| [2020] FWC 6275 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Michael Kahrilas
v
Check Point Software (Australia) Pty Limited
(U2019/12630)
COMMISSIONER JOHNS |
SYDNEY, 23 NOVEMBER 2020 |
Application for an unfair dismissal remedy.
[1] On 12 November 2019, Michael Kahrilas (Applicant) made an application to the Fair Work Commission (Commission) under s.394 of the Fair Work Act 2009 (Cth) (FW Act) for a remedy, alleging that he had been unfairly dismissed from his employment with Check Point Software (Australia) Pty Ltd (Check Point/Respondent). The Applicant seeks compensation. 1
[2] Check Point is a multi-national provider of software and combined hardware and software products for information technology (IT) cyber security. Its products and services are sold to government clients, enterprises, service providers, small and medium-sized businesses and consumers. It operates in a competitive market. Client acquisition and retention are important revenue sources. The renewals business accounts for approximately 65% of the Respondent’s revenues in Australian and New Zealand (ANZ).
[3] The Applicant was employed by Check Point between 4 March 2013 and 31 October 2019. When his employment ceased the Applicant was the Respondent’s ANZ Renewal Manager. He had a list of accounts to manage and was required to provide them with renewal support and services contracts. He had annual budgets to achieve.
[4] There is a dispute about the Applicant’s performance. Ultimately, on 31 October 2019 the Applicant’s employment was terminated because his “performance [was] still unsatisfactory.” A decision was made to terminate his employment “for the following reasons:
• Performance standards not being met around renewal closure rates and SFDC 2 updates frequently, not being completed.
• Continued absenteeism.
• Systemic lack of responsiveness to email and phone requests from distributors, colleagues and management.”
[5] I am satisfied that there was a valid reason to terminate the Applicant’s employment because he did not meet the required standards for renewal closure rates.
[6] For the reasons set out below, I am also satisfied that:
a) the Applicant was unfairly dismissed within the meaning of section 385 of the FW Act because of significant procedural defects in the dismissal process; and
b) reinstatement is inappropriate.
[7] However, I am presently unable to decide on what amount of compensation (if any) the Respondent should pay to the Applicant having regard to the application of s.392(2) of the FW Act and the principles to be derived from Sprigg v Paul’s Licensed Festival Supermarket. 3 The matter will be re-listed for that purpose.
When can the Commission order a remedy for unfair dismissal?
[8] Section 390 of the FW Act provides that the Commission may order a remedy if:
(a) the Commission is satisfied that the Applicant was protected from unfair dismissal at the time of being dismissed; and
(b) the Applicant has been unfairly dismissed.
[9] Both limbs must be satisfied. I am therefore required to consider whether the Applicant was protected from unfair dismissal at the time of being dismissed and, if I am satisfied that the Applicant was so protected, whether the Applicant has been unfairly dismissed.
When is a person protected from unfair dismissal?
[10] Section 382 of the FW Act provides that a person is protected from unfair dismissal if, at the time of being dismissed:
(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and
(b) one or more of the following apply:
(i) a modern award covers the person;
(ii) an enterprise agreement applies to the person in relation to the employment;
(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high-income threshold.
[11] In the present matter it was not contested, and I am satisfied, that, the Applicant is protected from unfair dismissal.
When has a person been unfairly dismissed?
[12] Section 385 of the FW Act provides that a person has been unfairly dismissed if the Commission 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.
[13] In the present matter it was not contested, and I am satisfied, that:
a) the Applicant has been dismissed,
b) the Small Business Fair Dismissal Code is not relevant;
c) the dismissal was not a case of genuine redundancy; and
d) the application was made within the period required in subsection 394(2)
[14] What is contested is whether the dismissal was harsh, unjust or unreasonable.
[15] There being contested facts involved, the Commission was obliged by s.397 of the FW Act to conduct a conference or hold a hearing.
[16] After taking into account the views of the Applicant and the Respondent and whether a hearing would be the most effective and efficient way to resolve the matter, I considered it appropriate to hold a conference for the matter (s.399 of the FW Act). I did so on 5 May 2020. Thereafter, there was a program for the filing of submissions. 4 That process concluded on 28 August 2020 when I advised the Respondent that I would not be assisted by it making yet further submissions.
Permission to appear
[17] The Respondent sought to be represented before the Commission by a lawyer. The Applicant objected to the Respondent being represented.
