John Simon v NGS Group Pty Ltd ATF NGS Discretionary Unit Trust [2019] FWC 3442

John Simon v NGS Group Pty Ltd ATF NGS Discretionary Unit Trust [2019] FWC 3442 | Case summary | Zoe

[6]

[1] This decision concerns the circumstances under which John Simon's employment with NGS Group Pty Ltd ATF NGS Discretionary Unit Trust (NGS Group) ended, and in particular, whether he was dismissed and if so, whether that dismissal was unfair within the meaning of the Fair Work Act 2009 (the Act). On 10 January 2019 Mr Simon lodged an application for unfair dismissal remedy in relation to his asserted dismissal.

[2] The Respondent, referred to in this decision as the NGS Group undertakes a signage business from premises in Heidelberg, Victoria. With only 12 employees at 21 December 2018,[1] it is a small business employer as that term is defined by the Act.

[3] Section 396 of the Act requires the determination of four initial matters before consideration of the merits of the application. The evidence before the Commission allows findings in relation to three of the elements; namely that, Mr Simon's application was lodged with the Fair Work Commission within the 21 day period for making such applications; that, if there was a dismissal, he was otherwise a person protected from unfair dismissal; and that no question arises as to whether his termination of employment was a genuine redundancy.

[4] The matter of consistency with the Small Business Fair Dismissal Code requires consideration in the event that a dismissal is found by me.

[5] Witness evidence was received from Mr Simon on his own behalf and Mr Rohan Welsh, Director, NGS Group and Mr Allan Hineman, General Manager, NGS Group for the Respondent.

[6] Mr Geoff Lake of Counsel, instructed by Talitha Curcio of McDonald Murholme appeared on behalf of the Applicant while Ms Julie Zhou of Counsel, instructed by David Marks of Henty's Lawyers appeared for NGS Group. Permission for both parties to be represented in these proceedings by a lawyer was granted by me pursuant to s.596 of the Act, with me being satisfied that legal representation would enable the matter to be dealt with more efficiently taking into account the complexity of the matter (s.596(2)(a)).

[7] For the reasons set out below, I have found that Mr Simon was dismissed within the meaning of the Act, and that his dismissal was not consistent with the Small Business Dismissal Code. After further consideration, I have found that his dismissal was otherwise unfair, taking in to account the criteria within s.387 of the Act, and that an amount of compensation is to be awarded to Mr Simon as the appropriate remedy.

[10]

[13] Mr Simon had a substantial career working for NGS Group, 18 years in all, having started with the company in September 2000 as an apprentice. His employment ended with NGS in December 2018.

[14] During his employment, Mr Simon worked first as an apprentice in signage between September 2000 and September 2004. At the conclusion of his apprenticeship he was offered a permanent full-time position as a tradesperson signage installer.[2] In 2012, he became the company's Production Manager. Having performed the Production Manager duties for around three years, in February 2015 Mr Simon was promoted into the position of Sales/Key Account Manager (referred to in this decision as the Account Manager position).[3]

[15] As Account Manager, Mr Simon's salary from 25 January 2018 was $90,363 with him also being entitled to other employment benefits including the provision of a motor vehicle and mobile telephone.[4] Superannuation contributions were made in addition to the cash component, calculated at the rate of 9.5% of his base salary.[5] Mr Rohan Welsh, an owner and Director of the NGS Group had agreed in or around 2015 that Mr Simon could work flexible hours by leaving early on Monday and Tuesday in order to pick up his daughter up from school on those days.[6] Mr Welsh is critical of Mr Simon in relation to the flexible working arrangements saying that Mr Simon did not hold up his part of the bargain by working back late or working from home as had been promised by Mr Simon.[7]

[16] There is some evidence that in the period prior to May 2018 that Mr Simon had been experiencing some difficulties in performing his work. In addition, his direct manager Mr Hineman, the company's General Manager had expressed his displeasure with the performance of a number of people in a meeting held either in December 2017 or January/March 2018.[8] Mr Simon's evidence is that the meeting involved a number of people, including himself, Mr Hineman and Matthew Short, the Production Manager as well as Kate Welsh and Mia Russell, both Sales Managers, with his recollection being that Mr Hineman "yelled" words to the effect that "everyone's performance is shit and if you don't like it you can fuck off somewhere else".[9] Mr Hineman agrees he probably did say something along these lines however, "I was unhappy with the results, but I made the comment as a general comment to those present in the meeting. It wouldn't have been directed at Johnny individually".[10]

[17] On 16 May 2018, Mr Simon sent a text message to Mr Hineman asking if there might be a position for him if he stepped away from his Account Manger Role. Mr Simon's evidence is that this was merely an enquiry on his part to determine whether such was an option.[11] The text itself and Mr Hineman's response are as follows:

From Mr Simon:

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[21] Mr Hineman was specific in answers to later questions that he told Mr Simon on two occasions that "Matt's on $36 an hour as a production manager" and that the conversations were within a two week period before Mr Simon's leave and on 13 August 2018.[19]

[22] Neither Mr Hineman's nor Mr Simon's written statements reference the first of these discussions and Counsel for NGS Group, Ms Zhou, did not put the proposition to Mr Simon that he had been told these things by Mr Hineman before going on leave. The written evidence of Mr Hineman and Mr Simon was that the $36 per hour salary was discussed in the meeting on 13 August 2018 and that Mr Simon believed he should be paid more:

• Mr Simon relates that in the conversation on 13 August 2018, "I asked what my salary as a Tradesperson - Sign Writer would be to which Mr Hineman said I would receive $36 per hour and would still be required to perform FOB duties"[20], to which he responded that this arrangement would be unfair since he "would still be required to perform duties of a Sales/Key Account Manager";[21] and

• Mr Hineman relates that during their conversation on 13 August 2018, "I told him that he would earn $36 per hour base, and that this meant he could earn more than he did as an Account Manager due to the overtime. He never said to me that it was unfair to pay him that. He did say that because of his experience he should be paid more than Matt Short, but I reminded him that Matt had more responsibilities as the Production Manager."[22]

[23] A handover was undertaken by Mr Simon as well as reassignment of several of his duties after which he proceeded on annual leave between 1 and 12 August 2018.[23] During the period of his leave the NGS Group started paying him $36 per hour which on Mr Simon's calculation equated to "a salary of $71,136 per annum. This was significantly less than my ordinary salary of $90,363 per annum".[24]

[24] When Mr Simon returned from leave on 13 August 2018 he continued to perform at least some duties of his former position. A debate arose between Mr Simon and Mr Hineman about the vehicle that had been allocated for Mr Simon's use and the motives behind what had been said by Mr Hineman to Mr Simon at the time.[25]

[25] More significantly a dispute emerged between them about the payment that was to be made to Mr Simon. What is clear from the evidence is that Mr Simon disputed the proposition that he be paid $36 per hour.

