Fair work cases; dismissal unfair despite valid reason

This is an extract from a decision of the Fair Work Commission in an unfair dismissal case to hold that the dismissal was relevantly unfair despite there being a valid reason for dismissal.

 

[“42]  In all the circumstances, I find that there was a valid reason related to the Applicant’s conduct in terms of his failure to follow direction on the completion of the calling cards. I am also satisfied that his sales performance was poor in the latter months of his employment. This weighs against a finding the dismissal was unfair.

 

Section 387(b) – Was the Applicant notified of the valid reason?

 

[43]    Proper consideration of s.387(b) requires a finding to be made as to whether the Applicant “was notified of that reason”. Contextually, the reference to “that reason” is the valid reason found to exist under s.387(a).32 Notification of the valid reason to terminate must be given to the employee before the decision to terminate is made.33 It is apparent from the evidence of Mr Stopp that the Applicant was not notified of the valid reason before the decision was made. Essentially, he was told to resign or be dismissed.34 The decision to dismiss had already been made. This factor weighs in favour of a finding that the dismissal was unfair.

 

Section 387(c) – Was the Applicant given an opportunity to respond to any valid reason related to their capacity or conduct?

 

[44]    For the Commission to have regard to whether an employee has been given an opportunity to respond to the reason for dismissal, there needs to be a finding that there is a valid reason for dismissal.35 An employee must be notified of the reason for termination and must also be given an opportunity to respond to that reason before the decision to terminate is made. In this matter, the Applicant was told by Mr Stopp on 20 September 2023 to resign or be terminated. There was no opportunity to respond. This factor weighs in favour of a finding that the dismissal was unfair.

 

Section 387(d) – Did the Respondent unreasonably refuse to allow the Applicant to have a support person present to assist at discussions relating to the dismissal?

 

[45]    I find that the Respondent did not unreasonably refuse to allow the Applicant to have a support person present at discussions relating to the dismissal. This is also a neutral consideration. There was no unreasonable refusal of a support person. The procedure to effect the dismissal did not actually involve any discussions where there would have been an opportunity to even consider securing a support person.

 

Section 387(e) – Was the Applicant warned about unsatisfactory performance before the dismissal?

 

[46]    Warnings become relevant when an employee is dismissed for unsatisfactory performance. Unsatisfactory performance is more likely to relate to the employee’s capacity to do the job than their conduct.36 Performance includes ‘factors such as diligence, quality, care taken and so on’.37

 

[47]    The Commission must take into account whether there was a period of time between:

 

  • an employee being warned about unsatisfactory performance, and
  • a subsequent dismissal.38

 

 

 

[48]    This period of time gives the employee the opportunity to understand their employment is at risk and to try and improve their performance.

 

[49]    The Applicant was warned about his performance and was on notice his employment was at risk due to his performance issues. On 20 July 2023 the Applicant was issued with a letter regarding his performance. This letter stated that the Respondent was happy with the Applicants initial 2 months of sales and thought he was doing well, however, the Applicant was then producing some of the lowest sales figures in the last 10 years which was very concerning to the Respondent.39 The Respondent wrote that they needed the Applicant to commit 100% to his position and ensure that he completed the mandatory tasks set out in the Conditions of Employment to ensure he remained in his current position.40 On 14 August 2023, a further letter was issued to the Applicant where the Respondent outlined that a strict requirement for the Applicant to hold his position with Duo Trading was completing the daily calling cards as set out in the Conditions of Employment.41 The Applicant was warned that this was his last warning regarding this, and they asked that the Applicant begin doing his calling card entries daily, consistent with what is required.42

 

[50]    I am satisfied the Applicant was warned his employment was at risk as a result of his poor performance and this weighs against a finding that the dismissal was unfair. However, I am not satisfied that there was a sufficient period of time between that warning and the subsequent dismissal to allow the employee sufficient time to potentially improve his performance. This weighs in favour of a finding that the dismissal was unfair.

 

Section 387(f) and (g) – To what degree would the size of the Respondent’s enterprise be likely to impact on the procedures followed in effecting the dismissal and to what degree would the absence of dedicated human resource management specialists or expertise in the Respondent’s enterprise be likely to impact on the procedures followed in effecting the dismissal?

 

[51]    In the circumstances these matters can be dealt with together. The Respondent made no submissions that the size of its enterprise or absence of human resource specialists or expertise was likely to impact on the procedures followed in effecting the dismissal.

 

[52]    While there is acknowledgement that small businesses are genuinely different in nature both organisationally and operationally, the procedures followed in dismissing a person cannot be ‘devoid of any fairness’.43

 

[53]    The Commission has commented that ‘[c]ommon sense courtesies of conduct ought to exist in any workplace, whatever the size’.44

 

[54]    While this is a relatively small business, the evidence shows that the dismissal of the Applicant lacked procedural fairness. Mr Fergusson did not think the small size of the business had an impact on his procedure for effecting the dismissal. The only concession from Mr Fergusson was that “…we need to use a lot stronger wording in our letters”.45 These factors are in the circumstances neutral considerations.

 

Section 387(h) – What other matters are relevant?

