| [2018] FWC 6060 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Anthony Gambling
v
Digital Fox Pty Ltd T/A Mango 4 Office Technology
(U2017/12471)
DEPUTY PRESIDENT ASBURY |
BRISBANE, 28 SEPTEMBER 2018 |
Application for an unfair dismissal remedy - Jurisdictional objection on ground that Applicant was not dismissed – Finding that Applicant did not resign employment – Dismissal unfair – Dismissal arguably redundancy – Finding that Applicant would not have remained in employment for longer than notice period paid – Not an appropriate case to exercise discretion to award unfair dismissal remedy - Unfair dismissal provisions not appropriate mechanism to recover money due under the Fair Work Act 2009 or contract of employment - If Applicant has a claim for redundancy entitlements or disputed bonus payments it can be made to a court.
1. BACKGROUND
[1] This Decision concerns an application by Mr Anthony Gambling for an unfair dismissal remedy in respect of the ending of his employment with Digital Fox Pty Ltd T/A Mango 4 Office Technology (Digital Fox). Digital Fox objects to the application asserting that Mr Gambling was not dismissed, but resigned his employment pursuant to an oral agreement reached with a Director of Digital Fox, Mr Paul Power in discussions on 8 and 9 November 2017. That agreement involved transactions in relation to leased motor vehicles with associated costs to Digital Fox being offset by Mr Gambling’s notice and accrued entitlements to annual leave and long service leave, with the residual amount being paid to Mr Gambling.
[2] Mr Gambling states that he was employed from 4 January 2005 and was dismissed on 9 November 2017. Mr Gambling denies that he resigned his employment and states that the agreement was reached after he was informed of his dismissal. In his Form F2 application Mr Gambling states that he was given no reason for his dismissal and that it was unfair on the basis that he had been employed as General Manager for almost 13 years and was 52 years of age when he was dismissed, six weeks before Christmas. Mr Gambling seeks compensation for what he asserts was an unfair dismissal.
2. THE HEARING
[3] The matter was not resolved at conciliation and the file was referred to me for hearing in relation to the jurisdictional objection and merits. A mention was held on 8 January 2018. Legend Legal Group sought permission to represent Digital Fox at the mention. Given that an officer of the Company was not in attendance, permission for legal representation was granted for the mention only, and Directions were issued as discussed with the parties at the mention. Given the difficulties that later arose in relation to the hearing of this matter, it is necessary to set out the Directions that were discussed with the parties and issued immediately following the mention on 8 January 2018. Relevantly the Directions required that:
“THE APPLICANT’S MATERIAL
[2] The Applicant is to file the following material in the Commission, and serve on the Respondent:
1. By no later than 4.00pm on Tuesday, 16 January 2018, an outline of submissions and a witness statement of any witness the Applicant intends to rely upon at hearing in support of his application for an unfair dismissal remedy; and
2. By no later than 4.00pm on Tuesday, 23 January 2018, an outline of submissions and a witness statement of any witness the Applicant intends to rely upon at hearing in reply to the jurisdictional objection.
THE RESPONDENT’S MATERIAL
[3] The Respondent is to file the following material in the Commission, and serve on the Applicant:
1. By no later than 4.00pm on Tuesday, 16 January 2018, an outline of submissions and a witness statement of any witness the Respondent intends to rely upon at hearing in support of the jurisdictional objection;
2. By no later than 4:00pm on Tuesday, 16 January 2018, a submission in support of the Respondent being granted permission to be legally represented pursuant to s. 596 of the Act; and
3. By no later than 4.00pm on Tuesday, 23 January 2018, an outline of submissions and a witness statement of any witness the Respondent intends to rely upon at hearing in reply to the application for an unfair dismissal remedy.”
[4] The text of the following relevant provisions of the Act was also appended to the Directions: s. 386 Meaning of dismissed; s. 387 Criteria for considering harshness etc.; s. 391 Remedy – Reinstatement; and s. 392 Remedy – Compensation. The Directions also stated:
“MATERIAL
[4] The parties are to ensure that material filed regarding whether the Applicant resigned his employment (the jurisdictional objection) addresses s. 386 of the Act as appended to these Directions.
[5] The parties are to ensure that material filed regarding whether the Applicant was unfairly dismissed addresses ss. 387, 391 and 392 of the Act appended to these Directions.
[6] To assist the parties in preparing their respective statements, the following links are provided: the Applicant’s Statement(s) of Evidence; the Respondent’s Statement(s) of Evidence. Any document parties seek to rely to support their application should be attached to a relevant statement.”
[5] In short, the Directions made it clear that the hearing was in relation to both the jurisdictional objection and the merits. At a further mention on 8 February 2018 I heard submissions from the parties in relation to permission for Digital Fox to be represented by a lawyer. At the point permission for Digital Fox to be represented by a lawyer was considered, both parties had filed their submissions and witness statements in relation to both jurisdiction and merits. The Respondent’s material was obviously prepared by its legal representative. The material filed by the parties and the dates on which that material was filed was as follows:
• 16 January 2018 – Applicant’s statement of evidence in relation to merits and Appendices comprising: letter of offer of employment dated 24 November 2004; letter notifying of transfer of employment dated 3 March 2016; hand written notes of meeting on 8 November 2017; email of 9 November 2017 from Mr Gambling advising staff of Digital Fox that his employment was finishing that day.
• 16 January 2018 – Digital Fox outline of submissions in relation to jurisdiction and permission for legal representation, and affidavits of Mr Power and Mr Ackary dated 13 and 15 January 2018 respectively;
• 23 January 2018 – Submissions of Mr Gambling in response to jurisdictional objection and appendices comprising two emails dated 10 November 2017 in relation to novated lease payments; and an affidavit dated 23 January 2017 sworn by Ms Davis the Administration Manager for Digital Fox.
• 23 January 2018 – Digital Fox outline of submissions in response to unfair dismissal application and affidavits of Mr Power and Mr Ackary sworn 23 and 22 January 2018 respectively.
[6] At the mention of 8 February 2018 I decided to refuse permission for Digital Fox to be represented by a lawyer on the following reasons; I was not satisfied on the basis of the material filed by the parties that the matter was attended by such complexity that it would be more efficient to allow Digital Fox to be legally represented; Mr Gambling was self-represented; there was no apparent reason why a Director of Digital Fox could not represent the Company; and taking into account fairness between Mr Gambling and Digital Fox, it was not unfair to refuse permission.
[7] The matter was listed for hearing in Rockhampton on 20 March 2018. Mr Gambling represented himself. Mr Ackary and Mr Power attended the hearing on behalf of the Respondent and Mr Power basically took carriage of the Respondent’s case. On the basis of the material filed, Mr Power was to be a witness. Mr Power’s status with Digital Fox was unclear but late on the first day of the hearing Mr Power said that he had discovered that he may still be a Director. I allowed Mr Power to conduct the case on the basis that Mr Ackary agreed that this would occur. Given the disconnect which emerged between the affidavits of Mr Power and Mr Ackary filed by lawyers for Digital Fox and their oral evidence, the hearing was conducted in the form of a determinative conference with Mr Ackary also participating in the presentation of Digital Fox’s case.
[8] Much of the hearing was taken up with challenges from Mr Power about the nature of the proceedings. It became apparent that Mr Power had formed the view that the hearing related only to the jurisdictional objection and not the merits of Mr Gambling’s unfair dismissal application. Mr Power also continually asserted that he and/or Digital Fox had not been provided with Mr Gambling’s material so that he could comment on it and put evidence in response to the Commission. It was necessary to point out to Mr Power that this was patently incorrect given that material had been filed by lawyers for Digital Fox including affidavits sworn by Mr Power and Mr Ackary on various dates in January 2018, deposing that Mr Power and Mr Ackary were responding to the material filed by Mr Gambling and containing specific references to that material.
