[2012] FWA 8136 |
|
DECISION |
Fair Work Act 2009
s 394—Application for unfair dismissal remedy.
Ivo Pasalic
v
Technometal Pty Limited
(U2011/13765)
DEPUTY PRESIDENT SAMS |
SYDNEY, 9 OCTOBER 2012 |
Unfair dismissal - jurisdiction - employed for a specified task - poor performance - allegations of misconduct - denial of procedural fairness - dismissal unfair - reinstatement not appropriate - compensation ordered.
BACKGROUND
[1] This decision will determine an application, filed by Mr Ivo Pasalic (‘the applicant’), pursuant to s 394 of the Fair Work Act 2009 (the ‘Act’), in which he seeks an order from Fair Work Australia (FWA) for an unfair dismissal remedy arising from his dismissal on 3 November 2011 by Technometal Pty Ltd (‘the respondent’). The applicant had been employed for just over six years as a designer / drawer for the respondent; a manufacturer of automatic packaging machinery in Ingleburn, NSW. The respondent’s Managing Director is Mr Marius Togi. Mr Togi and the applicant were the only persons who gave evidence in this case.
[2] There has been some delay in this matter being listed for final arbitration before the Tribunal as presently constituted. This was so because the respondent had initially objected to the application being accepted by FWA on jurisdictional grounds; namely, it was said that the applicant was an independent contractor and not an employee, and therefore not a person able to make an application for a remedy for unfair dismissal under Part 3-2 of the Act. That jurisdictional issue was subsequently heard and determined in the applicant’s favour, by His Honour Watson, VP on 20 April 2012; See: Pasalic v Technometal Pty Ltd [2012] FWA 3291.
[3] At the hearing of the application on 3 September 2012, the applicant was represented by Ms J Prats, Solicitor and Mr R Aslanian and the respondent was represented by Mr S O’Brien of Counsel instructed by Mr M Donovan. Both legal representatives were granted permission to appear. At the outset of the proceedings, I inquired of the parties as to their views as to whether the matter should proceed by way of hearing or conference; (s 399 of the Act). Both parties indicated a preference to proceed to a hearing and I adopted that course.
[4] At the commencement of proceedings, Mr O’Brien informed the Tribunal and the other party, for the first time, that the respondent intended to invoke another jurisdictional objection to the application proceeding; namely, that the applicant had not been dismissed because he ‘was employed under a contract of employment for a specified period of time, for a specified task, or for a specified reason and the employment has terminated at the end of the period, on completion of the task or at the end of the season’ (s 386(2)(a) of the Act) (my emphasis). I shall return later to consider this objection; suffice to say at this point, that I made it clear to Mr O’Brien that I was less than impressed with the respondent raising another jurisdictional objection, without any prior notice to the applicant’s representative or the Tribunal. It had the real potential to derail and/or delay the proceedings and I may well have ruled against the respondent being able to adjust the case the applicant was required to meet, at ‘the heel of the hunt’ and without any notice (although I was not asked to). That said, I was grateful to both legal representatives for conducting the case to conclusion in the allocated time earlier believed sufficient to do so.
THE EVIDENCE
The applicant’s Evidence
[5] The applicant has a mechanical engineering degree from the University of Banja Luka (Bosnia) and had worked as a mechanical engineer in Bosnia for 20 years before migrating to Australia in 1996. The applicant claimed that he was required to work a 40 hour week from 7am - 3pm sketching, drawing and designing parts for the Company’s manufacturing clients. He completed daily timesheets. Occasionally, he would accompany Mr Togi on visits to clients, including Coca Cola, ARA Alexandria, VISY, Pilkington, Dairy Farmers and Australia Post, where he would be introduced as Mr Togi’s mechanical design draftsman. While attending the clients’ premises, the applicant said he would take measurements and rough sketches and make modifications according to Mr Togi’s instructions. Mr Togi also instructed him on the more technical aspects of design and how to create DFX files to be sent to external companies, as required. The applicant said Mr Togi would regularly request modifications to his work.
[6] The applicant said that Mr Togi provided him with:
[7] The applicant claimed that he received regular increases in his hourly rate of pay (from $30.00 to $32.00 to $35.00 to $37.00) and bonuses. Mr Togi would often compliment him on his work. In 2006, he was required to work on a design program which transformed 2D sketches to 3D and he later become involved in coordinating the manufacturing and installation process for the client. In 2009, he travelled with Mr Togi to Townsville and Melbourne to visit clients. In October 2009, the applicant was advised to change the Company’s name on his invoices from Technometal Design to Technometal and he did so. However, Mr Togi countered this evidence by putting that when the applicant was asked to change his invoices, he had ignored the request for many months.
[8] In October 2011, the Company installed new computer software, Solid Edge ST3 (‘ST3’)) and the supplier (Siemens) had also released a newer version, Solid Edge ST4 (‘ST4’). The applicant said he wanted to download the newer version to better understand ST3 and on 30 October 2011 he attempted to download a 45 day trial of ST4 on his personal laptop at home. In doing so, he was required to fill in a form, which included his name, occupation, place of work and current software. The download failed.
