Fair Work Act 2009

s.394 - Application for unfair dismissal remedy

Application for an unfair dismissal remedy - Compensation awarded.

• [1] Mr Martin Gunn has applied under section 394 of the Fair Work Act 2009 (the Act) for an unfair dismissal remedy. He was dismissed by Polymaster Pty Ltd (Polymaster) on 7 May 2024. Polymaster opposes the application contending that Mr Gunn was not unfairly dismissed.

• [2] The application was heard by way of conference.

• [3] I find that Mr Gunn was unfairly dismissed. I have decided to award Mr Gunn compensation in lieu of reinstatement of $27,600.00, less applicable taxation.

When can the Commission order a remedy for unfair dismissal?

• [4] Section 390 of the Act provides that the Commission may order a person's reinstatement, or the payment of compensation to a person if satisfied that the person was protected from unfair dismissal and was unfairly dismissed. There was no dispute that Mr Gunn was protected from unfair dismissal and I find that he was. The question is whether he was unfairly dismissed.

• [5] Section 385 relevantly provides that a person has been unfairly dismissed if the Commission is satisfied of four things: the person has been dismissed; the dismissal was harsh, unjust or unreasonable; the dismissal was not consistent with the Small Business Fair Dismissal Code, and the dismissal was not a case of genuine redundancy.

• [6] There was no issue that Mr Gunn was dismissed, that the Small Business Fair Dismissal code did not apply and the reason for dismissal was not redundancy. Consequently, the first question for determination in this case is whether the dismissal was harsh, unjust or unreasonable.

• [7] The facts are largely uncontested. Mr Gunn commenced working for Polymaster on 8 May 2023 as its Account Manager Southern NSW. He was employed under a contract of employment and the Commercial Sales Award 2020. His rate of pay at the time of dismissal was $119,600 per year. His was provided with a vehicle for business use. He was also provided with a laptop computer and a mobile phone. As an account manager Mr Gunn was expected to manage the distribution and sales of Polymaster's products in Southern NSW. Polymaster allocated a number of clients in that area and Mr Gunn and he was responsible for those accounts.

• [8] In November 2023 Mr Gunn notified his manager, Ben Steele, and Polymaster's National Sales Manager, Phil Collins, that he may lose his drivers' licence. He said that he was challenging the loss of licence. Mr Collins responded that appropriate arrangements would be made and a discussion was had with Mr Steele about what could be done in the event Mr Gunn lost his licence. Mr Gunn was told not to worry.

• [9] On 9 January 2024 Mr Gunn informed Mr Collins and Mr Steele that he would be losing his licence for a period of 6 months from 7 February 2024. There was discussion about what arrangements would be made to allow Mr Gunn to continue working and to visit his allocated clients face-to-face. It was proposed that Mr Gunn perform his duties by phone and using his laptop and the company would arrange for someone to drive Mr Gunn around the area to maintain some face-to-face contact. There were further discussions, initiated by Mr Gunn, in the following weeks to finalise those arrangements.

• [10] On 2 February 2024 Mr Gunn spoke with Mr Steele and the arrangements were confirmed. The company would permit him to work from home, maintain contact with clients by phone, and that Mr Steele and other employees of Polymaster would drive Mr Gunn to visit clients to allow face to face contact every 4 to 6 weeks. Mr Steele confirmed that the company was willing to make these arrangements and work with Mr Gunn while he did not have a licence.

• [11] Mr Steele said that he thought he made it clear to Mr Gunn that the arrangements were proposed on a trial basis. Mr Gunn was adamant that there was no mention that the arrangements were only a trial. When challenged Mr Steele was not confident that he had told Mr Gunn it was a trial and said that it may have been that he thought there would be a trial without telling Mr Gunn. I accept Mr Gunn's account that he was not told the arrangements were proposed as a trial. Mr Steel's recollection was not firm. There was no correspondence or other written confirmation of the arrangements which described them as a trial.

• [12] On 8 February 2024 Mr Steele asked Mr Gunn to provide a list of clients that he hadn't visited recently so that they could do the face-to-face visits. Mr Gunn provided a list. After some discussion a modified list was agreed. Mr Gunn was concerned that he had visited some on the final list a couple of months before, but Mr Steele insisted that they travel in the Orange, Bathurst and Mudgee areas. Mr Gunn travelled by train to Orange on 18 February 2024 and Mr Steele and Mr Gunne travelled together for 3 days allowing Mr Gunn to visit clients. At the end of the trip Mr Steele dropped Mr Gunn back to Wagga and confirmed that he had no issues with the arrangements.

• [13] It was Mr Steele's practice to hold one on one meetings online with Mr Gunn once a month. Mr Gunn would ask at these meeting whether there were issues with his performance. No issues were raised with Mr Gunn in any of the meetings about his performance. There was no monthly meeting in February 2024. In the March meeting Mr Steele told Mr Gunn that everything was going OK. The April meeting was cancelled by Mr Steele.

• [14] No arrangements were made to drive Mr Gunn to meet clients in March or April.