 

 

 

[55]    Section 387(h) requires the Commission to take into account any other matters that the Commission considers relevant. The Applicant was told that he needed to either resign or be dismissed in a phone call on 20 September 2023. The only step that proceeded that phone call was to tell the Applicant that his remuneration would be altered with effect from the end of September, effectively as a sanction for his poor performance. The Applicant was not happy about that change but not unreasonably expected his employment would continue and he would have an opportunity to improve. However soon after he was told to either resign or be terminated. Two days later he was advised his employment was to terminate on 25 September 2023. The explanation advanced for this rather botched process was not coherent.46 The most likely explanation for the haste in effecting the dismissal is the submission of Mr Ferguson that he was conscious of the approaching 6 months of the Applicant being employed.47 There was a near total lack of procedural fairness in effecting the dismissal. This weighs towards a finding the dismissal was unfair.

 

[56]    A further matter is the Applicant failed a drug test on the first day of employment. Traces of THC from using cannabis were detected. While this was not a valid reason for dismissal for reasons set out earlier, it is not necessarily irrelevant to the consideration of whether the dismissal was unfair, where for example that earlier conduct which was condoned nevertheless was just the first instance of repeated similar behaviour. However, there is no suggestion that is the case here. The failed drug test is a neutral consideration in the circumstances.

 

[57]    There was also a suggestion from Mr Fergusson that the Applicant had falsified his resume.48 There is no evidence to support that claim. What is concerning is that the claim of Mr Fergusson that the resume was not accurate appeared to relate to the manner in which the Applicant described the personal relationship he was in at the time of employment.49 Mr Fergussons evidence was “As a company policy, we just look for people in so-called relationships and have certain backgrounds”.50

 

[58]    Two things need to be said about that evidence. Firstly, it is irrelevant as to what the Applicant included on his resume as to his relationship status as it should have formed no part of a decision to employ or not employ him. Secondly, to the extent that Mr Fergusson is making decisions to employ or not employ persons people in particular relationships or backgrounds then there is a real possibility he is in engaging in conduct that is in breach of anti-discrimination legislation and the Fair Work Act. In any event, this matter has no bearing on the fairness or otherwise of the decision to dismiss the Applicant.

 

Is the Commission satisfied that the dismissal of the Applicant was harsh, unjust or unreasonable?

 

[59]    I have made findings in relation to each matter specified in s.387 as relevant. I must consider and give due weight to each as a fundamental element in determining whether the termination was harsh, unjust or unreasonable.51

 

[60]    There were two valid reasons for the dismissal. This weighs against a finding the dismissal was unfair. However, the dismissal lacked any procedural fairness. This weighs in favour of a finding the dismissal was unfair. The Applicant had been warned about his performance and his employment was at risk. This weighs against a finding the dismissal was unfair. However, the failure to afford sufficient time to the Applicant to improve his

 

 

 

performance weighs in favour of a finding of unfairness. Other factors are neutral. Having considered each of the matters specified in s.387 of the FW Act, I am satisfied that the dismissal of the Applicant was unreasonable, as a result of the failure to accord procedural fairness and allow some time for the applicant to potentially improve his performance.

 

Conclusion on whether the dismissal of the Applicant was unfair.

 

[61]    I am therefore satisfied that the Applicant was unfairly dismissed within the meaning of

s.385 of the FW Act.

 

Remedy

 

[62]              The relevant provisions of the FW Act pertaining to remedy are contained in s.390: “390   When the FWC may order remedy for unfair dismissal

(1)      Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:

 

(a)      the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and

 

(b)     the person has been unfairly dismissed (see Division 3).

 

(2)      The FWC may make the order only if the person has made an application under section 394.

 

(3)      The FWC must not order the payment of compensation to the person unless:

 

(a)      the FWC is satisfied that reinstatement of the person is inappropriate; and

 

(b)     the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.

Note:  Division 5 deals with procedural matters such as applications for remedies.”

 

[63]    It is also necessary to consider the objects of Part 3-2 of the Act, especially s.381(c) of the Act which provides that an object of that Part of the Act is to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement. The presumption in the legislation is that should a dismissal be found to be unfair, that reinstatement is the primary remedy, and that compensation is a secondary consideration if reinstatement is not appropriate.

 

[64]    In this matter, the Applicant does not seek reinstatement. The remedy the Applicant is seeking is “financial compensation”.52 The Applicant has indicated that he does not wish to be reinstated as he does not feel that he will “have a supportive work environment to return to”.53 Further, the Applicant has successfully obtained other employment.54

 

 

 

[65]    The Respondent has indicated that they do not think that reinstatement is appropriate as:

 

“The applicant to this day continually provided false information throughout his employment with Duo Trading Pty Ltd highlighted by falsifying his resume, failing a compulsory drug & alcohol test from having illegal drugs in his system, and continually making false accusations through this FWC process with no proof to justify his claims. All trust has been lost with the applicant and we would never consider reemploying him again as his values to (sic) not align with our staff’s or our companies”55

 

[66]    Having taken that evidence into account, I agree that reinstatement is not an appropriate remedy in the circumstances of this case. Having determined that reinstatement is not appropriate I must consider what compensation, if any, is payable, in lieu of reinstatement.”

 

Wallace v Duo Trading Pty. Ltd. (2024) FWC 678 delivered 4 April 2024 per Lee C