[18] Relevantly, section 596(1) of the FW Act provides that a party may be represented in a matter before the Commission by a lawyer or paid agent only with the permission of the Commission.
[19] Section 596(2) provides that the Commission may grant permission for a person to be represented by a lawyer or paid agent in a matter before the Commission only if:
(a) it would enable the matter to be deal with more efficiently, taking into account the complexity of the matter; or
(b) it would be unfair not to allow the person to be represented because the person is unable to represent himself, herself or itself effectively; or
(c) it would be unfair not to allow the person to be represented taking into account fairness between the person and other persons in the same matter.
[20] The decision to grant permission is not merely a procedural step but one which requires consideration in accordance with s.596 of the FW Act. 5 The decision to grant permission is a two-step process. First it must be determined if one of the requirements in s.596(2) have been met. Secondly, if the requirement has been met, it is a discretionary decision as to whether permission is granted.6
[21] Having considered all the matters that was advanced before me in respect of the question of whether the Respondent would be given permission to be represented, I determined that allowing the Respondent to be represented by a lawyer would enable the matter to be dealt with more efficiently, taking into account the complexity of the matter
[22] I therefore decided to exercise my discretion to grant permission for the Respondent to be represented.
[23] Accordingly, at the conference on 5 May 2020, the Applicant was self-represented and the Respondent was represented by Stephen Hardy, a partner in the firm Baker & McKenzie. During the conduct of the matter the Applicant continued to complain about Mr Hardy’s representation of the Respondent. I reject the Applicant’s complaints. Mr Hardy’s representation of the Respondent assisted in the efficient conduct of a complex matter.
Witnesses
[24] The Applicant gave evidence on his own behalf. In summary the Applicant gave primary evidence about:
a) his qualifications,
b) how he came to be employed by the Respondent,
c) how his employment has been rewarded over time by allocations of shares and increases in salary,
d) his performance review by a previous manager in February 2019,
e) his role as the ANZ Renewal Manager,
f) his performance targets and achievement of the same,
g) the events leading to the termination of employment (commencing on 25 September 2019 and ending on 31 October 2019).
[25] The Applicant also filed a witness statement in reply to the evidence of the Respondent’s witnesses.
[26] The following witnesses gave evidence on behalf of the Respondent:
a) Mr Hamish Soper, the Respondent’s ANZ Channel Director. In summary Mr Soper gave evidence about:
i. his history of his employment with the Respondent
ii. his duties as the ANZ Channel Director (including renewals falling within his remit),
iii. general information about the business of Check Point,
iv. the absence of a dedicated human resource function for the Respondent in Australia,
v. the Applicant’s reporting lines and changes to them (ultimately resulting in the Applicant directly reporting to Mr Soper from 1 July 2019),
vi. changes he implemented when he became the Applicant’s manager,
vii. the difference between unmanaged and managed accounts. Managed accounts have Major Account Managers attached to them. Unmanaged accounts do not,
viii. the list of accounts provided to the Applicant to manage,
ix. the Applicant’s commission structure,
x. the closure rates for unmanaged accounts and discussions he had with the Applicant about closure rates,
xi. weekly Channel Team meetings to which the Applicant had a standing invitation,
xii. concerns he had about the Applicant’s attendance in the office,
xiii. management of the Applicant’s performance,
xiv. the better performance of the Applicant’s co-worker, Ruth Holmes (who had a closure rate of about 96% compared to the Applicant’s closure rate of about 60%),
xv. his and Ms Keniry’s role in managing the Applicant’s performance,
xvi. a realignment in the Renewals Business from July 2019 and a focus on the unmanaged accounts and rate of renewal of the same,
xvii. the concerns about the Applicant’s performance that Ms Keniry reported to him relating to the Applicant’s absenteeism and lack of responsiveness to communications from distributors, colleagues and managers,
xviii. regular forecast calls and emails with Mr Kahrilas and Ms Holmes from September 2019,
xix. a meeting between him and the Applicant on 1 October 2019,
xx. a discussion between him and the Applicant on 17 October 2019 about “an exit strategy”,
xxi. Mr McKinnel (the Respondent’s then Managing Director) taking responsibility for further discussions with the Applicant.
