s.170CE application for relief in respect of termination of employment

Palazzo Corporation Pty Limited t/as Noble Storage and Transport

[1] On 19 March 1999 Mr Peter Crozier lodged an application under section 170CE of the Act claiming that his termination was harsh, unjust or unreasonable. Prior to his termination Palazzo Corporation Pty Limited trading as Noble Storage and Transport, of Noble Park, Victoria (the company), employed Mr Crozier as a sales executive.

[2] The application was the subject of conciliation proceedings on 6 May 1999. Those proceedings did not resolve the matter and subsequently a certificate to that effect was issued on 10 June 1999. In accordance with the usual practice the contents of that certificate are not available to the Commission as presently constituted. On 11 June 1999 Mr Crozier elected to proceed to arbitration to determine whether the termination was harsh, unjust or unreasonable. On 24 August 1999 the matter was listed for mention and possible hearing on 17 November 1999. Directions were forwarded to the parties requiring service of an outline of submissions, documentary material relied on and witness statements. There was compliance with the directions and the hearing was held on 17 November 1999.

[3] Mr Crozier commenced employment with the company on 17 August 1998. He was terminated on 1 March 1999. His terms and conditions of employment were contained in a letter of offer dated 14 August 1998, accepted by Mr Crozier on the same date. The position was described in that letter as a sales representative and the terms and conditions included the following:

The original advertisement for the position indicated that the functions of the position included the sourcing and development of new business opportunities through new and existing clients.

[4] It is common ground that during his employment with the company Mr Crozier was directly responsible for introducing business valued at $1300.00. There is no evidence that his work has led to the introduction of any other business. The employer conceded that Mr Crozier made contact with many potential clients, and there was no criticism of the effort he put into his job.

[5] Mr Crozier was the only witness for the applicant, while the Manager, Mr John Black and the Principal of the company Mr Antonio Palazzo gave evidence for the respondent. That evidence, to the extent it is relevant, is considered below.

[6] Section 170CG(3) of the Workplace Relations Act 1996 provides:

In determining, for the purposes of the arbitration, whether a termination was harsh, unjust or unreasonable, the Commission must have regard to:

(a) whether there was are valid reason for the termination related to the capacity or conduct of the employee or to the operational requirements of the employer's undertaking, establishment or service; and

(b) whether the employee was notified of that reason; and

(c) whether the employee was given an opportunity to respond to any reason related to the capacity or conduct of the employee; and

(d) if the termination related to unsatisfactory performance by the employee - whether the employee had been warned about that unsatisfactory performance before the termination; and

(e) any other matters that the Commission considers relevant.

[7] Section 170CA sets out the principal object of Division 3 of the Act, which deals with termination of employment. Subsection 1 provides:

(a) to establish procedures for conciliation in relation to certain matters relating to the termination or proposed termination of an employee's employment in certain circumstances; and

(b) to provide, if the conciliation process is unsuccessful, for recourse to arbitration or to a court depending on the grounds on which the conciliation was sought;...

Subsection 2 provides:

The procedures and remedies referred to in paragraphs (1) (a) and (b), and the manner of deciding on and working out such remedies, are intended to ensure that, in the consideration of an application in respect of termination of employment, a "fair go all round" is accorded to both the employer and employee concerned.

Was there a valid reason for the termination - 170CG(3)(a)?

[8] The company's position is that Mr Crozier failed to obtain business, as his employment required. His failure to obtain business related to his capacity or conduct and it related to the operational requirements of the business. As Mr Burchardt, appearing for the company put it:

"It is submitted that the fact that there was effectively almost no sales, only $1300 in six months does provide a valid reason."[1]

Mr Gray, appearing for Mr Crozier, argued that Mr Crozier had operated in a situation where no sales targets were set, that there was inadequate training, assistance and advice about the work process by comparison with what could reasonably have been expected.

[9] It is true that there is no evidence of the setting of any sales targets, if by that phrase specific weekly or monthly dollar-value targets are meant. Mr Palazzo gave evidence that in mid-November, at about the time of the expiry of Mr Crozier's probation period, the need for success in attracting new business was discussed and that he was required to make progress in that endeavour by 1 March 1999 or he would be terminated. Mr Black, who attended the same meeting concurred. Mr Crozier denied the discussion.

[10] As to the issue of training, assistance, advice and counselling the evidence is somewhat sparse. Mr Black accompanied Mr Crozier on three visits to clients. Mr Black claimed he made available the client lists in his possession, but Mr Crozier disputed this. Mr Black also claimed to have directed Mr Crozier to specific potential clients, in particular one transport company, however Mr Crozier was unable to obtain an interview with the relevant people at that company. Apparently a number of meetings were held between Mr Crozier, Mr Black and Mr Palazzo, including one with Mr Palazzo junior. There is dispute about whether all of the conferences occurred, their timing and disagreement about what was discussed. One thing is clear however, they provided Mr Crozier with a forum for him to discuss problems and it would appear from his own evidence that he did so.