[26] The dispute about the basis of payment for Mr Simon's tradesperson role continued over several days, culminating on 21 August 2018. After being provided with an employment contract pertaining to the tradesperson role and expressing the view that he was unhappy with the salary "because I would still be expected to manage FOB and "I should be getting paid more than Matt (Short) as I have been here for 18 years and given I have 10 years on him"",[26] Mr Simon says that he was directed within the meeting by Ms Munday and subsequently told by Mr Hineman that he should sign the contract then and there. Mr Hineman sees the conversation somewhat differently, but ultimately accepting that he had requested Mr Simon to sign it in the meeting:

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[28] After being promoted to the position of Account Manager in February 2015 Mr Simon was given a flexible working arrangement to enable him to attend to the care of his children. Mr Simon has two children, one of whom was diagnosed with several disorders in early 2018 and as such is unable to participate in childcare.[30] The flexible working arrangement enabled Mr Simon to pick up his daughter from school on Mondays and Tuesdays, with the hours to be made up by working from home Monday and Tuesday afternoons and staying late Wednesdays to Fridays.[31]

[29] Mr Simon's workload had earlier changed from July 2014 as, in addition to his usual duties as Production Manager, he also became responsible for sales duties including product quoting, client accounts and site measuring which required travel both throughout Victoria and interstate.[32] While Mr Hineman disputes the change in workload he accepts that at the time in question Mr Simon was doing sales duties with a view of him transitioning into a sales role.[33] During this time Mr Simon also began to experience financial hardship on an ongoing basis which was known to the NGS Group.[34]

[30] Additionally, in or around October 2017 Mr Simon was diagnosed with a matter requiring surgery and around three weeks personal leave for recovery time.[35] While it is disputed between the parties how Mr Simon's leave for this surgery was arranged, it is agreed that the leave for the surgery occurred between 25 January 2018 to 16 February 2018.[36] Mr Hineman also puts forth in his evidence that the NGS Group was aware that Mr Simon had previously suffered depression and anxiety previously, in and around 2013.[37]

[31] Against this background was a sequence of events and conversations which saw a deterioration in communication with Mr Simon in the workplace. In or around December 2017 overall sales were down and increased scrutiny was being placed both on the sales team generally and individuals within the team. Mr Simon recalls a sales meeting during this time, with the exchange reported above in which Mr Hineman agreed he probably said words to the effect "everyone's performance is shit and if you don't like it you can fuck off somewhere else", with Mr Simon's characterisation being that Mr Hineman "yelled" those words.[38] Mr Hineman does not dispute the wording given the disappointing sales results at the time however, clarifies that the comments were directed at the team generally and not Mr Simon individually.

[32] In or around December 2017, Mr Simon met with Mr Hineman, Mr Nelson and Ms Kate Walsh, the company's Sales Manager, and Mr Welsh's sister. Mr Hineman said a number of things, including "that NGS was worried about my wellbeing and to "pick up your bottom lip, sad sack""; and that "he was worried about my performance and compared me to past NGS underperforming employees". Mr Hineman also asked Mr Simon "to estimate where my sales would be at the end of the month to which I replied that I was unsure" after which Mr Hineman "shit, my three-year-old son could work that out".[39] Mr Hineman does not believe the meeting was in December 2017, but at some other, unspecified time, but broadly accepts there was such a meeting, although denying the "sad sack" reference attributed to him. Mr Hineman did not deny the commentary that he said his 3 year old son could work out the end of month sales projection:

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[35] In February 2018, Mr Simon disclosed to Mr Hineman that "[t]hings are a bit tough financially", to which Mr Hineman responded ""look at your finances". Mr Hineman then said that my wife did not hold" ... a high paying role so she could pick up and drop off your daughter"".[44] Following that discussion, Mr Simon attributes to Mr Hineman a comment about his personal effects, when the latter said in the presence of Mr Nelson and Ms Russell[45] words to the effect of "Nice bag, I thought you had no money and were crying broke. Now you rock up with a new laptop bag_"_.[46] Mr Simon later complained, through his solicitors in September 2018 that this comment was part of the verbal abuse and humiliation he experienced from Mr Hineman. Mr Simon also gave evidence about comments about his working arrangements from another employee Mr Garry Nelson, the Production Manager who "regularly made comments to me about my leaving early including, "oh, just the five hours today, Johnny" and "you're off already"".[47]

[36] As part of Mr Hineman's performance management of Mr Simon, steps were put in place from as early as March 2018 for Mr Simon to provide regular report backs surrounding who he had visited and received sales from. Mr Hineman describes these as general in nature and as a tool to ensure Mr Simon was up to date with his sales.[48] However, in April 2018 Mr Simon submits that by April 2018 the scrutiny on his work performance was increasing to the point that he was required to provide Mr Hineman with weekly updates on completed tasks, while being advised that he needed to 'communicate better'.[49]

[37] On 16 May 2018 in response to the increased pressures and demeaning comments Mr Simon enquired as to the possibility of transferring to sign writer duties while also making a bullying complaint to Mr Welsh in early June 2018 against Mr Nelson and Mr Hineman to the effect that his working environment was 'toxic'. Mr Simon's evidence records several complaints being made to Mr Welsh about his concerns:

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[42] In late June 2018 Mr Simon received a phone call from Mr Hineman regarding his performance asking "where is your sales budget". Mr Simon submits he cried and said "this is a toxic environment. I can't do this anymore", with Mr Hineman responding "We'll find something else for you".[59] On 28 June 2018, Mr Simon received a formal warning letter regarding his performance and continued to receive ongoing performance management.