[9] On 3 November, a Siemens representative contacted the applicant and told him that Technometal did not have a licence to operate ST3. The representative asked the applicant if he was the owner of the business. The applicant said he did not know about the licence and that he was not the owner. About 15 minutes later, Mr Togi approached him and asked if he had spoken to a representative from Solid Edge. When he said yes, Mr Togi said ‘I am giving you the sack, go upstairs, pick up your stuff and leave’. When the applicant asked why, Mr Togi said ‘I don’t need to give a reason’. The applicant received no letter of termination, no payment of notice or any of his outstanding entitlements. After requesting a separation certificate from Mr Togi the applicant received a letter from him in the following terms:
Mr Pasalic,
You have not been employed by Technometal Pty Ltd at any stage. You presented invoices for payment, not wages or salary.
You worked as a subcontractor, independent identity or sole trader on a daily basis, as required.
All invoices for payments were including GST (14 days payment terms) made for your services, clearly defines without any doubts your position as an independent subcontractor on undefined terms or conditions, open to the public.
There was no contract or agreement of any periods or services required. Your services provided were determined by work requirements on a daily basis/hourly basis
Marius Togi
Director
Technometal Pty Ltd
[10] The applicant said that when he worked for the Company, he had earned $36,561.10 between 1 July 2011 and 3 November 2011; an average of $2031.17 per week. He said he has since had difficulty finding work at his age (60 years) and that he had applied for more than 100 jobs. He is ineligible for Centrelink payments as his wife is paid workers’ compensation of $525 a week. His two sons have provided some financial support.
[11] In further examination in chief, the applicant said that there had never been any issues raised about his work performance and he had never received any written warnings about his conduct or performance.
[12] In cross-examination, the applicant denied that he was employed on a project by project basis and said there were no occasions where Mr Togi did not have something for him to do. The applicant was referred to the Coca Cola project which ended in mid October 2011. Mr Togi had complimented him on his work. He denied that mistakes with the design cost the Company $20,000 to correct.
[13] The applicant deposed that he had attempted to download ST4 on a Sunday while at home. He had not been directed to download the program, but had wanted to improve his own productivity. He said he could not download it on his office computer as there was no internet connection. He did not know anything about any licensing requirements and understood that the Company was using ST3 at the time.
[14] The applicant accepted that when he attempted to download ST4, he had filled in a form in which he described the customer as Technometal Design being the company for which he worked. The applicant said he had only sought to download ST4 for his own training purposes, and to make himself ‘more productive, faster and accurate’.
[15] The applicant deposed that, at no time during his employment with the Company had he been performing work for anyone else. When shown his invoices to the Company, the applicant denied ever billing twice for the same services. The applicant agreed that in October 2009 he was asked to change the name of the Company on his invoices and to change his own ABN number. However, he believed this was not an important issue for the Company.
[16] The applicant was asked how he had behaved towards another employee, Ms Charlotte Osbourne. He denied snatching his time sheet from her on one occasion. The applicant further denied making mistakes with his drawings. He said it was Mr Togi who would constantly want changes and alterations. He denied scrunching up a drawing on one occasion and throwing it on the floor. He said that if Mr Togi had been unhappy with his work, he would not have worked for him for so long. The applicant denied interfering with the work of other employees of the Company. He would sometimes go to the workshop to explain how a particular drawing was meant to work. He had never had any disagreements with any other staff when he had visited the workshop.
[17] The applicant denied making any mistakes on the Coca Cola project. He said he had two options - ‘one short, the other tall.’ He was asked to redo the drawings because they were too short. The applicant was shown a number of other drawings, which he claimed were produced by him.
[18] The applicant said he had applied for many types of jobs since being dismissed and had not limited himself to mechanical engineering roles. He accepted that he might not have been successful because of his limited work experience in Australia. However, no prospective employer had mentioned his age.
[19] The applicant deposed that when he was dismissed he was given 10 minutes to collect his belongings and leave the premises. He was later asked to return the Company’s hard drive disks. He asked a friend to do so. In his evidence, Mr Togi said the hard drive data had all been deleted and it represented hundreds, if not thousands, of drawings made over 5 years. Mr Togi believed the applicant had deliberately deleted the material. However, the applicant denied returning the hard drives with the contents deleted and said that he did not know what happened to them after they were returned.
Mr Togi’s other evidence
[20] Mr Togi acknowledged that he was not a fully qualified mechanical engineer. However, Mr Togi said the applicant was not engaged to design or redesign parts; he was required to draft drawings from sketches that he (Mr Togi) prepared and draft drawings of existing parts only.
