[2011] FWA 161

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FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Susan Patricia Ryan
v
Logan & Co Pty Ltd
(U2010/11077)

COMMISSIONER CARGILL

SYDNEY, 11 JANUARY 2011

Termination of employment.

[1] This decision arises from an application by Ms S Ryan (the applicant) pursuant to section 394 of the Fair Work Act 2009 (the Act) for relief in respect of the termination of her employment by Logan & Co Pty Ltd (the respondent or the company). The applicant’s dismissal occurred on 20 July 2010 and the application was lodged with Fair Work Australia (FWA) on 28 July 2010.

[2] The matter was dealt with by an FWA Conciliator but did not settle. It was heard by me in Narrabri on 16 November and 14 December 2010. The matter proceeded by way of hearing as I considered that it was appropriate to do so having taken into account the factors set out in section 399 including the views of the parties as reflected in the conciliator’s report.

[3] The applicant was represented by Mr Booby, solicitor and the respondent by Mr Moss, solicitor.

[4] The applicant gave evidence. Her witness statement was marked Exhibit 2. Her oral testimony is at PN 30-1283 of Transcript.

[5] The following witnesses gave evidence on behalf of the respondent:

[6] There was extensive evidence and much material provided in these proceedings. Although I may not specifically refer to each and every issue raised, in reaching my conclusions I have had regard to all relevant materials and evidence before me.

FACTS AND EVIDENCE

[7] It should be noted that the parties provided a Statement of Agreed Facts. This became Exhibit 1. Although I do not set it out in full in this decision I have drawn upon it in the following summary of facts and evidence.

[8] The respondent owns and operates the Mitre 10 store in Narrabri which is where the applicant was employed. The company also runs the Retrovision store and a furniture business in Narrabri as well as a funeral business which operates in Narrabri, Moree and Goondiwindi. There are 25 full time equivalent employees in the Narrabri businesses with 11 of these within the Mitre 10 store. There was no evidence as to the number of employees in those parts of the funeral business which operate in Moree and Goondiwindi.

[9] The applicant commenced employment with the respondent in November 2000. During the period of her employment the applicant worked in a number of different roles primarily in the area of building and paint supplies. In July 2007 she was appointed Manager of Building Supplies.

[10] In August 2008 the applicant received a pay rise. In October 2008 Mr Logan had a discussion with the applicant about various performance issues. He also provided her with a note setting out areas where improvement was required. That is Attachment THL1 to Exhibit Respondent 3.

[11] In November 2008 the applicant injured her right hand at work and a workers’ compensation claim was made. A few weeks later the applicant requested a further pay rise. She received one although it was not as high as she had requested.

[12] Mr Logan’s evidence is that he agreed to an increase despite reservations about the applicant’s performance as he hoped that the increase would encourage her to improve. Each of the section managers, including the applicant, received an end of year bonus of $1,000.

[13] As a result of the injury to her hand the applicant underwent at least two operations, in February and September 2009. There was also mention of an operation in June 2010 however it is unclear whether that was a third operation or an incorrect date. The applicant was on a return to work plan which included reduced hours. Initially, she worked a few hours a day for a few days a week. As at the date of the applicant’s dismissal in July 2010 she was working 30 hours a week.

[14] The applicant was also taking prescribed painkillers. Her evidence is that they made her tired and drowsy which could have affected her work. The applicant testified that she told Mr Logan that the medication affected her. Mr Logan’s evidence is that he knew the applicant was on medication but it hadn’t been apparent that her work may have been suffering as a result.

[15] Mr Logan’s evidence is that, during 2009, he spent time training the applicant in certain areas of her work but problems were still occurring. In July 2009 he provided the applicant with a note about changes which needed to be made and the requirement to have a daily discussion with him. That is Attachment THL2 to Exhibit Respondent 3.

[16] In October 2009 Mr Logan had a discussion with the applicant about the way in which her duties could be carried out in the best interests of the business. Mr Logan’s evidence is that he provided the applicant with a document which set out the responsibilities of her position. That is Attachment THL3 to Exhibit Respondent 3.