[43] Mr Hineman gave evidence that there were some informal discussions with 'people in the office' in terms of 'team work' and 'supporting everyone'[60] as a result of the complaint. Mr Hineman's evidence is that he spoke with Mr Nelson to the effect that "you know, Johnny is not happy with those comments; we need to leave that alone. So if the banter is upsetting him, leave the banter aside, guys".[61] There was no evidence led as to when this conversation was said to have occurred, nor whether there were any witnesses present at the time of the conversation. Mr Hineman appeared unsure whether further comments had continued after Mr Simon's complaint and led no evidence of whether there were any repercussions for Mr Nelson's behaviour.[62] Mr Hineman's evidence about what was done by him about the workplace bullying complaint is noteworthy for its lack of precision about what he actually did, as well as not showing any obvious concern about the gravity of the matters complained about. What he saw was banter and other than saying to Mr Nelson "Gaz, enough is enough", and "you know, Johnny is not happy with those comments; we need to leave that alone. So if the banter is upsetting him, leave the banter aside, guys",[63] he left it to Mr Welsh to address, despite earlier having said he had asked Mr Simon why he had taken the complaint to Mr Welsh since he "didn't have a lot of involvement inside the business at that time". Mr Hineman's evidence is also that he had informal discussions with Mr Welsh about the situation; however, what is presented is vague and imprecise:

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[45] Mr Hineman also gave evidence that "we've since conducted harassment and bullying workshops through the business, which we did in February".[66]

[46] In July 2018 Mr Simon sought medical treatment and was diagnosed with 'work-related stress' and was given a prescription to assist with anxiety and depression.[67] Mr Hineman's evidence is that he was unaware of this diagnosis at the time.[68]

[47] In or around July 2018, discussions ensued between Mr Simon and Mr Hineman about Mr Simon returning to a sign writer position as originally raised by Mr Simon in May 2018. There is little detail surrounding the content or length of this discussion however, as discussed earlier, the parties' evidence is that there were some discussion surrounding a car to be provided, a start date of 9 August 2018, as well as that salary would be discussed upon Mr Simon's return from leave with a salary being somewhere in the realm of Mr Short's, with Mr Simon being unaware at the time of Mr Short's salary. As detailed above, Mr Hineman's evidence claims there were also discussions held in the two-week period prior to 1 August 2018 in which Mr Short's salary was disclosed, however his evidence in this regard is slight and not reliable, taking into account the whole of his evidence which is fraught with inexact recollections, assumptions and statements that something "would have" occurred. What is more likely is that the issue of salary was simply not dealt with or postponed until Mr Short's return from leave on 13 August 2018.

[48] Upon his return from leave, Mr Simon had a further conversation with Mr Hineman about the new role surrounding sales tasks such as Free on Board out of China and managing shelves for several bottle shops, the type of vehicle Mr Simon would receive and finally the salary. During these discussions Mr Simon's evidence is that Mr Hineman made comments to the effect that he would receive Ms Welsh's motor vehicle (a Nissan Captiva). Mr Simon replied that Ms Welsh's vehicle would be inappropriate if he was to return to a sign writer position and that a dual cab ute would be more practical because he needed somewhere to store his tools. Mr Simon recalls that Mr Hineman "shouted "well I don't give a fuck about your tools. That is the car you're getting"".[69] Mr Hineman records a different tone and context to the discussion, saying instead "I don't give a fuck about your tools, I'm more concerned about your family and how you are going to drive your family around'".[70] When asked about the subject in cross-examination, Mr Simon did not directly dispute Mr Hineman's somewhat more nuanced recollection of the phraseology employed.[71]

[49] After Mr Hineman advised Mr Simon that he would receive $36 per hour in the role, Mr Simon submits that he disputed the salary given the reduction from his previous salary on the grounds that he would still be required to perform some sales aspects. Mr Simon submits he enquired about an employment contract that he could review stating words to the effect that "good, because I want to look over it before making a decision".[72]

[50] The contract was presented to Mr Simon in a meeting on 21 August 2018. Mr Simon submits that Ms Munday directed him to sign the contract. After Mr Simon declined, Mr Hineman said words to the effect that "Can't you just sign it" to which he replied that he wished to negotiate the rate. Mr Simon again pursued his claim that he should be paid more than Mr Short which was rejected by Mr Hineman in words to the effect "I don't give a fuck if you've been here for three months just read over and sign it".[73] Mr Hineman does not recall using those words, suggesting that "It's a rarity for me to use that language when talking with staff".[74] However, after taking account of all of Mr Hineman's evidence and his generally less than clear recollection of events and conversations, I consider it more than likely that he did say the words Mr Simon recalls.

[51] From 29 August 2018 Mr Simon commenced paid leave and there is no evidence that any further conversations occurred between Mr Simon, Mr Welsh and Mr Hineman after the meeting on 21 August 2018. All communications after this meeting appeared to occur by way of Mr Simon's legal representative and were confined to discussions surrounding a return to Mr Simon's Account Manager position.

[52] The matters of Mr Simon's workplace bullying complaint and NGS Group's warning of continued poor work performance are not directly relevant to determination of whether he was dismissed, however they are potentially relevant to assessment of whether there was an unfair dismissal, and remedy in the event there was.

[78]

The question whether a term in a contract is a condition or a warranty, ie, an essential or a non-essential promise, depends upon the intention of the parties as appearing in or from the contract. The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor. If the innocent party would not have entered into the contract unless assured of a strict and literal performance of the promise, he may in general treat himself as discharged upon any breach of the promise, however slight. If he contracted in reliance upon a substantial performance of the promise, any substantial breach will ordinarily justify a discharge. In some cases it is expressly provided that a particular promise is essential to the contract, eg, by a stipulation that it is the basis or of the essence of the contract; but in the absence of express provision the question is one of construction for the Court, when once the terms of contract have been ascertained. In general, Courts of common law have been more ready than Courts of Equity to regard promises as essential. This is in part due to the fact that Courts of common law are in the main concerned with ordinary commercial contracts in which it is common to find provisions which are intended to be strictly and literally performed. It is now provided by s 13 of the Conveyancing Act 1919 (taken from the Judicature Act 1873 , 36 and 37 Victoria, Ch 66, s 25(7)) that stipulations in contracts, as to time or otherwise, which would not before the commencement of the Act have been deemed to be or to have become of the essence of such contracts in a Court of Equity shall receive in all Courts the same construction and effect as they would have heretofore received in such Court. This serves to make equitable liberality of construction supersede common law strictness, so far as is consistent with apparent intention, in fields where equity and common law overlap; but it does not affect the principle that effect must be given to the apparent intention of the parties as disclosed in the contract."