[9] Mr Power did not dispute that he had sworn and signed the affidavits including an affidavit sworn on 23 January 2018 stating that he was responding to a particular paragraphs and content in Mr Gambling’s witness statement dated 16 January 2018. I can only wonder at how Mr Power, who is a company director, and who swore an affidavit in January 2018, specifically responding to a statement also received in January 2018, can maintain that he had not seen the statement he was responding to until a hearing in March 2018. It was also pointed out to Mr Power that the Form F3 Response to Mr Power’s application filed by Digital Fox nominated Mr Ackary as the contact person for the Company and provided telephone and email contact details for Mr Ackary. Accordingly, all correspondence from the Commission had been directed to Mr Ackary and it was not the responsibility of the Commission for any failure on the part of either Mr Ackary or the former legal representative of Digital Fox to provide relevant documentation to Mr Power. This is particularly so given that Mr Power’s status and standing in the unfair dismissal proceeding was that he was to be a witness for Digital Fox.
[10] Notwithstanding that I pointed out the apparent inconsistency between Mr Power’s affidavits and his assertions about not having previously seen Mr Gambling’s witness statement and attachments, Mr Power persisted with his assertions about the purpose of the hearing, and that he had not seen the documentation and was being denied an opportunity to present the Company’s case. Mr Power also resisted all of my efforts to explain the process of the hearing and what steps he needed to take to present the case on behalf of Digital Fox including putting his version of meetings to Mr Gambling.
[11] Unfortunately most of the first day of the hearing was taken up with dealing with Mr Power’s issues, so that it was necessary to list the matter for a further day of hearing. Due to the availability of the parties, the second day of the hearing was held on 12 July 2018 and was conducted by video link between Brisbane and Rockhampton.
3. ISSUES IN DISPUTE
[12] The application was made on 23 November 2017, within the time required in s. 394(2) of the Act. It is not in dispute that Mr Gambling is a person protected from unfair dismissal as defined in s.382 of the Act. Mr Gambling had completed the relevant minimum period of employment and his annual earnings were below the high income threshold. The dismissal is not a case of genuine redundancy. It is also not in dispute that Digital Fox is not a small business and that at the time Mr Gambling’s employment ended, employed more than 15 employees.
[13] Accordingly the issues for determination are whether Mr Gambling was dismissed within the meaning in s. 386 of the Act. If the jurisdictional objection does not succeed it will be necessary to decide whether Mr Gambling’s dismissal was unfair on the basis that it was harsh, unjust or unreasonable having regard to the criteria referred to in s.387 of the Act. If the dismissal is found to be unfair, it will then be necessary to determine remedy.
4. EVIDENCE
[14] The evidence relevant to the matters in dispute can be summarised as follows. Mango 4 Technology is owned by Digital Fox. Mango 4 Technology was acquired by Digital Fox in March 2016. Digital Fox acquired Mango 4 Technology from Foxworth Pty Ltd (Foxworth) and CQ Digital Solutions Pty Ltd (CQDS). Foxworth was owned by Mr Paul Power and CQDS was owned by Mr Ken Ackary. Mr Power was a Director of Foxworth and Mr Ackary was a Director of CQDS. Mr Gambling was employed by Foxworth/ Mango 4 at the time it was acquired by Digital Fox. Mr Power and Mr Ackary were both Directors of Digital Fox when it acquired Mango 4 Technology. Mr Power gave some evidence about the early iterations of the Company. Essentially Mr Power started the Company in 1989. The bulk of the business was a contract with Fuji Xerox and the business operated as the Xerox Shop. The Company lost that dealership in 2014 or 2015 and according to Mr Power, this essentially removed the Company’s profitability. 1
[15] Mr Gambling tendered a letter dated 24 November 2004 offering him employment in the position of general manager of Mango 4 Office Technology. The terms of the letter of offer included annual incentive payments expressed as follows:
“Part A
You will receive a payment of 33% (of net profit before tax less $240,000), eg if net profit is $400,000, you will receive 33%*(400,000 – 240,000) = $52,800. Up to 100% of this amount will be paid to you monthly in arrears at your discretion.
Part B
You will receive another payment of 33% (of net profit before tax less $240,000), eg if net profit is $400,000, you will receive 33%*(400,000 – 240,000) = $52,800. This amount will be set aside and is immediately payable to you in the following situations:-
1. To use as a deposit to buy the business;
2. Should the business be sold to any entity other than you.
Should the business be sold to any entity other than you, you are entitled to, and will be immediately paid the greater of one year’s base salary or the balance of the Part B amount.” 2
[16] Mr Gambling also tendered a letter dated 4 March 2016 informing him that Foxworth Pty Ltd and Mango 4 had entered into an agreement to combine its business with CQ Digital Solutions Pty Ltd and the combined business would commence trading on 1 March 2016 or shortly thereafter. The letter went on to state that:
“Your employment will be transferred to the new entity…(Digital Fox)…and subject to the policies of that new entity. That is, the terms and conditions of employment under which you were originally employed, Superannuation fund of choice arrangements and your accrued leave entitlements and period of service will be transferred to, and recognised by Digital Fox….
The parties acknowledge and agree that the terms of the Employment Agreement will be transferred to Digital Fox and will continue to apply to the employee and will apply to Digital Fox as if Digital Fox had been the original employer under the Employment Agreement.” 3
[17] Mr Gambling’s view is that his entitlement to the bonus arrangements and a bonus amount that he had earned prior to the transfer, continued after the transfer of his employment from Foxworth to Digital Fox. The issue of Mr Gambling’s entitlement to a bonus and whether he had earned any bonus in the part of the financial year immediately preceding the transfer, is contested. Mr Gambling asserts that a bonus for the financial year ending 30 June 2016 is owed to him by Digital Fox on the basis that his entitlement transferred to Digital Fox in March 2016 when that Company acquired Mango 4 from Foxworth. Mr Gambling asserts that the amount of the bonus he is owed is $96,914.00. Mr Power said in his evidence that he generally honoured the bonus deal with Mr Gambling but that when the contract with Fuji Xerox was lost by Foxworth he said to Mr Gambling that the Company could not afford to pay that kind of bonus. Mr Power also said that in the interim there were other bonus agreements – at least two or three – entered into between Mr Power and Mr Gambling. 4
[18] In July 2017, Mr Gambling instructed the Administration Manager of Digital Fox to convert the amount of bonus he claims is owing to an amount of accrued annual leave. Relevant email correspondence 5 tendered by Digital Fox indicates that on 14 July 2017 Mr Gambling emailed the Administration Manager stating that as discussed that morning “the amount to go in as an unpaid staff entitlement is $96,914.” The next email in the chain was sent by the Administration Manager to Mr Gambling on 17 July and states that if the amount was to be converted to annual leave, it would be 1448.85 hours.
[19] It is common ground that at the time this transaction was undertaken, Mr Gambling did not inform Mr Ackary or Mr Power that he had converted this amount to annual leave and that it had been included in Mr Gambling’s accrued leave balance as an employee of Digital Fox. Mr Ackary and Mr Power’s uncontested evidence is that they did not become aware of this transaction until October 2017. Mr Power also pointed to the fact that the conversion occurred some 15 months after the establishment of Digital Fox and the transfer of employees (and their leave accruals) from CQDS and Foxworth to Digital Fox so that the alleged bonus amount which Mr Gambling converted to annual leave did not transfer at that time.
[20] In or around August 2017, Mr Ackary and Mr Power were engaged in negotiations in relation to one or the other acquiring all of Digital Fox. A bundle of documents tendered by Mr Power 6 establishes that in August 2017, Mr Gambling’s leave balance had a value of $109,737.717 including 17.5% annual leave loading. On 27 August 2017 Mr Ackary emailed Mr Power setting out a number of issues that needed to be resolved to understand if either Mr Power or Mr Ackary could afford the monthly repayment required to fund paying out either of them. The email further states that Mr Gambling has 216 leave days accrued, which is a ridiculous amount that needs to be reduced to four weeks. The email also indicates Mr Ackary’s reservations about taking on debt to the Australian Taxation Office owed by Digital Fox. The email concludes with a request that Mr Power provide Mr Ackary with a value suitable for him to buy Mr Power out.