[17] The applicant denies seeing this document prior to these proceedings. She does agree that Mr Logan held discussions with her on a number of occasions and informed her that there was room for improvement. The applicant’s evidence is that Mr Logan was not being critical of her performance but was merely indicating where things could be improved.

[18] In November 2009 Mr Logan provided the applicant with a further document setting out a list of things which should be done. He also provided to the applicant and other product buyers a memo about a new procedure for ordering stock. Both of these documents are in Exhibit Respondent 1. The first-mentioned document is also Attachment THL5 to Exhibit Respondent 3. The applicant denies receiving two other memos dated 3 February and 23 November 2009, Exhibit Respondent 2 and Attachment THL7 to Exhibit Respondent 3, which were addressed to purchasing staff.

[19] The applicant also denies receiving a memo from Mr Logan dated 22 March 2010 addressed to both herself and Mr Welsh concerning the cleanliness of the building supplies area and the need to make urgent improvements. This memo is Attachment THL6 to Exhibit Respondent 3.

[20] Mr Logan’s evidence is that he continued to try to bring the applicant’s performance up to a satisfactory level. This was despite decreasing turnover in the building section. He understood that he could not move the applicant out of her role as the manager because she was on workers’ compensation.

[21] Mrs Logan began working in the Mitre 10 store in April 2009. In early 2010, at her husband’s request, she began to oversee the applicant’s work. Her evidence is that she found numerous errors. She brought them to the applicant’s attention and recorded the outcome of the discussions in writing. There are two records of discussion, Attachments SPR4 and 5 to Exhibit 2 and Attachment KJL1 and 2 to Exhibit Respondent 4, which reflect discussions on 23 April and 19 May 2010. The applicant agreed that she had not indicated to Mrs Logan that any of the errors which had been raised with her were not her responsibility.

[22] Mr Logan’s evidence is that, by May 2010, sales were falling. Mr Welsh had been employed in March to assist because the applicant was absent so much as a result of her injury and its aftermath. Mr Welsh was employed as a sales representative and was “on the road” most of the time. Mr Welsh’s evidence is that he sensed that the applicant resented him. He assured her on a number of occasions that he didn’t want her job.

[23] Mr Logan’s evidence is that, as a result of his concerns, on 26 May he provided the applicant with a letter of warning, Attachment SPR6 to Exhibit 2, Attachment THL4 to Exhibit Respondent 3 and Attachment KJL3 to Exhibit Respondent 4. In the letter Mr Logan raised the following issues: the grade of steel ordered for the building of a cement shed; the provision of a trade discount to a customer who was not entitled to one; and the lack of communication with Mr Welsh and himself especially in relation to ordering. The letter concludes with the statement that further instances of carelessness could place the applicant’s position in jeopardy.

[24] There was extensive evidence about the first two of these issues. In 2009 a cement shed was to be erected at the store. The applicant’s evidence is that she simply ordered what the builder had requested which was first grade steel. Mr Logan’s evidence is that this was not necessary. The steel was returned to the supplier who charged a restocking fee of $600. Mr Logan spoke to the applicant about the issue.

[25] About nine months later more steel was required for the cement shed. Mr Welsh gave the applicant a list of necessary material, Attachment SPR9 to Exhibit 2 and Attachment KJL8 to Exhibit Respondent 4. The list does not mention the grade of steel to be ordered but Mr Welsh’s evidence is that he discussed the order with the applicant and told her it should be second grade. First grade steel was delivered.

[26] The applicant’s evidence is that she didn’t remember the earlier incident and, in cross-examination, she agreed that she probably should have checked with Mr Logan about the grade of steel he required. Mr Logan’s evidence is that he asked the applicant on more than one occasion to return the steel. This was not done and the steel was then unable to be sent back as it had been rained on and was rusty. The applicant’s evidence was that it was not her responsibility to store the steel. Mr Logan’s evidence is that the cost to the business was $2,500.