b) Ms Belinda Keniry, the Respondent’s ANZ Distribution Manager. In summary Ms Keniry gave evidence about:
i. her history of employment with the Respondent,
ii. her responsibilities as Distribution Manager,
iii. the relationship between the Renewals team and the Distributors,
iv. events that took place in 2019 which related to renewals and also the Applicant’s employment,
v. Mr Kahrilas’ and Ms Holmes “dotted reporting line” to her and her “informal supervision and management” of them,
vi. the difference between Managed Account Managers (MAM), Channel Account Managers (CAM) and unmanaged accounts,
vii. the respective responsibilities of the Applicant and Ms Holmes,
viii. the increased focus of renewals in 2019 and the priority given to them by Mr McKinnel and Mr Soper,
ix. her increasing frustration with the Applicant (that she reported to Mr Soper),
x. Mr Kahrilas’ absenteeism, and
xi. her general impression and observations of his performance.
c) Mr Scott McKinnel, the Respondent’s former Managing Director ANZ. In summary Mr Soper gave evidence about:
i. his previous employment with Check Point, 7
ii. his qualifications and work experience,
iii. the Respondent’s business,
iv. the lack of a human resources specialist in Australia,
v. Mr Kahrilas’ employment,
vi. a business review he conducted towards the end of 2018 that identified the low closure rates on accounts in ANZ (in particular unmanaged accounts with lower dollar values),
vii. his decision to change the Applicant’s reporting line from Singapore to Australia,
viii. his observations of the Applicants attendance (late to work and leaving early),
ix. the strong performance of Ms Holmes when compared to the Applicant,
x. his instruction to Mr Soper in September 2019 to commence disciplinary discussions with the Applicant,
xi. his discussion with Mr Soper following the meeting that Mr Soper had with the Applicant on 1 October 2019 where the Applicant sort a redundancy,
xii. his meeting with Mr Kahrilas on 29 October 2019,
xiii. the decision to terminate on 31 October 2019.
[27] In coming to this decision I have had regard to the witness evidence and oral evidence given by the witnesses. All of the witnesses made themselves available for cross-examination.
[28] The Applicant was self-serving in his evidence. His inability to make concessions or demonstrate any insight into what part of this saga he should bear responsibility for was breath-taking. When faced with inconvenient evidence about the performance expectations required of him he invented new excuses not previously dealt with in his materials. It had all the ring of his evidence being a recent invention on his behalf.
[29] Mr Soper presented as a credible witness. He readily made concessions.
[30] Ms Keniry was a credible witness. However, her evidence lacked some utility. She was an off-stage extra in the drama. The problem with her evidence about how frustrated she became with the Applicant, is problematic because there is particularised evidence that she raised these matters directly with Mr Kahrilas. Most of her complaints about the Applicant were made to Mr Soper. In any case it was all too general in nature to be of use in the proceedings.
[31] Finally, Mr McKinnel also presented as a credible witness. He too made appropriate concessions. As the person who decided to dismiss the Applicant his evidence was the most relevant to the questions before me.
Submissions
[32] The Applicant filed submissions in the Commission on 13 February 2020. The Respondent filed submissions in the Commission on 3 March 2020.
[33] During the course of the conference documents were called for. On 22 May 2020 the Respondent responded to the call for documents. On 26 June 2020 the Applicant made submissions about the Respondent’s response to the call for documents.
[34] Final written submissions were filed by the Respondent on 22 July 2020. Final written submissions were filed by the Applicant on 14 August 2020. On 28 August 2020 the Respondent sought leave to file additional submissions. I did not grant leave.
[35] In coming to this decision I have had regard to all that has been submitted in relation to the matter.
[36] Section 387 of the FW Act provides that, in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission 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.
[37] I am required to consider each of these criteria, to the extent they are relevant to the factual circumstances before me. 8
[38] I set out my consideration of each below.
[39] In order to be a valid reason, the reason for the dismissal should be “sound, defensible or well founded” 9 and should not be “capricious, fanciful, spiteful or prejudiced.”10
[40] It is not the Commission’s role to “stand in the shoes of the employer and determine whether or not the decision made by the employer was a decision that would be made by the court.”11 However, I “must consider the entire factual matrix in determining whether an employee’s termination was for a valid reason.”12
Submissions
[41] The Respondent submitted that there was a valid reason for the dismissal related to the Applicant’s capacity or conduct because it contended that (as stated in the termination letter dated 31 October 2019) a decision was made to terminate his employment “for the following reasons:
• Performance standards not being met around renewal closure rates and SFDC 13 updates frequently, not being completed.
