment or other work during the period between the dismissal and the
making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the
person during the period between the making of the order for compensation
and the actual compensation; and
(g) any other matter that the FWC considers relevant.
Misconduct reduces amount
(3) If the FWC is satisfied that misconduct of a person contributed to the
employer’s decision to dismiss the person, the FWC must reduce the amount it would
[2013] FWC 3034
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otherwise order under subsection (1) by an appropriate amount on account of the
misconduct.
Shock, distress etc. disregarded
(4) The amount ordered by the FWC to be paid to a person under subsection (1)
must not include a component by way of compensation for shock, distress or
humiliation, or other analogous hurt, caused to the person by the manner of the
person’s dismissal.
Compensation cap
(5) The amount ordered by the FWC to be paid to a person under subsection (1)
must not exceed the lesser of:
(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the
dismissal.
(6) The amount is the total of the following amounts:
(a) the total amount of remuneration:
(i) received by the person; or
(ii) to which the person was entitled;
(whichever is higher) for any period of employment with the employer during
the 26 weeks immediately before the dismissal; and
(b) if the employee was on leave without pay or without full pay while so
employed during any part of that period—the amount of remuneration taken to
have been received by the employee for the period of leave in accordance with
the regulations.
Evidence
[56] The Applicant’s evidence is that he was unemployed for six weeks following the
termination of his employment. He says he sought work through a number of employment
agencies and eventually secured a sales position earning $80,000 per annum.
[57] Prior to the termination of his employment the Applicant was being paid $80,000 per
annum with some commission payments. He also received a motor vehicle allowance of
$220.00 per week and superannuation (assumed to be 9%).21
Consideration
[58] I do not consider that the making of an order for compensation will affect the viability
of the Respondent (s.392(2)(a)).
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[59] The Applicant was employed by the Respondent for seven months prior to his
dismissal (s.392(2)(b)).
[60] The Applicant had a relatively short period of service with the Respondent. Given the
events at the party, the apparent deterioration in the relationship between the Applicant and
representatives of the Respondent and the increased tension in the office it is my opinion that
the Applicant would not have remained in employment for any more than a further 13 weeks.
The employment relationship was under substantial strain and I cannot see that it would have
continued for much longer.
[61] I estimate the Applicant’s lost remuneration for 13 weeks to be:
Salary $20,000.0022
Motor vehicle allowance23 $2860.00
Superannuation $1800.00
Total $24,660.00
[62] I therefore find that, had the Applicant not been dismissed, the remuneration he was
likely to have received for the three months he would have remained in employment is
$24,660.
[63] This amount needs to be reduced by the $1538.46 the Applicant received as pay in lieu
of notice.24 This deduction results in lost remuneration of $23,121.54.
[64] This amount should normally be reduced for contingencies. In this case I do not make
such a deduction. A deduction for contingencies is to ‘take account of other matters which
might otherwise adversely affect earning capacity.’25 In this case the three month period
during which I estimate the Applicant would have remained in employment has passed.
Nothing occurred during the period to adversely affect the Applicant’s earning capacity such
that I should apply a reduction for contingencies.
[65] As there is no contingency to apply the total amount of lost remuneration of the
Applicant is $23,121.54 (s.392(2)(c)).
[66] I am satisfied that the Applicant has taken appropriate steps to mitigate his loss. He
took appropriate action through a number of agencies to find, and subsequently secure,
ongoing employment (s.392(2)(d)). He was without work for a six week period after which he
found a position as a sales person earning $80,000 per year.
[67] I have assessed that the Applicant would only have remained in employment for a
period of three months. In this period the applicant earned, from his new employment,
$9,230.77 (six weeks based on $80,000 per annum) plus 9% superannuation. I do not need to
consider the earnings of the Applicant up until the time of the order or from the making of the
order to the time of any payment of that amount as the thirteen week period has passed.
[68] I have deducted the amount of $10,061.54 ($9230.77 plus 9% superannuation) from
the $23,121.54 remuneration the Applicant would have earned had he not been dismissed
(392(2)(e)). This resulting amount is $13,060.00.
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[69] There are no other matters that I consider relevant (s.392(2)(g)).
[70] I have not considered the taxation treatment of the amount I have determined.
[71] I have not reduced the amount for misconduct (s.392(3)) and I have not included any
component for shock, humiliation or distress (s.392(4)).
[72] The amount I intend to award as compensation is less than the amount the Applicant
would have received had he remained in employment for 26 weeks and is less than the high
income threshold (s.392(5)).
[73] No application has been made that any award of compensation should be able to be
paid in instalments.
[74] I have therefore determined that the Applicant should receive compensation of
$13,060.00.
Conclusion
[75] For all of the reasons given I have decided that the Respondent pay compensation to
the Applicant the amount of $13,060.00 gross, to be taxed according to law, in lieu of
reinstatement. It is appropriate that the compensation be paid within 14 days.
[76] An order to this effect will issue in conjunction with this decision.
COMMISSIONER
Appearances:
J. McCarron on behalf of himself, the Applicant.
M. Aldis for the Respondent.
Hearing details:
2013.
Melbourne;
8 April 2013.
1 Transcript PN280-1.
2 Transcript PN282-3.
3 [2012] FWA 10625.
4 Attachment L to the Respondent’s submission.
5 Whilst he did sign the commission arrangement the Applicant could not tell me what ‘OTE’ stood for.
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6 Attachment C to attachment B of the Applicant’s submission.
7 exhCFM2, paragraph 4.
8 (1995) 62 IR 371, 373.
9 Print R4471, [19].
10 AIRC Print S5897, [73].
11 Fastidia Pty Ltd v Goodwin, Print S9280, [43].
12 Transcript PN514-5, 555.
13 Transcript PN526.
14 Respondent written submission dated 12 March 2013, page 3.
15 Attachment P to the Respondent’s submission.
16 Attachment M to the Respondent’s submission.
17 Attachment R to the Respondent’s submission.
18 Attachments K & L to the Respondent’s submission.
19 (1995) 185 CLR 410, 465 per McHugh and Gummow JJ.
20 Section 390(3).
21 See attachments K, L, M & N to attachment B to the Applicant’s submission.
22 The Applicant provided no information that would allow me to make any determination on his likely commission payment
had he remained in employment. It has therefore not been included in the calculation.
23 The Applicant received an allowance of $220 per week.
24 Attachment N to attachment B of the Applicant’s submission is his final pay slip showing payment in lieu of notice.
25 Wynn v NSW Insurance Ministerial Corporation the High Court (per Dawson, Toohey, Gaudron and Gummow JJ) as cited
in Ellawala v Australian Postal Corporation Print S5109 (17 April 2000), [37].
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