126 In view of the determination made above that the Applicant was an award employee, there is no necessity to go into detail in relation to this matter save to indicate that the determination, based on the principles laid down in Austech, would have been in favour of the Applicant.
The Substantive Merits of the Case
The Evidence
First Employment Contract
127 Mr Rossi confirmed in his affidavit evidence that when the Sydney representative left the company's employment in 2001, New South Wales was looked after by a sales representative engaged and based in the Adelaide office. When that salesperson's employment ceased, he received an approach from Tim Patterson, Senior Consultant with the recruitment firm Bladen Taylor & Associates, who indicated that he had on his books people who were capable of meeting the company's requirements. Owing to the fact that prospects in New South Wales had built up over that time, a decision was made to re-open an office in Sydney and have it manned from Sydney. By that time, eight sales of the system had been made in New South Wales and four in New Zealand at a cost of between $10,000 and $170,000 per system.
128 One of those persons on Mr Patterson's books was Mr Jason Pritchard, a British national, who held a business visa, a condition of which was that he had to have work in Australia.
129 Mr Pritchard stated that at the time of his engagement by the Respondent, he had 16 years' experience in the field of sales generally. Of those 16 years, 8 years were in software sales. He stated that during his employment with a firm called IDS Enterprise Systems Pty Ltd, he had achieved sales $0.1 million above the $1.5 million annual budget he had been.
130 It was not disputed that Mr Pritchard attended two interviews with Mr Rossi for the position of Business Development Manager (New South Wales and New Zealand) on 08 and 09 June 2005. The role was principally to be on the road selling the company's product known as "Trident Global".
131 "Trident Global" is a global trade management system at the high end of the market for use in the distribution of commodities for export sale. The cost of a typical software package, including after sales service and maintenance/administration fees, was $100,000. Although that system had been on the market since 1991, only approximately 120 systems had been sold Australia-wide, mainly in the States of Victoria and South Australia. The total number of potential purchasers of this type of system in Australia was approximated to be 2000.
132 Mr Pritchard confirmed that he had prepared a 7-page document headed "Company & Position Questions" which he discussed with Mr Rossi at the interview on 08 June 2005. He confirmed that he had included in that document an assurance that, because of his vast experience, his training period for the position of Business Development Manager would be considerably shorter.
133 It was also not disputed that during those interviews, Mr Rossi had explained to him the targets that he needed to achieve in that job (that is, $1.5 million in sales per annum - split equally between New South Wales and New Zealand) and that he had assured Mr Rossi that he could achieve those targets. Those targets were set out in a Schedule to the Contract of Employment.
134 Mr Rossi was allowed access to his personal notes relating to both pre-employment interviews held with the Applicant. He agreed, in cross-examination, that the letter of appointment, the job description and his handwritten notes of the interview amounted to the entirety of the contemporaneous records he had kept of the meetings of 08 and 09 June 2005.
135 He could not identify anywhere in his handwritten notes where he had made a notation of having told the Applicant of the requirement for 8 face-to-face meetings with prospective clients and 40 closed activities per week. Neither was there any mention in those notes of key performance indicators (KPIs). Nevertheless, Mr Rossi did not accept that the notes reflected all that was discussed at the interviews on 08 and 09 June, 2005. He relied on other documents such as the job specification and the job co file which were also provided to the Applicant and also referred to during the interviews. "Closed activities" were defined as including making telephone calls, sending and receiving emails, sending or receiving letters or reviewing a past activity to decide how to action it.
136 He agreed that nowhere in the 2-page job description relating to the first contract was there a reference to KPIs, 8 face-to-face meetings or 40 closed activities. Mr Rossi recalled that during discussion on four points listed in that part of the document headed "Uses and maintains the company CRM software efficiency," they had discussed the targets as they related to the use of the program "Efficiency" for managing prospects in a given territory.
137 Mr Pritchard denied that Mr Rossi had explained to him during those interviews that he had to meet any weekly targets in relation to meetings and activities or that those issues had been covered during his induction training.
138 Nevertheless, he agreed that Mr Rossi had explained to him the use of a tool called "Efficiency" which was used to manage those activities. It allowed him to enter details of those activities on to the computer so that prompts may be provided to him, at the appropriate time, for certain follow up actions to be undertaken. He agreed that he had received approximately two days' training on that program.
