[2017] FWCFB 3864 [Note: a correction has been issued to this document]
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009

s.604—Appeal of decision

Robert Etienne
v
FMG Personnel Services Pty Ltd
(C2017/3210)

JUSTICE ROSS, PRESIDENT
DEPUTY PRESIDENT COLMAN

COMMISSIONER CIRKOVIC

SYDNEY, 13 OCTOBER 2017

Appeal against decision [2017] FWC 1637 of Deputy President Binet at Perth on 25 May 2017 in matter number U2016/10522 – permission to appeal – arguable case of error – permission granted.

[1] Mr Robert Etienne has applied for permission to appeal a decision of Deputy President Binet issued on 25 May 2017 (the Decision). 1 The Deputy President found that Mr Etienne’s dismissal by FMG Personnel Services Pty Ltd (FMG) was not unfair, and dismissed his application for an unfair dismissal remedy.

[2] Mr Etienne’s employment as an inventory controller was terminated on 3 August 2016, when FMG decided that its performance management of Mr Etienne had been unsuccessful and that further efforts to improve his performance would be futile. The company’s concerns about Mr Etienne’s performance related to his competencies and his ability to form working relationships.

[3] The dismissal occurred one week into a six week formal performance improvement process (PIP), and followed 12 months of informal performance management. At the time of dismissal, the company formed the view that Mr Etienne had not engaged with the PIP. Mr Etienne disputes that, and contends that he should have been afforded an opportunity to complete the six week PIP.

Permission to appeal

[4] The Commission’s powers in relation to an appeal under s.604 of the Act are only exercisable if there is error on the part of the primary decision-maker. 2 There is no right to appeal and an appeal may only be made with the permission of the Commission.

[5] The decision subject to appeal was made under Part 3-2 of the Act, which relates to unfair dismissal. Section 400(1) provides that permission to appeal must not be granted from such a decision unless the Commission considers that it is in the public interest to do so. Further, in such matters, appeals on a question of fact may only be made on the ground that the decision involved a “significant error of fact” (s.400(2)). In Coal & Allied Mining Services Pty Ltd v Lawler and others, the Federal Court characterised the test under s.400 as ‘stringent.’ 3

[6] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error. 4 However, the fact that the member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal. 5

[7] An application for permission to appeal is not a de facto or preliminary hearing of the appeal. In determining whether permission to appeal should be granted, it is unnecessary and inappropriate for the Full Bench to conduct a detailed examination of the grounds of appeal.  6 However, it is necessary for a Full Bench to engage with the appeal grounds in order to consider whether they disclose an arguable case of error.

Background

[8] Mr Etienne commenced employment with FMG in September 2014 as an inventory controller in the procurement group. He was required to manage inventory at a Linfox distribution centre, monitor and action the inventory inbox, and communicate with stakeholders, particularly the Linfox supervisor and operations manager. Mr Etienne reported to Mr Cogger, save for the last six months of his employment, when he reported to Mr Kenny. 7

[9] By September 2015, Mr Cogger and Mr Kenny had formed the view that Mr Etienne lacked the skills and knowledge to perform his role, and that his manner and attitude to customers and staff was unsatisfactory. 8 First, they were concerned that Mr Etienne could not grasp important concepts, such as the treatment of ‘rotables’ in SAP.9 Secondly, they had concerns about Mr Etienne’s ability to maintain working relationships; in particular, there had been several complaints about him from the Linfox operations manager and the warehouse supervisor.10 They were also concerned about Mr Etienne’s ability to prioritise and to comply with business processes. Various examples are referred to in the decision, although several of them occurred or continued after September 2015.11 These included Mr Etienne’s failure to complete a stock count plan for the 2015/2016 financial year, despite repeated requests by Linfox warehouse staff for this to be done;12 and his failure to complete a stock count and reconciliation for that year, whereby he accounted for only 10% of the relevant stock.13