• Continued absenteeism.
• Systemic lack of responsiveness to email and phone requests from distributors, colleagues and management.”
[42] The Applicant submitted that there was no valid reason for the dismissal related to his capacity or conduct. He contended that,
“I do not accept that there are any reasons sated in the termination letter were the real reason for the termination of my employment. [Check Point] has conveniently used … my attitude of exiting the company via redundancy to terminate my employment basint in on my lack of performance without any evidence in support.”
Evidence – performance standards
[43] Having considered the evidence in this matter I am satisfied that:
a) The renewals business is a critical part of the Respondent’s business. The renewal business accounts for approximately 65% of its revenue in ANZ.
b) It was clear to senior management within the Respondent in late 2018/early 2019 that the closure rate on a number of accounts was unacceptable.
c) A large number of these accounts were the responsibility of the Applicant.
d) That concern led to two managerial restructures that affected the Applicant; first, a dotted line responsibility to Mr Soper and then, from 1 July 2019, a direct line responsibility to Mr Soper.
e) At all times the Applicant knew which accounts were assigned to him. He was aware from at least February 2019 that unmanaged accounts were a priority.
f) Mr Kahrilas knew that the business sought a 94% closure rate across all accounts.
g) In May and June 2019 Mr Soper and the Applicant were actively engaged in emails about the Respondent’s expectations.
h) Weekly Channel Team meetings occurred.
i) In July 2019 there was a meeting with the Australian Sales Team. The presentation specifically addresses a closure rate (of 92%). The Applicant says the proposed changes had not been approved by the person to who Mr McKinnel reported. This is another example of Mr Kahrilas simply missing the point.
j) Mr Kahrilas’ failure to perform (especially in relation to unmanaged accounts) was communicated to him.
k) In July, when Mr Soper became the Applicant’s direct manager he met with him (and Ms Holmes) and reiterated the expected closure rate across accounts.
l) The performance expectations were not unreasonable. Ms Holmes achieved them.
Conclusion – performance standards
[44] In the proceedings before me Mr Kahrilas was fixated on his prior performance as evidence that, as at 31 October 2019, the Respondent had no valid reason for the termination of his employment. It seems apparent that, prior to Mr Soper becoming the Applicant’s direct manager, no one raised concerns with the Applicant about his performance. He was coasting along in the comfortable position of having a remote manager. That changed on 1 July 2019 when Mr Soper became his direct and resident manager. The Applicant’s fixation on his prior performance was misplaced. It demonstrated his continuing inability to accept that the performance expectations of him changed on and from 1 July 2019 when Mr Soper became his direct manager. He was resistant to that change, to his peril.
[45] In respect of the instruction that the Applicant focus on the unmanaged accounts I am reminded of the old adage that “what interests my boss, fascinates the heck out of me.” In this matter it is readily apparent that the Applicant had very little fascination in what interested Mr Soper. The Applicant was unresponsive. He did not give priority to what Mr Soper wanted. He did not increase the renewal rate of unmanaged accounts (in stark contrast to the achievements of his co-worker, Ms Holmes).
[46] The performance expectations placed on the Applicant by the Respondent were reasonable and attainable. His co-worker, Ms Holmes’ attainment of those expectations is evidence of the reasonableness of the expectations placed on Mr Kahrilas. Consequently, the decision to dismiss Mr Kahrilas, because he failed to meet performance standards related to renewal closure rates, was sound, defensible and well found. It was a valid reason for dismissal.
[47] To the extent that the Applicant continued to deny (even during the hearing before me) any substantive understanding of the above matters relating to the expectations that were communicated to him, he was not a witness of truth. Noting the importance of the closure rate to Messrs McKinnel and Soper, I do not believe that the Applicant was not made aware of the expectations.
[48] Mr Kahrilas’ main complaint appears to be that these matters were not ever formally brought up with him in writing. That is true. However, that goes to the issue of procedural fairness which I deal with below. It does not negate his non-performance as a well-founded basis for deciding to terminate his employment.
Evidence – absenteeism
[49] In the course of 6 years of service Mr Kahrilas has 7.5 days as examples of unaccounted for absences. However, in respect of the days in late August the evidence is that Mr Kahrilas made his employer aware of his absences. The unaccounted nature of those absences is explained by his failure to update the relevant human resources systems.