139 Mr Rossi rejected the assertion that he had assured Mr Pritchard, during his second interview, that no sales were expected of him in the first three months, that one or two sales would be expected in the next quarter and he should be able to perform comfortably thereafter.
140 Written confirmation of the appointment was forwarded dated 17 June 2005. The letter of appointment included the following terms:
v Commencement date: 04 July, 2005;
v A base remuneration package equivalent to $100,000 per annum, inclusive of superannuation contributions, payable monthly;
v An incentive payment based on the successful invoicing of products and services; and
v A three-month probationary period during which employment may be terminated by either party providing one weeks notice. Upon its successful conclusion, the employment would be confirmed in writing.
141 The Applicant entered into a subcontracting arrangement with the Respondent for the period 04 - 12 July 2005 while the issue of a business visa was resolved. Formal employment commenced on 12 July 2005.
142 The Applicant spent the first three weeks, commencing from 04 July, at an induction course in Adelaide. He admitted that the training had included information on the Monday Morning Huddles - meetings at which spreadsheets, required outcomes and targets were reviewed.
143 Ms Whiteread agreed, in cross-examination, that during that induction, the Applicant had made some useful contributions which she had set out in an email to Mr Rossi. However, even though she had appreciated his positive contributions, she denied that the comments had reflected her true feelings about him. In re-examination, she explained that she did not mind being asked questions during the induction training, however, Mr Pritchard's interjections got to a point where the induction was taking far too long and was becoming frustrating.
144 Mr Pritchard commenced to undertake full-time duties on and from 25 July 2005.
145 Mr Rossi insisted, in re-examination, that he had advised Mr Pritchard of the weekly targets he was supposed to meet. In addition, when Mr Pritchard commenced employment, he had available to him, in "Efficiency", approximately 800 prospects rated A, B and C and another 180 not yet rated. Of those 800, there were 100 with face-to-face meetings that were able to be converted to a sale within a 12-month period. In Mr Rossi's opinion, the goals set for the Applicant were achievable given the number of rated prospects already available to him. Indeed, he recalled that Mr Pritchard had stated that he could achieve those targets. If the Applicant had achieved those targets then, in his opinion, he would have been able to achieve the $1.5 million target in the contract.
146 Mr Hayes became Mr Pritchard's direct manager approximately a fortnight before his first trip to Sydney in early August 2005.
147 He insisted that he had given specific KPIs to Mr. Pritchard as at 06 September 2005.
148 The Applicant did not achieve a single sale during the first three months of employment.
First Dismissal from Employment
149 Mr Pritchard denied that he had been put on notice by Mr Rossi, during the probationary period, that he would be dismissed from employment if he failed to meet the targets.
150 Mr Pritchard was attending training in Adelaide on Thursday, 29 September 2005 when he was called out of the Workshop to attend a meeting with Messrs Rossi and Hayes and Ms Whiteread. His employment was terminated effective 30 September 2005. Mr Pritchard stated that he returned to the Workshop when the meeting ended.
151 Mr Rossi stated that he had terminated the Applicant because he had serious doubts about his skills and because of the issues raised in the letter of 06 September. The Applicant had raised his expectations as to his skill level during the employment interview when he indicated that his "ramp up time will be considerably shorter.... I believe I will be instantly empowered to assist and to help your organisation rapidly achieve a large pipeline and its realisation of its sales and strategic targets"
152 He vehemently denied the assertion that the termination letter had been provided to the Applicant during the course of the meeting, insisting that the termination letter had been prepared and provided to the Applicant after the meeting.
153 Mr Pritchard contended that he was handed the termination letter, dated 29 September 2005, during the course of that meeting. It cited the following reasons for his termination:
1. Concerns about your skills and experience, in particular due to our expectations as a result of interviews prior to engagement;
2. Demonstrated behaviours over the last three months resulting in concerns about your abilities as a Business Development resource, please also refer to our letter dated 06 September 2005; and
3. Your current package being well above market rates for your skills.
154 Mr Rossi insisted that he had gone into the meeting with the applicant on 29 September with the intention of terminating his employment. However, a verbal offer of a second contract of employment was made to the Applicant during that meeting following representations from him as to prospective business in New South Wales. Attention became focused on closing the three prospects that the Applicant contended were ready to convert to a sale. Multiplying the sales value of those three prospects meant that the Applicant would be able to achieve the sales targets for the months of October and November and therefore earn commission.