[21] Mr Togi gave an example of the applicant’s lack of design skills. On one occasion, he had been asked to replace a door. He designed the door upside down and the fittings didn’t line up. Mr Togi said he constantly had to correct errors in the applicant’s drawings and when he asked him to prepare new drawings, he would often throw the old ones in the bin and refuse to do so. Mr Togi denied ever telling the applicant he was pleased with his work. Mr Togi also denied that the applicant visited client work sites to carry out design works. Due to his lack of proficiency in English and lack of design skills, he could not trust the applicant to liaise directly with his customers. In cross examination, Mr Togi accepted that the applicant had occasionally attended work sites with him. However, all the design work was carried out by him (Mr Togi) and other contractors. As he had no confidence in the applicant’s design skills, his work was only ever at the very preliminary stage. Mr Togi said the applicant was never involved in design or installation, except for one occasion for Australia Post at Gosford. Mr Togi said that this job was a total disaster. He lost all subsequent work for Australia Post and everyone who had worked on the project with the applicant had resigned.
[22] Mr Togi said that the Company did not provide the applicant with a camera or measuring instruments. In fact, the applicant did not like using the camera and the drawing instruments were shared with everyone else in the office.
[23] In his further evidence, Mr Togi specifically denied:
● that the applicant’s duties were expanded after being trained on Solid Edge 18;
● ever allowing the applicant to organise any jobs, as he behaved in an interfering manner and caused disagreements with others;
● that the applicant was ever instructed to coordinate the manufacturing and installation process or that he had travelled to sites to help with installation;
● ever telling the applicant he was an excellent worker whose drawings ‘were the best’. On the contrary, the applicant cost the respondent $20,000 when the drawings for the Coca Cola bins had to be reworked; and
● that the applicant was paid a bonus. Rather, the applicant described the amount of hours he worked at home as a bonus.
[24] Mr Togi deposed that about a week after the applicant’s services were terminated, the Company’s computer system crashed for a week. He believed the ‘crash’ was probably related to the applicant using a USB from his personal laptop on the Company computer. It required an external IT person to restore the computer system. In answer to a question from me, Mr Togi accepted that he could not be certain that it was the applicant’s fault for the ‘crash’ of the Company’s computer. Mr Togi said he was not sufficiently computer literate to explain all of the issues relevant to the Company’s systems.
[25] Mr Togi insisted the applicant was never authorised to download other versions of Solid Edge. He did so without Mr Togi’s knowledge or consent. The Company continued to use the version 19 and had not upgraded to Solid Edge ST3. The applicant had wasted a lot of time trying to change the system when he should have been doing his drafting work.
[26] Mr Togi accepted that he did not give the applicant any reason for dispensing with his services. However, this was because, from his experience, the applicant would have only argued. The call from Siemens had been the ‘last straw’ for Mr Togi.
[27] Mr Togi detailed an incident in 2009 involving the client Dairy Farmers, Parmalat, in which the applicant made major mistakes costing the Company many thousands of dollars and lost production. When asked why he had not dismissed him at that time, Mr Togi said that he was silly and naive and had tolerated the applicant’s arguments and mistakes. Mr Togi said the applicant had been trouble for years and he had received several verbal warnings. Mr Togi said that, as the Company was a small operation, he did not have time for written warnings. He believed verbal warnings were sufficient. These included warnings issued for actively interfering with other people’s work, making various mistakes and refusing to provide Mr Togi with daily project drawings. Nevertheless, Mr Togi conceded the applicant was ‘meticulous’ with his work, but slow - someone else could do it in half the time.
[28] Mr Togi agreed that the applicant had received increases in his hourly rate of pay, but only by the CPI; the same as for the other contractors. He was not paid any bonuses, but was paid for work performed at home. Mr Togi said the applicant had three computers in his office and had access to email and Google provided by the Company.
[29] Mr Togi said that on 3 November 2011, the applicant was on the phone for 45 minutes to a representative of Siemens, Mr Northend. He had billed the Company for this time. A woman from Siemens later rang Mr Togi and told him he may have an unauthorised copy of ST3. Mr Togi said he was fired up because he was very busy and had been interrupted by the applicant’s private inquires. Mr Togi confirmed he gave the applicant no reason for his dismissal and had just said ‘I’m sorry, I’m letting you go’. Mr Togi said he did not give a reason because there were so many reasons, each of which would have been disputed by the applicant. He did not have the ‘luxury of time’ to spend arguing with him.
[30] Mr Togi said it was irrelevant to him what qualifications the applicant had before being engaged by him. All he had wanted was a draftsman. Mr Togi denied that he had dismissed the applicant because he feared the Company could be in breach of copyright, for unauthorised use and distribution of software. Mr Togi reiterated that the applicant had received numerous warnings, there were regular arguments with him in which he would throw things, slam doors and scream through the office. He was also ‘double dipping by’ claiming twice for the same time worked. On the day of the dismissal, he had just had enough of him and said ‘Go, I’ve had enough’.
SUBMISSIONS
For the applicant
[31] Ms Prats noted that the applicant had had 25 years experience as a qualified mechanical engineer. He undertook significant projects for the respondent during his 6 years and 24 days of employment. She described his duties as drawing sketches for mechanical parts, upon the instructions of Mr Togi and the respondent’s clients. Ms Prats said the applicant received regular pay increases and frequent bonuses during his employment. He had taken no sick leave or annual leave during his 6 years of employment.