[50] All things considered I am not satisfied that Mr Kahrilas’ absenteeism was a valid reason for his dismissal.
Evidence – lack of responsiveness
[51] The evidence presented in respect of this matter was very light on. It lacked specificity.
[52] All things considered I am not satisfied that Mr Kahrilas’ responsiveness was a valid reason for his dismissal.
Conclusion about valid reason
[53] Having regard to the matters I have referred to above, I find that there was a valid reason for the dismissal related to the Applicant’s conduct because performance standards around renewal closure rates were not met.
Was the Applicant notified of the valid reason?
[54] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made to terminate their employment, 14 and in explicit15 and plain and clear terms.16
Submissions
[55] The Applicant submitted that he was not notified of the valid reason on the basis that “prior to receiving the termination letter [he] was not afforded any genuine opportunity to discuss [his] performance issue with [Check Point], nor was any plan formulated with respect to future performance management.”
[56] The Respondent submitted that the Applicant was notified of the valid reason on the basis that he was “provided with opportunities to respond to the possibility of the termination of his employment (including over a period of approximately a month during October 2019). Notwithstanding, the Applicant failed to provide an adequate or acceptable response to the Respondent”.
[57] Mr McKinnel was the decision maker. On 29 October 2019 he met with the Applicant. There is a disagreement about what was said at the meeting. However, even on the Applicant’s account, it must be accepted that he was notified of the reasons (his complaint that he was not provided with an opportunity to respond is a separate consideration dealt with below). The letter of termination which ended employment was served on 31 October 2019.
Conclusion – notified of reason
[58] Having regard to the matters referred to above, I find that the Applicant was notified of the reason for his dismissal prior to the decision to dismiss being made.
Was the Applicant given an opportunity to respond to any valid reason related to their capacity or conduct?
[59] An employee protected from unfair dismissal should be provided with an opportunity to respond to any reason for their dismissal relating to their conduct or capacity. An opportunity to respond is to be provided before a decision is taken to terminate the employee’s employment. 17
[60] The opportunity to respond does not require formality and this factor is to be applied in a common sense way to ensure the employee is treated fairly. 18 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, this is enough to satisfy the requirements.19
Submissions
[61] The Applicant submitted that he did not have an opportunity to respond to any valid reason because, he contends, “in respect of the matters in the termination letter dated 31 October 2019, [he] was not given an opportunity to respond. There was no opportunity for [him] to discuss issues that may have changed the Respondent’s view”.
[62] The Respondent submitted that the Applicant did have an opportunity to respond to any valid reason related to the Applicant’s capacity or conduct because, it contended, he “was provided with multiple opportunities to respond to the reasons relating to the Applicant’s performance and conduct related to issues including over the period 1 October 2019 through to 31 October 2019. The Applicant was aware of the serious … nature of the issues raised and was well aware that his employment was as risk of termination.”
Evidence
[63] I make the following findings of fact:
a) On 1 October 2019 Mr Soper met with the Applicant to discuss the renewal closure rate and the relevant accounts. They disagreed about the Applicant’s performance.
b) Either Mr Soper or the Applicant raised the prospect of the Applicant exiting the business. There is a disagreement about who raised that prospect. Nothing turns on who did so first. However, the result was that both parties turned their mind to the Applicant exiting the business. The performance discussion was put aside.
c) Mr Soper then made the necessary inquiries internally aimed at the Applicant exiting the business around 15 December 2019. The fact that Mr Soper received sign off is not proof that a definite decision had been made to terminate the Applicant’s employment. It was an administrative process aimed at getting the ball rolling in circumstances were the Applicant had clearly communicated he was prepared to exit the organisation. The Applicant was chasing a redundancy payment.
d) Mr McKinnel then took over the discussions with the Applicant.
e) Mr McKinnel was the person who decided to terminate the Applicant’s employment.
f) Mr McKinnel and the Applicant met on 29 October 2019. There is a disagreement about what occurred at the meeting. However, even on the version of events advanced by Mr McKinnnel it cannot be said that the Applicant was provided with an opportunity to respond to clear and specific allegations about his performance.
g) True it is that the conversation became sidetracked (again about an exit package), but as the Managing Director, Mr McKinnel bore the responsibility to ensure that the discussion was brought back on track and the Applicant was afforded a proper and fair opportunity to answer the grievances that the Respondent had with his performance. This did not occur.
h) On 31 October 2019 a letter of termination was issued.