155 Mr Rossi stated that, at the conclusion of the meeting with Mr Pritchard, he had instructed Ms Whiteread to contact Business South Australia for advice. She had reported back to him on the same day to say that she had received advice that they could not extend the probationary period, however, the Respondent could dismiss the Applicant and enter into a second contract with him which would include a probationary period with provision for an extension by a further three months. Ms Whiteread offered to prepare a new contract based on that advice. Mr Rossi insisted that he had signed the letter of offer relating to the second contract prior to leaving the office on the evening of 29 September. It encapsulated the terms of the offer made during the meeting. He had also signed off on the job description at that time.
156 Mr Rossi denied that the Applicant had been provided with the dismissal and re-engagement letters at the same meeting. He also vehemently denied that the employment was intended to be continuing. He insisted that the second letter of appointment was provided to the Applicant on 30 September 2005 with engagement in the new position taking effect from Monday, 03 October 2005.
157 Mr Pritchard denied that he had urged Mr Rossi to offer him a new contract with reduced targets and reduced remuneration and was emphatic that he had not indicated, as an inducement, that he had three prospective clients, ANZ Exports, Aussie Pulse and Ausscot, ready to complete sales by mid November 2005. He also denied emphatically that he held a long discussion with Mr Rossi during which negotiations ensued as to the contents of a new contract. He stated that it was Mr Rossi who had introduced the idea of a revised contract.
158 Mr Pritchard stated that he had not protested about the dismissal and subsequent re-employment under a new contract as he "was still being paid the same amount...". During cross-examination, he clarified that to mean that he was being paid the same gross salary but not the same total remuneration. During persistent cross-examination, he conceded that he had been wrong to state that he was being paid the same amount under both contracts.
159 He confirmed that he had received an advance payment of commission of $1,666 on 15 October, 2005 but insisted that it had been offered to him. He denied that he had requested that advance on those three sales that he expected to close by mid-November.
160 Mr Hayes confirmed that he had attended for part of the termination meeting held on 29 September 2005 and recalled that it was the Applicant who had raised the subject of being provided with a second chance. He denied that, while he was in attendance Mr Rossi had said to Mr Pritchard words to the effect that the Applicant would be offered a second agreement and detailed the scope of the responsibility, targets and pay attached to that agreement.
161 Ms Whiteread recalled being in attendance throughout that termination meeting. She further recalled that the Applicant was handed a letter of termination which she had prepared prior to the meeting. She recalled that Mr Hayes was present when the letter was handed to the Applicant.
162 She recalled that an offer of continuing employment was made to the Applicant but denied that the terms of the offer had been spelt out.
163 She agreed that she had been involved in discussions with Mr Rossi and Mr Hayes, prior to that meeting, about ways in which the Respondent could maintain the relationship with the Applicant after 29 September.
164 She agreed that she had received instructions to consult with Business South Australia about ways in which the probation period could be extended. She had contacted that organisation on 29 September but was not quite sure whether she had done so before or after the termination meeting. She was sure, however, that she had obtained the advice prior to preparing the 30 September letter of offer.
165 She had prepared the letter of re-engagement after the meeting and well before the close of business that day. She dated it 30 September 2005. She recalled that Mr Rossi had signed it just prior to leaving for the day, maybe 5.30 pm on 29 September.
166 Ms Whiteread contradicted herself later during cross-examination to state that the Respondent was prepared to terminate the Applicant based on occurrences prior to 29 September, however after the meeting she had been requested to contact Business SA to find out the mechanics of offering another contract. She, nevertheless, confirmed that prior to the commencement of the meeting, the Respondent was considering the prospect of continuing the relationship in one form or other. She agreed that the intention was reflected in the last sentence of the termination letter which read: "We hope that there may be an opportunity for us to continue our relationship with varied expectations and understandings."
167 She further agreed that she had discussed with Mr Rossi and Mr Hayes the goal they wanted to achieve at that meeting - a reduction in the Applicant's salary and some form of continuing probation.
