Note: An appeal pursuant to s.604 (C2013/4296) was lodged against this decision - refer to Full Bench decision dated 23 July 2013 [[2013] FWCFB 4744] for result of appeal.

[2013] FWC 2224

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FAIR WORK COMMISSION

DECISION

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

Mr Eduard Anneveldt
v
Heran Building Group Pty Ltd
(U2012/14491)

COMMISSIONER CAMBRIDGE

SYDNEY, 18 APRIL 2013

Unfair dismissal - alleged poor performance - no evidence from decision maker - inadequate evidentiary basis upon which to establish valid reason for dismissal - significant procedural deficiencies - denial of natural justice - harsh, unjust and unreasonable dismissal –compensation ordered.

[1] This matter involves an application for unfair dismissal remedy made pursuant to section 394 of the Fair Work Act 2009 (the Act). The application was lodged at Brisbane on 24 October 2012. The application was made by Eduard Anneveldt (the applicant) and the respondent employer is Heran Building Group Pty Ltd (the employer).

[2] The application indicated that the date that the applicant’s dismissal took effect was 10 October 2012. Consequently the application was made within the 14 day time limit prescribed by subsection 394 (2) of the Act.

[3] The matter was not resolved at conciliation and it has proceeded to arbitration before the Fair Work Commission (the Commission) in a Hearing conducted in Brisbane on 11 and 12 March 2013.

[4] At the Hearing, Mr A Fitzsimons, a barrister, appeared for the applicant. The applicant and one other witness were called to provide evidence in support of the claim. The employer was represented by Ms K Garner, a barrister, who called a total of four witnesses who provided evidence on behalf of the employer.

Factual Background

[5] The applicant had performed work for the employer as a contractor since about July 1988 and he became a direct employee of the employer in May 2007. Consequently the applicant’s period of service as an employee was about 5 years and 4 months. The applicant was engaged as a Construction Site Supervisor.

[6] The employer is a medium sized family business employing approximately 40 people. The employer operates a residential building/development Company based in South East Queensland. The employer is primarily controlled and managed by three brothers, Brian, Martin and Stephen Heran, who are Directors of the employer Company. A fourth brother, Glenn and a Shane Heran also have senior managerial roles in the employer’s business.

[7] In June 2011, the employer advised the applicant that his employment was terminated because of “... downturn in our business activity,...” 1. The applicant was given telephone and e-mail advice of the termination of employment from Mr Stuart Knock, the employer’s Accountant. The termination advice provided four weeks’ notice which meant that the applicant was to work until 20 July 2011. However, during this period of notice the employer reversed the decision to dismiss the applicant and he continued in employment up until 5 September 2012.

[8] On 5 September 2012, the applicant received telephone and e-mail advice from Mr Knock which provided five weeks notice of termination of employment. These communications from Mr Knock advised the applicant that he was dismissed on the basis of unsatisfactory performance and the e-mail included ten “reasons” which related to the unsatisfactory performance.

[9] The applicant worked in his role as Supervisor during the notice period which concluded on 10 October 2012 when his employment came to an end.

The Case for the Applicant

[10] Mr Fitzsimons, who appeared for the applicant, made verbal submissions in addition to documentary material which had been filed earlier. Mr Fitzsimons submitted that the initial matters arising from s.396 of the Act had been satisfied. Mr Fitzsimons said that the application had been made in time and the applicant was a person protected from unfair dismissal. Further, Mr Fitzsimons said that the Small Business Fair Dismissal Code did not apply nor was the matter a case of genuine redundancy.

[11] Mr Fitzsimons submitted that the matter was based around subsection 385 (b) of the Act, regarding whether the dismissal of the applicant was harsh, unjust or unreasonable. Consequently, according to Mr Fitzsimons, the determination of the case involved an assessment of the factors set out in s.387 of the Act.

[12] Mr Fitzsimons urged the Commission to accept the evidence of the applicant, particularly in respect to the alleged absence of any warning about the performance reasons which were contained in the letter of dismissal of 5 September 2012. Mr Fitzsimons criticized what he said was the lack of specificity arising from the employer’s evidence about any verbal warning that may have been given to the applicant. He said that there was no evidence of any written warning and the evidence of verbal warnings amounted to no more than vague, generalised criticism. Mr Fitzsimons submitted that the employer’s evidence of prior warning was unable to satisfy the notion of a warning but instead represented a general unhappiness.

[13] According to Mr Fitzsimons, the absence of specific warning and the generalised nature of complaint made against the applicant established that there was not a valid reason for the dismissal.