Conclusion – opportunity to respond
[64] Having regard to the matters referred to above, I find that the Applicant was not given an opportunity to respond to the reason for his dismissal prior to the decision to dismiss being made.
Did the Respondent unreasonably refuse to allow the Applicant to have a support person present to assist at discussions relating to the dismissal?
[65] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, an employer should not unreasonably refuse that person being present.
[66] There is no positive obligation on an employer to offer an employee the opportunity to have a support person:
“This factor will only be a relevant consideration when an employee asks to have a support person present in a discussion relating to dismissal and the employer unreasonably refuses. It does not impose a positive obligation on employers to offer an employee the opportunity to have a support person present when they are considering dismissing them.”20
[67] In the present matter the Applicant was not offered an opportunity to have a support person. Consequently, the circumstances did not arise where he was refused the opportunity to have a support person. This is not a relevant consideration in determining if the dismissal was harsh, unjust or unreasonable.
Was the Applicant warned about unsatisfactory performance before the dismissal?
[68] A mere exhortation for an employee to improve their performance would not be a sufficient warning. A warning must:
a) identify the relevant aspect of the employee’s performance which is of concern to the employer; and
b) make it clear that the employee’s employment is at risk unless the performance issue identified is addressed. 21
Submissions
[69] The Applicant submitted that he had not been warned about the unsatisfactory performance prior to dismissal on the basis that, he contended, “[he] was not given any opportunity to understand that [his] employment was as risk and rectify the situation”.
[70] The Respondent submitted that the Applicant had been warned about the unsatisfactory performance prior to dismissal on the basis that, it contended:
“31. The Applicant was informed about the expectations of his position on a number of occasions by the Respondent in clear and specific terms.
32. The Applicant was warned about his unsatisfactory performance on a number of occasions by various members of the Respondent's business in similarly clear and specific terms.
33. The Applicant was provided with an opportunity during Quarter 2 and Quarter 3 of 2019 to improve his performance to the standard expected and communicated to the Applicant.
34. The Respondent assigned a senior employee, Ms Belinda Keniry, Distribution Manager, Australia and New Zealand to assist with the informal (day-to-day) supervision and management of the Applicant.
35. The Respondent's Mr Soper actively, reasonably and appropriately managed the performance of the Applicant and provided support to the Applicant during this process.”
Evidence
[71] It is clear from the evidence that:
a) There were many informal discussions with the Applicant about the closure of renewal rates.
b) There was a discussion on 25 September 2019 between Mr Soper and the Applicant that focused on the end of the September quarter and the accounts Mr Soper wanted attended to.
c) There was a further conversation between Mr Soper and the Applicant on 1 October 2019 where Mr Soper complained about the Applicant’s lack of progress on the accounts they had spoken about on 25 September 2019.
d) None of these meetings resulted in a formal (or indeed informal) warning being given to the Applicant.
e) As stated above, after the meeting on 1 October 2019 the parties moved their thinking to exiting Mr Kahrilas from the business. There were no demands made on him after this time to do certain things concerning the renewals by a certain time.
Conclusion – warnings
[72] I reject entirely the Respondent’s submission that “the Applicant was warned about his unsatisfactory performance on a number of occasions by various members of the Respondent's business in similarly clear and specific terms.” What did occur were discussions about closure rate on renewals. At no time was the Applicant told words to the effect,
“…unless you achieve a closure rate on renewals of 94% by 30 September 2019 you will be the subject of disciplinary action, which may include the termination of your employment.”
[73] It was never made clear to the Applicant that his job was in jeopardy. Mr Kahrilas was exhorted to improve his performance (admittedly over many months), but nothing more. There was no formal warning process. There was not even any informal process. No witness of the Respondent gave evidence that the Applicant was warned that his job was on the line. It was clearly in the mind of the Respondent’s witnesses, but none of them communicated it to him.
[74] Having regard to the matters above, I find that the Applicant was not warned of his unsatisfactory performance before dismissal.
To what degree would the size of the Respondent’s enterprise be likely to impact on the procedures followed in effecting the dismissal?