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[56] The question of whether there has been a repudiation of the contract of employment is determined objectively, it is unnecessary to show a subjective intention to repudiate[79] and is a question of fact not law.[80] Relevantly, for the present purposes for there to have been a variation inferred by the conduct of the parties, it must be found that the conduct of the parties is capable of proving all the essential elements of a variation, including acceptance.[81] The mere silence of an employee is not acceptance, and neither is the continued performance of duties by an employee on its own. The context of the continued performance of duties must be viewed as a whole and as a question of fact, with there being no acceptance where there has been an unequivocal rejection of the proposal coupled with continued performance.[82] Repudiation may exist where an employer reduces the wages of an employee without the employee's consent[83] or where there is a serious non-consensual intrusion on the nature of the employee's status and responsibilities in a way which is not permitted by the contract.[84] Similarly, if an employer seeks to bring about a change in the employee's duties or place of work which is not within the scope of the express or implied terms of the contract of employment, the conduct may evince an intention to no longer be bound by those terms. Therefore, in these circumstances if an employee does not agree to the change, which if agreed would amount to a variation of the contract, the employee may claim to have been constructively dismissed.

[57] Consideration must first be given to whether there has been a breach of an essential term of the contract of employment. As set out above, the test of essentiality includes an assessment of whether the matter is of such importance to the promisee that they would not have entered into the contract without it. It is plain from the parties' conduct construed objectively that the question of Mr Simon's forward remuneration is to be regarded as essential; he plainly objected to performing the role at the rate on offer and was prepared to suffer continuing in the Account Manager role if mutual terms could not be achieved. NGS Group saw it as important to retain relativities between Mr Simon and its other employees and would not negotiate with him about the subject. The question of whether the breach is of a non-essential term does not arise in this matter.

[58] What is clear from the narrative set out above is that Mr Simon explored the possibility of moving from an Account Manager role to that of a tradesperson but that he did not irrevocably or unconditionally commit to doing so. By the time Mr Simon returned from leave on 13 August 2018, neither he nor NGS Group had concluded the negotiation that needed to take place on the essential terms of the transfer and ongoing engagement. In particular, there is no doubt that he and NGS Group had not by that time concluded to a point of consensus their negotiations about the pay Mr Simon was to receive.

[59] The proper characterisation of the duties Mr Simon performed when he returned from leave on 13 August 2018 is subject to some ambiguity, with Mr Simon saying that he "continued to perform sales duties which included Free on Board (FOB) out of China and managing shelving for several bottle shops", but with him agreeing that upon his return he "performed the position of Tradesperson".[85] Mr Hineman agrees that when Mr Simon returned from leave, he undertook the trades role, with his daily duties involving "manufacturing signs, installing signs, manual factory work and liaising with the Production Manager". Mr Hineman argues that the continuing sales duties would not have taken more than an hour a week; that Mr Simon had the choice of whether he took on the FOB duties; that "[w]e thought it was good for him to keep a hand in sales in case he wanted to revert to the role" and that, with Mr Simon performing the trades role between 13 and 28 August 2018, Mr Simon "never mentioned to me, and I'm not aware he mentioned to anyone else, that he wanted to go back upstairs to the Account Manager role".[86]

[60] The overall circumstances in which Mr Simon explored the possibility of a movement from his Account Manager position is that he was failing to some extent, if not to a significant extent, in that job. He argues that he was subjected to bullying. NGS Group and its witnesses reject that possibility. Even so at the very least, two things are factually evident. Firstly, that Mr Simon was under such significant pressure in his job, or even perhaps life in general, that he asked Mr Hineman whether, if he stepped away from sales there might be a position elsewhere and NGS. He may have been very emotional and cried either in that or earlier conversations.[87] Secondly, on 28 June 2018 he received the written warning detailing his performance in the Account Manager role. Those factors at least explain why Mr Simon may have been motivated to consider alternatives. However, the consideration of alternatives is not to be regarded as a blank cheque - move me somewhere and pay me what you will.

[61] Instead the proposition being put forward by Mr Simon must reasonably be seen to be something akin to an invitation to reach agreement about an alternative to the then prevailing Account Manager position. Contractually of course, for a variation of contract to have occurred such would need to have been subject to offer, acceptance, consideration of the terms and intention to create a legal relationship in the usual way, and once negotiations had concluded and agreement on terms reached, the Account Manager contract would be terminated and the new one commence.[88] Further, by mid-September, Mr Simon had informed NGS Group that he viewed resolution of the salary dispute as essential to the continuation of his relationship with the firm and that failing agreement, he expected to return to the Account Manager position.

[62] The fact that there had been a change in duties on one date and a change in pay at another date is not especially unusual and does not stand for the proposition that receiving the pay rate $36 per hour was tantamount to Mr Simon accepting what was really only an offer of payment at that rate.

[63] The evidence does not reasonably lead to a finding that Mr Simon at any time "accepted" the pay rate in the sense of being seen to contractually accept what was on offer by NGS Group. Instead the evidence shows unambiguously that by no later than 21 August 2018 Mr Simon indicated that he was not going to accept the amount offered. Contractually speaking, the logical product of a failure to reach agreed terms would be that there could be no acceptance and thereby no contract. In the first of three letters from Mr Simon's solicitors, dated 11 September 2018, the following was unambiguously put forward on his behalf:

[83]

[64] In this situation, the alternatives contractually available to NGS Group were to either do something that would get them to the point of consensus with Mr Simon or to take him at his word and return him to the Account Manager position once he was fit to do so. In the context of the storm that had been brewing for some time, the return of Mr Simon to the Account Manager position would probably be the least desirable of the alternatives available for either party since he was hardly flourishing in the role and by that time also had accused his manager and co-worker of bullying conduct. While that may be so, the cleft stick in which the Respondent was being squeezed made that essentially the only viable alternative if agreed terms for the transfer to a tradesperson position could not be reached.