[10] In response to the concerns that had been identified about Mr Etienne’s performance, Mr Cogger instructed Mr Kenny to monitor and manage Mr Etienne’s performance. To facilitate this, Mr Cogger rearranged the seating within the inventory team so that Mr Kenny could sit next to Mr Etienne and provide him with coaching. Mr Kenny then worked with Mr Etienne over the next ten months to assist him to improve his performance. 14

[11] Despite the steps that Mr Kenny took to assist Mr Etienne, his performance did not show any improvement. 15 In May 2016, Mr Cogger and Mr Kenny met with Mr Fewster, FMG’s group manager of procurement, to discuss Mr Etienne’s performance. Mr Kenny explained the steps he had taken to assist Mr Etienne to improve his performance and advised Mr Fewster that, despite having spent more time coaching Mr Etienne than the rest of the team put together, he had not been able to improve Mr Etienne’s performance.

[12] Mr Fewster decided that Mr Etienne should be placed on a formal PIP. 16 Mr Cox, a FMG human resources advisor, prepared the PIP with Mr Cogger and Mr Kenny. The plan identified the key conduct and performance issues that had led to the PIP. The areas of concern were: complying with processes including stock count and reconciliation; building working relationships; prioritisation of different tasks and duties; stock count planning; and ‘BPM6 clean up’. The plan listed the expected performance standards, and established weekly progress review dates over a six week period. It identified the support and resources that would be available to Mr Etienne to ensure the PIP was achievable.

[13] On 27 July 2016, Mr Cox, Mr Cogger and Mr Kenny met with Mr Etienne and discussed the PIP, and what was required of him in order to meet the expected areas of performance and conduct outlined in the PIP. 17 During the meeting, Mr Etienne nodded in apparent understanding of the issues that had been raised, and asked for an amendment to one item and an adjustment to the relevant timeframe for it.18 Later that day Mr Cox sent to Mr Etienne a copy of the revised PIP.

[14] On 28 July 2016, Mr Etienne sent an email to Mr Cox, copied to Mr Fewster, which stated:

[15] Mr Fewster was very concerned about this message, because it appeared to him that Mr Etienne did not accept the PIP or the concerns about his performance. 20 He considered continuing with the PIP but believed that the process would be futile.21 Mr Fewster decided to meet with Mr Etienne to discuss his response to the PIP, and that if Mr Etienne did not say anything to alter his view that the employment relationship had become unworkable, Mr Etienne’s employment would be terminated.22

[16] On 3 August 2016 Mr Fewster and Mr Cox met with Mr Etienne. Mr Fewster told Mr Etienne that he appeared unwilling to participate in the PIP and that the company had real concerns about his capacity and behaviour. 23 Mr Fewster then asked Mr Etienne whether he had anything to say. Mr Etienne did not say anything.24 Mr Cox then told Mr Etienne that his employment was terminated effective that day.25 Mr Etienne denied that he was told that his employment had been terminated, and contended that he was not informed that he had been terminated until the following Monday.26

The decision

[17] The Deputy President found that FMG had a valid reason for terminating Mr Etienne’s employment. She stated that FMG dismissed Mr Etienne because it believed that he was incapable of perceiving or achieving an acceptable level of work performance, 27 and concluded:

[18] The Deputy President then addressed the other considerations that the Commission is required by s.387 to take into account, and decided that the termination of Mr Etienne’s employment was not harsh, unjust or unreasonable, and accordingly was not unfair.

[19] We now consider the six grounds in Mr Etienne’s notice of appeal.

Grounds 1 and 2: Acceptance of company evidence over applicant’s evidence

[20] Grounds 1 and 2 in the notice of appeal concern the Deputy President’s acceptance of company evidence in preference to conflicting evidence of Mr Etienne.

[21] Ground 1 contends that the Deputy President erred by failing to give adequate reasons for accepting the company’s evidence over that of Mr Etienne. No particular evidence is referred to in this regard, although ground 2 calls into question the evidence of Mr Cogger and Mr Kenny, which we address further below.