168 She did not believe that she handed the letter of 30 September to the Applicant at the same time as his termination letter, however, she stated that she had no specific recollection as to when she handed it to him.
169 She confirmed that she was in charge of the payroll and was aware that all statutory entitlements were required to be paid out on termination. She agreed that she had not paid out the Applicant because in her mind he was not really terminated but was continuing on with the company in another role.
170 During re-examination, Ms Whiteread stated that the purpose of the meeting on 29 September was to terminate Mr Pritchard. However, she recalled that Mr Pritchard asked if he could be re-employed citing financial reasons for his request. The discussions that were held in relation to his request had not been specific in relation to the terms of re-engagement. Mr Rossi instructed her to call Business SA for the purpose of establishing where the firm stood in relation to the concerns it had with the Applicant and its requirement for a probationary period.
171 Mr Pritchard stated in his affidavit evidence that within an hour of his termination, Mr Rossi had invited him to join him and his family at the Pub for drinks that evening to watch Mr Rossi's son on a TV show. During drinks, Mr Rossi had asked him to join his family for dinner. During cross-examination, Mr Pritchard stated that the invitation had been issued by Mr Rossi's son. He corrected his evidence a third time to state that both father and son had invited him. Finally, he agreed that there were other people from the office present and he remained after they left prompting Mr Rossi to ask him if he would like to join them for dinner.
172 Mr Rossi stated that he had gone to the pub on the evening of 29 September, 2005 with other members of his family because one of his son's television programs was being shown there. He denied that he had invited the Applicant to join them. He was aware that the Applicant was also at the Pub and was watching the show but he had not invited him. It was initially a large group of people - some of whom were not employees of Trident Global. He agreed that he had later invited the Applicant to join his family for dinner.
173 Mr Rossi confirmed, during cross-examination, that he was aware of the company's policy in relation to disciplinary action and termination procedures. He conceded that the policy on termination procedures did not distinguish between probationary employees and non-probationary employees. He conceded that he had not followed that procedure in relation to disciplinary proceedings and termination of the Applicant. He further agreed that the Applicant had not been issued with any written warnings. He agreed that the Respondent had breached the procedures in relation to the notice period required to be provided to the Applicant by providing only one day's notice.
174 Mr Rossi acknowledged that he was required to pay Mr Pritchard his accrued statutory entitlements upon termination. He confirmed that he had not directed his staff to make such payments but refused to admit that such action was indicative of the fact that the Applicant had not been terminated as at 30 September 2005.
175 During re-examination, Mr Hayes confirmed that the Monday morning huddles commenced to be held with the Applicant from when his induction programme concluded on 26 July 2005 right up until his termination. If a public holiday fell in on a Monday, then the huddle would be held on the following day. They were conducted over the telephone.
176 During each huddle, they had evidenced on a screen how many KPIs each individual sales person had achieved. The statistics discussed included the number of closed activities, number of meetings booked, number of meetings held and the dollar value in the pipeline and sales, year to date sales value. The technology used allowed the Applicant to view the same screen. As the huddles involved all staff, the personal performance of staff members was not brought up. Mr Pritchard's personal performance was discussed with him during the Friday sales meetings he held by telephone with the Applicant and during the review sessions they held for a few hours whenever he was in Sydney. He insisted that he had informed the Applicant about his KPIs and told him that his activity level was not high enough to meet the number of face-to-face meetings that he needed. The Applicant was aware of his sales target in dollar terms. He was required to deduce, by working back from there, what activity was required to meet that dollar amount. He had advised the Applicant to stop wasting time on websites, marketing activities, sales strategy suggestions and so on and to focus on getting in front of customers.
Second Employment Contract
177 Mr Pritchard was re-employed as Business Development Manager for New South Wales only. His letter of appointment, dated 30 September 2005, confirmed the following:
v Commencement date: 03 October 2005;
v A base remuneration package equivalent to $80,000 per annum, inclusive of superannuation contributions, payable monthly;
v In addition to the base salary, an incentive would be paid based on the successful invoicing of products and services;
v A notice period of one month for termination by either party except for instances of misconduct, in which case termination of employment would be summary; and
v A three-month probationary period, with the option to extend for a further three months if required. This period is for the purposes of assessing your suitability for the position. During this period either party may terminate employment by giving one weeks notice. Upon the successful completion of this probationary period your continued employment will be confirmed in writing.