[27] Although it was not mentioned in the letter, another matter arose out of Mr Welsh’s note mentioned above. It had listed a roller door with particular dimensions. The door that was delivered was of a smaller width. The applicant’s evidence is that she had faxed Mr Welsh’s note to the supplier and consequently any mistake must have occurred with them.

[28] The second issue in the letter of 26 May concerned the applicant providing a trade discount to a customer by placing a sale through the account of the customer’s brother. The sale involved a light bulb. Mr Logan agreed that the amount was not large however it resulted in less profit for the business. Mr Logan was also concerned it might not have been a “one off”. His evidence is that staff were authorised to charge goods to a tradesman’s account by “associated persons” only if the material was for a job. In this case it was for personal use.

[29] The applicant’s evidence is that was the usual practice to put material bought by any other family members of this particular customer on his account. The applicant’s evidence is that people could go elsewhere to purchase goods so at least the respondent was making a sale even if it involved less profit.

[30] At the time that the letter of 26 May was given to the applicant, she and Mr Logan had a discussion about its contents. The applicant’s evidence is that she later attempted to see Mr Logan a few times to speak to him further about it however he was not in the store.

[31] The evidence of Mr and Mrs Logan is that, after speaking to “Workcover and Department of Industrial Relations”, they decided to move the applicant out of her role as Manager. Her absences and reduced hours were causing dislocation to the business. The applicant’s salary level was maintained. The applicant was informed of this change on 9 July.

[32] The applicant’s evidence is that she requested a job description for the new position but was not given one. Mrs Logan’s evidence is that a job description was not provided as they did not know which duties the applicant could do competently.

[33] At some point between 9 July and 20 July two matters came to Mrs Logan’s attention which led to her decision to terminate the applicant’s employment. The first involved the sale of some products to a customer in Wee Waa. Mrs Logan’s evidence is that the applicant had made errors in adding up, in calculating the mark-up on the goods and/or the freight component and had also ordered too many items. Mrs Logan’s evidence is that the applicant had overcharged the customer $210.

[34] The applicant acknowledged that she had made an arithmetic error in adding up the cost of the order, however, she denied that she had made any other mistake in relation to it. Paperwork concerning the order is at Attachment KJL5 to Exhibit Respondent 4.

[35] The second matter which caused Mrs Logan to decide to dismiss the applicant is that it was reported to her that the applicant had spoken to a customer in the store describing both Mr Logan and Mr Welsh as “dickheads”. Mr Welsh’s evidence is that he overheard the applicant telling a customer that “there is a new dickhead running” the building section who was “nearly as bad as the dickhead who owns the place”.

[36] The applicant denies making such a comment to a customer. Her evidence is that her only use of the word in the store was when she called Mr Welsh a “dickhead” one day when they were both in the office.

[37] Both Mr Logan and Mr Welsh gave evidence that the customer had been approached to provide a statement but had been unwilling to do so.

[38] Mrs Logan’s evidence is that she had also had other issues with the applicant’s performance, including the ordering of too many door handles and the failure to have orders countersigned by an appropriate person. Her evidence is however, that the two matters identified in paragraphs 33 and 35 above were pivotal to her decision. She discussed the situation with her husband and it was decided that the applicant’s employment could not continue. Mrs Logan prepared a termination letter, Attachment KJL4 to Exhibit Respondent 4 and Attachment SPR7 to Exhibit 2.

[39] On 20 July a meeting was held between Mrs Logan and the applicant. The applicant had a support person with her and the floor manager from Mitre 10 was also present as a witness. Mrs Logan read the letter to the applicant. Her evidence is that the applicant was then allowed an opportunity to respond.

[40] The applicant’s evidence is that she spoke about some of the issues raised in the letter including denying that she had used the word “dickhead” in front of the customer. The applicant’s evidence is that she was not given a proper opportunity to respond. She was dumbfounded and rather stunned. Her evidence is that she was not in a position to ask for more time in which to respond as she was told to leave the premises immediately. The applicant was provided with pay in lieu of notice as well as her other entitlements.

