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[2003] NSWIRComm 1054
plaintiff. Commission found dismissal harsh, unreasonable and unjust; reinstatement impracticable; ordered employer to pay $24,000 gross compensation to applicant within 21 days (paras 37-38; Orders 1-2).
The Commission found the employer unfairly dismissed the applicant because she was not given clear warning that dismissal might follow nor an opportunity to respond. A scheduled follow-up after a 6 December warning did not occur, and at the 23 December meeting the applicant was immediately told she was dismissed. The employer lacked a documented disciplinary policy and its manager's evidence was not persuasive. Reinstatement was impracticable; the Commission awarded $24,000 compensation (approximately 20 weeks' pay).
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Rossana Stanziola-Jones (the applicant) was employed as Sea Freight Operations Manager with Birkart Globistics Pty Ltd for about two years and three months. On 6 December 2002 she received a written warning from the employer identifying performance concerns and indicating a further meeting would be arranged for the week commencing 16 December 2002 (para 6). No such meeting occurred. On 23 December 2002 the applicant was summoned to a meeting and invited to bring a witness, but was not told that dismissal was likely; at the start of that meeting the managing director, Mr Kilian, advised her that she was dismissed (paras 21-22). The applicant applied under s 84 of the Industrial Relations Act 1996 on 8 January 2003; the arbitration hearing was held on 5 September 2003 and Commissioner Cambridge delivered the decision on 8 October 2003 (paras 1-2, Orders).
The evidence at hearing concentrated on both the substantive allegations of poor performance and the procedure adopted by the employer. The applicant and the employer's managing director were the only witnesses (para 10). The Commission preferred the applicant's evidence on credit and found the managing director's testimony to be unconvincing and inconsistent, particularly about the existence and content of a disciplinary policy (paras 11-12, 28-29). The Commission concluded the dismissal was procedurally unfair and, on substantive grounds considered together with the procedural failings, unfair overall. Reinstatement was judged impracticable and compensation of $24,000 gross (approximately twenty weeks' pre-dismissal pay) was ordered, payable within 21 days (paras 31, 37-38; Orders).
The decision rests on two linked strands: procedural fairness and the impact of procedural failings on the substantive justification for dismissal.
Procedural fairness: The Commission applied the fundamental principle of natural justice that, before dismissing an employee for poor work performance, the employer must provide proper warning that dismissal is contemplated and give the employee an opportunity to explain or remedy the deficiencies (para 35). The facts showed no unequivocal warning prior to dismissal. The written warning of 6 December anticipated a further meeting to be held in mid-December which did not occur. When the applicant was called to a meeting on 23 December, she was not informed that dismissal was possible, and was terminated at the meeting's start without being given a chance to answer (paras 6, 21-23, 31-34). The Commission found this procedure fundamentally deficient and contrary to the expectations of fair process (paras 20-26, 31, 35).
Substantive effect: Even if the employer held legitimate concerns about performance, the Commission emphasised that dismissal cannot be justified absent effective prior warning that dismissal might result. The complaints were contested and the Commission resolved conflicts in favour of the applicant on credit grounds (paras 27-31). The Commission noted that the identified errors were not of such gravity that they could justify immediate dismissal without prior communication that dismissal was a possible consequence (para 36). Consequently, the procedural failure undermined any substantive basis for the dismissal.
Credibility and documentation: The employer's managing director gave inconsistent evidence about the disciplinary policy, at times implying a formal policy existed yet conceding there was no documented policy provided to employees (paras 28-29). The absence of a written disciplinary procedure was treated as a contributing factor to the procedural errors, and the managing director's evasive evidence detracted from the employer's case on both procedure and substance (paras 28-29).
Remedy: Having found the dismissal unjust, the Commission considered remedy. It concluded reinstatement or re-employment was impracticable and therefore ordered compensation under ss 89(5) and 89(6). The compensation assessment took into account attempts to find alternative work, earnings in alternative employment, and termination payments, resulting in approximately twenty weeks' remuneration and a $24,000 gross award (paras 37-38).