[75] Where an employer is substantial and has dedicated human resources personnel and access to legal advice, there will likely be no reason for it not to follow fair procedures.22
[76] In the present matter the Respondent is not a small business. It has the resources that enabled it to engage Baker & McKenzie in the proceedings before me. However, it seems obvious that the Respondent did not access legal advice before making the decision to dismiss the Applicant on 31 October 2019. It would have been well advised to pause the process and obtain some legal advice. Having regard to the significant procedural deficiencies in this matter, I doubt a competent lawyer in the field of workplace relation would have given the Respondent the ‘green light’ to terminate Mr Kahrilas’ employment on 31 October 2019.
[77] Having regard to the size and resources of the Respondent, I find that the size of the Respondent’s enterprise was not likely to impact on the procedures followed in effecting the dismissal. This is a neutral consideration.
To what degree would the absence of dedicated human resource management specialists or expertise in the Respondent’s enterprise be likely to impact on the procedures followed in effecting the dismissal?
[78] While it seems that the ANZ operations could have received some human resources assistance from Singapore, in all the circumstances, I find that the absence of dedicated human resource management specialists in the Respondent’s ANZ operations had an impact on the procedures followed in effecting the dismissal. No prudent human resource specialist would have signed off on the dismissal of the Applicant on 31 October 2019. This is a neutral consideration.
What other matters are relevant?
[79] Section 387(h) requires the Commission to take into account any other matters that the Commission considers relevant.
Submissions
[80] The Applicant made no specific submissions in respect of s.387(h). However, he did submit he has “not been in a good mental state since termination.” Further, that he has “been informed by recruiters that it will be very difficult to obtain permanent employment before the beginning of next year.”
[81] The Respondent submitted that the following other matters are relevant to the Commission’s consideration of whether the dismissal was harsh, unjust or unreasonable:
a) “the nature of the position held by the Applicant and the high level of trust required by the Respondent;
b) the critical level of importance of the renewals business to the Respondent's business (accounting for approximately 65% of revenue in Australia and New Zealand);
c) the comparative performance of Ms Holmes, Renewals Manager, as set out within the statements of Mr Soper and Ms Keniry filed in the Proceedings;
d) the informal supervision and management of the Applicant put in place by the Respondent.”
[82] I accept that each of the matters identified by both the Applicant and the Respondent are relevant to my consideration of whether the dismissal was harsh, unjust or unreasonable.
[83] I have made findings in relation to each matter specified in section 387 as relevant.
[84] I must consider and give due weight to each as a fundamental element in determining whether the termination was harsh, unjust or unreasonable. 23
[85] Having considered each of the matters specified in section 387 of the FW Act, I am satisfied that the dismissal of the Applicant was unreasonable because the Applicant was never put on notice (i.e. he was never properly warned) that unless the renewals rate was achieved he would lose his job. The procedural unfairness in this matter outweighs the legitimate concerns that the Respondent’s representatives held about the Applicant’s non-performance. My conclusion is that Mr McKinnel acted with unnecessary hast in terminating the Applicant’s employment. His process errors on 29 October 2019, in addition to those contributed to by Mr Soper in not providing clear and unequivocal warnings, resulted in the Applicant being unfairly dismissed.
Conclusion
[86] I am therefore satisfied that the Applicant was unfairly dismissed within the meaning of section 385 of the FW Act.
Remedy
[87] Being satisfied that the Applicant:
• made an application for an order granting a remedy under section 394;
• was a person protected from unfair dismissal; and
• was unfairly dismissed within the meaning of section 385 of the FW Act,
I may, subject to the FW Act, order the Applicant’s reinstatement, or the payment of compensation to the Applicant.
[88] Under section 390(3) of the FW Act, I must not order the payment of compensation to the Applicant unless:
(a) I am satisfied that reinstatement of the Applicant is inappropriate; and
(b) I consider an order for payment of compensation is appropriate in all the circumstances of the case.
[89] In the present matter reinstatement was not sought. That is not end of the matter. The views of the employee are relevant, but not determinative of the issue. There has been a complete breakdown in the trust and confidence that would be necessary to restore the employment relationship between the Applicant and the Respondent.
[90] Having regard to the matters referred to above, I consider that reinstatement is inappropriate. I will now have to consider whether a payment for compensation is appropriate in all the circumstances.