[22] The Deputy President provided an overall assessment of the evidence. She stated that a ‘pattern’ had emerged of a divergence between Mr Etienne’s perception and recollection of events and those of the company witnesses. 28 She cited as an example the witnesses’ differing evidence as to whether Mr Etienne was terminated on 3 August 2016 or the following Monday, and explained that she preferred the evidence of the company witnesses because Mr Etienne did not return to work on 4 August 2016, and that his return to work on the following Monday was a surprise for the company.29

[23] The Deputy President’s decision also addressed the different characterisations given by Mr Etienne and the company witnesses of the discussions that occurred about his performance, Mr Etienne describing them as ordinary workplace conversations, the company as training and coaching for the purposes of performance management. The Deputy President preferred the company witnesses’ evidence and concluded that the exchanges were intended to be and were properly characterised as informal performance management. 30 She did not provide separate reasons for this finding, but had earlier noted that she was satisfied that the company had reasonable concerns about Mr Etienne’s performance ‘based on the consistency of the evidence of the three FMG witnesses and the contemporaneous evidence which was tendered.’31

[24] It is clear that the Deputy President provided reasons for preferring evidence of the company witnesses to that of Mr Etienne.

[25] Ground 2 submits that the Deputy President erred by accepting the evidence of Mr Cogger and Mr Kenny, in circumstances where according to Mr Etienne, their evidence should have been treated with caution or rejected. Several bases were put forward in support of this argument.

[26] First, it was contended that Mr Kenny was obliged to correct an error in his statement, and that he lied about what prompted him to make the correction. 32 However, the transcript of proceedings does not suggest to us anything unusual in Mr Kenny’s correction of the error in his statement, or that the error was significant. We do not discern from the transcript a basis to conclude that Mr Kenny was not truthful about how he noticed the error.33

[27] Secondly, Mr Etienne points to the fact that Mr Kenny admitted in cross examination that he had discussed his evidence with Mr Cogger, and that he had read at least parts of Mr Cogger’s statement. 34 Mr Kenny explained that he read the statement when Mr Cogger was drafting it because Mr Cogger had consulted him as to times and dates;35 and that they shared recollections about the events in question because they discussed the details of the case every day at work.36 As well as being the subject of cross-examination, these matters were raised in Mr Etienne’s closing submissions.37 They are not addressed in the Deputy President’s decision. As noted above, the Deputy President made the assessment that the evidence of the three company witnesses was consistent.38 This appears to have been significant in her finding that the company had reasonable concerns about Mr Etienne’s performance, and her conclusion that there was a valid reason for Mr Etienne’s dismissal.39

[28] It is not apparent from the decision that the Deputy President considered the possibility that the consistency of the evidence of two of the company witnesses may have been due in some measure to Mr Cogger’s and Mr Kenny’s prior discussions of the events in question, and Mr Kenny’s reading of Mr Cogger’s statement. As we discuss further below, it is not necessary for a decision-maker to refer to every contention and point of evidence. However, in our view, there is at least an arguable case that this was a centrally material consideration that the Deputy President failed to take into account, and consequently an error of the kind envisaged in House v The King. 40

Grounds 3 and 4: Notification of reason for dismissal, opportunity to respond

[29] Ground 3 in the notice of appeal contended that the Deputy President erred in finding that the company told Mr Etienne why it was dismissing him prior to his dismissal. This ground goes to the consideration in s.387(b) of the Act, whereby the Commission must take into account whether an employee was notified of the reason for dismissal. In considering this factor, the Deputy President stated:

[30] It is questionable whether an employer’s efforts to make an employee aware of performance related concerns would be sufficient to constitute notification of the reasons for termination. However, on a fair reading of the passage above, in the context of the decision as a whole, we consider that the Deputy President concluded that the company had notified Mr Etienne of the reason for his dismissal. In particular, she refers in her decision to the evidence of Mr Fewster about what he said to Mr Etienne at the meeting on 3 August 2016 about the company’s concerns regarding his performance, 41 and evidently accepts it. We do not consider that ground 3 points to an arguable case of error.