[41] The applicant has applied for a number of jobs since her dismissal. The details are in Exhibit 3. She has been unsuccessful in her endeavours. The applicant’s evidence is that she has continued to receive workers’ compensation payments except for a period of about one month immediately following the dismissal.

[42] The applicant seeks reinstatement. Her evidence is that her employment prospects are poor because of her ongoing injury related problems. The respondent opposes reinstatement. Mr Logan’s evidence is that it would not be in the firm’s best interests. His evidence is that the applicant is not capable of a management position and her loyalty to the respondent is in question.

[43] It should be noted that the respondent raised several additional performance issues during the proceedings. These included the ordering of fascia boards, silicone, weld mesh, door jambs, aluminium paint and a shower rail as well as the sale of insulation and inconsistency of mark-ups. Mr Logan also had a general concern about the cleanliness and tidiness of the applicant’s office and the building supplies section. Mrs Logan gave evidence that the applicant failed to properly enter information into the computer ordering system. I have not dealt with these matters in any detail. The applicant provided explanations for them and, in any event, they were not critical to the decision to dismiss.

SUBMISSIONS ON BEHALF OF THE APPLICANT

[44] Mr Booby submitted that the termination of the applicant’s employment was harsh, unjust and unreasonable. He referred to the decision of the High Court of Australia in Byrne and Frew v Australian Airlines Pty Ltd (1995) 185 CLR 410 @ 465 and noted that a dismissal could be harsh, but not unjust and unreasonable, unjust but not harsh or unreasonable or unreasonable but not harsh or unjust. Mr Booby submitted that all three elements were made out in this matter.

[45] Mr Booby submitted that there was no valid reason for the applicant’s dismissal. In this regard he referred to the decision of Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 @ 373.

[46] Mr Booby noted that all of the performance related letters which had been given to the applicant had been provided after she had suffered her workplace injury. Mr Booby submitted that there was no proper basis for the two main issues which had been relied upon by the respondent.

[47] He noted Mrs Logan’s confused evidence that the error in relation to the Wee Waa order could have been either the mark-up or the freight charge. Mr Booby submitted that it was likely that neither had occurred but, in any event, they were not of such significance as to justify the dismissal of an employee with the applicant’s length of service. He submitted that the second reason which had been put forward by the respondent, the alleged “dickhead” remarks, had not been made out.

[48] Mr Booby submitted that the applicant had provided a robust defence to the other performance matters which had been raised by the respondent. He noted that the applicant was on medication which had produced adverse side effects. He also noted that the building supplies area was busy and that the applicant’s job was now being done by two people. Mr Booby further noted that the applicant had conceded that she had made some mistakes during the course of her employment.

[49] Mr Booby submitted that the applicant had not been provided with an opportunity to respond to the reasons for termination. The applicant had not been given access to any counselling or human resources services. Mr Booby submitted that the respondent employed a reasonably significant number of staff.

[50] Mr Booby submitted that reinstatement was appropriate. The applicant had applied for many jobs but had been unable to find work. Mr Booby opined that this was to be expected in light of the applicant’s ongoing workplace injury. He submitted that the evidence supported the applicant’s dedication to her job and her efforts to be able to work up to 30 hours per week following her injury.

SUBMISSIONS ON BEHALF OF THE RESPONDENT

[51] Mr Moss submitted that the termination of the applicant’s employment was not harsh, unjust or unreasonable. He submitted that the respondent had afforded the applicant more than sufficient fairness during the course of her employment. Mr Moss noted that, despite the downturn in profits, the applicant had been retained in her position for eighteen months after her injury.

[52] Mr Moss referred in detail to the applicant’s employment history. He noted that she had been in her management position for some time prior to faults occurring in her performance. The lack of any formal job description was therefore not fatal. Mr Moss also noted that Mr Logan had raised various performance issues with the applicant as early as 2008. The question of the tidiness and cleanliness of the building supplies section had been a continual concern.