[14] Mr Fitzsimons further submitted that the Commission should, in accordance with the principle recognised in the case of Jones v Dunkel, 2 draw an adverse inference from the absence of any evidence from, in particular, Mr Brian Heran. Mr Fitzsimons said that Brian Heran had directed the termination of the applicant’s employment and he had not been called to give evidence and there was no satisfactory explanation for his absence.

[15] According to Mr Fitzsimons, Brian Heran was the controlling mind behind the termination and his absence and that of Stephen Heran, the manager most directly involved with the work of the applicant, should lead the Commission to draw an inference that these individuals were not called as witnesses because their evidence would have been deleterious to the employer’s case. According to the submissions made by Mr Fitzsimons, the absence of any evidence from Brian and Stephen Heran should assist to support the evidence of the applicant.

[16] Mr Fitzsimons made further submissions which examined each of the ten points contained in the letter of dismissal. Mr Fitzsimons submitted that upon analysis, each of the ten points which were relied upon as reasons for dismissal were either so generalised so as to be unfounded, or unable to be supported by the evidence as factually accurate. Therefore, according to Mr Fitzsimons, there was no basis to establish that the applicant was dismissed for any valid reason.

[17] Mr Fitzsimons also criticised the procedure adopted by the employer which involved the e-mail advice to the applicant of his dismissal as the first written representation of complaint. Mr Fitzsimons said that the absence of any prior written warning was completely inadequate.

[18] Mr Fitzsimons summarised his submissions by concluding that the dismissal of the applicant was unfair because it was without valid reason and it involved a deficient process, particularly in respect of the failure by the employer to give any proper warning about the alleged reasons contained in the letter of dismissal. Mr Fitzsimons urged that the Commission find in favour of the applicant and that remedy by way of compensation be Ordered.

The Case for the Employer

[19] The employer was represented by Ms Garner who submitted that the dismissal of the applicant was not unfair. Ms Garner made submissions which elaborated upon documentary material which had been filed on behalf of the employer.

[20] Ms Garner commenced her submissions by advocating that the evidence provided by the employer’s witness should be accepted as credible and preferred wherever it differed from the evidence of the applicant. In this regard, Ms Garner made particular mention that on balance and weight, the evidence regarding Mr Martin Heran yelling at the applicant in frustration should be preferred over the blanket denials of the applicant.

[21] Ms Garner submitted that there were valid reasons for the dismissal of the applicant. Ms Garner said that the sound, defensible and well-founded reasons for dismissal were set out in the letter of dismissal of 5 September. Ms Garner further submitted that the applicant was notified of these reasons and that these problems with the applicant’s work performance had been consistently conveyed to him prior to his dismissal.

[22] Ms Garner further submitted that the applicant had been advised about the employer’s concerns and the seriousness with which the issues were being treated by the employer. Further, Ms Garner submitted that the applicant had been given opportunity to improve his performance and it was conveyed to him that if he didn’t get his act together he could be dismissed from employment. Consequently, according to the submissions of Ms Garner, the applicant was not denied natural justice and the allegations set out in the letter of dismissal would not have come as a surprise to the applicant.

[23] It was also submitted by Ms Garner that even if there was some validity to the criticism of the process adopted by the employer, the problems with the applicant’s performance were of such a serious ongoing nature that even if a formal warning process had been followed, the outcome would not have been likely to have been any different.

[24] Ms Garner also submitted that the Commission should have regard for the nature and size of the employer’s business. Ms Garner said that it would be unrealistic to expect that a family business without dedicated human resource management would adopt formalised procedures of a kind that might be found in other less familial workplaces.

[25] Ms Garner submitted that there was no basis to find that the applicant had been unfairly dismissed. However, if the Commission was disposed to find in favour of the applicant then Ms Garner said that any remedy should be confined to limited compensation. Ms Garner stressed that the applicant had not mitigated his loss and she referred to evidence that the applicant did not actively pursue an offer of alternative employment made to him shortly after the dismissal.

Consideration

[26] Section 385 of the Act stipulates that the Commission must be satisfied that 4 cumulative elements are met in order to establish an unfair dismissal. These elements are:

[27] There was no dispute that in this instance the matter was confined to a determination of that element contained in subsection 385 (b) of the Act, specifically whether the dismissal of the applicant was harsh, unjust or unreasonable. Section 387 of the Act contains criteria that the Commission must take into account in any determination of whether a dismissal is harsh, unjust or unreasonable. These criteria are:

387 (a) - Valid reason for the dismissal related to capacity or conduct

[28] In this case the applicant was dismissed for unsatisfactory work performance. The nature of the unsatisfactory performance was particularised in ten points which were included as reasons in the letter of dismissal. Consequently, the Commission has been required to examine the ten reasons for dismissal and establish whether one or more of those reasons could be held to be valid.