[65] Accepting that small business employers will frequently have difficulty accessing professional advice on the subject of employment negotiations or that they will sometimes endeavour to move poor situations forward without necessarily applying all the expectations of natural justice, transparency or contractual negotiations, any view held by Mr Welsh or Mr Hineman or any other manager of the NGS Group to the effect that Mr Simon could have been managed sideways by agreement should have been unambiguously dispelled with the receipt by the company of the second and third correspondence from Mr Simon's solicitors respectively dated 20 September 2018 and 9 October 2018. There is no doubt from that correspondence of the seriousness in which Mr Simon viewed the situation, with it firmly putting the proposition that a failure to satisfy his concerns may be viewed by him as a repudiation of his contract of employment, in which case he may exercise his right to elect to accept it as a termination of employment by the NGS Group.

[66] The letter of 20 September 2018 asked that NGS Group confirm that Mr Simon would continue to be employed in his Account Manager role and paid a salary of $90,363 and provided with a motor vehicle and a mobile phone.[90] The letter of 9 October 2018 was blunt; by paying Mr Simon in accordance with the terms of the proposed 21 August 2018 contract, this constituted:

[119]

[80] There is no specific reason advanced by the NGS Group for Mr Simon's dismissal of any kind, whether related to his capacity or conduct, or valid or not.

[81] Nonetheless, it may be inferred from the overall evidence before the Commission that it was likely convenient from the company's perspective at least, that since Mr Simon had been experiencing some considerable difficulties in undertaking his role as an Account Manager over the first part of 2018 it was convenient to accept the opportunity presented to it in May 2018 when Mr Simon asked whether it may be possible to move to another position. Following from this in something of a "carpe diem" moment it is likely that NGS Group saw the potential move of Mr Simon away from Account Manager position to a tradesperson role as not only a good idea, but one that should be brought about if at all possible.

[82] Mr Simon had worked with Mr Welsh and his company for 18 years, having started when both were considerably younger than they are now. Even for a person starting a new job as an apprentice in 2000, it would have been less than likely that it could be foreseen that employment would continue as long as it has, given the turnover of employment generally, as well as the pressures for survival for small businesses. One can understand then that faced with a difficult, potentially unpleasant, situation in 2018 in which Mr Simon's dismissal was identified in the warning letter as a real possibility, it is not much of a leap to see that a viable solution for NGS Group was simply to turn sideways so as to avoid a confrontation and to "keep the peace" in a manner in which both sides could have some dignity for as long as each could tolerate the other.

[83] From Mr Simon's perspective though what occurred with his employment during 2018 was not a caring response to his situation with his best interests in mind. He accuses Mr Hineman and Mr Nelson of having bullied him at work.

[84] However, even if those matters were accurate or somehow the NGS Group was simply trying to manage its way through a difficult situation, or perhaps shut down workplace bullying complaints that it neither welcomed or saw as justified, the Respondent strenuously denies that it has dismissed Mr Simon and has not set forward any alternative argument on the subject. That is, it is not put to the Commission that while the Respondent's primary argument is that there was no dismissal, a secondary set of considerations should be taken into account in the event that the primary argument does not succeed. In its mind, there was no dismissal, and no reason for dismissal. This is not an instance in which a small business puts forward that it has done the best it possibly could dealing with a very difficult situation and that factors within that situation meant that nonetheless a valid reason for dismissal could be found.

[85] As a result, there is no alternative to the finding that there was no reason before the Commission for Mr Simon's dismissal, let alone a valid reason relating to his capacity or conduct (including its effect on the safety and welfare of other employees).

[133]

[92] There is some, but not great, evidence before the Commission to the effect that Mr Simon's work performance was under some significant strain during 2018. Whether that can be attributed to Mr Simon's own health, the pressures of the Account Manager position or externalities impacting upon it, or to the actual performance of Mr Simon, or to the actuality of the workplace bullying that he alleged from Mr Hineman and Mr Nelson is a matter for some debate.

[93] It is unlikely in the overall context of the evidence before the Commission that Mr Simon's complaint of workplace bullying was taken seriously by the NGS Group. A review of the available material on that subject would indicate that the conduct towards Mr Simon by Mr Hineman and Mr Nelson was likely unreasonable and that Mr Simon was entitled to view it as workplace bullying. Mr Simon's complaints appear to be in at least two categories; complaints about the conduct of Mr Hineman and Mr Nelson towards him and complaints about aspects of performance management.

[94] The evidence generally supports a finding that Mr Simon was entitled to be aggrieved by many of the things said to him, and that those things were likely unreasonable. In some respects, the way Mr Hineman communicated with others is likely part of a broader workplace culture in which robust communication occurs and good-natured swearing and banter is tolerated. However, the reality is that one person's good-natured banter is another's bullying. It's not the person saying the words who gets to determine if the comment is good-natured, but the person to whom the words are directed. By the start of 2018, Mr Simon was under some level of work-related pressure and likely felt threatened when told in a group meeting "everyone's performance is shit and if you don't like it you can fuck off somewhere else".[107] He was also entitled to feel humiliated when Mr Hineman said, in front of Mr Nelson and Ms Russell "Nice bag, I thought you had no money and were crying broke. Now you rock up with a new laptop bag".[108] The comment was designed to embarrass and, with the reference to him being thought to be "crying broke", Mr Hineman unintentionally or not disclosed Mr Simon's private information to Mr Nelson and Ms Russell.

[95] Being told "I don't give a fuck if you've been here for three months. Just read over and sign the contract"[109] with reference to a request to sign the contract for the tradesperson position then and there, when Mr Simon wanted more pay as he had been with the NGS Group for longer than Mr Short, is intensely intimidatory and designed to be such.

[96] The complaints regarding performance management are not especially well particularised, however in the overall context of the available evidence, there appears to be some justification to NGS Group's criticisms of Mr Simon, although in fairness, those complaints were identifiably broader than just Mr Simon, when Mr Hineman had cause to say to the group the things mentioned above; it wasn't Mr Simon's performance that was "shit", it was "everyone's". While noting that Mr Simon objected to the content of the warning letter given to him, not the least because he thought the client was "difficult" and their behaviour "toxic" and that he acknowledged the warning letter by signing it since he felt he had no other option,[110] the detail in the warning letter within the context of all the evidence before me appears sufficient to show there was a performance issue on Mr Simon's part that required addressing.