[32] Ms Prats submitted that when Mr Togi arranged to install ST3 in October 2011, the applicant received no training on its use. He took the initiative to become acquainted with ST3 by downloading its successor ST4 at home. In order to do so, he provided his name, occupation, employer and he identified the software he used at work. On 3 November 2011, a representative of Siemens rang the applicant to inquire if he had a license to download ST3, as his attempt to download ST4 had failed. He told the representative he was not the owner of the Company and did not know about the license. When Mr Togi queried him as to whether he had been contacted by Siemens and said yes, Mr Togi replied, ‘I am giving you the sack, go upstairs, pick up your stuff and leave’. When the applicant asked the reason, Mr Togi said he did not need one.
[33] Ms Prats said that the applicant had received no written or verbal warnings during his 6 years of employment. On dismissal, he received no pay in lieu of notice or any of his outstanding entitlements. She said he had averaged $2031.17 per week during his last 5 months of employment with the respondent. The applicant had experienced difficulty in obtaining alternative employment, because of his age and limited work experience in Australia.
[34] By reference to the relevant statutory provisions, Ms Prats submitted that the applicant was a person protected from unfair dismissal. Further, he had been unfairly dismissed by Mr Togi on 3 November 2011, without any notice, for no valid reason, given no opportunity to respond to any reason and having been given no previous warnings of unsatisfactory performance or conduct. She relied on Byrne v Australian Airlines [1995] HCA 24, de Leon v Spice Temple [2010] FWA 3497 and O’Connor v Palmer & others [1959] 1 FLR 397.
[35] By reference to s 392 of the Act, Ms Prats argued that the applicant should be awarded the maximum compensation for his unfair dismissal. He had unsuccessfully sought to mitigate his loss and was relying on his wife’s workers’ compensation payments of $525 per week. Ms Prats calculated the amount of remuneration the applicant would have earned as $2031.17 per week over 43 weeks (date of dismissal to 3 September 2012). As to the maximum compensation sought, Ms Prats relied on Wogan v Plantbiz Pty Ltd t/as Bondi Garden [2010] FWA 5119 and de Leon v Spice Temple Pty Ltd.
For the respondent
[36] While Mr O’Brien of Counsel relied on a written outline of submissions, it was plainly apparent that these submissions were mainly focused on arguments that the applicant was a contractor and not an employee, with a secondary argument that even if he had been an employee, he had been overpaid by over $60,000 and should not be ‘unjustly enriched’ by an order of compensation in this case. Mr O’Brien wisely I think, eschewed reliance on these submissions, but did rely on the allegation that the applicant’s conduct of accessing the ST4 system without authority was misconduct and that the applicant’s other performance and conduct issues justified his ‘non continuance’. These were said to be his:
a) lack of design skills;
b) lack of installation skills;
c) inability to interact well with other personnel engaged by the respondent;
d) refusal to follow simple requests including, for example, the changing of the addressee and format of invoices and redrafting defective drawings;
e) propensity to improperly interfere with others in matters that did not involve him;
f) inability to perform drafting services without constant supervision;
g) slowness in preparing drawings, possibly as he was engaged on an hourly basis which rewarded his inefficiency;
h) time wasting in downloading computer software Solid Edge ST3 without authority from the respondent or need; and
i) probable causing of the respondent’s computer system to crash, causing one week’s downtime when the respondent required its computers to be functioning and incurring restoration costs to the respondent for a consultant’s services.
[37] In oral submissions, Mr O’Brien put that the applicant was not a person protected from unfair dismissal because he was engaged on a specific task - being to ‘draft drawings’.
[38] Mr O’Brien repeated that there was a valid reason for the applicant’s dismissal for misconduct in that he sought to download ST4 without authority. Mr O’Brien properly conceded that the applicant’s dismissal did not fall within the category of a summary dismissal and that Mr Togi did not give him any reason why he was dismissed. However, Mr O’Brien said there was evidence of the applicant’s poor performance and conduct which ought to be taken into account as providing a ‘defensible’ reason for the applicant’s dismissal; See: Allan v Jones and Jones Master Plumbers Pty Ltd [2012] FWA 4483.
[39] Mr O’Brien further submitted that, given the applicant’s prior employment history, it was unlikely that he would have continued in employment much longer; See: Albert v Techni-Clean Australia [2011] FWA 2665. The present case was not of the worst category and account should be taken of the fact that Mr Togi had not taken proper advice on the correct procedures for dealing with the situation.
[40] In reply, Ms Prats submitted that it could not possibly be misconduct to educate oneself in one’s own time so as to be a more productive employee. In any event, the applicant had continued in employment for 6 years. If he was as bad as Mr Togi made out, he would have been dismissed long ago. The issue triggering the dismissal was not a case of misrepresenting himself or the Company and he had not charged the Company for doing so.