[21] On 19 September 2017 at 9.58 am Mr Gambling emailed Mr Ackary in relation to financial problems facing Digital Fox. The email indicates that the ATO has approved a repayment schedule and Mr Ackary’s drawings need to be diverted to the ATO. The email states that the need for this change had been foreshadowed some time ago. Mr Ackary responded at 10.10 am requesting confirmation of the monthly ATO payment which was provided by Mr Gambling in an email sent at 10.23 am on 17 September 2017. On 19 September 2017 Mr Gambling emailed Mr Ackary (with a copy to Mr Power) in relation to the financial position of Digital Fox. The email essentially states that Mr Ackary’s drawings from the business are required to be diverted to paying debt to the ATO, in order to avoid the possibility of Digital Fox trading while insolvent. The email further states that profit has not been anywhere near the mark for both Directors to implement their agreement as to the amount of drawings and that Mr Ackary “cannot get blood out of a stone.”
[22] Mr Power and Mr Ackary became aware of the leave/bonus issue in or around October 2017. This is evidenced by an email chain tendered by Mr Power. 7 The emergence of this issue appears to coincide with an offer by Mr Ackary to purchase Mr Power’s 50% share in Digital Fox made by email on 1 October 2017. The offer involves vendor finance and Mr Power said in his evidence that this was the only way that he could get his investment in the business out of the business. The offer also states that the offer includes liabilities for leave provisions which have been provided by Mr Gambling as they were not included in internal reports.
[23] Mr Power and Mr Ackary maintain that they had no knowledge that Mr Gambling’s annual leave accruals with Digital Fox included the disputed bonus amount until an email was sent by Mr Gambling to Mr Ackary in response to questions Mr Ackary had been asking Mr Gambling in relation to his consideration of purchasing the business. The email chain tendered by Mr Power 8 commences with an email from Mr Ackary to Mr Gambling sent on 3 October 2017, in which Mr Ackary states:
“I require a full set of business reports including trial balance as at 30th September. If in doubt send it anyway, I need everything. After reviewing all staff leave balances, I think you need to correct your balance. I find it hard to believe that you have over ten years leave on the books. There is absolutely no reason for any member of staff to have this amount of leave balance owed.”
[24] In an email of 3 October 2017, Mr Gambling responded to this request for information, stating that the reason his balance of accrued leave is so high is that one year, instead of taking his bonus as a cash lump, he took it as accrued leave, as the business did not have the cash to pay him the bonus all at once. Mr Gambling also offered to cash out the leave if Mr Ackary wanted the balance reduced. Mr Ackary responded also on 3 October 2017, asking how many days of the leave related to Mr Gambling’s Foxworth bonus. The response from Mr Gambling on 4 October 2017 is as follows:
“The bonus was for the year ended 30/06/16. So the bulk of the profit on which the bonus was based was earned by Foxworth (up to March 2016) then Digital Fox took over all employee entitlements of CQDS and Foxworth as at March 2016 and the bonus became payable as at 1/7/16 when the full years profits are known.”
[25] Mr Ackary’s response sent on 4 October 2017 asks whether Mr Power was aware of these calculations and asserts that it appears that Mr Power has overstated the figures in relation to the merger. The email also asks why Digital Fox should be liable for Mr Gambling’s Foxworth bonus. There is a further exchange in which Mr Gambling states that Mr Power has not overstated the figures and that at the time of the merger in March 2016 the amount of the bonus was unknown as it is not calculated until 30 June each year. Mr Ackary’s response requests confirmation as to whether Mr Gambling told Mr Power that he was converting his 2016 Foxworth bonus to a leave entitlement which was then to be transferred to Digital Fox. The email also asserts that Digital Fox is not responsible for the bonus and that only accrued leave entitlements were to be transferred and not entitlements based on a bonus agreement between Foxworth and Mr Gambling. Further the email asserts that the bonus has been boosted by a 17.5% leave loading and that Mr Ackary is unhappy with the situation.
[26] Mr Gambling’s response confirms that he did not tell Mr Power of his decision to convert his cash bonus to annual leave and that it was his decision made solely for the good of the business, as it did not have the cash flow to pay the bonus. The response goes on to assert that the leave accrual does not affect the profit and loss statements and that it is simply a liability transferred from Foxworth to Digital Fox along with other accrued employee liabilities.
[27] In his affidavit sworn on 23 January 2017, Mr Power asserts that no bonus was due, owing or agreed between the Foxworth and Mr Gambling, and no such bonus was in existence during the course of Mr Gambling’s employment. In his oral evidence, Mr Power said that if there was a debt owed by Mr Gambling for the bonus (which Mr Power disputes) it would be owed by Foxworth and not Digital Fox. 9 Mr Power also said it would not transfer because it was based on profits earned by Foxworth. Further, it was asserted for Digital Fox that Mr Gambling’s contract of employment with Foxworth did not allow him to convert bonuses to leave.10
[28] It is apparent from the evidence that the conversion by Mr Gambling of the claimed bonus amount of annual leave and issues associated with whether the bonus was owed and by which entity, became an issue in the sale negotiations and the finalisation of an agreement between Mr Power and Mr Ackary in relation to the purchase by Mr Ackary of Mr Power’s share of Digital Fox. Mr Power said in relation to this matter: “…the problem with that agreement was Ken [Ackary] couldn’t afford to meet the conditions of it which were that $96,000 bonus and if there was a dismissal. Sorry not a dismissal a redundancy at issue.” 11
[29] Mr Power agreed to a proposition put by me that when he travelled to Rockhampton for the meeting with Mr Gambling on 8 November 2017, he intended to have a discussion about the bonus/leave issue and the fact that it was hindering the finalisation of the sale agreement between Mr Ackary and Mr Power. 12 Mr Power’s evidence about the meetings with Mr Gambling on 8 and 9 November as set out in his affidavit filed on 23 January 2018 is as follows. Mr Power states that Mr Gambling had offered to resign from his employment on a number of previous occasions but continued his employment until the Company changed ownership. Mr Power met with Mr Gambling on 8 November 2017 and Mr Gambling agreed to resign on the basis that Digital Fox:
• passed ownership of his company vehicle to Mr Gambling;
• continued to meet the finance payments for the remaining term of the vehicle which amounted to $27,010.94; and
• paid outstanding amounts due to Mr Gambling as per the provisions of the Fair Work Act 2009.
[30] The meeting was suspended until the following morning by agreement, to allow Mr Power to put these terms and the associated amounts to Mr Ackary. Mr Power put the terms to Mr Ackary that evening and Mr Ackary agreed with them. On 9 November 2017 the meeting resumed and Mr Gambling advised that he would no longer continue with the agreement and requested that the vehicle be fully paid out and that he retain his Company mobile telephone number for personal use. Mr Power informed Mr Ackary of these additional requests and agreed that he would loan the necessary funds to Mr Ackary as Digital Fox had insufficient funds to meet those requests. Mr Power states that he and Mr Ackary then met with Mr Gambling and they shook hands on the resignation agreement. Mr Power states that Mr Gambling was provided with calculations (set out in tabular form in paragraph 9 of his affidavit made on 15 January 2018) at the meeting on 9 November 2017 and they agreed that they were correct. Mr Power tendered a bank statement and evidence of a payment in the amount of $28,091.86 being made to Kia Finance.
[31] Mr Power’s oral evidence about the meetings on 8 and 9 November 2017 was that he travelled to Rockhampton to have a discussion with Mr Gambling about the fact that the business could not continue to operate if wages had to be paid to a manager and that the choice was to either close the doors or for Mr Ackary to take over the Manager’s role. Mr Power also intended to discuss an issue with Mr Gambling’s claim to be owed a bonus as it was impeding the sale of his share of the business to Mr Ackary. According to Mr Power, during the discussion with Mr Gambling on 8 November 2017, Mr Gambling accepted that Digital Fox did not owe him a bonus and that it was wrong to let this issue impede the sale agreement. Mr Power states that he discussed the fact that Mr Gambling would be paid his leave entitlements, however he did not know what the individual amounts of those entitlements were. In relation to the cars, Mr Power’s understanding was that some of Mr Gambling’s accrued entitlements would be withheld and used to make lease payments on behalf of Mr Gambling.
[32] According to Mr Power, on 8 November 2017 it was agreed with Mr Gambling that the lease payments would continue to be made as they became due. On 9 November 2017 Mr Gambling came to Mr Power and said that he would no longer agree to the lease payments being made periodically as the lease had a long way to run and he was concerned that Mr Ackary would not be able to meet those payments. Instead, Mr Gambling sought that the lease be paid out so that the vehicle could be transferred into his name. This would require an amount of approximately $30,000 to be paid. Mr Power had a discussion with Mr Ackary who said he could not pay out that amount. Mr Power was able to arrange for the necessary funds to be paid to the finance company. Later, Mr Gambling and Mr Ackary agreed that an arrangement would be entered into whereby lease payments on Mr Gambling’s wife’s car would continue to be made using funds withheld from Mr Gambling’s accrued entitlements on termination of his employment.