These findings are expressed and grounded in specific paragraphs of the decision: the factual description of the meeting and lack of notice (paras 21-23), the general statement of principle requiring warning (para 35), credit findings (paras 11-12, 27-31), and the remedial orders (paras 37-38; Orders).
Before this decision, general principles requiring procedural fairness in dismissals, particularly the right to be warned and given an opportunity to respond, were well established in employment and industrial jurisprudence. This decision applies those established principles to the particular factual matrix of performance-based dismissal, reiterating that:
An employer must provide a clear and unequivocal warning that insufficient performance may lead to dismissal, and specify reasonable standards and timeframes (paras 24-26, 31, 35).
Where an employer outlines a remedial process (for example in a written warning), it should follow that process or at least ensure the employee is unmistakably put on notice that dismissal may follow (paras 6, 23, 31).
After this decision, the ruling reinforces how the Commission will treat failures to follow such processes. Practitioners should note the emphasis on:
The need for documented or at least consistent disciplinary procedures; their absence can be a factor supporting a finding of unfair process (para 29).
The interplay between procedural defects and substantive justification: procedural unfairness can render otherwise meritorious substantive complaints insufficient to justify termination (paras 30-31, 36).
The decision does not create novel legal doctrine; rather it applies and clarifies existing procedural fairness requirements in the context of an employer who failed to follow its own contemplated processes.
Para 21-22 (procedural setup and dismissal): "Mr Kilian invited the applicant to a meeting and did not advise dismissal was likely; at the meeting he commenced by advising of dismissal." Translation: The employee thought the meeting might be an appraisal; the employer suddenly told her she was fired, without prior warning that firing was possible or without giving her a chance to explain.
Para 24-26 (requirement to follow process in warning and opportunity to respond): Translation: If you tell someone they will be reviewed and possibly given another chance, you must actually give them that chance or clearly warn them that firing could happen if they do not improve, and allow them to respond before you sack them.
Para 29 (absence of documented policy): "The employer did not have a documented disciplinary policy and that contributed to procedural errors." Translation: Not writing down your process makes it harder to follow a fair, consistent procedure, and weakens your defence if you dismiss someone.
Para 35 (statement of principle): "It is a matter of fundamental natural justice ... employer should provide proper warning ... that dismissal is contemplated." Translation: Basic fairness requires telling an employee when their job is at risk and letting them try to fix things before firing them for poor performance.
Para 37 (conclusion on fairness): "Consequently on both procedural and substantive foundations the dismissal ... was harsh, unreasonable and unjust." Translation: Because of how the employer acted and because the problems were not severe enough to justify immediate dismissal, the firing was unfair.
This decision applies where an employer dismisses an employee for poor performance but:
The employer has previously identified performance concerns and indicated a follow-up process or meeting, but fails to conduct the follow-up (paras 6, 23, 34).
The employer calls a meeting without telling the employee dismissal is a possible outcome, and then advises dismissal at the meeting's start without giving an opportunity to respond (paras 21-22).
There is absence or ambiguity in the employer's disciplinary policy, particularly a lack of documented warnings outlining the standards to be met or the consequences of failure (paras 28-29).
There is conflicting evidence as to the seriousness of performance failings and the employer's account lacks credibility or detail (paras 10-12, 27-31).
Practitioners should expect that, where these elements exist, a Commission or tribunal will scrutinise whether an unequivocal warning and an opportunity to respond were given and whether the employer followed its own expressed procedural steps.
The decision is an application of established procedural fairness principles rather than a novel rule likely to generate extensive distinguishing commentary. The judgment itself proceeds by assessing credibility, procedural history and remedial discretion. Because this is a single Commission determination, subsequent authorities would treat it as persuasive within the Commission's own jurisprudence for similar fact patterns. It reinforces consistent lines of inquiry for later tribunals: did the employer give unequivocal notice, was there an opportunity to respond, and were documented procedures followed. Any later court or tribunal addressing materially similar facts would likely apply the same reasoning: procedural failure to warn and to give an opportunity to respond will generally render a performance-based dismissal unfair.