• [15] On the morning of 7 May 2024 Mr Gunn received an email from Mr Steele with an invitation to attend an online meeting that afternoon. The attendees on the invitation were Mr Gunn, Mr Steele and Ms Osborn, Polymaster's People and Culture Manager. The subject line of the invitation was "current working arrangements". Mr Gunn responded asking what the meeting was about but received no reply.

• [16] Mr Gunn attended the online meeting as requested. At the meeting Mr Steele informed Mr Gunn that the current arrangements were not working as his sales figures had dropped. Mr Gunn explained that he had not been provided with support as no one had driven him to see clients as agreed. Mr Steele responded that as Mr Collins had left the business there was no longer capacity to drive him to clients. Mr Gunn also raised that clients had been taken from him which also affected his sales figures. Mr Gunn was told the company intended dismissing him as he was unable to fulfil the inherent requirements of his position and would remain unable to do so for a further 3 months.

• [17] On 8 May 2024 Mr Gunn was sent a letter signed by Ms Osborn terminating his employment. It was dated 7 May 2024. The reason for dismissal was stated as Mr Gunn's inability to perform the inherent requirements of his role. The letter went on to say that Mr Gunn had lost his licence for 6 months, reasonable adjustments were trialled but Polymaster had been unable to support face-to-face contact with clients. It said that the drop in sales performance in March and April indicated that face-to-face contact was an inherent requirement of the role. The letter stated that as Mr Gunn would continue to be without a licence for the next 3 months, the company was unable to continue with the current arrangements, and that Mr Gunn's employment would end that day.

• [18] I was provided with Mr Gunn's sales figures for the 12 months up to his dismissal. They were:

Month Actual 23/24 Budget 23/24 Var %

Jul $264,780 $400,000 66%

Aug $390,934 $450,000 87%

Sept $427,449 $450,000 95%

Oct $445,529 $500,000 89%

Nov $475,375 $500,000 95%

Dec $237,374 $350,000 68%

Jan $206,327 $450,000 46%

Feb $626,046 $600,000 104%

Mar $300,286 $550,000 55%

Apr $285,611 $450,000 64%

Was the dismissal harsh unjust or unreasonable?

• [19] The first question is whether the dismissal harsh, unjust or unreasonable. In considering that question I must take into account the matters set out in s.387 of the Act.

• [20] Polymaster dismissed Mr Gunn for performance reasons. The termination letter said that he could not perform the inherent requirements of his role due to his loss of licence. In those circumstances Polymaster was not willing to continue his employment. Consequently, s. 387(a) which directs my attention to whether there was a valid reason for the dismissal related to capacity or conduct is not relevant. Section 387(b) and (c) which go to whether the employee was notified of the valid reason related to capacity or conduct and given an opportunity to respond to those matters are also not relevant.

• [21] Section 387(d) goes to whether there was an unreasonable refusal to allow the employee to have a support person present to assist at any discussion relating to dismissal. In the morning of 7 May 2024 Mr Steele asked Mr Gunn to attend a meeting that afternoon. Mr Gunn did not know it, but the purpose of the meeting was not only to discuss his dismissal but to inform him that he was dismissed. Mr Gunn was not given an opportunity to have a support present at the meeting. This factor weighs in favour of a finding that Mr Gunn's dismissal was harsh, unjust or unreasonable.

• [22] Section 387(e) relates to dismissals for unsatisfactory performance, it requires that I take into account whether Mr Gunn had been warned about unsatisfactory performance before the dismissal. Mr Gunn was dismissed because of his performance. The meeting on 7 May 2024 was to inform Mr Gunn that his performance had been poor over the previous 2 months and to tell him that the company was going to dismiss him. He was not given a warning before the dismissal. This factor weighs in favour of a finding that Mr Gunn's dismissal was harsh, unjust or unreasonable.

• [23] Section 387(f) and (g) go to the degree to which the size of the employer's enterprise or lack of dedicated human resources management specialists were likely to have had an impact on the procedures followed in effecting the dismissal. Polymaster employed 128 employees at the time of the dismissal. Ms Osborn is People and Culture Manager and so meets the description of dedicated human resources management specialist. The procedure followed in dismissing Mr Gunn included a failure to give him an opportunity to be represented at the meeting on 7 May 2024 and the failure to give him a warning about his performance. Given the size of the enterprise and the access to a human resource management specialist I consider that these factors weigh in favour of a finding that the dismissal was harsh, unjust or unreasonable.

• [24] Section 386(h) requires that I consider other relevant matters. I consider three other matters relevant to the question of whether the dismissal was harsh, unjust or unreasonable. The first is that Mr Steele had assured Mr Gunn on a number of occasions that his loss of licence would be accommodated. The second is that Polymaster having agreed to the accommodation that others would assist in driving Mr Gunn to face-to-face meetings then failed to honour that agreement. The third is the way Mr Gunn was dismissed. He was given no warning about concerns about his performance and there was no opportunity to explore ways of addressing how he might work in the 3 remaining months that he would be without his licence. Other options by others driving him to clients or undertaking the face-to-face meetings to support him during this time may have been available.

