DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Mark Peters
v
Red Telecom Pty Ltd
(U2019/4847)

Application for an unfair dismissal remedy – dismissal unfair - compensation ordered.

[1] Mr Peters commenced employment with Red Telecom Pty Ltd (Red Telecom) on 5 June 2017 in the position of Senior Telecommunications Consultant. He was dismissed on 24 April 2019. The duties of his position primarily involved visiting clients across Sydney, Newcastle and the Central Coast to sell the various services of Red Telecom.

[2] Mr Peters says he was dismissed because he requested that he be able to take annual leave. Red Telecom contends that Mr Peters’ employment was terminated for poor performance.

[3] Mr Peters subsequently made an application pursuant to s.394 of the Fair Work Act 2009 seeking relief for his alleged unfair dismissed by Red Telecom.

[4] Red Telecom is a small business, and it asserts that Mr Peters’ dismissal was compliant with the Small Business Fair Dismissal Code.

[5] The application was heard on 16 September 2019. At the hearing, Mr Peters appeared on his own behalf and Ms Sandra Selim (Operations Manager) appeared for Red Telecom. Oral evidence was given by Mr Nicholas Kontaxis (Director) and Ms Selim on behalf of Red Telecom. Mr Peters also gave evidence.

[6] For the reasons set out below, I find that Mr Peters’ dismissal was unfair.

The case for Mr Peters

[7] Mr Peters contends that he was unfairly dismissed because he made a request to take annual leave which was denied by Red Telecom. He gave evidence that on 24 April 2019, he emailed Mr Kontaxis requesting four weeks annual leave to commence on 13 May 2019. Mr Kontaxis replied stating that the leave could not be approved because “we are way too busy”. Mr Peters replied to Mr Kontaxis’ email saying “sorry, it’s extremely necessary and I will have to take it off regardless.” Mr Kontaxis responded saying:

“Hi Mark, that’s not how it works. You can’t just take time off without approval. Sorry mate. I can’t authorise leave at this time. We are very busy and we are short staffed. I am sure you can appreciate you are a valuable part of the team that I can not loose for a month (sic). Thank you for understanding. What is the time off for?”

[8] Mr Peters gave evidence that Mr Kontaxis telephoned him shortly after the email exchange. A conversation to the following effect took place:

Mr Kontaxis: why do you need to go off?

Mr Peters: it’s a personal issue

Mr Kontaxis: it doesn’t work like that. You cannot take holiday leave unless I approve it

Mr Peters: I’m entitled to my holidays. I haven’t had one in two years

Mr Kontaxis: if you take that leave, we’ll say that you have abandoned your job

Mr Peters: well I said I can’t do much about that but I’m not abandoning my job. I just want to take my holiday

Mr Kontaxis: you seem to be unhappy lately. What’s the reason for that?

Mr Peters: I’m not unhappy, I’ve just got some personal issues that I need to sort out

Mr Kontaxis: we may as well finish you up now

Mr Peters: I don’t want to leave the job

Mr Kontaxis: we’ll finish you up today

[9] A short while later, Mr Peters attempted to log into the Red Telecom computer system and noticed that he had been locked out of the computer system and emails.

[10] Mr Peters did not receive notification of his dismissal in writing.

[11] Mr Peters gave evidence that he was totally unaware of any alleged performance issues until after he made his unfair dismissal application, and that he never received any warnings, verbally or in writing, with respect to his performance. On the contrary, he said he received multiple awards over the course of his employment. In this regard, Mr Peters provided a copy of a Certificate of Appreciation for sales representative of the month of January 2019 which said: “thank you for demonstrating the continued commitment required to achieve excellence and success”, which was signed by Mr Kontaxis. Mr Peters also gave evidence that he received an award for Employee of the Year for 2018.

[12] Mr Peters was cross-examined by Ms Selim, who put to him that he had not made the minimum number of sales during 2019 that were required for him to earn commission under Red Telecom’s commission structure. While Mr Peters acknowledged he did not meet the sales targets during 2019, he indicated that for the month of January, all staff did not return from leave until 15 January (i.e. only half the month was worked), and he was dismissed during the month of April.

[13] It was also revealed during Mr Peters’ cross examination of Ms Selim that Red Telecom moved its office in March 2019. Mr Peters contended that this disruption was part of the reason sales targets were not reached during that month.