178 Schedule "A" of the second contract provided a reduced target for the New South Wales region of $750,000 for the balance of the financial year.
179 He had indicated his acceptance of that contract by appending his name to it and dating it on 30 September 2005. Mr Rossi had signed and dated it on 29 September 2005.
Second and Final Dismissal
180 Mr Rossi signed the second letter of termination on 15 November 2005 so that Mr Hayes could hand it to the Applicant upon his arrival in Sydney the following day.
181 On 16 November 2005, Mr Pritchard arrived at the office to find Mr Hayes sitting at his desk. Mr Hayes advised the Applicant that he was there to terminate him and, in confirmation thereof, handed him a termination letter dated the previous day. The letter, signed by Mr Rossi, stated that he was terminated forthwith for his failure to respond appropriately to "warnings" raised with him, in both letters and emails, as to "unacceptable work procedures".
182 Mr Hayes denied that when he arrived at the Sydney office on 16 November he had deliberately wiped a number of personal files from the Applicant's computer. He explained that he had arrived at the office at about 8.50 am. He was uncertain about how the Applicant would react upon being advised of his dismissal and was concerned about leaving the Applicant alone with access to the computer if he had to leave the office for any reason. He had therefore logged into the laptop as his supervisor and changed the status of the Applicant's account from a user to a guest. He then issued the Applicant with a new password for use with his new guest status. The subsequent logging into Windows resulted in the system automatically deleting all of the Applicant's personal files.
183 Mr Hayes confirmed that exhibit SH9 was in his own handwriting. He had made those notes while they were attempting to recover the Applicant's personal material to install in a hard drive purchased by the Applicant after his dismissal. He confirmed that one of the files the Applicant had asked him to search in was C:\Program Files\Lime Wire\Share. He denied that he had maliciously deleted the Applicant's personal files stating that he had confirmed with an IT expert on the same day that the files had automatically been deleted upon logging in on the computer.
Driving Skills
184 Mr Rossi travelled to Sydney to accompany the Applicant to meetings in or about 26 - 28 July. Mr Pritchard admitted that he had informed Mr Rossi that he had scheduled a meeting with a prospective client, Ausscot, on 26 July 2005 at 12 noon instead of at 3 pm. When they arrived at the meeting and discovered the error, Mr Pritchard postponed another meeting already scheduled for that time in order to attend the meeting with Ausscot. He denied, however, that when he drove Mr Rossi around in his Subaru WRX Impreza, that he ran through red lights, had numerous near misses with other road users, or that Mr Rossi had requested that he abide by the road rules and not drive in that manner.
185 Mr Rossi agreed that he, personally, had not complained nor counselled the Applicant in writing about his driving although it was a matter that greatly concerned him. He disagreed that he was greatly exaggerating Mr Pritchard's driving misdemeanours claiming that he had been terrified.
186 Mr Pritchard admitted that he had insisted on picking up Messrs Rossi and Bullock from their conference and driving them out to the airport on 28 July 2005. He agreed that he had been late and they had missed their flight to Adelaide as a result. He explained that he was late because he had relied on the time displayed on his laptop which was programmed on South Australian time and therefore was half an hour behind New South Wales.
187 He agreed that he had driven Mr Hayes to meetings during the period between 16 - 18 August 2005. He denied, however, that he had travelled at speeds over 100 kilometres an hour in North Sydney or that Mr Hayes had warned him to slow down. He confirmed that he had received correspondence from Mr Hayes dated 06 September 2005 in which he had been cautioned him, amongst other things, to "Please be aware that there are numerous legal issues with breaking road rules while undertaking work related duties." Nevertheless, he considered that to be "a general statement" and the improvement in his driving was purely an independent action on his part.