CONSIDERATION
Jurisdictional Objection
[41] The respondent sought to rely on s 386(2)(a) of the Act to argue that the applicant was not a person to whom the unfair dismissal provisions of the Act applied. The subsection has the effect of excluding persons from the protection of the unfair dismissal provisions of the Act where:
‘the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season’
[42] Not surprisingly, Mr O’Brien could not cite any authority for the proposition he advanced that an employee, working continuously and on various projects, for an employer over a 6 year period, was engaged as performing ‘a specified task’ within the meaning of s 386 (2)(a) of the Act. On the contrary, the authorities which have dealt with the expression ‘specified task’ as an unfair dismissal exemption criterion, in my view, seem to expressly repudiate Mr O’Brien’s submission.
[43] In Hewitt v ACTek Custom Engineering Pty LTd [2001] AIRC 500, Lacy, SDP said at para 22-24:
‘[22] The phrase “a specified task”, as it relates to reg 30B(1)(b), has been defined narrowly in the relevant authorities. In Qantas Airways Limited v Fetz, the Full Bench of this Commission stated that the phrase “a specified task” would “normally apply to an identifiable project or job.” The Full Bench cited three dictionary definitions which define “task” as being, “[1] a piece of work imposed on or undertaken by a person ... [2] A definite piece of work assigned or falling to a person; a duty ... [3] any piece of work.”
[23] Another definition which may provide assistance in understanding the meaning of the phrase “a specified task” can be found in The CCH Macquarie Dictionary of Employment and Industrial Relations. In it, the word “task”, relevantly, is defined as being, “an element or group of elements of work by which a specific result is achieved.”
[24] I agree that the phrase “a specified task” should be interpreted narrowly so as to cover only situations where an employee has been engaged under a contract to perform a project or job which is distinct or identifiable in its own right. The task to which the original employment contract relates should be self-contained and not leave open the possibility of the employee performing any work outside the realm of the specific task for which the employee is being employed. That is not to say that an employee engaged under a contract for a specified task could not agree, during the performance of the contract, to undertake some other work for the employer that was peripheral to the original contract. In those circumstances, a question might arise as to whether there has been a variation of the terms of the original contract.’
See also: Christopher Essam and Geoff Organ v SPC Ardmona Operations Ltd [2005] AIRC] 338 and Qantas Airways Ltd v Fetz & Ors (1998) 84 IR 52.
[44] That said, three other issues arise from Mr O’Brien’s submission which, in my opinion, must lead to the inevitable conclusion that it simply cannot be correct. Firstly, there was no evidence of any contract of employment which demonstrated that the applicant was employed ‘for a specified task’, or indeed on any other basis. Moreover, there was no evidence of any contract of employment, at all, between the applicant and the respondent.
[45] Secondly, in s 386(2)(a) of the Act, the expressions, ‘a specified period of time’, ‘a specified task’ and ‘a specified season’ are in the singular and cannot be read to mean multiple periods of time, tasks or seasons. On the uncontested evidence in this case, the applicant had been engaged in numerous projects, some of them possibly contemporaneously. In my opinion, the use of the singular word ‘task’ discloses a deliberate intention of the legislature to restrict the exemption of a person from unfair dismissal protection to a narrow and limited one based on a singular specified task. I am fortified in this conclusion because the exemption in the subclause later refers to a termination ‘on the completion of the task.’ If Mr O’Brien’s submission is right, it would mean the applicant’s employment was terminated at the completion of each project. Obviously, this did not occur over the six years of employment.
[46] Thirdly, it was put by Mr O’Brien (although, mercifully, not with much relish), that the applicant’s ‘specified task’ was ‘to draw drawings’. The absurdity of this proposition can be readily seen by a few analogies; are truck drivers, teachers or aircraft refuellers exempt from unfair dismissal provisions by the exclusions under s 386(2)(a), because their specified task(s) are driving trucks, teaching children or refuelling aircraft respectively? I think not. In other words, a ‘specified task’ is not synonymous with a person’s job or profession.
[47] Mr O’Brien properly did not labour his jurisdictional submission or enthusiastically engage with me when I questioned the logic of his submissions. However, lest it be thought as having been left unclear, I unreservedly reject the proposition that the applicant was engaged on a ‘specified task’ and that therefore he is not a person protected by the unfair dismissal provisions of the Act. There are no other jurisdictional barriers to this application being now considered on its merits.
Was the dismissal harsh, unreasonable or unjust?
[48] The legislative provisions governing this application are found at s 387 of the Act as follows:
‘In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA must take into account:
(a) whether there was a valid reason for the dismissal related to the perons’s capacity or conduct (including its effect on the safety and welfare of other employees); and
(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 the 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 FWA considers relevant.’
[49] The frequently quoted authority as to the meaning of ‘harsh, unjust and unreasonable’ is that of the High Court in Byrne & Frew v Australian Airlines Ltd [1995] HCA 24, where McHugh and Gummow JJ said at para [128]:
‘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’.
[50] The generally accepted meaning of the adjective ‘valid’ in s 387(a) of the Act derives from what North J said in Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 at 373:
‘In its context in s.170DE(1), 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 for the purposes of s.170DE(1). At the same time the reasons must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must “be applied in a practical, commonsense way to ensure that the employer and employee are treated fairly.’