[97] These matters go to factors of Mr Simon's knowledge and belief about his employer at a critical period during 2018. After raising a complaint of workplace bullying, NGS Group appears to have turned its back on him and nothing meaningful was done about the situation. When he retained solicitors to present his situation to his employer and seek a solution, no meaningful response was provided. When he drew to his employer's attention the legal consequences of what he perceived as the situation, no real action plan was put to him. The exception to this pattern was Mr Simon's refusal of an offer from NGS Group for private mediation in December 2018, which he declined because he "was reluctant to commit to the cost of a private mediation until [he] had received a response to [his] letter of 11 September 2018".[111]

[98] There are several other matters that may be relevant to the overall consideration of the application of s.387 and whether Mr Simon's dismissal was harsh, unjust or unreasonable. There is at least some evidence that Mr Simon's health had been under pressure potentially for some time, which I note, with him having been diagnosed and treated for an illness between October 2017 and February 2018 and then experiencing work related stress in July 2018 which required medication. If there were a real possibility that NGS Group were to say to this Commission that they got to this position through hapless inadvertence, and they very plainly have not, instead maintaining that there never was a dismissal, these matters of Mr Simon's experiences through 2018 may count towards a finding that his dismissal was not unfair. Finally, Mr Simon's length of service with the NGS Group and the circumstances in which he joined the company as a young person is a factor to be taken into account in assessment of whether his dismissal was unfair.[112]

[99] As set out above, my primary finding is that there was no valid reason for Mr Simon's dismissal (s.387(a)); that as a consequence of there being no reason given to him for his dismissal he was not notified of the reason (s.387(b)) or given an opportunity to respond (s.387(c)). It follows that since there was no discussions about his termination of employment there was no unreasonable refusal for him to be assisted by a support person in such discussions (s.387(d)). Similarly there is no finding to be made that Mr Simon's dismissal related to unsatisfactory performance on his part (s.387(e)). I am satisfied that the size of the NGS Group and the absence of dedicated human resource specialists or expertise in its enterprise likely impacted upon the procedures followed in effecting Mr Simon's dismissal (s.387(f) and (g)).

[100] In relation to the criterion within s.387(h), the circumstances of the repudiation of Mr Simon's employment contract leans to a finding of unfairness, however NGS Group's status as a small business, potentially with questions about what it could do with Mr Simon, leans against such a finding. On balance though, there must be a finding of unfairness; Mr Simon has arrived at his current state of unemployment because of the actions of his employer, which neither heeded his assertions about his legal position or how he would treat any action they took to change his contract of employment or address his workplace bullying complaint.

[101] I must consider and give due weight to each as a fundamental element in determining whether the termination was harsh, unjust or unreasonable.[113]

[102] Having considered each of the matters specified in section 387 of the Act, I am satisfied that the dismissal of the Applicant was harsh, unjust or unreasonable. It was harsh because the effect of NGS Group's conduct was to terminate the employment of someone who had worked for it for 18 years without properly taking into account Mr Simon's requests about his employment. It was unjust and unreasonable because the NGS Group acted contrary to its contractual obligations to Mr Simon.

[103] As a result of the foregoing consideration of s.387, I find that Mr Simon's dismissal was an unfair dismissal.

[151]

[108] Following the hearing and at the invitation of the Commission, the NGS Group filed certain materials relating to its financial position and in particular the requirement of the Commission to take into account the effect of an order for compensation on the viability of the employer's enterprise. The additional materials are within a Further Witness Statement of Rohan Welsh which included three attachments. The Applicant did not seek to examine Mr Welsh on the further materials or to make submissions about it.

[109] The material filed by the NGS Group asserts that the company "is currently under financial pressure to the extent that should an order for payment of significant compensation be made by the Commission against it, NGS could find its financial viability under threat".[117]

[110] The Further Witness Statement of Mr Welsh refers to several matters supporting the above contention. I do not consider it appropriate to publicly detail the matters save to indicate that they relate to demands made in January and March 2019 by the Australian Taxation Office which include a garnishee notice to the company's bankers as well as a Director Penalty Notice (a DPN) upon Mr Welsh. In addition, Mr Welsh's Further Witness Statement includes correspondence from the NGS Group's accountants, Progression Group. After identifying both the factor and impact of the ATO action the advice indicates the following matters:[118]

"A DPN is a critical document that requires the Director to consider the appointment of an Administrator within 21 days or acknowledge that they become personally liable for any outstanding PAYG tax.";

"On being advised of the DPN being issued, Nicholas Zoch from our office called a crisis meeting with Rohan and NGS General Manager, Allan Hineman for the 19 March 2019. This was based on the seriousness of the DPN in addition to NGS's depleted working capital position assessed at the end of February.";

The need for Mr Welsh to make a home loan drawdown on his family home "has placed significant stress on the family finances as the equity in their modest ... home has been absorbed";

In the March meeting the parties prepared a cashflow projection for the period March to December 2019 and determined a supplier payment plan and established a significant cashflow shortfall in May 2019 that is required to be sourced from a third party;

Further, after referencing their client's overdraft limit and noting that it is "effectively fully drawn" and that NGS is juggling its cashflow in certain respects, its view is that "NGS are in a precarious solvency position at present (which in our opinion is the worst it has been in the 18 years we have acted)."

[111] While I accept that the foregoing matters represent a precarious solvency position for the NGS Group and no doubt Mr Welsh personally, I note that NGS Group has not chosen to file in the Commission a Statement of Cash Flows, Profit and Loss Statement, or a Balance Sheet, although its accountants have said "we can furnish the Commission with bank overdraft statements, garnishee notices, director penalty notices, ATO portal reports, balance sheets, cashflow projections and any other document to support the above commentary".[119] The absence of those documents mean that the effect of an order for compensation on the viability of the NGS Group's enterprise is difficult, if not impossible, to independently assess. In a matter in which each party is represented by Counsel, and in which I have specifically invited submissions from the Respondent on the matter of viability it is not for the Commission to further request those documents. If NGS Group considered they may have persuasive value, it should have provided them. The material provided to the Commission does not sufficiently distinguish between the extent to which the tax liability has come about because of the Respondent's activities instead of Mr Welsh's own personal or other business interests. It also does not disclose whether other directors of the company have been served with similar notices (which could well be germane to the matter of enterprise viability).