[33] Mr Power agreed that during the meeting on 8 November 2017, Mr Gambling stated that there were three ways that his employment could end: resignation, termination or redundancy. Mr Power maintained that he did not say that Mr Gambling was sacked. Mr Power also said that he stated to Mr Gambling that he did not want to sack Mr Gambling because it would affect his career and the only thing that Mr Gambling had done wrong was “the possible fraud thing with the misallocation of the Tax Department money”.
[34] It is necessary to interpolate that there is evidence that an alteration to a document from an ATO portal was made so that it appeared that a debt owed by Digital Fox to the ATO did not exist. How this occurred, whether Mr Gambling knew about it, and at what point is in dispute. The involvement of the Administration Manager was also alleged. That person was to give evidence in relation to the time at which certain calculations of accrued entitlements for Mr Gambling were undertaken. When this matter ceased to be an issue because of concessions made by Mr Ackary and Mr Power about the time at which the calculations were completed, Mr Gambling withdrew the Administration Manager’s witness statement.
[35] Mr Power objected to this as he wanted to question the Administration Manager about the ATO issue. I allowed the statement to be withdrawn and declined to ask the Administration Manager to give evidence on the basis that if Digital Fox wanted to put this matter in issue and apportion blame for it to Mr Gambling, then it should have been done when its material in relation to the merits of Mr Gambling’s case was filed. I was also of the view that it was unfair to subject the Administration Manager to questioning about this matter on the ground of possible self-incrimination.
[36] At the conclusion of the first day of the hearing I made it clear to Mr Power (who continued to protest about being denied an opportunity to put a case) that if Digital Fox wanted to call further evidence, including from the Administration Manager, permission would need to be sought. This was confirmed in correspondence from my Associate to the parties sent on 13 April 2018. Further, Mr Power was permitted to resume his cross-examination of Mr Gambling on the second day of the hearing notwithstanding that he had been excused, given that I did not require the Administration Manager to give evidence and Mr Power insisted he had questions going to credit of Mr Gambling that he wished to ask in relation to his involvement in the ATO matter. It suffices to say that Mr Gambling stated that he became aware of the issue and was horrified about it and took steps to resolve the matter. Mr Gambling determined that those steps should not involve dismissing the Administration Manager.
[37] Mr Gambling’s evidence about the meetings as set out in his witness statement filed on 16 January 2018, is that on the afternoon of 8 November 2017, Mr Power arrived at Mango 4 unannounced and that this was a rare occurrence. Mr Power and Mr Gambling had a meeting in Mr Gambling’s office and Mr Power asked that the door be closed. According to Mr Gambling, Mr Power stated in a raised voice that Mr Gambling should resign immediately or he would sue Mr Gambling for fraud. Mr Gambling rejected this allegation and Mr Power then apologised regarding that accusation. Mr Gambling asked for a support person and Mr Power said that this was not necessary and continued the meeting. Mr Gambling informed Mr Power that he would not resign. Mr Power told Mr Gambling that he wanted to sell his 50% share in Digital Fox to Mr Ackary the other owner, and that Mr Ackary would only buy Mr Power out if Mr Gambling was no longer part of the business.
[38] Mr Gambling said that Mr Power told him that Mr Ackary wanted him gone, so that Mr Ackary could perform the role of general manager himself, and so that he would not have to pay Mr Gambling an outstanding bonus. Mr Gambling further asserted that Mr Ackary was well aware of the bonus because he had corresponded with him in relation to it in October 2017. Mr Gambling states that he told Mr Power that terminating his employment would not change the obligation for Digital Fox to pay him the bonus. Mr Power responded by saying: “Sue me for it.” Mr Gambling states that he then informed Mr Power that there are three ways to separate an employee from a company: resignation, termination or redundancy. Mr Gambling further states that he told Mr Power that he would not resign and the remaining options were termination or redundancy.
[39] According to Mr Gambling, Mr Power then stated: “OK you’re sacked.” Mr Gambling responded by asking: “You’re dismissing me?” to which Mr Power responded by stating: “Yes, even if my lawyer advised me not to say that.” Mr Gambling states that he was shocked and asked for a break. When the meeting reconvened, Mr Gambling told Mr Power that he did not agree with the dismissal and reserved his rights.
[40] A discussion then took place in which Mr Power told Mr Gambling that Mango 4 would struggle to pay all of Mr Gambling’s entitlements as required. Mr Gambling states that independently of the fact that he had been terminated, and having reserved his rights, he then offered a way to “partially ease the cash flow burden placed on Mango 4” associated with his termination and the business having to pay out his accrued employee entitlements and owed bonuses. Mr Gambling’s idea was to take the company car he had used as part of his severance, instead of cash. The proposal was that the remaining lease payments (approximately $27,011) would be deducted from Mr Gambling’s termination cash payment and he would take that amount instead of cash. Mr Power responded by stating that he would need to discuss this with Mr Ackary and the meeting would re-convene first thing in the morning.
[41] At approximately 9.00 am on Thursday 9 November 2017 Mr Power and Mr Gambling again met in Mr Gambling’s office, behind a closed door. According to Mr Gambling, Mr Power told him that he and Mr Ackary had agreed to Mr Gambling taking the car as part payment of his outstanding entitlements. Mr Ackary then joined the meeting. Mr Gambling states that he proposed the content of an email to be sent to all staff informing them of his dismissal. Mr Gambling asserts that Mr Power and Mr Ackary proof read and approved the email and were copied into it when it was sent. An email sent at 12.00 pm on Thursday 9 November 2017 was tendered by Mr Gambling. The email has a subject line “Tony dismissal” and contains a farewell message from Mr Gambling and the following statement:
“The ownership structure of Mango 4 is changing in that Paul Power is selling his equity to Ken Ackary. Ken will become the 100% owner of Mango 4 once the sale is complete. Ken will assume the role of General Manager.” 13
[42] Mr Power denied that he had proof read the email before it was sent or that he had seen it on Mr Gambling’s computer screen as suggested to him by Mr Gambling in cross-examination. Mr Power also said that he was not sure that the subject “Tony dismissal” was in the version of the email that he saw. 14 Mr Gambling later packed up his office and returned Company items including fuel card and door keys. Mr Gambling also tendered notes which he claims to have taken contemporaneously in the meetings with Mr Power on 8 and 9 November 2017.15 Those notes are consistent with Mr Gambling’s evidence about the meetings. The notes of the meeting on 8 November 2017 indicate that Mr Power told Mr Gambling that Mr Gambling was “the last sticking point” in the sale of his interest in Digital Fox to Mr Ackary.
[43] Mr Gambling states that the “correct” final payment of his entitlements up to 9 November 2017 was made up of:
• Accrued long service leave of $24,082.73;
• Normal hours worked up to 8 November 2017 of $3,894.23;
• Unpaid 2016 bonus of $96,914;
• Payment in lieu of notice of $10,817.30; and
• Accrued annual leave of $13,545.46.
[44] The total of these payments is $149,254.72. In his second statement responding to the jurisdictional objection, Mr Gambling said that on 10 November 2017, it occurred to him that he had a novated lease for his wife’s car (a three year lease beginning in 2017) which could only continue if there is an employer to deduct the novated lease payments from the employee’s pay and remit them to the novated lease company each pay period. Mr Gambling tendered an email sent by him to Mr Ackary at 5.31 am on 10 November 2017 requesting that Mango 4 withhold 6 fortnights of lease payments from his termination pay and continue to pay them to the leasing company pending Mr Gambling finding a new job and transferring the novated lease to his new employer. The email states that this will buy Mr Gambling three months to find another job and that if Mr Gambling finds a job before this period expires, the balance of the withheld payments can be paid to him. Mr Gambling also tendered a response to that email sent by the Administration Manager indicating that Mr Ackary agreed with the proposal and that she would take seven payments out of the final pay – one for the current fortnight and six payments for the next three months.