[14] In Mr Peters’ oral submissions, he said the evidence showed that within a few hours of him requesting to take his annual leave, he was dismissed. He highlighted Mr Kontaxis’ evidence to the effect that he would have made written notes of performance discussions had such discussions occurred, but none of the diary notes in evidence demonstrate that Mr Peters had been warned about his alleged poor performance or that he was at risk of being dismissed.

[15] Mr Peters submits that most of Ms Selim’s evidence was hearsay as she had not been directly involved in any conversations with him in relation to his performance.

[16] In terms of sales targets for 2019, he submits that he had been Salesperson of the Month for January. In February, the office was relocated causing disruption, and that he was dismissed in April. In addition, there was a change in the organisational structure which removed the call centre. The call centre had previously generated leads whereby the sales staff would then go out and visit prospective customers. The removal of the call centre meant that sales staff had to generate their own leads and so instead of visiting an average of three customers per day, Mr Peters was spending two or three days a week in the office to generate the leads and make appointments.

[17] Mr Peters highlighted that while Red Telecom asserted his performance had severely impacted their business, the evidence of Ms Selim was that the business was operating without any sales people. If this were the case, he argued, then the basis for his dismissal was unfounded.

The case for Red Telecom

[18] The submissions filed on behalf of Red Telecom contend that Mr Peters’ dismissal was for poor performance and misconduct, of which he was warned about on several occasions and made no improvement.

[19] It was submitted that Red Telecom was a small business which employed fewer than 10 staff, and Mr Peters’ dismissal was compliant with the Small Business Fair Dismissal Code (the Code).

[20] Red Telecom acknowledged that Mr Peters generally met his key performance indicators and “performed particularly well during the 2018 year”. It contends that his performance began to deteriorate significantly at the start of 2019, and that he did not meet his sales targets for the last five months leading up to his dismissal. In this regard, Red Telecom said that Mr Peters only made two sales in January 2019, one in February 2019, two in March 2019 and one in April 2019.

[21] Red Telecom submits that Mr Peters was vocal about his dissatisfaction with the removal of its call centre, and his performance further declined immediately after this operational change. It also contends that Mr Peters’ attitude towards Mr Kontaxis declined around this time.

[22] In terms of the alleged misconduct, Red Telecom contends that it encountered a number of issues with Mr Peters’ sales orders which resulted in financial losses to Red Telecom. Specifically, it alleged Mr Peters had given several customers misinformation including promising access to government grants which were not actually available, inaccurate representations about Red Telecom’s pricing, and not properly explaining the structure of contractual agreements including rental components. Mr Peters adamantly denied these allegations.

[23] Red Telecom submits that it had complied with the Code. In this regard, it said that while no written warnings were given to Mr Peters, Mr Kontaxis did give numerous verbal warnings regarding poor sales performance throughout 2019. Red Telecom said that Mr Kontaxis approached Mr Peters on multiple occasions leading up to his dismissal to discuss performance issues, and Mr Peters was expressly given reasons as to why he was at risk of being terminated, specifically that Red Telecom could not afford to continue employing Mr Peters at his low performance level.

[24] It is submitted that Mr Kontaxis attempted to rectify Mr Peters’ poor performance by providing additional training including attending field sales appointments with Mr Peters and conducting demonstration sales pitches at customer’s premises. Mr Kontaxis also offered to assist Mr Peters in phone sales techniques and to help him call potential leads.

[25] Red Telecom denies that Mr Peters was dismissed due to his request for annual leave. It submitted that it was within its rights to refuse a request for annual leave because it would have been operationally detrimental to the business in the form of lost sales and revenue. It submitted that Mr Peters’ absence would have been detrimental to the revenue stream, and that the sales team was already short staffed at the time Mr Peters made his leave request.

Ms Selim

[26] Ms Selim gave evidence that she is the Operations Manager of Red Telecom, which is in the business of telecommunications goods and services, including network services and equipment (including phone systems, TV security systems and copiers).

[27] She said that Mr Peters was generally a good performer until the last five or six months of his employment. In support of this, she pointed to the fact that between December 2018 and April 2019, Mr Peters did not qualify for any commission earnings.