[29] For a reason to be a valid reason it must, inter alia, be capable of being established as a fact upon which the decision to dismiss was based. The Commission must, logically, have some evidence upon which to make the necessary finding of fact. In this instance there was no evidence provided by either the author of the letter which contained the ten reasons or the person who made the decision to dismiss, Brian Heran.

[30] Evidence which is provided by others and which may support the prospect that the ten reasons contained in the letter of dismissal have a basis in fact, cannot necessarily be translated into an evidentiary basis upon which findings could be made that those reasons were in fact the reasons held in the mind of the decision maker. As a matter of fundamental justice, how could the Commission find that the reasons have a basis in fact as the reasons for dismissal, without there being some testing of those reasons with the person who apparently held them to be facts upon which the decision to dismiss was taken?

[31] Unless the circumstances of a particular case allow for some means to establish incontrovertible evidence upon which the reason or reasons for dismissal can be established in fact as the reason(s) for dismissal, the absence of any direct evidence from the decision maker leads to an evidentiary conundrum. The resultant difficulty manifests as a requirement for the Commission to make an assumption that the stated reason or reasons were in fact those relied upon by the decision maker. In simple terms, how can the Commission be satisfied that what others said were the reasons for dismissal, was also what the decision maker thought?

[32] In addition to what I have described as the evidentiary conundrum created by the absence of any direct evidence from the decision maker, there was also considerable challenge made to the accuracy and or actual existence of each of the ten stated reasons contained in the letter of dismissal.

[33] For example, point 8 involved the pouring of a concrete driveway which had to subsequently be pulled up to permit underground services to be installed. There was inconclusive evidence provided during the Hearing as to whether or not the applicant or Stephen Heran was responsible for the pouring of the concrete driveway. The Commission simply had no evidence as to what the decision maker, Brian Heran, understood to be the factual position as to who was responsible for the pouring of the concrete driveway. Essentially, the Commission would have to assume that Brian Heran believed that the applicant was responsible, otherwise that reason would not have been mentioned. However the evidence presented during the Hearing could not necessarily support the conclusion which had apparently been reached by Brian Heran.

[34] There was strong challenge made to the accuracy or actual existence of each of the stated reasons for dismissal. Without the benefit of hearing from Brian Heran about such challenge, the Commission is presented with a completely unsatisfactory evidentiary position which does not enable proper findings of fact to be made as verification of the stated reasons for dismissal.

[35] The evidence did establish that a number of the employer’s managers had expressed considerable dissatisfaction with the applicant’s performance over an extended period. However, an employer’s general dissatisfaction cannot, particularly in the absence of any direct evidence from the person who made the decision to dismiss, be translated into a proper evidentiary basis upon which the Commission is able to make findings of fact that the stated reasons for dismissal were valid.

[36] The absence of any evidence from the person who made the decision to dismiss has prevented any finding that there was valid reason for the dismissal. The failure to call the decision maker as a witness also has other ramifications which are mentioned later in this Decision.

387 (b) - Notification of reason for dismissal

[37] The employer provided telephone and e-mail notification of the reasons for the applicant's dismissal. The manner in which these notifications were given to the applicant was entirely inappropriate.

[38] Unless there is some practical or logistical impediment, common decency requires that advice of termination of employment be made in person.

[39] It appeared that common decency was not an overabundant characteristic of the employer’s operation as evidenced by the 28 June 2012 e-mail instruction from Shane Heran to the applicant which stated: “Plumbing in unit 11 kitchen is in wrong fucking place fix it now fuckwit.” 3

387 (c) - Opportunity to respond to any reason related to capacity or conduct

[40] The employer’s first documented complaint about the applicant’s work performance was made when it sent him e-mail advice of his dismissal.

[41] Consequently, there was no opportunity for the applicant to consider the points contained in the letter of dismissal and respond to the allegations made against him. It is purely hypothetical as to whether or not, if given an opportunity, the applicant may have been able to disavow Brian Heran of his apparent predetermined view as to the particular reasons for dismissal that were contained in the e-mail from Stuart Knock.

387 (d) - Unreasonable refusal to allow a support person to assist

[42] Consistent with other aspects of the employer’s treatment of the applicant and so as to ensure the adoption of a comprehensively erroneous procedure, the employer did not provide any meeting or other forum which might have involved the presence of a support person to assist the applicant. Strictly speaking, there was no refusal to allow a support person to assist the applicant because there was no procedure which could have presented as an opportunity for the applicant to request a support person.