[45] Mr Gambling states that when his final entitlements were actually paid he received all of the amounts set out above except for the bonus. When Mr Gambling queried why his final payment was lower than it should have been, the Company’s Administration Manager told him in writing that she had been given a direction by Mr Ackary and Mr Power to withhold paying the $96,914 bonus payment. Mr Gambling asserts that this payment remains outstanding.
[46] Under cross-examination Mr Gambling maintained that he was told he was dismissed on 8 November 2017 and the dismissal took effect on 9 November 2018. Mr Gambling also maintained that he had been at Digital Fox for 13 years and intended to be there for another 13 years, and had novated leases in place with years to run. Mr Gambling further asserted that the only reason he was dismissed was that Mr Power wanted a commercial benefit to convince Mr Ackary to buy the business. In response to the proposition that he wrote his notes after the meetings on 8 and 9 November 2017, Mr Gambling maintained that they were written during the meetings on his iPad using a program called Evernote. Mr Gambling said that he put the words “approximately 4.00 pm” in the meeting notes in relation to the starting time of the meeting, because he started taking the notes after the meeting commenced when Mr Power started making allegations of fraud. In response to the proposition that the notes indicated that the discussion at the meeting went from Mr Gambling being told he was sacked to a severance package, Mr Gambling said that there was a break in the meeting between the two parts of the discussion and he raised the concept of the car being part of the severance arrangements after being told he had been sacked. Further, Mr Gambling said that he used the term severance agreement in his witness statement notwithstanding that he maintains that he was dismissed.
[47] Mr Gambling also said in cross-examination that when he agreed on a severance package he had reserved his rights including making an application for unfair dismissal and that his understanding when he reserved his rights was that he was going to receive all of his entitlements including the bonus and not a reduced amount. Mr Gambling agreed with the proposition that had the bonus been paid as part of the package he would have received all of his entitlements. 16
[48] Mr Power spent a considerable amount of time during his cross-examination of Mr Gambling dealing with Mr Gambling’s evidence about the fraud allegation that Mr Gambling claims Mr Power made against him on 8 November 2017. The proposition that Mr Power was attempting to put to Mr Gambling was not clear. I also spent a considerable amount of time explaining to Mr Power that if he wanted to contradict Mr Gambling’s version of the discussion he needed to put the alternative proposition to Mr Gambling by – for example – asserting that he did not discuss or raise the issue of fraud at all during the discussion; or that he did raise the issue of fraud but in a different context.
[49] Mr Power’s view was that it was sufficient to establish that he had not made the alleged statement by asserting this in his own evidence, and as a result the cross-examination on this point was deficient as Mr Power did not put his version of the discussion to Mr Gambling. In the questions directed to Mr Gambling on this point, and in his exchanges with me, Mr Power alternated between stating that fraud was not mentioned in the meeting with Mr Gambling on 8 November 2017 and stating that fraud was raised in that meeting “in a completely different context” 17. Mr Power also said that he talked to Mr Gambling about “another element of fraud” and “a number of elements of fraud that were in existence.18 Mr Power also stated that what he said to Mr Gambling about fraud was that he did not want to raise the issue because it would affect Mr Gambling in his employment.19 Mr Power also said that during the meeting on 8 November 2017 he raised the issues with ATO documentation. This is a matter that I have dealt with above.
[50] Mr Gambling did not depart from his evidence that Mr Power initially accused him of fraud and then backed away from that accusation and stated that he wanted Mr Gambling gone because he wanted to sell his share of the business to Mr Ackary. Mr Gambling also maintained under cross-examination that he told Mr Power that dismissing him did not relieve Digital Fox of paying the bonus that was owed, and that he would not resign, and that Mr Power then told Mr Gambling that he was sacked. Mr Gambling also asserted in his witness statement filed on 23 January 2018 that the calculations set out in Mr Power’s witness statement said to have been shown to him at the meeting on 9 November 2017, were not prepared by the Administration Manager until 13 November 2017. An affidavit from the Administration Manager confirming that this was the case was tendered by Mr Gambling. In their evidence at the hearing on 20 March 2018, Mr Power and Mr Ackary accepted that the calculations were not prepared at the time the meetings between Mr Power and Mr Gambling took place on 8 and 9 November 2017. Given this concession Mr Gambling determined that it was not necessary to call the Administration Manager to give evidence.
[51] In his second affidavit sworn on 23 January 2018 in response to Mr Gambling’s first statement, Mr Power asserts that he did not dismiss Mr Gambling in relation to an unpaid 2016 bonus in the amount of $96,914.00. Mr Power further states that he denies Mr Gambling’s assertion that Mr Ackary did not want Mr Gambling working for Digital Fox. Mr Power also maintained that Mr Gambling resigned on the terms set out in his earlier affidavit.
[52] Mr Power was cross-examined by Mr Gambling about the sale of the business and the related issues. Mr Power stated that Mr Ackary had told him that if Mr Ackary bought the business he would not be able to afford to employ Mr Gambling and that post-sale Mr Gambling would have no role if Mr Ackary was the purchaser. 20 In relation to fraud, Mr Power said that there the issues were:
• The conversion of Mr Gambling’s leave 15 months after the event which Mr Power discovered after Mr Gambling’s employment ceased; and
• The ATO issue and the discovery after Mr Gambling’s employment ceased of a debt to the ATO which had been concealed. 21
[53] Mr Ackary’s evidence in relation to the jurisdictional objection as set out in his affidavit made on 13 January 2016 is consistent with the evidence set out in Mr Power’s affidavit. In his second affidavit, Mr Ackary denies that he represented to Mr Power that he would only purchase Mr Power’s share of the business if Mr Gambling was no longer a part of the business. Mr Ackary asserts that on 9 November 2017 Mr Gambling asked to send a farewell email to staff and that he agreed subject to having the right to review the contents of that email. Mr Ackary further asserts that the email dated Thursday 9 November 2017 with the subject line “Tony dismissal” is not the version that he approved and that Mr Gambling altered the contents and added the subject line later.
[54] Under cross-examination Mr Ackary agreed that he did not correct the email after it was sent but maintained the content did not mention dismissal. Mr Ackary also said that later when he read the email he just thought Mr Gambling was having a final dig. 22 In his second affidavit Mr Ackary also denies that Mr Gambling was dismissed on the basis of the bonus or that he did not want to have Mr Gambling working for Digital Fox. Mr Ackary further denies that the bonus was owed to Mr Gambling.
[55] In his oral evidence, Mr Ackary said that when he agreed to purchase the business he did not need a general manager and had no interest in continuing to employ Mr Gambling. Mr Ackary also stated that he considered Mr Gambling’s conduct in converting the bonus to annual leave and putting it into the books of Digital Fox as fraudulent. Mr Ackary further stated that his agreement with Mr Power to purchase the business was subject to Mr Power making arrangements with Mr Gambling to sort out the bonus/leave issues and for Mr Gambling to agree to leave the business. Mr Ackary maintained that he would not have purchased the business if Mr Gambling remained as an employee. Mr Ackary also maintained that if he and Mr Power had been unable to come to an arrangement because of the financial state of the business at the time, the next move would have been to wind it up if Mr Power was not willing to purchase it from Mr Ackary. 23
[56] In response to the proposition that there was no handover between Mr Gambling and Mr Power and that if Mr Gambling’s departure was amicable there would have been a handover, Mr Ackary said that he did not need a handover from Mr Gambling as he knew how to run a business. Mr Ackary also said that having a handover from Mr Gambling would have been pointless as he did not want Mr Gambling there. Further Mr Ackary said that he stayed out of the meetings between Mr Power and Mr Gambling and let Mr Power sort things out. Mr Ackary also maintained that it was never the intention to sack Mr Gambling and that the intention was that he would leave on an amicable basis. This was evidenced by Mr Ackary agreeing to the ongoing payment of the novated lease as requested by Mr Gambling and that this arrangement only ceased when Mr Gambling made his unfair dismissal application whereupon Mr Ackary returned the balance of the lease payments to Mr Gambling. 24
[57] Mr Ackary agreed that there was no actual cost to the business in relation to Mr Gambling taking the car instead of his accrued entitlements but maintained that regardless he had to borrow the money to fund either the pay-out of the car or the entitlements because he did not have that money. 25 There was also evidence that there had been discussions in February 2017 and August 2017 where the possibility of Mr Gambling ceasing employment with Digital Fox on the basis that his position would be redundant would be discussed. In this regard, Mr Gambling tendered an email dated 25 August 2017 which stated that an amount of $300,000 needed to be trimmed from expenses to get to a break-even point and $500,000 to return the business to profit levels discussed in February 2017.26 Mr Gambling’s suggestion to trim expenses was that three employees including Mr Gambling be removed by way of redundancy.