[11] I am of the view that the training, assistance advice and counselling provided may have been lacking perfection. However, Mr Crozier's had considerable previous experience in the area as his application for employment discloses[2]. Thus I consider the shortfall does not affect the validity of the reason for termination, particularly as it relates to the issue of operational requirements. The evidence of Mr Crozier, which was not seriously challenged by the company, is that he was well organised and hard working. He brought a professional approach to his job. Within the constraints imposed by his employer regarding pricing structures and available facilities he did his best, and his best could not be faulted. It may be that the product he was to sell and the price at which he was to sell it made his task impossible. In the absence of some ulterior motive (and none was suggested here) it is not unreasonable for the employer to determine the nature of his product and the price at which it is to be sold. I think the situation is best described, again by Mr Burchardt as follows:

"In my respectful submission, sir, this episode was an unhappy one for all concerned. The company thought they were getting a person who could sell and Mr Crozier thought he could do it. Through no fault of his own, he was not able to. It was just a disastrous error of judgement by all."[3]

[12] As noted, there is no dispute that Mr Crozier was responsible for bringing in only $1300.00 (gross) worth of business. Moreover, there can be no dispute that in a little over six months of employment the employer paid to Mr Crozier, directly and indirectly an amount in excess of $22,000.00. To continue that situation, in the absence of any expected return, would be an invitation to economic ruin. There was no evidence of any certainty of future return as a consequence of the work performed by Mr Crozier.

[13] In all of the above circumstances I am satisfied there was a valid reason connected with the operational requirements of the business for the company's termination of Mr Crozier's employment.

Was the employee notified of the reason - 170CG(3)(b)?

[14] There is some conflict of evidence on this point. Mr Palazzo and Mr Black both testified that at the meeting on 20 November 1998 Mr Crozier was advised that it was necessary for him to improve his sales figures if he was to continue in employment beyond 1 March 1999. Mr Palazzo testified that he reminded Mr Crozier of the requirement on 16 February 1999. Mr Crozier denies he was given both the original advice and the reminder. On 1 March 1999 Mr Black advised Mr Crozier of his termination. Mr Crozier agreed with the following description of what occurred:

"And on that day Mr Black called you in to his office, did he not?---Correct.

"And said words to this effect: the situation is you have not made any sales, we cannot continue your employment any longer, your position as a salesman is ended immediately. Does that strike you as being roughly what he said?---Yes, roughly, words to that effect, yes."[4]

Thus, while there is dispute about the earlier events regarding the reasons for termination, it is clear that on the day of termination Mr Crozier was advised of the reason.

Was the employee given any opportunity to respond to any reason related to his capacity or conduct - 170CE(3)(c)?

[15] On the day of termination Mr Crozier, on his own evidence was given an opportunity to respond, and he did. He specifically raised his concerns about the rates charged for storage being uncompetitive. By this time however the decision to terminate had been taken and there is no suggestion that there was any response he could have made that would have altered that decision. The extent to which he was given the opportunity to respond on other occasions is an issue inextricably interwoven with the dispute as to whether there were previous occasions on which he was warned about his performance. This is dealt with below.

Was the employee warned about any unsatisfactory performance prior to dismissal - s170CE(3)(d)?

[16] The company's witnesses claimed there were at least three meetings with Mr Crozier at which the unsatisfactory nature of his performance was discussed. The first was on 20 November 1998, which was allegedly held to discuss his performance at the conclusion of the first three month probation period. Both Mr Black and Mr Palazzo said that the outcome of the meeting was that the probation was extended until 1 March 1999. This decision was taken in the light of explanations given by Mr Crozier. The second meeting, with the same participants and Mr Palazzo junior, was held on 30 November 1998. At that meeting there was some discussion on business promotion connected with the proposed purchase of trailers, an agreement to drop the rates for storage and it was proposed that Mr Crozier make an approach to a particular transport company. The third meeting was between Mr Palazzo and Mr Crozier on 16 February 1999. At this meeting Mr Palazzo viewed and rejected a marketing document proposed by Mr Crozier, and reminded Mr Crozier of the need to achieve results by 1 March 1999.

[17] Mr Crozier had a different view about the three meetings. His evidence was that in early December Mr Black asked him for a report on his work and prospects for 1999, which he had provided. He understood the report was for Mr Palazzo. He provided the report, but did not discuss it with Mr Palazzo. In other words, he did not recall the mid-November meeting at all. The second meeting referred to was, he said, held in mid-January 1999. It did not involve any discussion of his performance. He specifically denied that Mr Palazzo had expressed any dissatisfaction with his performance at the meeting on 16 February 1999.