[112] In relation to the advice given by the company's accountants referred to above to the effect that the response to the ATO's DPN notice includes either requiring the Director to consider the appointment of an Administrator within 21 days or to acknowledge that they have become personally liable for the outstanding tax, I note that no advice has been received by the Commission from the NGS Group to the effect that they are now in Administration.

[113] In assessing the effect of an order upon the viability of the NGS Group I consider that it is appropriate to accept that an order for compensation of the amount considered by me below is likely to have some negative impact. However, the extent of that negative impact is impossible to assess on the basis of the information presently before me. Mr Simon was one of 12 employees employed by the NGS Group at the date of his dismissal. He earned a salary of $90,363 per year, with superannuation paid in addition and was provided with a motor vehicle and mobile telephone. At least some others in the business earned the same or more; it was being put to him that if he accepted the rate of $36 per hour on the proposed contract for the sign writer position and worked overtime he would earn at least the same as in his Account Manager role. It may be inferred then that the company's total wages bill is significant. If the wages of other employees in the business were typically lower than Mr Simon's and a factor of seven times Mr Simon's salary was used to consider the overall wages bill, such would impute a wages bill of more than $600,000 per year. In the alternative, if Mr Simon's salary was actually fairly typical of others in the business, and a factor of 10 or 12 times was used, it would put the overall wages bill in the vicinity of $900,000 to $1.1m. These are no more than speculative estimates, however the range of estimates would suggest that the NGS Group overall size is not insignificant. It also should be noted that enterprise viability is not a function of just one cost line, but of the margin by which income exceeds cost. Evidence of those matters is not before me.

[114] While accepting that there will likely be some negative impact on the viability of NGS Group from an order for compensation, such impact as is capable of being objectively assessed leads to the view that the compensation assessed below, which is in the order of around 40% of Mr Simon's annual base salary and about 37% of his salary plus superannuation, is unlikely in and of itself to be catastrophic to the operations of the company, albeit that there appears to be a cashflow issue of some significance in May 2019.

[115] Notwithstanding this observation though, I consider that some consideration should be given to not exacerbating what is obviously a difficult cash flow situation for NGS Group. In particular, a staging of the compensation should be ordered namely, the staging of the first payment will be such that it is not due until June, after the cashflow shortfall indicated for May 2019.

[116] After consideration of the matters before me on the subject of the NGS Group's viability, the order for compensation will include that one-third will be payable within 14 days of the decision; one-third within 30 days; and the balance, one-third, within 45 days.

[159]

[120] Assessment of the anticipated period of employment in this case is not without its challenges.

[121] From Mr Simon's perspective he had arrived at the situation in December 2018 because of the workplace bullying he believes he was subjected to, as well as the intemperate and unjustified decision-making of the NGS Group when he raised complaints both about workplace bullying and the unresolved matter of his pay if he had moved to a tradesperson position.

[122] NGS Group see the situation differently putting forward that the most Mr Simon should be paid if compensation was ordered was the notice to which he would have been entitled[121] with this being justified on the basis that his dismissal was of a "technical nature" as well as the Commission being required to take into account "the nature of the culpability of the respondent if the Commission finds that there has been a dismissal".[122] It is also relevant to note that the NGS Group's answer to some of the claims made by Mr Simon about his treatment was to point to the fact that in June 2018 he had been issued with a written warning about his work performance and the consequences of continued unacceptable performance.

[123] In assessing the anticipated period of employment there are likely at least two different issues which require some consideration in balancing; the allegations of workplace bullying; and the assertions made by NGS Group about his deficient work performance in the Account Manager role. A further matter to be taken into account is the state of Mr Simon's health. Had Mr Simon not been dismissed in December 2018 each of those factors would likely have impacted upon the viability of continued employment. At that date Mr Simon had not been in the workplace for almost 4 months, albeit that he had been in receipt of paid leave entitlements since 29 August 2018 after being certified as medically unfit for work.

[124] It is insufficient in the context of these proceedings merely to say that a dismissed person such as Mr Simon would have otherwise continued indefinitely in their employment. Such would be highly unlikely given the overall fragility of the relationship in the latter half of 2018, and in particular in December 2018. By that time Mr Simon had been away from the workplace because of ill health for four months with there being no certain end in sight. On the other hand to suggest that the anticipated period of employment should be set at a low level and equating to the period of notice only is fanciful. The evidence does not suggest that under no circumstances could Mr Simon have contemplated a return to work. The correspondence from his solicitors repeatedly put forward the proposition, untested to any significant degree by the Respondent, that he wanted to return to his Account Manager position in the event terms could not be agreed about an appropriate wage for reassignment to a tradesperson role.

[125] Nonetheless there is an air of unreality about the propositions put forward by both parties for the prospects of future employment. Neither have grappled to any great extent with how things were with Mr Simon and his employment with the NGS Group in December 2018.

[126] The complexity of the circumstance is this; the relationship between Mr Simon and the people he worked with had deteriorated over 2018; that deterioration appears to be not only for reason of factors personal to Mr Simon and in particularly for his health and family circumstances, but it also was likely significantly impacted by actual workplace bullying directed in his direction by at least Mr Hineman and Mr Nelson. In relation to Mr Simon's health there is some evidence given by Mr Simon to the effect that in July 2018 he had been diagnosed with work-related stress which required medication to assist with anxiety and depression.[123] Medical certificates were presented justifying his absence from work on personal leave for periods after 30 August 2018. There is no comprehensive medical evidence before the Commission about Mr Simon's overall state of health or an expectation when he would be able to return to work. Nonetheless the evidence generally on the subject of Mr Simon's health would suggest that a return to work near to mid December 2018 was unlikely and especially so if his workplace bullying complaints had not been satisfactorily resolved.

[127] When Mr Simon complained about workplace bullying, the actions of Mr Welsh were, to say the least, superficial and inadequate. Mr Simon's work performance slipped and may even have slipped before 2018. The bald facts about the matters set out within the June 2018 warning letter support that Mr Simon should have been given such a warning; it is unlikely that the circumstances surrounding the warning were contributed to by the workplace bullying he was experiencing. The warning letter is very clear both about what caused the issue of the warning as well as what is to be expected on the part of Mr Simon. A person in a sales position who oversees a deterioration in the value of one important client from $300,000 to under $20,000 in a single year must reasonably be called to account for their involvement in the situation as well as being informed that the continuation of the situation is unsustainable. There is no evidence that could reasonably be accepted in this hearing which would cause a finding that the warning was unjustified because the factual circumstances surrounding the client in question were somehow not as they were presented in the letter.