[31] By ground 4 in the notice of appeal it was contended that the Deputy President erred in finding that Mr Etienne had an opportunity to respond to the reason for which he was dismissed. This ground is relevant to the consideration prescribed by s.387(c), namely whether a person was given the opportunity to respond to any reason related to the capacity or conduct of the person.

[32] In relation to this consideration, the Deputy President found as follows:

[33] We note that s.387(c) is not a ‘criterion’. It is not the case that a person must be provided with an opportunity to respond to any reason related to conduct or performance. Rather, s.387(c) is a consideration to which the Commission must have regard in its analysis of whether a termination is harsh, unjust or unreasonable. However, in the passage extracted above, the Deputy President makes a clear finding that Mr Etienne was given an opportunity through the PIP and the termination meeting to respond to the reasons for dismissal. We do not identify an arguable case of error in connection with this finding.

Grounds 5 and 6: Alleged significant errors of fact

[34] Grounds 5 and 6 concern contentions that the Deputy President made significant errors of fact.

[35] Ground 5 submitted that the Commission erred in finding that the company dismissed Mr Etienne ‘because it believed that Mr Etienne was incapable of perceiving or achieving an acceptable level of work performance’. 42 It is not entirely clear what the alleged significant error of fact is said to be. It might be the finding that the company believed that Mr Etienne was incapable of achieving an acceptable standard of work, when in fact it did not hold this belief; or that the company held this belief but this was not the reason for which Mr Etienne was terminated. However, it appears to us that this ground of appeal is properly understood as contending that Mr Etienne had engaged with the PIP process, couldperceive and achieve an acceptable level of performance’, and that the company’s belief to the contrary was wrong.

[36] However, according to s.400(2) of the Act, an appeal from a decision of the Commission on a question of fact concerning an unfair dismissal matter must be made on the ground that the decision of the Commission involved a significant error of fact, not the decision of the employer. The Deputy President’s finding that the company dismissed Mr Etienne ‘because it believed that Mr Etienne was incapable of perceiving or achieving an acceptable level of work performance’ appears to us to be correct. The company did hold this belief. The belief may have been wrong (we return to this below). But the Deputy President’s finding that the company held the belief is not in our opinion a significant error of fact. It appears to us to be a correct finding of fact.

[37] Ground 6 then contends that the Deputy President erred by not taking into account various ‘matters of fact.’ These were said to include the following. First, Mr Fewster is said to have wrongly formed the view that Mr Etienne had not engaged in the PIP process during the first week of the PIP. In this regard, it is submitted that Mr Fewster did not know that Mr Etienne had agreed to achieve the objectives in the PIP; and that he did not know that Mr Etienne had requested a longer period of time to complete one of the PIP objectives. Secondly, it is submitted that Mr Fewster acknowledged that, had he known of Mr Etienne’s engagement with the process, he might not have dismissed him.

[38] Depending on the circumstances, it is possible for a significant error of fact to be made as a result of relevant factual matters not being taken into account. Those factual matters must of course be established.

[39] The evidence appears to support the contentions of fact raised in connection with ground 6. The transcript of proceedings before the Deputy President confirms that Mr Fewster did not know that Mr Etienne had requested an extension of time to complete one of the PIP objectives, and that had he known of the request for an extension, he might have changed his decision. 43 Further, Mr Cox’s evidence supports the contention that Mr Etienne did agree at the PIP meeting to achieve the objectives. In response to a question from Mr Etienne’s representative as to whether Mr Etienne engaged with the PIP process during the meeting of 27 July 2016, Mr Cox said: ‘He sort of nodded all the way through, so yes – I would say yes.’44

[40] The Deputy President set out in her decision the witnesses’ accounts of the ‘PIP meeting’ of 27 July 2016, 45 as well as of the final meeting on 3 August 2016.46 She also sets out the email from Mr Etienne to Mr Cox and Mr Fewster of 28 July 2016, and their reactions to that message.47 This evidence is relevant to the question of whether Mr Etienne had engaged in the PIP process. However, the two matters in ground 6 referred to above are not addressed in the Deputy President’s analysis of whether the dismissal was unfair. It may be that she considered them but found it unnecessary to refer to them. She finds that despite the informal performance management and PIP process, Mr Etienne remained ‘oblivious’ to his performance deficiencies,48 and that FMG believed further performance management was unlikely to be successful.49