[18] I am unable to reconcile all of this evidence. Mr Black, in cross-examination, testified that the meeting to discuss probation was held on 20 November 1998, and later that it was held in mid-December 1998.[5] He also testifed there was a meeting at some stage in December.[6] During his testimony Mr Palazzo was asked about the nature of the warnings[7]

"And you did not actually warn Mr Crozier about his employment, did you?---Oh, yes I did, many times.

"How often do you say you did that?---Oh, starting when his three months was up and even before that. If I bump into him, I ask how are you going and he was saying to me I `m doing this and I'm doing that and then I might ask John Black about it and he's doing a lot, but there is no results.

"THE COMMISSIONER: Well ask him what he did say. What did you say to him?---What did I say to Mr Crozier?

"Yes, what do you call a warning? You know, what was it that you said that you say is a warning?---Well, I said to him that, you know, the business won't be able to afford your expenses forever. We have to get something.

"MR GRAY: But you did not actually say to him, look, if things are not going very well on 1 March, you will be dismissed, did you?---Yes, we did.

"...in November we actually said to him that we'll give you another three months and then something was said about the Christmas break... and we says, well, Christmas break is the period where you should get most of the business, because everybody needs storage at Christmas.

"And you did not say anything more severe that that subsequently did you?---Well its like I said before. Since I started employing people back in 1967, that I can't remember anyone who can complain of not being treated fairly. I wasn't going to start after 35 years of business treating people badly.

Thus, I conclude, apart from the meeting on 20 November 1998 it is likely on Mr Palazzo's own evidence that any warning was an equivocal one.

[19] I turn now to the meeting of 20 November 1998 at which it is alleged Mr Crozier effectively had his period of probation extended. Mr Black was uncertain at to its date in his testimony, a matter I have already referred to. This uncertainty could simply be a matter of confusion. However, in terminating Mr Crozier on 1 March 1999, it is both Mr Black and Mr Crozier's evidence that no mention was made of his probation period coming to an end or that Mr Black was simply giving effect to the November decision. Taking these two matters together, I am not satisfied that any warning was given at the November meeting, or indeed that the meeting occurred in the manner suggested by the company's witnesses.

[20] I am therefore not satisfied that Mr Crozier was warned that his performance could lead to his termination. It follows that his opportunity to respond to any reason related to his performance was also limited.

[21] From the above analysis it follows that I consider the company had a valid reason for terminating Mr Crozier and that they informed him of that reason. They did not however, give him any appropriate warning about his performance and there was only a limited opportunity to respond. I am not aware of any other relevant matters for consideration. In ensuring a `fair go all round' as I am required to do it is necessary to weigh up the effect of the failure to warn and to only provide a limited opportunity to respond. The failure to warn Mr Crozier about his performance and the consequent limited opportunities for him to respond, in this case, does not, in my view mean that the termination was harsh, unjust or unreasonable. There was no complaint about his effort, his approach or his demeanour as an employee. The real complaint was that he was not successful as a sales representative. Mr Crozier knew he was unsuccessful and made suggestions for changes to the company's approach, which the company did not totally accept. He continued to be unsuccessful, and it is not clear what effect a warning would have had. At most, he would have had the opportunity to seek other employment while still employed.

[22] I cannot accept that Mr Crozier believed that he would continue in employment indefinitely despite his lack of success. I am surprised that he did not take the initiative to discuss his future with the company in the circumstances where he made no sales between October 1998 and the date of his termination on 1 March 1999.

[23] On balance I do not consider that Mr Crozier was disadvantaged by the company's failure to warn him about his performance or to provide him with only limited opportunities to respond to concerns about his conduct or performance.

[24] For the reasons set out above Mr Crozier's application for relief under section 170CE of the Act is dismissed. I so order.

Termination of employment - unfair dismissal - applicant dismissed for alleged failure to obtain new business - grounds related to conduct and capacity and operational requirements - applicant claimed no sales targets were set and training and assistance were inadequate - Commission found while training and assistance lacking perfection, applicant had considerable previous experience - satisfied there was a valid reason for termination - not satisfied applicant given appropriate warning or opportunity to respond - in this case such failure does not mean termination was harsh , unjust or unreasonable - no complaint about applicants effort, approach or demeanor - applicant was not successful as a sales representative - application dismissed.Crozier v Palazzo Corporation Pty Limited t/as Noble Storage and TransportU No 31013 of 1999Print S2466Simmonds CMelbourne13 January 2000

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