[128] It would have been a challenge of some moment for Mr Simon to overcome the work performance issues set out within the warning letter, but it would not have been impossible to do so if he was properly focused and motivated and the workplace bullying issues had been addressed and diminished. While NGS Group certainly tried to game to their advantage an outcome to Mr Simon's enquiry about moving to a trades role, Mr Simon likely tried the same in return and overreached with his very extensive legal correspondence which appears designed to inflate the dispute rather than settle it.

[129] Focusing upon the state of the relationship in December 2018, there would be no ongoing relationship at all unless Mr Simon actually returned to work. Notwithstanding his solicitors' advice that he sought his employer accept his request that the company confirm it would continue to employ him in the Account Manager role, such was conditioned upon him being cleared to return to work by his medical practitioner. The overall evidence before the Commission leads to the view that a return to work from that point in December 2018 could feasibly only occur if Mr Simon was additionally satisfied that his workplace bullying complaint had been addressed and resolved. That would have required far more than the actions taken by NGS Group.

[130] Mr Welsh never really grappled with the possibility that Mr Simon had been bullied at work. His response to Mr Simon's solicitors dated 12 September 2018 endeavoured to put forward steps taken by the company to resolve the workplace bullying complaint. On the one hand he says that "To think that the conduct by certain staff engaged by NGS has resulted in extreme adverse health, wellbeing and family implications for Johnny is unfathomable",[124] yet on the other side the evidence reveals that the only steps taken of any significance by Mr Welsh about the situation were to speak to the named protagonists and caution them about the matters that were raised by Mr Simon as well is to take some uncertain training actions in February 2019.

[131] Given that Mr Simon had raised the complaints and seen that nothing of any significance had been done about them, acceptance that it was safe to return in December 2018 would likely have required a lot more action on the part of NGS Group. That action would include a real investigation, real ascertainment of facts and findings about any transgressing behaviour and then the issuing of sanctions in the event any adverse findings had been made. From late December 2018 that process was likely to take between two and three months.

[132] Separate to the process of properly investigating and determining Mr Simon's workplace bullying complaints are the two issues of what may then have occurred at the end of that process as well as what may have occurred in respect of the continuation of the performance management that had been started with Mr Simon in June 2018 in his Account Manager role.

[133] In relation to the first issue, of Mr Simon's response after a proper investigation into his workplace bullying complaints, it is entirely predictable that he likely would not have been especially satisfied of all the findings or the proposed ameliorating actions. Likely on the evidence before me there would be findings of workplace bullying which in a somewhat small workplace would be highly problematic. While people such as Mr Hineman and Mr Nelson could be cautioned about their conduct as well as asked to attend training or to apologise for their actions this is simply not a workplace in which Mr Simon's reporting line or work location could be changed so that he never had anything to do with the two again. NGS Group's workplace culture would also be unlikely to change particularly quickly, if at all.

[134] On the second matter, the continuation of Mr Simon's performance management, it is likely that his legal assertion of his right to continue in the Account Manager role was setting himself up to fail. The very stark reduction in sales for the client who complained about his performance reveals such a depth of problem which may well have proved insurmountable. These two matters combined lead me to be pessimistic that Mr Simon's employment with NGS Group in the Account Manager role would have continued very far, even upon a return to work after conclusion of an independent workplace bullying investigation. It is unlikely that Mr Simon's employment with NGS Group would have continued for more than one to two months from the time the workplace bullying investigation had been concluded. He may well have found it all too much and resigned at that time, with or without another job to go to, or NGS Group may have actioned the matters warned of and dismissed him for a valid reason.

[135] Drawing these considerations together I find that the anticipated period of employment in December 2018 was four months.

[171]

[142] While expressed in relation to the matter of unfairness, the factors of age and length of service appear equally germane to assessment of the adequacy or otherwise of an amount of compensation otherwise to be ordered. In this matter, only length of service may be a relevant factor in assessment of compensation.

[143] There is no evidence before the Commission that Mr Simon wanted to be terminated from employment. In fact, the evidence is to the contrary that he wanted to continue in employment but upon his contractually agreed terms or upon terms that he could agree. This is not a circumstance, seen so often by the Commission, in which an employee-on-the-ropes angles for the pay-out of their employment. With some relatively minor effort and compromise agreed terms for the continuation of Mr Simon's ongoing employment could have been achieved. Further, Mr Simon has had, and likely will continue to have challenges in obtaining future employment given his distrust of NGS Group about what they would say if approached for a reference. With only one former employer to point to, the task may be very difficult.

[144] Mr Simon's contract of employment also enabled him to have a motor vehicle used both for work-related and private purposes. A valuation of the private use of the vehicle was not before the Commission.

[145] Overall, Mr Simon's unique circumstances lead to the conclusion that the level of compensation earlier referred to may be clearly inadequate. I also take into account the small size of NGS Group. It is a small business with no appreciable employee relations or human resource management expertise available. Its size and lack of resources lead to the view there is a case for some reduction in the compensation ordered. Compensation based upon four months' pay is likely insufficient, and clearly so, for a person who has served 18 years, lost their job through no fault of their own and who may now face significant difficulty in obtaining further secure employment.

[146] I consider that the amount of compensation derived above, based only on the anticipated period of employment, would be clearly inadequate and therefore requires adjustment. In overall terms my consideration is that because of the above factors the amount of compensation should be increased by 10%. The amount would be 15% if I took into account only the factors in Mr Simon's consideration and took no consideration of the NGS Group's circumstances, and especially the material which has been provided to the Commission about the financial circumstances of it and Mr Welsh. The formation of my view about the clear inadequacy of the initially derived compensation gives no consideration to the factors of shock, distress etc, within s.392(4) of the Act.

At a glance

Court

Decision date

Source

Judgment (238 paragraphs)

John Simon v NGS Group Pty Ltd ATF NGS Discretionary Unit Trust [2019] FWC 3442 (5 June 2019)

Parties

Legislation Cited (1)

Cases Cited (15)