• [25] I find that the dismissal was harsh, and unreasonable. It was unreasonable to dismiss Mr Gunn for a drop in performance in all of the circumstances. The first observation to be made is that Mr Gunn's performance in the months of March and April 2024 was not a significant drop when considered in the context of sales in the months prior. His March figure was 55% of target but that can be compared to his January 2024 performance which was 46% of target. No complaint was raised about the January performance. The 64% of target performance in April was higher than the January 2024 and not far from the 66% figure for July 2023 and the 68% figure for December 2023. I was also provided with the sales figures for other Account Managers employed by Polymaster in other regions. Those figures show others regularly falling below sales targets. The performance of those employees was not markedly different from Mr Gunn's results even during his period without a licence.

• [26] I also consider that it was unreasonable to dismiss Mr Gunn for being unable to perform the inherent requirement of his role. I accept that it was an inherent requirement of the role that he make sales. Clearly the loss of licence did not incapacitate him such that he could not perform his sales role. He continued to make sales in March and April without face-to-face contact with clients. He was hampered in achieving sales by the loss of licence, but he was not incapable of conducting sales. He was not dismissed because he was incapable of making sales but that he was not performing well in the previous to months when he was not given support. Indeed, in February, when he was without a licence and received the support agreed, he exceeded his sales targets.

• [27] Relatedly, in circumstances where Polymaster had reached an agreement with Mr Gunn to accommodate his loss of licence, an accommodation which assisted him in achieving above target sales in February, it was harsh to dismiss him when Polymaster failed to honour that agreement.

• [28] Accordingly, I find that Mr Gunn was unfairly dismissed.

• [29] Mr Gunn did not seek reinstatement. Polymaster has engaged someone to replace Mr Gunn. Although replacing an employee who has sought an unfair dismissal remedy is not a matter that will have much weight on the question of whether reinstatement is appropriate. I find that in any event the relationship has broken down and reinstatement is inappropriate. Mr Gunn seeks compensation. I am satisfied that it is appropriate to make an order for payment of compensation in lieu of reinstatement. Mr Gunn seeks 15 weeks' pay as compensation. He submits that as he is 65 years of age and living in a regional location it will be difficult to gain full-time employment. He has applied for work but has been unsuccessful. He continues to apply for work.

• [30] Subsection 392(2) of the Act requires all the circumstances of the case be taken into account when determining an amount to be paid as compensation in lieu of reinstatement. The subsection requires me to consider the matters listed in s. 392 (a) to (g). In relation to paragraph (a) there is no suggestion that an order for compensation will have an impact on the financial situation of the business. For the purposes of s.392(b) I note that Mr Gunn commenced work for Polymaster in May 2023 so only worked for the company for 12 months. In relation to paragraph (c), there is some uncertainty associated about how long Mr Gunn would have remained with the business. While he is 65 years of age he continues to seek work. Some speculation is involved in this aspect of the test. It appears there were no concerns with Mr Gunn's work other than his loss of licence. Polymaster submitted that had he not lost his licence it is likely he would still be working there. My view is that Mr Gunn would have continued to work for the company until retirement age. As to mitigation, which is mentioned in 392(2)(d), Mr Gunn has not found alternative employment although he continues to apply for work. For the purposes of s.392(2)(e) and (f) he has not received earnings since the dismissal and there is no prospect of him earning income up to the making of the compensation order.

• [31] Paragraph 392(2)(g) requires me to consider any other matter considered relevant. Mr Gunn drew my attention to the company's failure to pay him 2 weeks in lieu of notice rather 2 weeks as required by his contract.

• [32] The approach taken in the Commission to the assessment of the quantum of compensation under s.392 of the Act is to apply the "Sprigg formula" derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul's Licensed Festival Supermarket.[1] Put briefly, it involves estimating the remuneration the employee would have received but for the dismissal, deducting monies earned since termination, discounting that amount for contingencies and assessing the tax implications to ensure no adverse impact on the employee. An order for compensation can be no more than 6 months pay.

• [33] Taking these matters into account and noting in particular that Mr Gunn would have continued to work for the company had he not been dismissed, he had worked for Polymaster for only 12 months before the dismissal, and he has attempted to find alternative work without success I consider that Mr Gunn should receive compensation of 12 weeks' pay in lieu of reinstatement. He was paid fortnightly for 80 hours work at the rate of $57.50 per hour. This amounts to $4,600.00 per fortnight or $2,300 per week. These figures are before tax. 12 weeks' pay is $27,600.00. This amount will be subject to taxation which I do not regard as adversely impacting Mr Gunn.

• [34] Under s.292(3) I may reduce this amount if the employee's conduct warrants doing so. I do not propose to do so here. Mr Gunn did nothing wrong and there is no reason to reduce the amount of compensation on account of Mr Gunn's conduct.

• [35] For the reasons outlined I consider that Mr Gunn was unfairly dismissed and will order that Polymaster pay him an amount of compensation of $27,600 less applicable taxation in lieu of reinstatement.

• [36] An order requiring payment in this amount will issue separately.

[1] [1998] AIRC 989; (1998) 88 IR 21

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