[41] It is possible that the Deputy President determined that Mr Etienne was unable to appreciate his performance deficiencies, and that it did not matter whether he had engaged in the PIP or agreed to meet the performance standards in it, as there was nonetheless a valid reason for dismissal. However, there is no finding to this effect in the decision.

[42] In Linfox Australia Pty Ltd v Fair Work Commission, 50 the Full Court of the Federal Court observed that it is not necessary for a decision-maker to refer to every piece of evidence and every contention made by a party; however a failure to address a submission that is ‘significant’ or ‘centrally relevant’ may indicate that it has not been taken into account and thereby expose error.51 The fact that Mr Fewster was unaware of a potentially important piece of information, and might have made a different decision had he been aware of it, appears to us to be significant, as it is at least potentially relevant to the validity of the reason for dismissal. In our opinion Mr Etienne has established an arguable case, for the purposes of permission to appeal, that the Deputy President did not take into account these facts, resulting in a significant error of fact, namely that Mr Etienne had not engaged in the PIP process.

Valid reason

[43] Finally, we note that the Deputy President made the following conclusion on the question of whether there was a valid reason for dismissal:

[44] In the context of termination of employment related to the conduct of an employee, it is well established that the Commission must make a finding as to whether the conduct in question occurred. So much is clear from the decision of the Full Court of the Federal Court in Edwards v Giudice, 52 and numerous subsequent decisions of the Full Bench of the Commission.53 The question is whether the conduct took place, and this is to be determined by the Commission on the basis of the evidence in the proceeding before it. The test is not whether the employer reasonably believed that the conduct occurred.54

[45] Section 387(a) requires the Commission to consider whether there is a valid reason related to a person’s conduct or capacity. The distinction between conduct and capacity is not always a clear one. The question of whether an employee has engaged in a performance improvement process, for example, could be described as involving either conduct or capacity, or both. In either case, the Commission must consider whether the relevant reason is valid. If the reason for dismissal is said to have been deficient performance, the Commission must be satisfied that the performance was deficient.

[46] The consideration prescribed by s.387(a) is whether there is a valid reason, and the Commission must satisfy itself of validity of the reason and its factual underpinning. In this regard, we recall that in considering whether there is a valid reason for termination, the Commission is not confined to the reason given by the employer. 55

[47] In the context of paragraph 91 of the decision, the inquiry is not whether there were ‘reasonable grounds’ for the company to determine that further performance management would be unlikely to be successful, but whether further performance management would be unlikely to be successful.

The public interest

[48] As we have noted, the test for permission to appeal in respect of matters of this type is a stringent one. The Commission must not grant permission to appeal unless it considers that it is ‘in the public interest to do so’.

[49] The expression ‘the public interest’ has no fixed content. 56 The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment.57 In GlaxoSmithKline Australia Pty Ltd v Makin a Full Bench of the Commission identified some of the considerations that may attract the public interest:

[50] Mr Etienne’s submission with respect to permission to appeal is that it is in the public interest to correct a manifest injustice and an outcome which is counterintuitive, namely that Mr Etienne was dismissed one week into a six week performance improvement plan which, according to the evidence, he had engaged in. We do not view this as a case involving a manifest injustice. However we consider that the outcome, in light of the questions raised by the arguable errors we have identified above, is counterintuitive, and that the matter engages the public interest.

[51] Finally, we would note that our decision should not be understood as suggesting that employers are always required to conclude a performance improvement process once it has begun. There may be a valid reason not to do so. Each case will turn on its own facts.

Disposition of the application for permission to appeal

[52] Mr Etienne has made out an arguable case of error in relation to grounds 1, 2 and 6 in the notice of appeal.