387 (e) - Warning about unsatisfactory performance

[43] This factor has particular relevance in this case where the applicant was dismissed for reasons of unsatisfactory work performance.

[44] There was no evidence of any formal written warning made to the applicant. The employer attempted to rely upon the prior (and subsequently reversed) dismissal of the applicant in June 2011 as representing a warning to the applicant. However that dismissal was stated to be for reason of “...downturn in our business activity,...” 4. During the Hearing, the employer sought to recant from the stated reason and instead Martin Heran said that the primary reason for the earlier dismissal was the applicant’s “poor workmanship and performance”5.

[45] Martin Heran was questioned about the earlier, reversed, dismissal of the applicant and the extent of the employer’s misrepresentation of the reason for that action expanded to the point that according to Martin Heran, the applicant was dismissed for “gross incompetency” 6.

[46] In an endeavour to demonstrate prior warning to the applicant, the employer introduced a suggestion that the applicant had also been dismissed on another occasion nominated to have been 4 October 2011. There was no evidentiary material provided to support this assertion and during the Hearing the proposition appeared to lapse.

[47] The overall impression that emerges from an examination of the evidence which was advanced in the employer’s attempt to establish that the applicant had been given prior warning can be summarised as a confused “clutching at straws”. This unfortunate situation was confirmed when, on the second day of Hearing, Glenn Heran provided the following testimony:

387 (f) - Size of enterprise likely to impact on procedures

[48] The employer is a medium sized family business. It is acknowledged and accepted that a business of this type may operate with a considerable degree of informality in the manner with which it deals with its employees. Further, there was evidence that several of the employer’s managers had developed considerable frustration with the perceived inadequacies of the applicant’s work performance. In these circumstances, it would be unrealistic to expect the employer to adopt sophisticated processes for dealing with the potential for termination of employment.

[49] However, there was not even an informal meeting or other discussion between the decision maker, Brian Heran, and the applicant before the decision to dismiss was taken. It is difficult to accept that it could be reasonable or just for any employee to be dismissed without a fundamental process that included the opportunity to put a case, face to face, with the decision maker.

[50] The requirement for such a process is primarily derived from the notions of natural justice. Large organisations usually have structured hierarchies that devolve decision making to particular individuals. These decision makers will logically rely heavily on information and recommendations provided by others. However, no matter what size the organisation, if the decision maker determines something as serious as termination of employment without providing opportunity for face to face contact, he or she risks creating the appearance that they do not have the courage of their convictions. In addition, both the legal and ethical basis for the decision is open to manifest challenge.

[51] In a medium sized family business which is not encumbered by the bureaucracies of a large enterprise, there would be little difficulty for the decision maker to provide some basic respect for human dignity and advise of any termination of employment personally. The callous act of instructing someone else to tell the dismissed employee the “bad news” appears to reinforce the earlier mentioned suggestion regarding a lack of courage of conviction. This unfortunate approach appeared to have been repeated with the absence of the decision maker from the proceedings before the Commission.

[52] For completeness it should be stated that there are exceptional circumstances where a decision to dismiss might be appropriately taken without need to provide the employee with an opportunity to be heard in person. These exceptional circumstances usually involve acts of gross and wilful misconduct, admitted or undeniably existent, and which warrant no further inquiry because no possible explanation or mitigation could alter the decision. In this case the dismissal was for reasons of alleged poor work performance and must therefore be contrasted with a dismissal based on gross and wilful misconduct.

387 (g) - Absence of management specialists or expertise likely to impact on procedures

[53] The employer did not have dedicated employee relations management specialists. However an expert is not required in order to provide a procedure that contains a basic level of common human decency.

387 (h) - Other relevant matters

[54] There was evidence provided by those witnesses who were called by the employer which established that the applicant’s work performance was, in their opinion, unsatisfactory. Importantly, none of these individuals were responsible for the decision to dismiss the applicant. However, I have not discarded the evidence from the employer’s witnesses which upon an objective assessment, leads me to conclude that there was legitimate basis for serious concern about particular aspects of the applicant’s work performance.

[55] Consequently I have balanced the evidence which verified legitimate basis for criticism of the applicant’s work performance against the various other factors under consideration. The corollary of this consideration is that I am unable to countenance that an extended period of general dissatisfaction with the work performance of the applicant should operate to displace the requirement that the applicant was entitled to natural justice. In particular, it would not have been onerous or unrealistic for the decision maker to have put the ten reasons contained in the letter of dismissal to the applicant and heard “his side of the story” before any decision to dismiss was taken.