[58] At the final hearing, in response to questions from me, Mr Gambling confirmed that the Directors of Digital Fox did not know that he had converted his bonus to annual leave and agreed that the Directors dispute he was owed the bonus. Mr Gambling contended that rather than converting the bonus to annual leave he could simply have instructed the Administration Manager to pay the amount into his bank account. In response to a proposition from Mr Power that he decided to take a second crack at the whole matter after an agreement was reached, by making an unfair dismissal application, Mr Gambling said that there was no agreement about his resignation and that Mr Power terminated his employment and a commercial arrangement was then made in relation to the leased motor vehicles. At a later point Mr Gambling formed a view that his dismissal was unfair. Mr Gambling also said that he had reserved his rights in the discussion with Mr Power which resulted in his dismissal. 27
[59] In response to propositions from me, Mr Gambling conceded that taking the car in lieu of cash was advantageous to him, as was retaining his work mobile telephone and telephone number. In relation to the bonus he claimed, Mr Gambling agreed that at 30 June 2016 when it became (on his view) payable, he did not ask Mr Ackary or Mr Power why it had not been paid. Mr Gambling further agreed that he had not sent a spreadsheet or other documentation to Mr Power in relation to the amount claimed as he had done in previous years. Mr Gambling’s explanation for this was that the business did not have the cash flow to support paying the bonus. Mr Gambling also denied that the issue of the bonus was discussed in his meetings with Mr Power on 8 and 9 November 2017. Later Mr Gambling agreed that the bonus was discussed in the context that Mr Power said that Mr Gambling could sue him about it. Mr Gambling and I had the following exchange in relation to the discussion about the bonus at the meetings on 8 and 9 November 2017:
“I am asking you, Mr Power says he challenged you on the bonus at that meeting and I'm asking you to agree or disagree with that proposition and stop digressing from the question?---I disagree with that proposition.
So Mr Power didn't - - -?---I disagree.
- - - discuss this bonus at all?---Other than if I wanted it, I should sue him for it but he wasn't going to pay it. So, yes, we did talk about it and he said they couldn't afford to pay it, sue them for it.
So you knew by then that Mr Power wasn't accepting that he owed you $96,000?--- Well, I knew that he couldn't afford to pay it.
He put to you, "I'm not paying you $96,000?" Whether he said, "I can't afford to pay it" or "I'm not paying it" or "Sue me", and it came as somewhat of a surprise to you when you got the figures on 13 November that the $96,000 wasn't in them?--- Yes, ma'am. Mr Power, as much as I'm a fan of his, says a lot of things that don't translate into reality. So, a meeting that could take 20 minutes may take longer, so it's difficult to figure out which bit is wheat and which bit is chaff.” 28
[60] At the conclusion of the hearing, I put the proposition to Mr Gambling that he was seeking compensation in the amount of 26 weeks wages less five weeks in lieu of notice that he had been paid, and that it was arguable that he would not have remained in employment for that period. I put the further proposition that the financial issues confronting Digital Fox as set out in Mr Gambling’s email of 25 August 2017 in relation to potential redundancies, made it unlikely that Mr Gambling would have continued in employment for that period. Mr Gambling’s response was that if the business had not sold he would still be employed. Mr Gambling also responded as follows to a proposition from me:
“The proposition I am putting to you is not long, not long at all because the business was being sold and the person buying it didn't want you, and if the business wasn't sold, then it would have closed down because we all agree it was in dire financial circumstances. So, how much longer do you assert you would have stayed? --- Ma'am, the allegation of dire financial circumstances we've been using in a non-technical sense. The business was significantly reduced profit to what it used to be. It still trades now and if the only difference is the fact that I'm not there, Mr Ackary is, I'm sure, at least taking whatever money they were paying me as a wage, so the net cost to the business is exactly the same as it would have been had I been there. Prior to the sale, Mr Ackary and Mr Power and I had entered into a three-year lease agreement for my wife's car, you know, there was no intention for me to not be there. So the statement that they would close the business if they didn't sell it is a dramatic one, there's no evidence to suggest that was the case at all.” 29
[61] I also put the proposition to Mr Gambling that his conduct in converting a disputed bonus entitlement to annual leave, without the knowledge of the Directors of Digital Fox could be viewed as conduct that provided a valid reason for dismissal. Mr Gambling maintained that he was entitled to the bonus and to authorise its payment and that the conversion to annual leave benefited Digital Fox.
5. CONSIDERATION
5.1 Whether Mr Gambling was dismissed
[62] Legislative provisions relevant to the question of whether a person has been dismissed, are as follows:
385 What is an unfair dismissal
A person has been unfairly dismissed if FWA is satisfied that:
(a) the person has been dismissed; and
(b) the dismissal was harsh, unjust or unreasonable; and
(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and
(d) the dismissal was not a case of genuine redundancy.
Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.
386 Meaning of dismissed
(1) A person has been dismissed if:
(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or
(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.
(2) However, a person has not been dismissed if:
(a) 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; or
(b) the person was an employee:
(i) to whom a training arrangement applied; and
(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;
and the employment has terminated at the end of the training arrangement; or
(c) the person was demoted in employment but:
(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and
(ii) he or she remains employed with the employer that effected the demotion.
(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.
[63] By virtue of s.386, a person has been dismissed for the purposes of s.385, where employment is terminated by the employer or the person was forced to resign as a result of conduct or a course of conduct engaged in by the employer. As the Industrial Relations Court of Australia held in Mohazab v Dick Smith Electronics 30:
“...a termination of employment at the initiative of the employer may be treated as a termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship...plainly an important feature is that the act of the employer results directly or consequentially in the termination of employment and the employment relationship is not voluntarily left. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship.” 31
[64] A Full Bench of the Australian Industrial Relations Commission observed in O’Meara v Stanley Works Pty Ltd 32 there is a need for the line distinguishing conduct that leaves an employee no real choice but to resign from employment and conduct that cannot be held to cause a resignation to be a termination at the initiative of the employer, to be closely drawn and rigorously observed.33 The Full Bench in O’Meara went on to state that the finding that a termination of employment was at the initiative of the employer requires that there be some action on the part of the employer which is either intended to bring the employment relationship to an end or has the probable result of bringing the employment relationship to an end.34
[65] This is not a case where Mr Gambling alleges that he was forced to resign or where any inference that this occurred can be drawn. Mr Gambling asserts that he did not resign and that Mr Power dismissed him. Mr Power asserts that Mr Gambling resigned in accordance with an agreement reached at the meetings on 8 and/or 9 November 2017. I am unable to accept that such an agreement was reached. On 8 and 9 November 2017 when Mr Gambling and Mr Power met, the following factual situation existed:
• Mr Gambling as recently as August 2017 had advanced a proposal to reduce operating costs of the business by making his position redundant;
• Mr Gambling was of the view that he was owed an amount of $96,914.00 as a bonus for the financial year ending 30 June 2016 and that Digital Fox was responsible for the payment of that bonus;
• Mr Gambling had – without the knowledge of the Directors of Digital Fox at the relevant time – converted the amount of the bonus he asserts was owed to him to annual leave, which was in the leave accruals of Digital Fox;
• Mr Power knew by 8 November 2017 that Mr Gambling had done this;
• Mr Power wanted to reach agreement with Mr Ackary for Mr Ackary to purchase Mr Power’s interest in Digital Fox;
• The accrued leave/bonus issue was the last sticking point to this agreement being reached;
• Mr Ackary did not wish to employ Mr Gambling as Mr Ackary intended to carry out this role, thereby implementing a cost saving; and
• Mr Power had travelled to Rockhampton to resolve with Mr Gambling the matter of the disputed bonus and that Mr Ackary did not want to continue to employ Mr Gambling.