[28] Ms Selim gave evidence that she spoke with Mr Kontaxis on multiple occasions regarding Mr Peters’ declining performance. She said Mr Kontaxis told her he had given Mr Peters multiple warnings about his performance and had tried to help and support him, including by providing further field training to him.

[29] She gave evidence that in April 2019, Mr Kontaxis was still hopeful that Mr Peters’ performance would turn around. She outlined that the business model was restructured in 2019 and the call centre was removed. She gave evidence that Mr Peters did not agree with the removal of the call centre and was vocal about his views.

[30] In cross examination, Mr Peters asked Ms Selim whether any notes were taken by her or Mr Kontaxis in relation to the alleged performance conversations. Ms Selim said she thought she may have taken some notes, however she did not have them with her and they had not been produced to the Commission.

Mr Kontaxis

[31] Mr Kontaxis gave evidence that Mr Peters was responsible for generating new network and equipment sales through both call centre leads and self-generated leads. He said he personally managed Mr Peters and had daily contact with him.

[32] Mr Kontaxis gave evidence that he was “continuously cautious in my approach to sales staff where poor performance or reprimanding is involved as I do not wish to lose valuable sales people”. He said that if a performance issue arose, he did everything in his control to remedy it, and that he “remain[ed] hopeful that poor performance can be rectified with coaching and training”. He also gave evidence that it was imperative to maintain staff retention in the sales team which is why he took a ‘casual approach’ rather than providing written warnings. Additionally, he said he found that salespeople were “creatively orientated, and their performance is usually improved by confidence building exercises”. He went on to give evidence that written warnings, in his opinion, were “heavy-handed and demoralising to salespeople who must always be in a positive state of mind in order to perform well”.

[33] In cross examination, Mr Kontaxis gave evidence that “I found that giving a written warning is not the best”, and “I don’t like giving written warnings … So for me, verbal communication is better. That’s what I found works in the past …”.

[34] Mr Kontaxis gave evidence that on 7 February 2019, he attended field appointments with Mr Peters to provide additional training to him. He said that on this occasion, he discussed with Mr Peters why he wasn’t “hitting his targets”.

[35] Mr Kontaxis gave evidence that at the end of March 2019, Mr Peters said to him words to the effect of: “I’m not hitting my targets, I don’t know why because I’m doing everything the same. I’m following the script”. Mr Kontaxis said he replied with words to the effect of: “well, my job is to coach you and help guide you to perform better. Clearly there is a problem because you haven’t sold in months”.

[36] Mr Kontaxis further gave evidence that on 22 April 2019 he spoke with Mr Peters on the telephone and asked whether he was going to reach his target that month. Mr Peters replied that he would not reach his target. Mr Kontaxis said words to the effect of “you have not hit your target in six months and you really need to hit your target this month otherwise I’ll have to take drastic measures”. Mr Peters then confirmed he would not reach his sales target that month.

[37] Mr Kontaxis attached to his statement extracts from his diary, which he said confirmed the conversations that took place on 7 February and 22 April 2019.

[38] Mr Peters cross examined Mr Kontaxis about whether he made any diary entries of the conversations in which Mr Kontaxis allegedly warned Mr Peters that he was at risk of being dismissed, given that no diary entries or other written records of such conversations had been produced in evidence. Mr Kontaxis agreed with Mr Peters’ proposition that had such a conversation taken place, he would have made a record of it.

[39] In its oral submissions, Red Telecom maintained that Mr Peters’ dismissal was performance-based, and that it should not be punished for administrative shortcomings insofar as it did not provide written warnings or failed to take handwritten notes. It submits that it was not in dispute that Mr Peters had not earned commission during 2019, which confirmed he had not met his sales targets.

[40] It is submitted that Mr Kontaxis is now responsible for sales on a day-to-day basis and so it was not correct for Mr Peters to say that the business has been surviving without a sales function.

[41] It is further submitted that Red Telecom had attempted to rectify Mr Peters’ poor performance.

[42] Mr Kontaxis also made a submission to the effect that the sales targets were not high, and Mr Peters could have worked harder if he wanted to. He said the evidence was clear that Mr Peters did not meet his targets for the last six months and that he would never dismiss anyone because they wanted to take annual leave.

Other matters

[43] Red Telecom also sought to rely on a statutory declaration from one of its customers. As the customer was not available to be cross-examined I declined to accept the statutory declaration into evidence.