[51] Subsections (b), (c), (d) and (e) of s 387 are matters relevantly dealing with whether a dismissed employee was afforded procedural fairness. The High Court in Byrne & Frew v Australian Airlines Ltd also described the distinction between procedure and substance in the following way at paras [129-130]:
‘The distinction between procedure and substance is elusive. This is so even in those fields of private international law, the statute law dealing with limitations of actions and the effect of repeal upon accrued rights, and the Statute of Frauds, where it has an entrenched operation. In our view, it is unhelpful and contrary to the tenor of the Award to introduce it into cl 11(a). That is not to say that the steps taken, or not taken, before termination may not in a given case be relevant to consideration of whether the state of affairs that was produced was harsh, unjust or unreasonable. Thus, it has been said that a decision which is the product of unfair procedures may be arbitrary, irrational or unreasonable. But the question under cl 11(a) is whether, in all the circumstances, the termination of employment disobeyed the injunction that it not be harsh, unjust or unreasonable. That is not answered by imposing a disjunction between procedure and substance. It is important that matters not be decided simply by looking to the first issue before there is seen to be any need to enter upon the second’.
[52] In this case, there can be no doubt that the applicant was denied procedural fairness. Mr O’Brien appropriately conceded as much. I refer to the decision of Moore J in Wadey v YMCA Canberra [1996] IRCA 568, 12 November 1996, as to the right of an employee to appropriately defend him or herself in respect to allegations made by the employer:
‘In my opinion the obligation imposed on an employer by that section has, for present purposes, two relevant aspects. The first is that the employee must be made aware of allegations concerning the employee's conduct so as to be able to respond to them. The second is that the employee must be given an opportunity to defend himself or herself. The second aspect, the opportunity to defend, implies an opportunity that might result in the employer deciding not to terminate the employment if the defence is of substance. An employer may simply go through the motions of giving the employee an opportunity to deal with allegations concerning conduct when, in substance, a firm decision to terminate had already been made which would be adhered to irrespective of anything the employee might say in his or her defence. That, in my opinion, does not constitute an opportunity to defend.’
[53] I shall now deal with each of the subsections of s 387 of the Act. It was common ground as to what occurred on 3 November 2011. It is recorded at paragraph [32] of this decision. On any view, the manner of the applicant’s dismissal was a gross denial of natural justice. There was no submission advanced that the respondent was a small business, as defined in s 23 of the Act, for which it might be said that some leniency might be given for Mr Togi’s actions. Mr Togi’s actions were capricious and fanciful, if not actually spiteful and could not possibly have constituted a valid reason for the applicant’s dismissal. Not only did Mr Togi fail to give the applicant a valid reason for his dismissal, he gave him no reason at all. He candidly admitted his view that he did not have to give him a reason. This was grossly unfair and unjust.
[54] Mr O’Brien, again appropriately, did not argue that the respondent’s actions were justified or met the requirements of s 387 of the Act; although, in the face of the respondent’s own evidentiary case, he could hardly have done otherwise. In my view, the respondent was in plain breach not only of sub-section (a) of s 387, but also sub-sections (b), (c), (d), and (e) of the Act. To spell it out, the applicant was not notified of any reason for his dismissal until these proceedings were commenced.
[55] The applicant was not paid in lieu of notice and left the workplace immediately. He obviously was given no opportunity to respond to any reasons the respondent may have believed were the reasons for his dismissal. He was not given any warning of his dismissal, given no opportunity to answer any concerns of the respondent as to his performance or conduct and given no opportunity to improve. Indeed, I am left to wonder why, if the applicant was as bad as Mr Togi made him out to be, and for so long (‘He was trouble for years.’), why he had lasted for six years.
[56] I do not consider that the lack of Mr Togi’s expertise in human resource management or the size of the respondent’s enterprise justified or excused the appalling lack of procedural fairness afforded the applicant at the time (sub-sections (f) and (g)). To suggest, as Mr Togi did, that the applicant would have been too argumentative and that he did not have the ‘luxury of time’ as justifying his actions in failing to give the applicant reasons for his dismissal, was refreshingly frank, but was a poor excuse for an appalling lack of procedural fairness.
[57] In addition, Mr Togi cannot rely on what he claimed were numerous verbal warnings given to the applicant over a long period of time, to justify the applicant’s dismissal. There is not a diary note, memo or any other corroborative evidence which demonstrates that correcting someone’s work or having a heated discussion with your boss, constitute warnings, in the relevant sense. In any event, warnings are not only given to hopefully address poor performance or conduct, but they must be couched in terms which indicate clearly to an employee that a failure to improve performance or desist from poor conduct, might lead to disciplinary action, including dismissal. None of these basic requirements were evident in this case.