Degree of specificity required: The decision requires a "clear warning" but does not specify the exact content or timeframe that must be included in such a warning. Future cases will continue to refine how specific and how long a remedial period must be in varied workplaces.
Effect of informal practices: The Commission criticised the absence of written policy (para 29), but it did not hold that a written policy is invariably required. How much weight to give consistent but undocumented disciplinary practices remains a practical question for employers and tribunals.
Quantification of compensation: Commissioner Cambridge used a pragmatic approach (about twenty weeks' pay) informed by mitigation and termination payments (para 38). Future cases will develop more detailed approaches to calculating compensation where reinstatement is impracticable, particularly in assessing mitigation and the period to be compensated.
Reinstatement practicability threshold: The decision states reinstatement was impracticable but provides little detail on why. Future decisions will further delineate circumstances that render reinstatement impracticable, and the evidentiary burden required to establish that.
In practice, employers should ensure fair process by documenting disciplinary policies, giving unequivocal warnings when dismissal is possible, and providing employees an opportunity to respond. Employees and advisers should focus on whether they were given real notice and a genuine chance to address concerns; absence of those will be a strong basis for an unfair dismissal finding as shown in this decision.
INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES
Application by R Stanziola-Jones pursuant to section 84 of the Industrial Relations Act 1996 re alleged unfair dismissal.
This matter involves a claim of unfair dismissal made pursuant to section 84 of the Industrial Relations Act 1996 (the Act). The application was filed on 8 January 2003, by Employment Help Services (EHS), agents, acting on behalf of Rossana Stanziola-Jones (the applicant). The respondent employer has been identified as Birkart (Australia) Pty Ltd (the employer).
Following unsuccessful attempts to settle the matter by way of conciliated agreement, the Hearing of the Arbitration of the claim was conducted on 5 September 2003.
The applicant is a woman who was some forty one years of age at the time of her alleged unfair dismissal on 23 December 2002. The applicant had been employed for a period of approximately two years and three months. The applicant had been engaged in a position described as "Sea Freight Operations Manager".
The employer is a member of Birkart Globistics AG, a Corporation with a Head Office in Germany. The employer operates in the business of international logistics, freight forwarding and customs queuing.
The applicant was dismissed on 23 December 2002, by Mr Thomas Kilian, the employer's Managing Director. The applicant was dismissed for reasons which were described as gross neglect of duty, as well as performance issues including attitude to other employees.
The applicant had received a written warning dated 6 December 2002, which made mention of various performance issues which were raised by Mr Kilian. Although the written warning of 6 December suggested that a further meeting between Mr Kilian and the applicant would be arranged for 16 December 2002, that did not occur, and at the commencement of the meeting of 23 December 2002, the applicant was advised that she was dismissed from her employment.
The applicant has asserted that her dismissal was unfair and has sought monetary compensation as appropriate remedy.
The evidence in this matter has generally concentrated upon issues of contest about the alleged substantive basis for the applicant's dismissal. There were a variety of particular events which were said to represent significant performance and conduct issues upon which the decision to dismiss was based.
There was considerable contest about the level of the applicant's involvement in respect to the particular issues which gave rise to complaint by Mr Kilian. The Determination of this matter has not been dependent upon conclusive findings regarding the points of fine detail that were identified in respect of the conduct and performance complaints that were raised by Mr Kilian. Importantly there was little contest about the procedure that Mr Kilian adopted in determining to dismiss the applicant and then implementing that decision.
The applicant was the only witness called in support of her claim. The applicant attested to the veracity of two witness statements that she had made in respect of these proceedings. Mr Thomas Kilian, the employer's Managing Director was the only witness called in support of the employer's case. There were some direct conflicts in the evidence as provided by the applicant and that provided by Mr Kilian. The issue of credit has become relevant to the settlement of some of the points of conflict as between the evidence of the applicant and that of Mr Kilian.