[53] Mr Moss referred to the issues raised in the letter of 26 May 2010 and submitted that, regardless of whether Mr Welsh had told the applicant to order second grade steel, it was a significant oversight on her part not to have discussed the matter with Mr Logan in view of the earlier incident. Mr Moss submitted that the applicant’s evidence about the use of the customer’s trade account demonstrated that she had not been acting in her employer’s best interests.

[54] Mr Moss submitted that the applicant had been afforded procedural fairness during the dismissal process. The fact that Mrs Logan had prepared the termination letter prior to the meeting does not mean that she had made a definite decision to dismiss the applicant. She had the idea to dismiss but wanted to give the applicant an opportunity to respond. Mr Moss noted that the applicant had not raised any concern about her opportunity to respond until these proceedings.

[55] Mr Moss submitted that the applicant could have been summarily dismissed as a result of the “dickhead” remarks. He submitted that it was more likely than not that the applicant had made the comments as evidenced by Mr Welsh. Mr Moss submitted that the respondent should not have to put up with such remarks. The applicant’s conduct in this regard also demonstrated disloyalty to her employer.

[56] Mr Moss submitted that the evidence showed that the applicant had agreed that she knew she had made mistakes in her work.

[57] Mr Moss submitted that the applicant’s failure to have informed the respondent of any adverse effects of the medication was a breach of the employment relationship. The respondent has occupational health and safety obligations which could have been affected.

[58] Mr Moss noted that the applicant had been continuing to receive workers’ compensation payments since her dismissal. These were not much less than her salary whilst she was employed.

CONCLUSIONS

[59] Section 396 of the Act sets out four matters which must be decided in applications of this type before the merits of a claim are considered. Those matters are:

[60] As indicated in paragraph 1 of this decision, the application was made eight days after the termination. This is within the period required in subsection 394(2). There is no issue that the applicant was protected from unfair dismissal within the meaning of section 382. Paragraphs (c) and (d) of section 396 have no relevance in this particular matter.

[61] Section 385 provides that a person has been unfairly dismissed if FWA is satisfied that:

[62] Paragraph (a) is clearly met. Paragraphs (c) and (d) have no relevance in this matter.

[63] In order to decide whether the applicant’s dismissal was harsh, unjust or unreasonable it is necessary to turn to section 387 which sets out the factors which must be taken into account by FWA. Those factors are as follows:

[64] I shall address each of these factors in turn.

[65] The matters put against the applicant include issues of both conduct and performance. The allegation of misconduct is that she referred to both Mr Welsh and Mr Logan as “dickheads” in a conversation with a customer. In my view, if the allegation had been made out, in particular in relation to Mr Logan as the owner of the business and her employer, then it would provide a valid reason for the applicant’s dismissal.

[66] However the evidence on this issue is insufficient for me to reach such a conclusion. Mr Welsh testified that the conversation took place. The applicant denies it. The vital witness, the customer, was not called to give evidence. Even if the person was reluctant to become involved they could have been compelled by way of an order to attend. I appreciate that the respondent may not have wished to take such a step in relation to a customer. Nevertheless it was an important part of the respondent’s case.

[67] The other issue raised against the applicant concerned her performance. The broad details are set out earlier in this decision. It is clear that there were some shortcomings in the applicant’s performance. She conceded that she had made mistakes. I accept that her failings were the source of a great deal of frustration for Mr and Mrs Logan.

[68] However the applicant provided plausible explanations for many of the specific issues which were raised. In some instances it appears to be merely a matter of opinion as to whether the applicant made a particular error. For example, I am by no means satisfied that the error in relation to the customer from Wee Waa was of the nature or magnitude suggested by Mrs Logan.

[69] All in all, on the evidence before me, I am not satisfied that various performance issues, taken as a whole, amount to a valid reason for the applicant’s dismissal.

[70] The applicant was notified of the reasons for the termination of her employment in that the letter which set out those reasons was read to her in the meeting on 20 July. However I am not satisfied that she was given any proper opportunity to respond. It is true that she made brief comments about some of the issues which were raised however, in my view, Mrs Logan had clearly made up her mind that the applicant’s employment was to end. No responses were going to change that decision.