[58] That said, both the applicant and Mr Togi were passionate, expressive witnesses. They obviously both hold strong convictions, which meant that their evidence was open and forthright. It was clear enough that even if Mr Togi was frustrated beyond reason, and the applicant was an argumentative and uncooperative employee, this was not the way to handle a termination of the employment relationship. Moreover, Mr Togi’s evidence is that the ‘straw which broke the camel’s back’ was the applicant seeking to access ST4 without approval or authorisation. This conduct by the applicant could not have been considered misconduct, in the conventional sense. I think it will be useful for Mr Togi, in the future, to appreciate what constitutes misconduct and to this extent I refer him to what I said in de Leon v Spice Temple Pty Ltd [2010] FWA 3497 at para [30] - [31]:
“[30] Under the Act’s Small Business Fair Dismissal Code, serious misconduct is described as including ‘theft, fraud, violence and serious breaches of occupational health and safety procedures’. There are obviously numerous other examples, including fighting in the workplace, being under the influence of alcohol or drugs at work, gross insubordination or a wilful refusal to comply with an employer’s reasonable direction. However, the guiding principles as to what constitutes misconduct can be distilled from O’Connor v Palmer and Others (No I) (1959) 1 FLR 397, where the Commonwealth Industrial Court held at page 401:
“Without attempting to define exhaustively the word “misconduct” it involves something more than mere negligence, error of judgment or innocent mistake.”
[31] A more expansive definition can be found in Pillai v Messiter (No 2) (1989) 16 NSWLR 197, where the New South Wales Court of Appeal, under the heading ‘”Misconduct” means more than mere negligence’, said:
“The words used in the statutory test (“misconduct in a professional respect”) plainly go beyond that negligence which would found a claim against a medial practitioner for damages: Re Anderson, (at 575). On the other hand gross negligence might amount to relevant misconduct, particularly if accompanied by indifference to, or lack of concern for, the welfare of the patient: cf Re Anderson (at 575). Departures from elementary and generally accepted standards, of which a medial practitioner could scarcely be heard to say that he or she was ignorant could amount to such professional misconduct: ibid. But the statutory test is not met by mere professional incompetence or by deficiencies in the practice of the profession. Something more is required. It includes a deliberate departure from accepted standards or such serious negligence as, although not deliberate, to portray indifference and an abuse of the privileges which accompany registration as a medical practitioner: cf Allison (at 760 – 761). These are the approaches which have been taken in our courts. They have been taken in the courts of England where such misconduct is alleged. And they have similarly been taken in the courts of the United states. The entry in Corpus Juris Secundum, vol 58, (1948) at 818, reads:
“Both in law and in ordinary speech the term ‘misconduct’ usually implies an act done wilfully with a wrong intention, and conveys the idea of intentional wrongdoing. The term implies fault beyond the error of judgment; a wrongful intention, and not a mere error of judgment; but it does not necessarily imply corruption or criminal intention, and, in the legal idea of misconduct, an evil intention is not a necessary ingredient. The word is sufficiently comprehensive to include misfeasance as well as malfeasance, and as applied to professional people it includes unprofessional acts even though such acts are not inherently wrongful. Whether a particular course of conduct will be regarded as misconduct is to be determined from the nature of the conduct and not from its consequences.”
Reference to much United States authority is provided to support this passage. In the 1988 supplement to the Corpus, reference is made to Beaunit Mills Inc v Board of Review, Division of Employment security, Department of Labor and Industry 128 A 2d 20 (1956). In that case, the New Jersey Superior Court held that “misconduct” does not mean mere mistakes, errors in judgment or in the exercise of discretion or minor but casual or intentional, carelessness or negligence. It did not mean mere inefficiency, unsatisfactory conduct, failure of performance as a result of inability or incapacity inadvertent in isolated instances or errors of judgment which were not made in bad faith or some other ingredient. Numerous other recent cases are cited to support the proposition that, in the United States, “misconduct” generally means wrongful, improper or unlawful conduct, motivated by premeditated or intentional purpose or by obstinate indifference to the consequences of one’s acts. Similar approaches to the meaning of the word “misconduct” have been taken in Australia, outside the context of professional discipline: see, eg, O’Connor v Palmer (No 1) (1959) 1 FLR 397. The primary dictionary meanings confirm that this is also the way “misconduct” is used in everyday speech.”
[59] As to the specific reason for the applicant’s dismissal, I accept that the applicant was not to know of the licensing arrangements between the Company and Siemens. Moreover, he did not seek to misrepresent himself or his employer and did not seek to take any advantage for himself in contacting the Solid Edge supplier out of work hours. It was a completely innocent, but ultimately regrettable inquiry, which had serious repercussions for him. It was no more than an error of judgement, which was neither deliberate nor wilful. In any event, and as I indicated earlier, Mr Togi neither put the allegation (such as it was) to the applicant, nor sought an explanation from him. Maybe if he was not so busy at the time, the explanation might have been acceptable.
[60] As to Mr Togi’s other claims of poor performance and conduct, I find some of his other assertions to be highly prejudicial to the applicant. Most were made without any evidentiary base; let alone a sound one. For example, Mr Togi concluded (though he used the words ‘I believe’) that the applicant had:
(a) double-billed the Company for work;
(b) caused the Company’s computers to ‘crash’ a week after he had actually been gone from the workplace; and
(c) deleted all of the drawings and diagrams on the hard drive he had returned to the Company after his dismissal.