The applicant presented as an open and honest individual with a slightly nervous disposition. The applicant did not seek to avoid answers to questions which were obviously detrimental to her case, nor did she seek to embellish her answers to questions which were supportive of her claim. Although the applicant became a little confused at times during the course of her testimony, she generally provided evidence which was believable, and I have determined that she was a witness of truth.
The performance of Mr Kilian as a witness was less than commendable. Although Mr Kilian commenced his testimony by making various proclamations of his expertise, he was subsequently unable to provide convincing answers in respect of matters of detail regarding the alleged inadequate performance and conduct issues concerning the applicant. Mr Kilian provided some important evidence which was not included in his affidavit and it appeared, at times, that evidence regarding important matters, particularly an alleged meeting between himself and the applicant on 20 December 2002, had not been the subject of any previous recollection. At times Mr Kilian became overly defensive and appeared to fail to understand some simple propositions which when eventually answered provided for generally unconvincing testimony.
Ms N Alameddine, from EHS appeared for the applicant. Ms Alameddine provided the Commission with a written outline of submissions. Ms Alameddine provided oral submissions in elaboration of the written outline of submissions.
Ms Alameddine submitted that the dismissal of the applicant was harsh, unjust and unreasonable on the basis that the applicant was not provided with substantive or procedural fairness. Ms Alameddine submitted that the substantive basis for the dismissal which was described as poor performance, gross neglect of duty, and poor attitude and behaviour with fellow employees, could not be substantiated.
Ms Alameddine further submitted that the applicant was not allowed a chance to raise her objections to any of the matters which were involved with her dismissal. Ms Alameddine submitted that the allegations of poor work performance were not substantiated and also the applicant was denied procedural fairness.
Ms Alameddine urged the Commission to find in favour of the applicant.
The employer was represented by Mr C Hart, agent, from Partnering Services Pty Ltd. Mr Hart submitted that the Commission should find that there was a clear range of performance concerns associated with the applicant. Mr Hart submitted that the employer had conducted many discussions with the applicant about her performance and which made complaint about various performance and conduct related matters.
Mr Hart contended that "... ultimately we have assessed her performance and felt that in the - from a commercial perspective it was not working." Mr Hart further submitted that the employer had attempted for many months to obtain appropriate performance from the applicant, and that this had been exhausted over a period of time, such that on 23 December 2002, a final meeting was held to conclude the employment contract arrangement.
Mr Hart also submitted that the employer had provided "every opportunity" for the applicant to voice her opinion about the repeated performance expectations that had been raised with her.
The consideration of this matter has not involved resolution of complex or difficult issues. The uncontested evidence about the procedure that was utilised to implement the dismissal of the applicant, would, on any reasonable and objective analysis, ensure that the applicant's claim succeeded.
On 23 December 2002, Mr Kilian advised the applicant of the requirement for her to attend a meeting with him later that day, and that she was invited to bring a witness to be present during the meeting. Mr Kilian did not advise the applicant that the meeting would be likely to involve the dismissal of the applicant. The applicant understood that the meeting would probably involve an annual review process and may have represented the deferred meeting that was the subject of the letter of warning of 6 December 2002.
Rather than representing an opportunity for the applicant to be heard on any question of ongoing inadequate work performance Mr Kilian commenced the meeting by advising the applicant of her dismissal. The meeting of 23 December 2002, did not represent an opportunity for the applicant to make out a defence or give an explanation regarding her behaviour or performance in respect to any of the issues about which Mr Kilian had complaint.
It is appropriate to recognise that even if Mr Kilian had some legitimate basis for his complaints about the work performance of the applicant, it was necessary for him to follow the process that had been broadly outlined in the letter of warning of 6 December 2002. The absence of a further meeting in the week commencing Monday, 16 December 2002, could legitimately be interpreted to represent that some or all of the previous concerns may have dissipated or disappeared.
Although the applicant would have been aware of the dissatisfaction that Mr Kilian had expressed regarding her work performance, there was no clear warning of what reasonable requirement was to be attained within some reasonable period of time, and that failure to meet the reasonable standards as required would result in the termination of employment. If, after having provided a proper warning, the reasonable expectations of Mr Kilian had not been satisfied, then the employer could properly commence to implement the dismissal of the applicant.