Consideration

Protection from Unfair Dismissal

[44] There is no dispute and I am satisfied that Mr Peters is a person protected from unfair dismissal by virtue of s.382 of the Act.

[45] I will now consider if the dismissal of Mr Peters was unfair within the meaning of the Act.

Was the dismissal unfair?

[46] A dismissal is unfair if the Commission is satisfied on the evidence before it that the circumstances set out at s.385 of the Act existed. Section 385 provides the following:

385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.

[47] There is no dispute that Mr Peters was dismissed and that subsection (d) does not apply.

[48] In this case, Red Telecom is a small business within the meaning of the Act, and so I must consider whether Mr Peters’ dismissal was consistent with the Code.

[49] The Code is as follows:

Summary Dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other Dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement. The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Procedural Matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.”

[50] The onus is on Red Telecom to demonstrate that the Code has been complied with.

[51] Red Telecom does not contend that Mr Peters was summarily dismissed, and in any event there is no evidence to support such a contention.

[52] The question, then, is whether the requirements of the Code in relation to ‘Other Dismissal’ have been met.

[53] Based on the evidence before the Commission, I am not satisfied that Mr Peters was warned that he was at risk of being dismissed. The Code expressly provides that an employee must be warned either verbally or preferably in writing that they are at risk of being dismissed if improvement is not shown. To the extent that there were discussions about him not having met sales targets, these discussions could not reasonably be considered to be a warning as contemplated by the Code. Both a warning and an opportunity to respond are necessary parts of the Code. I am not satisfied that Mr Peters’ dismissal was consistent with the Code.

[54] Accordingly, I now need to consider whether Mr Peters’ dismissal was harsh, unjust or unreasonable within the meaning of the Act.

Was the dismissal harsh, unjust or unreasonable?

[55] The criteria the Commission must take into account when assessing whether the dismissal was harsh, unjust or unreasonable are set out at s.387 of the Act:

387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

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

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

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.

[56] The ambit of the conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd¹ as follows:

‘... It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.’

[57] I am required to consider each of these criteria in reaching my conclusion², which I now do.

Valid reason - s.387(a)

[58] The meaning of ‘valid reason’ in s.387(a) is drawn from the judgement of Northrop J in Selvachandran v Peteron Plastics Pty Ltd³. This meaning has been applied by this Commission and its predecessors for many years:

‘…, the adjective ‘valid’ should be given the meaning of sound, defensible or well-founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s.170DE(1). At the same time the reasons must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must ‘be applied in a practical, commonsense way to ensure that’ the employer and employee are treated fairly, ...’4

[59] In other words, the reasons should be justifiable on an objective analysis of the relevant facts.

[60] There is no mandate for giving the ‘valid reason’ criterion any greater emphasis or weight than any of the other criteria in s 387. It is well settled that the statutory requirement to ‘have regard to’ or ‘ take into account’ requires the Commission to give the matter(s) weight as a fundamental element in the decision making process. Even if it is found that there was a valid reason for the dismissal, an overall assessment must be made as to whether the dismissal was harsh, unjust or unreasonable.

[61] For the reasons set out below, I am not satisfied overall that there was a valid reason for Mr Peters’ dismissal.

[62] In this case, Red Telecom contends it dismissed Mr Peters because of his failure to meet sales targets during 2019 and because of misconduct allegations. While Mr Peters did not meet his sales targets in 2019, there were in my view valid reasons for not doing so. First, for the month of January, Red Telecom staff were on annual leave until 15 January, providing only half the month to be able to make sales. Mr Peters received an award of Salesperson of the Month for January 2019. The office relocation and the removal of the call centre, which had generated sales leads for Mr Peters, both contributed to a decreased opportunity to make sales. Mr Peters was dismissed in April 2019.

[63] In terms of the alleged misconduct, the evidence does not establish that this occurred. These allegations seem to be an attempt to justify Mr Peters’ dismissal after the event.

[64] The evidence set out earlier does not support a finding that Mr Peters performance was so poor as to warrant his dismissal. Weighing up all the circumstances of this matter, I find that there was no valid reason for Mr Peters’ dismissal.