[66] I do not accept that Mr Gambling would have reached agreement to resign his employment if that agreement involved foregoing a $96,914.00 bonus that he maintained was owed to him. It is highly improbable that the bonus/leave issue was not discussed at the meetings on either 8 or 9 November 2017 and even more improbable that Mr Gambling would have resigned on the basis asserted by Mr Power. It is also the case that Mr Gambling understood that in circumstances where Mr Ackary wanted to assume the role of General Manager, he would be entitled to make a claim for a redundancy payment. This adds to the improbability that Mr Gambling would have resigned his employment. Mr Power accepts that Mr Gambling said that there were three ways his employment could end: termination, redundancy or resignation. Mr Gambling well knew that if he resigned he would not have an entitlement to redundancy payments and I do not accept that he did resign.
[67] I do not doubt that Mr Power wanted Mr Gambling to resign and that it would have suited Mr Power if this had occurred. Mr Power conceded that the leave/bonus issue was stopping the agreement as was the prospect of Digital Fox having to fund a redundancy payment for Mr Gambling in the event that Mr Gambling did not resign. It is also clear that – contrary to the affidavits sworn by Mr Power and Mr Ackary –Mr Ackary did not want Mr Gambling to remain in the role of General Manager of Digital Fox, or indeed in any role.
[68] It may be that Mr Power genuinely believed that Mr Gambling had agreed to resign. Mr Power demonstrated a propensity in his evidence to maintain his view of events regardless of cogent evidence to the contrary and refused to make concessions where they were warranted. I do not doubt that much of Mr Power’s hostility in the unfair dismissal proceedings was generated by the view that he had been outmanoeuvred by Mr Gambling. In my view, Mr Power was outmanoeuvred. The impression I gained is that Mr Gambling is an intelligent man well aware of his rights. In addition to his role as General Manager of Digital Fox, Mr Gambling is a Director of a number of entities within a very large organisation for which he receives a not inconsiderable fee which well exceeded his salary at Digital Fox. Mr Gambling may have agreed to resign had Mr Power agreed to pay the disputed bonus.
[69] However, regardless of Mr Power’s view to the contrary, on the balance of probabilities, I am satisfied and find that Mr Gambling did not resign his employment but simply acquiesced in the fact that Mr Ackary did not want to continue to employ him and accepted this fact while reserving his rights and then negotiating arrangements for his leased vehicles. Mr Power’s conduct in the meetings on 8 and 9 November had the effect of terminating Mr Gambling’s employment. Mr Power was acting in the capacity of Director of Digital Fox and accordingly Mr Gambling was dismissed.
[70] In so finding, I do not doubt that had Mr Gambling been paid the amount of his claimed bonus in addition to the other amounts, he would have resigned. However, I do not accept that the Company has met the onus it bears to establish that Mr Gambling resigned. It follows that I am satisfied and find that Mr Gambling was dismissed. I turn now to consider whether the dismissal was unfair by reference to the criteria in s. 387.
5.2 Whether Mr Gambling’s dismissal was unfair
[71] Section 387 of the Act provides that in considering whether a dismissal is harsh, unjust or unreasonable, the Commission must take into account:
(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and
(b) whether the person was notified of that reason; and
(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and
(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and
(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(h) any other matters that the FWC considers relevant.
[72] Where a dismissal is related to capacity or conduct, the employer bears an onus of establishing that there was a valid reason for dismissal.35 A valid reason for dismissal is one that is “sound, defensible or well founded” and not “capricious, fanciful, spiteful or prejudiced.”36 The reason for dismissal must also be defensible or justifiable on an objective analysis of the relevant facts,37 and the validity is judged by reference to the Tribunal’s assessment of the factual circumstances as to what the employee is capable of doing or has done.38 While the employer bears the onus of establishing the validity of the reason for dismissal, the dismissed employee bears the onus of establishing that the dismissal was unfair. In finding that there was a valid reason for dismissal, the Commission is not limited to the reason relied on by the employer.
[73] The difficulty in the present case is that Digital Fox did not put a proper case in the alternative if I found that Mr Gambling was dismissed. It is arguable that there were several grounds which might have been advanced as valid reasons for dismissal of Mr Gambling. One of those matters related to the manner in which Mr Gambling conducted himself in relation to the bonus he asserts he was owed. On Mr Gambling’s evidence, his claim in relation to the bonus is based on the financial year ending 30 June 2016. This period ended after Mr Gambling’s employment transferred from Foxworth to Digital Fox.
[74] Mr Gambling conceded that he did not follow his usual practice of setting out his claimed bonus in a spread sheet and sending it to Mr Power. Mr Gambling also conceded that he said nothing about the bonus when his employment transferred to Digital Fox. As a General Manager Mr Gambling should have known that his claim for a bonus of that magnitude was a significant liability in the context of Digital Fox being established. Furthermore, some fifteen months after that transfer, and twelve months after the bonus was allegedly due, Mr Gambling converted it to annual leave. Mr Gambling did so without telling either Director about the transaction. Mr Gambling kept quiet about the transaction in the knowledge that Mr Power and Mr Ackary were discussing who would buy the other’s share of the business. Mr Gambling described the transaction as an “unpaid staff entitlement” in his instruction to the Administration Manager to convert the amount to annual leave. In short, it is arguable that Mr Gambling’s conduct appears to have been designed to conceal the fact that he was claiming an entitlement to a bonus and the conversion of that bonus to annual leave.
[75] Mr Gambling’s evidence that he converted the bonus to benefit Digital Fox is not credible. The leave went into the balances held by Digital Fox and the Company was liable to pay Mr Gambling for that leave if he took it or his employment terminated. It was a liability regardless of whether it showed up in the profit and loss figures of the Company. The leave came into focus when Mr Ackary was examining the records of the business with a view to buying Mr Power’s share of the business. If it was such a helpful exercise on the part of Mr Gambling to convert his claimed bonus to annual leave, I can only wonder at why he did not inform Mr Power that he had done this. It is arguable that Mr Gambling was protecting his position in the event that Mr Ackary bought the business in the knowledge that his tenure would be of short duration if this occurred. The impression I gained was that Mr Ackary and Mr Gambling did not have a good relationship and that Mr Gambling’s relationship was with Mr Power.
[76] I am also of the view that Mr Power did believe that Mr Gambling had engaged in fraudulent activity with respect to the leave conversion and that he had concerns about Mr Gambling’s involvement in the ATO issue. Mr Power knew that Mr Gambling had converted a claimed bonus to annual leave by 8 November 2017 when he met with Mr Gambling. The leave conversion is a matter that Mr Power was entitled to raise as a possible misconduct issue. There was also the ATO issue. Even if Mr Gambling was not privy to the alleged conduct of the Administration Manager in relation to the ATO, it is surprising that this transaction could have been undertaken on his watch as General Manager. This is a matter that Mr Power and Mr Ackary may have been entitled to consider as misconduct constituting a valid reason for dismissal.
[77] Notwithstanding that this conduct may have constituted grounds upon which Digital Fox asserted that it had a valid reason to dismiss Mr Gambling in the event that its jurisdictional objection failed, it did not do so. These are serious allegations and Mr Gambling was entitled to at least have them put to him prior to filing his reply material on 23 January 2018 in accordance with the Directions for the hearing of this matter. In all of the circumstances, I am unable to find that there was a valid reason for Mr Gambling’s dismissal related to his conduct or capacity.
[78] In relation to the consideration in s. 387(b) of the Act, the use of the term “that reason” refers to a reason or reasons for dismissal related to capacity or conduct as provided in s. 387 of the Act. In light of the unsatisfactory state of the evidence about the meetings between Mr Power and Mr Gambling I am unable to be satisfied that, Mr Gambling was given reasons for his dismissal to the extent that it related to his conduct.
[79] Mr Gambling was not given an opportunity to respond to any reason for dismissal related to his conduct in circumstances where it is probable that Mr Gambling’s conduct with respect to the matters considered with respect to s. 387(a) related to his conduct. Mr Gambling asked to have a support person at the meeting with Mr Power and given that the meeting was conducted over two days, Mr Gambling could have pressed his request and brought a support person at least on the second occasion that he met with Mr Power. Mr Gambling was not informed of any concerns about his conduct in circumstances where there is a possibility that the dismissal was based on conduct.