Conclusion

[56] The decision to dismiss the applicant was taken by Brian Heran who was not called to give evidence in these proceedings. The absence of evidence from the decision maker is ordinarily problematic in one of these matters. In a case involving a dismissal for unsatisfactory work performance the absence of any evidence from the decision maker would almost invariably be fatal to the defence. In this instance this difficulty was compounded by evidence that the decision maker had no direct contact with the applicant concerning the termination of his employment.

[57] The procedure that the employer adopted to deal with the implementation of the dismissal represented a blatant example of a denial of natural justice.

[58] The absence of any evidence from the person who apparently concluded that ten reasons existed as the basis for dismissal means that those reasons can not be properly verified as findings of fact to have been the reasons for dismissal. Consequently, the Commission must conclude that there is insufficient evidence upon which to establish that the dismissal of the applicant was for valid reason. A dismissal without valid reason and implemented by way of a procedure which involved a very unfortunate absence of natural justice must be held to have been harsh, unjust and unreasonable.

Remedy

[59] The applicant has not sought reinstatement as remedy for his unfair dismissal. Instead, the applicant has asked that the Commission make Orders for monetary compensation pursuant to s. 392 of the Act which is in the following terms:

[60] I have decided that compensation would be an appropriate remedy for the applicant’s unfair dismissal and I turn to the factors which involve the quantification of any amount of compensation.

[61] Section 392 of the Act prescribes certain matters that deal with compensation as a remedy for unfair dismissal. I have approached the question of compensation having regard for the guidelines that were established in the Full Bench Decision in Sprigg v Paul’s Licensed Festival Supermarket 8 and as commented upon in the subsequent Full Bench Decision in Smith and Ors v Moore Paragon Australia Ltd 9.

[62] Firstly, I confirm that an Order of the payment of compensation to the applicant will be made against the employer in lieu of reinstatement of the applicant.

[63] Secondly, in determining the amount of compensation I have taken into account all of the circumstances of the matter including the factors set out in paragraphs (a) to (g) of subsection 392 (2) of the Act.

[64] There was no evidence that an Order of compensation would impact on the viability of the employer’s enterprise.

[65] The applicant had approximately 5 years and 4 months service as an employee.

[66] The applicant would have been likely to have received remuneration of approximately $2,300 per week if he had not been dismissed. There was some prospect that the employment may not have endured beyond a further year particularly if there had been proper attempts to warn the applicant of work performance inadequacies and he had been unable to rectify such concerns.

[67] The applicant has made efforts to mitigate the loss suffered because of the dismissal and he obtained 3 days fencing work which provided income of $1,170. The applicant did not earnestly pursue an offer of work which was made to him in the area of real estate sales. The applicant said that he was unfamiliar with and undesirous of working in real estate sales. The applicant has not secured any other employment.

[68] Thirdly, in this instance there was no evidence that any misconduct of the applicant contributed to the employer's decision to dismiss.

[69] Fourthly, I confirm that any amount Ordered does not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt caused to the applicant by the manner of the dismissal.

[70] There are two other relevant matters. The consideration of all factors relevant to compensation should be approached having cognisance that compensation should not be confused with penalty. I am mindful that compensation should not include some amount which represents a punishment to the employer for their actions in dismissing the applicant unfairly.

[71] Further, the written submissions of the applicant confined his claim for compensation to an amount of twelve weeks pay. Although I would have determined an amount approximating with twenty weeks pay, I am confined to the claim as quantified by the applicant.

[72] Consequently for the reasons outlined above, I have decided that an amount approximating with twenty weeks remuneration should be provided as compensation to the applicant and this amount has been adjusted in accordance with the applicant’s claim for twelve weeks. Consequently the amount that I Order as compensation is a gross figure of $27,600. Separate Orders [PR535620] providing for remedy in these terms will be issued.

COMMISSIONER

Appearances:

Mr A Fitzsimons, barrister, appeared for the applicant;

Ms K. Garner, barrister, appeared for the employer.

Hearing details:

2013.

Brisbane:

March, 11 & 12.

 1   Exhibit 5.

 2   Jones v Dunkel (1959) 101 CLR 298.

 3   Exhibit1 Annexure “EA-2”.

 4   Exhibit 5.

 5   Exhibit 4 paragraph 13.

 6   Transcript of proceedings (11 March 2013) @ PN1082.

 7   Transcript of proceedings (12 March 2013) @ PN1436.

 8   Sprigg v Paul’s Licensed Festival Supermarket, (Munro J, Duncan DP and Jones C), (1998) 88IR 21.

 9   Smith and Ors v Moore Paragon Australia Ltd, (Lawler VP, Kaufman SDP and Mansfield C), (2004) PR942856.

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<Price code C, PR535618>