It would seem that the commencement of such proper process would have to involve an opportunity for the applicant to provide explanation or make out a defence about the alleged failure to meet the reasonable performance standards as stipulated and unequivocally communicated by Mr Kilian. If, after having provided this opportunity, the applicant had failed to satisfy the reasonable requirements of Mr Kilian, then a dismissal based upon unsatisfactory work performance could be justified. In the absence of this fundamental process a dismissal based upon alleged inadequate work performance must be found to be procedurally deficient.
Although the dismissal of the applicant was implemented without proper warning and was therefore procedurally unfair, the Commission must also consider whether any of the substantive performance or conduct issues that were raised by Mr Kilian might represent justifiable basis for dismissal, notwithstanding the procedural deficiencies that were adopted.
The evidence about the detail of the performance complaints of Mr Kilian was the subject of some significant conflict. The applicant had alleged that in respect of some of the particular issues regarding alleged wrong documentation for particular consignments that she was not at fault, but rather that she had endeavoured to do her work to the best of her capacities and abilities or in alternative circumstances, that some other person may have been responsible for errors that were identified.
The resolution of these matters of conflict as between the evidence of Mr Kilian and that of the applicant has, in large part, been resolved on the basis of the issue of credit of the two individuals who provided witness evidence. On the question of credit it is appropriate to include example of evidence provided by Mr Kilian which contributed to the Commission's general adoption for evidence provided by the applicant wherever that differed from that provided by Mr Kilian. The following extract from transcript involving Mr Kilian's responses during cross-examination provides one relevant example:
"Q. Correct. Does the company have a disciplinary policy?
Q. With respect to say dismissing an employee - not based on a summary misconduct such as theft where it could be an instant dismissal - based on overall performance issues, what is the company's disciplinary policy in that respect?
A. Well, first of all it is already stated, of course, in our employment contracts, which relate to that procedure. Secondly of course, you have got to have proper counselling of staff; you have to discuss issues; we have then regular meetings; oral warnings as stated is done in this case, and then, of course, final written warnings, which need to be very clear and leave no doubt, which in fact this did leave no doubt as to the consequences that could be incurred.
Q. Certainly. Has the applicant seen a copy of this company disciplinary policy?
A. I'm not sure. I didn't - I can't answer the question.
Q. Are the employees of Birkart Globistics provided with a copy of the company disciplinary policy?
A. There is no such formal document at this stage.
Q. There is no formal document. Okay. So you say that there is no formal company disciplinary policy, correct?
A. No, I haven't said that. I have not said that. There's a formal procedures, it's not formally documented. It is actually something that we are proceeding with now, which is something I notice when I arrived." [1]
"Q. ...When you commenced employment in May 2002, and up until December 23, 2002, was there a formal company disciplinary policy in place?
Q. So there is a formal company disciplinary policy?
A. It's at this stage, not in writing, but there is a document which clearly outlines the company rules. The point you are trying to make, I can't quite- - -
Q. I'll be very blunt in saying so. Is there a document that says, "Birkart Globistics will terminate someone on the basis of poor performance if there is so many warnings"?
Q. So the company has no structure in terms of warnings and then dismissal?
A. As I just outlined, the structure that I followed. [2]
Mr Kilian provided some curious and generally unconvincing evidence about the employer's disciplinary policy. It ultimately emerged that the employer did not have a documented disciplinary policy as a guide for Mr Kilian to follow. The absence of such written policy or procedure document would have contributed in leading Mr Kilian into the procedural errors that were evident with the dismissal of the applicant on 23 December. Mr Kilian was less than frank about the question of a documented disciplinary policy, and this did not assist the veracity of his testimony generally.
An examination of the various issues which were said to provide substantive basis for the dismissal of the applicant leads the Commission to conclude that the nature and extent of the applicant's inadequate performance was not such as to justify the dismissal of the applicant without adequate warning. It is important to recognise that at no time prior to the dismissal of the applicant, did Mr Kilian clearly raise any of the various identified deficiencies of the applicant in the context that these matters represented potential for the dismissal of the applicant.