[71] There was no unreasonable refusal by the respondent to allow the applicant to have a support person present at the final discussion.

[72] The applicant had been previously warned about her performance specifically in Mr Logan’s letter of 26 May. She had also been spoken to about her performance on a number of occasions by both Mr and Mrs Logan.

[73] Although the respondent is not a small business employer within the meaning set out in the legislation, it is a moderately sized family run business with no dedicated human resources management specialists or expertise. In my view these factors had a negative impact on the procedures which were followed in effecting the applicant’s dismissal.

[74] There is no other particular matter which I consider to be relevant in this case.

[75] In all of the circumstances and having taken account of each of the factors in section 387 and my findings thereon I have determined, on balance, that the termination of the applicant’s employment was harsh. It follows from this and the other matters addressed in paragraphs 61 and 62 above, that the applicant’s dismissal was unfair.

[76] Sections 390, 391 and 392 of the Act deal with remedies for unfair dismissals. I am satisfied that the provisions of section 390(1) and (2) have been met in this case. Subsection (3) provides that an order for compensation must not be made unless FWA is satisfied that reinstatement is inappropriate.

[77] I have carefully considered all of the material which was put on the question of remedy and, in particular, whether reinstatement is appropriate. I have decided, on balance, that reinstatement is inappropriate in this case.

[78] In arriving at this conclusion I have paid particular attention to the applicant’s age, length of service, her workers’ compensation situation and the difficulties she has had and will presumably continue to have, in finding employment. However, my observation of the witnesses leads me to the view that the necessary relationship of trust and confidence could not be restored, especially between the applicant and Mrs Logan. In this regard it needs to be remembered that Mrs Logan is not just another employee but is a shareholder in the respondent company as well as the wife of the sole director.

[79] Pursuant to section 390(3)(b) I consider that, in all of the circumstances of this case, it is appropriate to make an order for the payment of compensation. Section 392(2) requires that, in determining an amount for the purposes of such an order, FWA must take into account all the circumstances of the case including:

[80] There was nothing before me as to the effect of any order for compensation on the viability of the respondent’s business. I am satisfied that the order which I propose to make would not have an adverse effect on such viability.

[81] The length of the applicant’s service with the respondent is considerable.

[82] There is always a speculative element involved in assessing the remuneration that a person would have or would have been likely to have received had it not been for their dismissal. In this case I consider that the applicant would have remained in the respondent’s service for some months if not longer.

[83] The applicant has made satisfactory efforts to mitigate her loss. The details of her job applications are contained in Exhibit 3. The fact that the applicant has not been successful in obtaining alternative employment should not be held against her.

[84] The applicant has not earned any remuneration from employment or other work since the dismissal. Her income has been from workers’ compensation payments. It seems reasonable to assume that these payments will be her only source of income in the period between making of the order for compensation and the receipt of such compensation.

[85] I do not consider that there are other relevant factors.

[86] Having taken all of these matters into account as well as all of the circumstances of the case, I have determined that I should make an order for 20 weeks compensation. This is to be based on the applicant’s weekly rate of pay for the hours being worked as at the date of her dismissal. The workers’ compensation payments are to be deducted from the total with allowance for the period of about a month immediately following the dismissal in respect of which the applicant did not receive such payments. In other words, the respondent is to pay the applicant her pre-dismissal rate for that period and is to pay her the difference between the workers’ compensation payments and that pre-dismissal rate for the balance of the 20 weeks. An order to this effect accompanies this decision.

[87] Finally, I indicate that, in deciding this matter, I have given consideration to the need to ensure that a “fair go all around” has been accorded to both the applicant and the respondent as provided in section 381(2) of the Act.

COMMISSIONER

Appearances:

R. Booby, solicitor, for the applicant.

L. Moss, solicitor, for the respondent.

Hearing details:

2010.

Narrabri.

November 16,

December 14.



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