[53] We have concluded that it is in the public interest to grant permission to appeal. Accordingly, we are required by s.400(1) to grant permission to appeal, and we do so.

PRESIDENT

Appearances:

Mr S Heathcote of counsel appeared for the Appellant

Ms H Millar of counsel appeared for the Respondent instructed by Ms Eloise Nagle of K & L Gates

Hearing details:

Melbourne

2017

11 July

 1   [2017] FWC 1637

 2   This is so because on appeal the Commission has power to receive further evidence, pursuant to s.607(2); see Coal and Allied v AIRC (2000) 203 CLR 194 at paragraph 17 per Gleeson CJ, Gaudron and Hayne JJ

 3   (2011) 192 FCR 78 at paragraph 43

 4   Wan v AIRC (2001) 116 FCR 481 at paragraph 30

 5   GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [26]-[27], 197 IR 266; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089 at [28], 202 IR 388, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663 at [28]

 6   Trustee for The MTGI Trust v Johnston [2016] FCAFC 140 at [82]

 7   Paragraphs 12 to 16 of the decision

 8   Paragraph 21 of the decision

 9   Paragraphs 22 – 26 of the decision

 10   Paragraphs 27 – 30 of the decision

 11   Paragraphs 31 – 39 of the decision

 12   Paragraph 31 of the decision

 13   Paragraph 38 of the decision

 14   Paragraph 40 of the decision

 15   Paragraph 43 of the decision, statement of Mr Kenny at paragraph 43

 16   Paragraph 55 of the decision; statement of Mr Kenny at 47, 59-61

 17   Paragraphs 57 to 60; transcript of proceedings before DP Binet, PN1413

 18   Paragraphs 58 and 59 of the decision

 19   Exhibit SC3 to the statement of Mr Cox

 20   Paragraph 63 of the decision; statement of Mr Fewster at paragraphs 24 and 25

 21   Statement of Mr Fewster at paragraph 25

 22   Paragraph 64 of the decision; statement of Mr Fewster at paragraph 25

 23   Paragraph 65 of the decision,

 24   Statement of Mr Cox, paragraph 40

 25   Statement of Mr Cox, paragraph 41

 26   Statement of Mr Etienne at paragraphs 51 and 57

 27   Paragraph 82 of the decision

 28   Paragraph 83 of the decision

 29   End of paragraph 83 of the decision

 30   Paragraph 85 of the decision

 31   Paragraph 84 of the decision

 32   Ground 2(i) and (ii)

 33   PN1547 and following of the transcript of proceedings before DP Binet

 34   PN 1573-1575

 35   PN1565

 36   PN1566

 37   See for example paragraph 3.12, Applicant’s Closing Submissions

 38   Paragraph 84 of the decision

 39   Paragraph 91 of the decision

 40   (1936) 55 CLR 499

 41   See paragraph 65 of the decision

 42   Paragraph 82 of the decision

 43   PN1854 to PN1858

 44   PN1928

 45   Paragraphs 58 to 60 of the decision

 46   Paragraphs 65 -66, and paragraphs 68-69 of the decision

 47   Paragraphs 61 to 63 of the decision

 48   Paragraph 89 of the decision

 49   Paragraph 90 of the decision

 50   [2013] FCAFC 157

 51   At [47]

 52   (1999) 169 ALR 89 at 92

 53   See for example King v Freshmore (Vic) Pty Ltd, Print S4213, Ross VP, Williams SDP, Hingley C

 54   N37 above, at 23 and 24

 55   See MM Cables v Zammit, Print S8106 at [42]

 56   Osland v Secretary, Department of Justice (No 2) (2010) 241 CLR 320 at [13]; cited with approval in Gregory v Qantas Airways Ltd and Another (2016) 241 FCR 72 at [53] per Buchanan J, with whom Bromberg and Rangiah JJ agreed.

57 O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398 at [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others (2011) 192 FCR 78 at [44] -[46]

58 [2010] FWAFB 5343, 197 IR 266 at [27]

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