Notification of the valid reason and opportunity to respond - s.387(b) and (c)

[65] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made,⁵ in explicit terms⁶ and in plain and clear terms.⁷ In Crozier v Palazzo Corporation Pty Ltd⁸ a Full Bench of the Australian Industrial Relations Commission dealing with similar provision of the Workplace Relations Act 1996 stated the following:

“[73] As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. Much like shutting the stable door after the horse has bolted.”9

[66] An employee protected from unfair dismissal must also be provided with an opportunity to respond to any reason for dismissal relating to the conduct or capacity of the person. Such requirement will be satisfied where the employee is aware of the precise nature of the employer’s concern about his or her conduct or performance and has a full opportunity to respond to this concern. 10 This criterion is to be applied in a common sense way to ensure the employee is treated fairly and should not be burdened with formality.¹¹

[67] The requirement to notify of the reason, together with the requirement to provide an opportunity to respond to the reason, involves consideration of whether procedural fairness was afforded to Mr Peters before his dismissal was effected.

[68] On the evidence before me, I am not satisfied that Mr Peters was notified of the reason for his dismissal and was not given an opportunity to respond to the reason. While I accept that there were discussions about meeting sales targets, the evidence does not support a finding that Mr Peters was told that it was his failure to meet those targets was the reason for his dismissal, and he was not given an opportunity to respond to that reason.

Unreasonable refusal by the employer to allow a support person - s.387(d)

[69] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, the employer should not unreasonably refuse that person being present.

[70] Mr Peters was not provided with the opportunity to have a support person.

Warnings regarding unsatisfactory performance - s.387(e)

[71] A warning for the purposes of s.387(e) must clearly identify:

(a) the areas of deficiency in the employee’s performance;

(b) the assistance or training that might be provided;

(c) the standards required; and

(d) a reasonable timeframe within which the employee is required to meet such standards.¹²

[72] The warning must also “make it clear that the employee’s employment is at risk unless the performance issue identified is addressed.”¹³

[73] I am satisfied on the evidence that Mr Peters was not given a warning that clearly identified these matters. In particular, it was not made clear to Mr Peters that his employment was at risk if his sales did not improve. The evidence of Mr Kontaxis is particularly relevant, in that it was clear he did not consider warnings of any kind were beneficial in improving the performance of a sales person.

Impact of the size of the Respondent on procedures followed (s.387(f)), and the absence of dedicated human resources management specialist/expertise on procedures followed (s.387(g))

[74] There is no dispute that Red Telcom is a small employer and does not employ any human resources staff, although Ms Selim does have legal qualifications. I am satisfied that the lack of human resource expertise had an effect on the procedures followed in effecting the dismissal.

Other relevant matters - s.387(h)

[75] Section 387(h) of the Act provides the Commission with a broad scope to consider any other matters it considers relevant.

[76] There are no matters that require consideration under this part of the Act.

[77] Having considered each of the matters specified in s.387 of the Act and for the reasons set out above, I am satisfied that the dismissal of Mr Peters was harsh, unjust and unreasonable.

Remedy

[78]  Having found that Mr Peters was protected from unfair dismissal, and that his dismissal was harsh, it is necessary to consider what, if any, remedy should be granted to him. Mr Peters seeks the remedy of compensation.

[79] Under section 390(3) of the Act, I must not order the payment of compensation to Mr Peters unless:

a. I am satisfied that reinstatement is inappropriate; and

b. I consider an order for payment of compensation is appropriate in all the circumstances of the case.

[80] In this case, I am satisfied that reinstatement is inappropriate. Mr Peters does not seek reinstatement and has obtained alternative employment. Additionally, Red Telecom’s evidence was that it no longer employed persons doing the work that Mr Peters had performed.

[81] I am also satisfied that an order for the payment of compensation is appropriate.

[82] Section 392(2) of the Act requires all of the circumstances of the case to be taken into account when determining an amount to be paid as compensation including:

(a) the effect of the order on the viability of Red Telecom;

(b) the length of Mr Peters’ service;

(c) the remuneration that Mr Peters would have received, or would have been likely to receive, if he had not been dismissed;

(d) the efforts of Mr Peters (if any) to mitigate the loss suffered by him because of the dismissal;

(e) the amount of any remuneration earned by Mr Peters from employment or other work during the period between the dismissal and the making of the order for compensation;

(f) the amount of any income reasonably likely to be so earned by Mr Peters during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the Commission considers relevant.