[61] As to the computer crash, Mr Togi later accepted that he could not be sure if it had been the applicant’s fault. As to the material missing from the hard drive, Mr Togi said he believed the applicant had deliberately deleted all the material. On the state of the evidence, I cannot be satisfied that either of these post facto allegations have been proven. I think Mr Togi’s personal opinion of the applicant may well have coloured his perceptions of what really caused these calamities. In addition, I note that Mr Togi gave the applicant some credit - describing his work as meticulous; albeit slow!
[62] There can be only one overriding finding in this case, which I am certain will come as no surprise to the respondent or his legal representatives. The applicant’s dismissal on 3 November 2011 was ‘harsh, unjust and unreasonable’, both substantively and procedurally, within the meaning of s 387 of the Act. I find accordingly.
Relief to be ordered
[63] As required, I have considered whether it would be appropriate to order reinstatement in this case (s 390(3)); See Holcim (Australia) Pty Ltd v Serafini [2011] FWAFB 7794. However, given that the applicant does not wish to be reinstated and accepting the obvious breakdown in the employment relationship, I consider reinstatement to be inappropriate.
[64] Ms Prats sought the maximum compensation to be paid to the applicant under s 392 of the Act. She based the applicant’s salary on an average of $2031.17 per week. Mr O’Brien did not put any submissions contradicting the quantum of the applicant’s average weekly salary. Nevertheless, he submitted that the applicant’s misconduct, his poor record of employment and the Company’s lack of professional human resource expertise, should be taken into account in determining any compensation to be ordered. I propose to accept Ms Prats’ calculation.
[65] In deciding an amount of compensation pursuant to s 392 of the Act, I am required to take into account the following matters:
Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1), FWA 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;
(g) any other matter that FWA considers relevant.
Misconduct reduces amount
(3) If FWA is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, FWA must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.
Shock, distress etc. Disregarded
(4) The amount ordered by FWA 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 FWA 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.
[66] Given that there was no evidence adduced as to the viability of the employer’s enterprise and the effect of any order on that viability, I consider this matter to be a neutral factor in this case (subsection 2(a)). While the applicant was neither a short term nor a long term employee, his six years of employment is a factor relevantly to be taken into account in this matter (subsection 2(b)).
[67] Accepting Mr Togi’s evidence at its highest, and notwithstanding the applicant’s evidence to the contrary, I am prepared to accept that Mr Togi would not have retained the applicant in the long term (subsection 2(c)). I accept Mr Togi was genuine when he said he had had enough of the applicant, and it would seem likely the applicant’s argumentative personality, even volatility, had rubbed Mr Togi the wrong way. I hasten to add that this does not absolve Mr Togi from his acknowledged shortcomings in his treatment of the applicant’s dismissal. While it can only be highly speculative, in my view, the applicant’s employment would have lasted for no more than a few months.
[68] I am satisfied from the applicant’s evidence that he has made numerous unsuccessful attempts to secure alternative employment. These include applications for positions in fields outside his expertise, and of lesser standing and remuneration than his professional qualifications would normally reward him. I am prepared to take judicial notice of the submission that the applicant’s age and his relatively limited experience in Australia are factors which have inhibited him from finding alternative employment (subsection 2(d)).
[69] I am not prepared to take account of the applicant’s wife’s weekly workers’ compensation payments of $525.00 in determining the appropriate order in this case. It is not ‘remuneration earned by the person from employment or other work’ (subsections (e)) and, in any event, was a payment for purposes unrelated to the payment for work performed. Subsection (f) is a neutral factor in this matter. I have canvassed, in the body of this decision, the other matters I consider to be relevant to this matter (subsection (g)).
[70] I do not consider that the applicant misconducted himself, in any relevant sense, such as to warrant any reduction in the amount I consider as an appropriate remedy in this case (s 392(3)). There is no component in the order for shock, distress, humiliation or any other analogous hurt caused to the applicant by the manner of his dismissal (s 392(4)) Further, the compensation caps under subsections (5) and (6) of the Act are not breached by the order I propose to make.
[71] In my view, an appropriate compensatory order in this case, particularly having regard to the principle of a ‘fair go all round’ under s 381(2) of the Act, should be in the amount of eight weeks pay at the rate of $2,031.17 per week, ie $16,249.36. To avoid any doubt, this order does not include any component for payments not made to the applicant in lieu of notice or any other unpaid outstanding statutory entitlements. Hopefully, such matters should be able to be agreed between the parties and, if not, the subject of separate proceedings in a Tribunal of competent jurisdiction. An order giving effect to this decision is published contemporaneously with this decision.
DEPUTY PRESIDENT
Appearances:
Ms J Prats, Solicitor, with Mr R Aslanian, for the applicant.
Mr S O’Brien, Counsel, instructed by Mr M Donovan, for the respondent.
Hearing details:
2012
Sydney:
3 September
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<Price code C, PR529387>