Given the nature of the complaints that Mr Kilian had regarding the applicant's work performance, it was incumbent upon him to warn the applicant that these various errors and other issues when considered in total, may translate into reasons for dismissal. The applicant would then have been under no misapprehension about the gravity with which the employer was treating any of these issues. Consequently, at very least, rather than advise the applicant of her dismissal at the commencement of the meeting held on 23 December, Mr Kilian should have prepared a final letter of warning requiring that the applicant rectify identified deficiencies, and advising that if there be repeat of any such deficiencies within a specified period of time, dismissal may be likely.
The applicant was dismissed on 23 December 2002, and was not provided with any correspondence stipulating the reasons for dismissal. This fundamental deficiency in respect to the absence of a letter of dismissal was consistent with the unsatisfactory approach adopted by Mr Kilian generally in respect to the performance and conduct complaints that he had with the applicant.
The employer has subsequently asserted that the applicant was dismissed for gross dereliction of duty, poor work performance, and other attitudinal problems. However the applicant was not provided with any clear warning about the particular issues which have subsequently been relied upon as basis for dismissal.
Although the applicant may not have been performing to the complete satisfaction of Mr Kilian, the applicant had not been clearly warned that her employment was in jeopardy. The matters that had been identified in the letter of warning of 6 December 2002, were to have been the subject of further meeting in the week commencing 16 December 2002. There was no further meeting in accordance with the procedure that had been outlined in the correspondence of 6 December. The applicant could have understandably assumed that the matters which Mr Kilian had previously raised had either been resolved or did not represent matters of such significance that would require further meeting in accordance with the earlier written advice.
It is a matter of fundamental natural justice that before dismissing an employee for alleged poor work performance, the employer should provide proper warning that the dissatisfaction is such that dismissal is contemplated. It is plainly unreasonable to dismiss an employee because they fail to perform to a desired standard without first telling that employee that a failure to meet a required (reasonable) standard might result in dismissal.
In this instance, although the applicant was aware of some level of dissatisfaction with her work, she was entitled to believe that the nature and magnitude of the complaint had either disappeared or decreased, such that it was not to be the subject of the scheduled further meeting. It was therefore a matter of significant surprise when at the commencement of the meeting on 23 December, the applicant was advised of her dismissal. The matters that were the subject of complaint were not errors of significance which in the absence of clearly communicated warning, would be able to provide sufficient substantive basis for dismissal.
Consequently on both procedural and substantive foundations the dismissal of the applicant was harsh, unreasonable and unjust. The applicant has sought Relief from her unfair dismissal by way of monetary compensation. I have concluded that it would be impracticable to make any Orders for reinstatement or re-employment of the applicant, and consequently I am prepared to make Orders for compensation to the applicant pursuant to sections 89(5) and 89(6) of the Act.
In determining the amount of compensation that I am prepared to Order, I have had regard for the attempts made by the applicant to find alternative employment, and the remuneration received in alternative employment. In addition I have also had regard for the payments made to the applicant upon termination. Consequently I propose to make Orders to provide monetary compensation equating with approximately twenty weeks of the applicant's pre-dismissal remuneration.
In this matter, for the reasons outlined herein, I have Determined that the dismissal of the applicant was harsh, unreasonable and unjust and I hereby make the following Orders:
The Commission Orders that the employer pay to the applicant an amount of compensation of $24,000.00. This amount is a gross figure and appropriate taxation treatment is a matter for the Parties.
The amount of compensation specified in Order 1 above is to be paid by the employer to the applicant, and no other person, within twenty one days from the date of this Decision.
[1] Transcript of proceedings, (5/9/03) @ pages 33-34.
[2] Transcript of proceedings, (5/9/03) @ page 34.
Commission found dismissal harsh, unreasonable and unjust; reinstatement impracticable; ordered employer to pay $24,000 gross compensation to applicant within 21 days (paras 37-38; Orders 1-2).