[83] In determining an amount to be paid as compensation, and as was noted by a Full Bench, “[t]he well-established approach to the assessment of compensation under s.392 of the FW 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 (Sprigg). 14 This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages15.”

Step 1: Estimate the remuneration the Applicant would have received, or have been likely to have received, if the employer had not terminated the employment (remuneration lost).

Step 2: Deduct monies earned since termination.

Step 3: Discount the remaining amount for contingencies.

Step 4: Calculate the impact of taxation to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.

Remuneration received, or likely to be received (s392(2)(c))

[84] While the evidence in this regard is limited, I consider that it is likely that Mr Peters’ employment would not have continued for a lengthy period, given Red Telecom’s dissatisfaction with his sales performance, and because of Mr Peters dissatisfaction with the changed organisational structure, in particular the removal of the call centre. While there is clearly an element of speculation in determining specifically how long Mr Peters would have remained employed, I consider it would not have been longer than another eight weeks.

[85] Mr Peters’ gross weekly earnings, as evidenced by the payslips provided by Red Telecom, was $3.069.55 per week.

Remuneration earned and income likely to be earned (s392(2)(e) and (f))

[86] Mr Peters gave evidence that he commenced alternative employment on 10 July 2019. There is no evidence that he earned any income between the period of his dismissal date of 24 April 2019 and 10 July 2019. He was therefore without an income for a period of 11 weeks.

Length of service (s392(b))

[87] Mr Peters was employed from 5 June 2017 to 24 April 2019. This is a relatively short period of employment, and I consider it does not support reducing or increasing the amount of compensation ordered.

Viability (s392(a))

[88] There is no evidence before me as to the effect of an order for compensation might have on the viability of Red Telecom.

Mitigation efforts (s392(d))

[89] Mr Peters was successful in obtaining alternative employment eleven weeks after his dismissal. This was a reasonable effort to mitigate his loss. I do not consider it appropriate to reduce the amount of compensation otherwise calculated for this factor.

Other relevant matters (s392(g))

[90] There are no other matters relevant to this consideration. Specifically, I do not consider it necessary to discount or increase the amount for ‘contingencies’. This step is a means of taking into account the possibility that the occurrence of contingencies to which Mr Peters was subject might have brought about some change in earning capacity or earnings.

Shock, distress etc (s392(4))

[91] The amount of compensation does not include a component for shock, humiliation or distress.

Compensation cap (s392(5) and (6)

[92] The amount of eight weeks’ pay is less than the amount of remuneration Mr Peters was entitled in his employment with Red Telecom during the 26 weeks immediately before the dismissal. I am satisfied there is no basis to reduce the amount by reason of s 392(5) of the Act.

Conclusion

[93] In my view, the application of the Sprigg formula does not yield an amount that is clearly excessive or inadequate.

[94] For the reasons outlined above, I am satisfied that a remedy of compensation in the amount of eight weeks’ base pay, being $24,556.40 less appropriate taxation in favour of Mr Peters is appropriate in the circumstances of this case. An order to that effect will be issued with this decision.

DEPUTY PRESIDENT

Appearances:

M Peters, on his own behalf.
S Selim for Red Telecom Pty Ltd.

Hearing details:

2019.
Sydney:
September 16.

Printed by authority of the Commonwealth Government Printer

<PR714098>

1 (1995) 185 CLR 410 at 465 per McHugh and Gummow JJ.

2 Sayer v Melsteel [2011] FWAFB 7498.

3 (1995) 62 IR 371.

4 Ibid at 373.

5 Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41].

6 Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151.

7 Previsic v Australian Quarantine Inspection Services Print Q3730.

8 (2000) 98 IR 137.

9 Ibid at 151.

 10   Gibson v Bosmac Pty Ltd (1995) 60 IR 1, 7.

11 RMIT v Asher (2010) 194 IR 1, 14-15.

12 McCarron v Commercial Facilities Management Pty Ltd t/a CFM Air Conditioning Pty Ltd [2013] FWC 3034, [32].

13 Fastidia Pty Ltd v Goodwin Print S9280 (AIRCFB, Ross VP, Williams SDP, Blair C, 21 August 2000), [43]-[44].

 14   (1998) 88 IR 21.

 15   [2013] FWCFB 431.