188 He had scheduled four meetings to be attended by himself and Mr Rossi on 24 August 2005. He agreed that the best potential prospects were the first meeting and the third meeting on that day. He further agreed that they had discussed, and agreed, that the first meeting which was with Ausscot would last approximately one hour. During cross-examination, Mr Pritchard confirmed that Ausscot was not ready to complete the deal. He denied that he had advised Mr Rossi that the negotiations with Ausscot had advanced to the stage where they were to sign off on the deal at the meeting that morning. He also denied that, owing to the misinformation as to the stage of negotiations with Ausscot, the meeting had lasted for approximately two hours and, as a result, he ran through red lights, had near misses with other road users, and driven dangerously in order to get to the next appointment on time. He further denied that Mr Rossi had asked him, on numerous occasions that morning, to slow down and suggested that the second meeting that morning could be rescheduled.
Compliance with Policies & Procedures
Downloading Software
189 Mr Pritchard acknowledged that the hand-written comments on the copy of the team manual tendered in the proceedings were his own. He admitted that he was aware of the following term in the manual:
Downloading of unauthorised data from any Internet site must be approved by a Manager or the Network Administrator before any attempt to download.
Any abuse of Internet access will be considered a serious misconduct.
190 He confirmed that he had participated by telephone in the Monday morning huddle on 15 August 2005 when Mr John Valeondis, Development Team Leader, informed all staff that he had discovered that someone had downloaded and installed a software sharing program called KAZAA. He further confirmed that after a pause, he had admitted that it was he who had downloaded that program. He denied, however, being aware that such a software sharing program exposed the Respondent's servers to a risk from hackers. Even though that program enabled the downloading of music files onto one's computer, he stated that he had not downloaded any files.
191 Yet in an email to Ms Whiteread dated 22 August 2005, Mr Pritchard stated:
Last Monday's (August 15, 2005) GGOB Monday Morning Huddle Conference Call where the KAZAA download was mentioned. I stuck up my hand right away and took full responsibility; I did not know I had downloaded onto the Terminal Server. I guess getting used to the two environment's is a learning curve.... The rationale, for three nights I had worked the previously (sic) week, until midnight, half past midnight and around 10:00 pm. I needed stimulation and motivation so sought music, this has been fully removed by myself as of the close of last Monday's call. I am a human being and need stimulation and motivation.... [emphasis added]
192 Despite the contents of that email, the Applicant insisted that he had not downloaded any music files:
"Yes, it's one thing to say I sought music, but did not deliver on that requirement or intention."
193 He agreed that Ms Whiteread had warned all employees not to download and install software such as KAZAA, indicating that it was illegal software.
194 Initially, Mr Pritchard denied that he had also received a warning from Mr Hayes in relation to downloading illegal software, a reminder about the company policy in relation to the computer network, and the terms of his employment in relation to KPIs.
195 Later during the cross-examination, however, he admitted that Mr Hayes had raised with him, on 16 August 2005, the fact that he had entered into a contract with Unwired without obtaining prior authorisation to do so. He denied that Mr Hayes had gone as far as informing him that installation of such programs was in breach of his employment terms and considered to be a dismissible offence.
196 Mr Pritchard agreed that when he received his termination notice on 16 November 2005, he had asked Mr Hayes for his Lime Wire files, however, he denied that he had 4 gigabytes of Lime Wire files on the computer. Lime Wire is another program for downloading music. He acknowledged that downloading music was unauthorised by company policy but did it nonetheless.
197 KAZAA had been downloaded on to the server and that was picked up by their IT staff as it was causing problems on the system in Adelaide. Ms Whiteread agreed, in cross-examination, that the Applicant had owned up to it and the software was deleted off the system. To her knowledge he had not, thereafter, downloaded any unauthorised software on to the server.
198 He had downloaded Lime Wire on to the C drive of his laptop computer. Although it had not impacted on the server, downloading unauthorised software on a work computer would have affected the speed of his connection.
199 In re-examination, Ms Whiteread stated that Mr Valiodis, their IT expert, advised her that the KAZAA software program would not only slow down the servers but had the potential to provide access to the Respondent's server system by external persons.
200 The Applicant had engaged Unwired without getting her authority to enter into such a contract. She acknowledged, however, that it ended up being a positive step to take "for a period", because it provided an avenue for contact with the Respondent's server while he was having other problems communicating out of the office in Sydney. She refused to accept, however, that it had not been an expensive exercise for the Respondent and would not accept that the issue of not obtaining authority was "a storm in a teacup".