[80] In relation to s. 387(f) and (g), while Digital Fox is not a small business as defined in the Act, Mr Gambling appeared to have a greater understanding of employment law and practice than did either of the Directors of the Company, and in my view the size of the Company and its lack of dedicated human resource management specialists and expertise impacted on the processes followed in dismissing Mr Gambling.
[81] In relation to s.387(h) I consider that the following matters are also relevant to consideration of whether Mr Gambling was unfairly dismissed. Firstly, for the reasons set out above, the conduct of Mr Gambling in relation to the conversion of the claimed bonus to annual leave was a matter about which the Directors of Digital Fox were entitled to take a dim view. It is also the case that but for the fact that Mr Gambling was not paid the bonus he asserts he was entitled to and/or a redundancy payment, Mr Gambling likely would not have made an unfair dismissal application at all. In short the impression I gained is that this application was more about the bonus and the fact that Mr Gambling’s dismissal was not treated as a redundancy than it was about an unfair dismissal.
[82] Even if there were no issues of Mr Gambling’s conduct with respect to the bonus, it is also the case that the Directors had agreed that the only way for the business to survive was for one to buy out the interest of the other. Mr Ackary had agreed to buy out Mr Power’s interest in the business. Mr Ackary had further decided that he did not want to employ a General Manager and would perform that role himself. Mr Ackary was entitled to take that view and a decision to terminate Mr Gambling’s employment as a result of that decision is not of itself unfair.
[83] On the other hand, Mr Gambling had in excess of thirteen years’ service with the Company, and in circumstances where Mr Ackary decided to remove the position of General Manager and undertake that role himself, it is arguable that Mr Gambling’s position was redundant and he was entitled to be dealt with on that basis. There is no evidence of consultation with Mr Gambling about what the change would mean to his role prior to the meeting on 8 November 2017 when he was essentially informed that he had no role.
[84] Furthermore, notwithstanding the reservations I have expressed, Mr Gambling may have an entitlement to a bonus based on profit for the 2015-16 year regardless of whether the bonus was payable by Foxworth or Digital Fox. It is also the case that Mr Gambling may have been able to convince the Directors that he had no knowledge of the ATO matter and could not reasonably have known about it. There is no evidence of any previous conduct or performance issues relating to Mr Gambling.
[85] In all of the circumstances, I find that Mr Gambling was exited from the business involuntarily to suit Mr Power, who wanted to sell his share of the business to Mr Ackary to enable Mr Power to extract money he had invested in the business. While the need to sell the business was pressing, it did not entitle Mr Power to deal with Mr Gambling in the manner that he did and renders Mr Gambling’s dismissal unfair. Having found that Mr Gambling’s dismissal was unfair, I turn to the matter of remedy.
6. REMEDY
[86] As required by s.390 of the Act, I am satisfied that Mr Gambling was protected from unfair dismissal and that he has been unfairly dismissed. Mr Gambling seeks an amount of compensation of 21 weeks payment, being the maximum amount that can be ordered minus five weeks payment he has already received. Mr Gambling stated in his submissions that he did not seek reinstatement, and acknowledged that his position with the Respondent was untenable. I agree with Mr Gambling’s submissions regarding reinstatement, and find that reinstatement would be inappropriate. Additionally, Mr Ackary now performs the duties of the role himself.
[87] However, I have concluded that this is a case where Mr Gambling should not have a remedy for his unfair dismissal. One of the considerations in determining the amount of compensation to be awarded is as provided in s. 392(c) – the remuneration that Mr Gambling would have received or would have been likely to receive if he had not been dismissed. In short, I do not accept that Mr Gambling would have remained in employment for a period of more than five weeks from the date he was dismissed. Any unfairness to Mr Gambling arises from the fact that he was dismissed and not paid a redundancy payment when it is arguable that he was entitled to such payment.
[88] Mr Ackary had agreed to purchase the business on the basis that he did not wish to employ Mr Gambling. There is no evidence that the sale did not proceed and Mr Ackary did not appear to have changed his position in this regard. Mr Gambling was paid five weeks wages in lieu of notice and I am satisfied that he would not have been employed for any longer period.
[89] I do not accept Mr Gambling’s evidence to the contrary. Mr Gambling’s assertion that the business of Digital Fox was profitable is completely at odds with the email he sent on 25 August 2017 outlining drastic action that needed to be taken in order to cut costs including making his own position redundant. It is also at odds with the email Mr Gambling sent to Mr Ackary informing him that his entire drawings from the business were required to fund payments to the ATO. That situation was not sustainable and I do not accept that Mr Gambling’s employment would have continued for longer than the notice period he was paid.
[90] Mr Gambling may well have a claim for unpaid bonus or for redundancy pay. As a full Bench of the Commission held in Dale v Hatch 39 it is not appropriate for the unfair dismissal provisions of the Act to be used as a substitute mechanism for the recovery of monetary entitlements under the Act or a modern award. I am also of the view that it is not appropriate to award compensation for unfairness based on failure to pay a redundancy payment in circumstances where any such entitlement could be obtained from a court. It follows that it is also not appropriate for the unfair dismissal provisions to be used to recover bonus payments of the kind that Mr Gambling asserts that he is entitled to in the present case. If Mr Gambling believes he has an entitlement to redundancy pay or to an unpaid bonus under his contract of employment, then he should make an appropriate application to a relevant court for the recovery of this entitlement.
[91] I accept that it is unusual that an employee who is found to have been unfairly dismissed should not have a remedy. However, in all of the circumstances of this case, I consider that it is not appropriate that I make an Order for compensation. Such an Order is discretionary and I do not think that this is an appropriate case for the exercise of that discretion.
DEPUTY PRESIDENT
Printed by authority of the Commonwealth Government Printer
<PR700895>
1 Transcript of proceedings 20 March 2018 PN71.
2 Exhibit A2 Item 1.
3 Exhibit A2 Item 2.
4 Transcript of proceedings 20 March 2018 PN71.
5 Exhibit R3.
6 Exhibit R2.
7 Exhibit R1.
8 Exhibit R1.
9 Transcript of proceedings 20 March 2018 PN188.
10 Transcript of proceedings 20 March 2018 PN191 – per Mr Ackary.
11 Transcript of proceedings 20 March 2018 PN138.
12 Transcript of proceedings 20 March 2018 PN216.
13 Exhibit A2 Item 4.
14 Transcript of proceedings 20 March 2018 PN553-562.
15 Exhibit A2 Items 3 and 5.
16 Transcript of proceedings 20 March 2018 PN803-804.
17 Transcript of proceedings 20 March 2018 PN1103.
18 Transcript of proceedings 20 March 2018 PN1022.
19 Transcript of proceedings 20 March 2018 PN1020.
20 Transcript of proceedings 20 March 2018 PN359-360.
21 Transcript of proceedings 20 March 2018 PN363.
22 Transcript of proceedings 20 March 2018 PN695.
23 Transcript of proceedings 20 March 2018 PN610 – 614.
24 Transcript of proceedings 20 March 2018 PN630 – 631, PN599-603.
25 Transcript of proceedings 20 March 2018 PN633-639.
26 Exhibit A1.
27 Transcript of proceedings 12 July 2018 PN1714-1715.
28 Transcript of proceedings 12 July 2018 PN1891-1895.
29 Transcript of proceedings 12 July 2018 PN2072.
30 (1995) 62 IR 200
31 Ibid at 205-206.
32 Print 973462, 11 August 2006.
33 ABB Engineering Construction Pty Ltd v Doumit Print N6999, 9 December 1996.
34 O’Meara v Stanley Works Pty Ltd PR973462.
35 Allied Express Transport Pty Ltd v Anderson (1998) 81 IR 410 at 5; Yew v ACI Glass Packaging Pty Ltd (1996) 71 IR 201 at 204.
36 Selverchandron v Peteron Plastics Pty Ltd (1995) 62 IR 371 at 373.
37 Rode v Burwood Mitsubishi Print R4471 at [90] per Ross VP, Polites SDP, Foggo C.
38 Miller v University of NSW [2003] FCAFC 180 at pn 13, 14 August 2003, per Gray J.