[91] Having found that reinstatement is inappropriate, it does not automatically follow that a payment for compensation is appropriate. As noted by the Full Bench, “[t]he question whether to order a remedy in a case where a dismissal has been found to be unfair remains a discretionary one…” 24
Compensation – what must be taken into account in determining an amount?
[92] Section 392(2) of the FW Act requires all of the circumstances of the case to be taken into account when determining an amount to be paid as compensation to the Applicant in lieu of reinstatement including:
(a) the effect of the order on the viability of the Respondent’s enterprise;
(b) the length of the Applicant’s service;
(c) the remuneration that the Applicant would have received, or would have been likely to receive, if the Applicant had not been dismissed;
(d) the efforts of the Applicant (if any) to mitigate the loss suffered by the Applicant because of the dismissal;
(e) the amount of any remuneration earned by the Applicant 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 the Applicant 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.
[93] In determining the issue of what compensation, if any, should be awarded I must consider all the circumstances.
[94] In the present matter the parties have not addressed me on s.392(2). Other than in respect of s.392(2)(b) – length of service being ^ - there is no evidence about the other matters. Further I am cognisant that the dismissal occurred more than 12 months-ago and it should now be possible to quantify what loss, if any, the Applicant has incurred and, if he did incur a loss, what efforts he made to mitigate that loss.
Compensation – how is the amount to be calculated?
[95] Further, as noted by the 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). 25 This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages26.”27
[96] The approach in Sprigg is as follows:
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.
[97] In the present matter the parties have not addressed me on Sprigg.
[98] Consequently, the matter will be listed for a mention/directions hearing to program the filing and service of evidence and submissions relevant to s.392(2) of the FW Act and the application of Sprigg.
COMMISSIONER
Appearances:
Mr M Kahrilas, the Applicant for himself.
Mr S Hardy, Partner, Baker & McKenzie, for the Respondent.
Hearing details:
2020.
5 May.
Sydney, (via MS Teams)
Final written submissions:
22 July 2020 – Respondent
14 August 2020 – Applicant
28 August 2020 – Respondent seeking leave to file additional submissions
Printed by authority of the Commonwealth Government Printer
<PR724792>
1 In his Application and again in his Submissions dated 14 August 2020 the Applicant sought other orders relating to commissions, shares, a Statement of Service and his employment record with the Respondent. I had previously explained to the Applicant that those Orders were not within the jurisdiction of the Commission.
2 SFDC means “Sales Force Dot Com” a sales force platform used by the Respondent. In essence it is a customer relationship management system
3 (1998) 88 IR 21.
4 By consent between the parties the dates for the filing of submissions amended from time to time.
5 Warrell v Fair Work Australia [2013] FCA 291.
6 Ibid.
7 He left the business in January 2020.
8 Sayer v Melsteel Pty Ltd [2011] FWAFB 7498, [14]; Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002), [69].
9 Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371, 373.
10 Ibid.
11 Commonwealth of Australia (Australian Taxation Office) t/a Australian Taxation Office v Shamir [2016] FWCFB 4185, [46] citing Walton v Mermaid Dry Cleaners Pty Ltd (1996) 142 ALR 681, 685.
12 Commonwealth of Australia (Australian Taxation Office) t/a Australian Taxation Office v Shamir [2016] FWCFB 4185, [46] citing Allied Express Transport Pty Ltd v Anderson (1998) 81 IR 410, 413.
13 SFDC means “Sales Force Dot Com” a sales force platform used by the Respondent. In essence it is a customer relationship management system
14 Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151.
15 Previsic v Australian Quarantine Inspection Services Print Q3730 (AIRC, Holmes C, 6 October 1998).
16 Ibid.
17 Crozier v Palazzo Corporation Pty Ltd t/a Noble Park Storage and Transport Print S5897 (AIRCFB, Ross VP, Acton SDP, Cribb C, 11 May 2000), [75].
18 RMIT v Asher (2010) 194 IR 1, 14-15.
19 Gibson v Bosmac Pty Ltd (1995) 60 IR 1, 7.
20 Explanatory Memorandum, Fair Work Bill 2008 (Cth), [1542].
21 Fastidia Pty Ltd v Goodwin Print S9280 (AIRCFB, Ross VP, Williams SDP, Blair C, 21 August 2000), [43]-[44].
22 Jetstar v Meetson-Lemkes [2013] FWCFB 9075, [68].
23 ALH Group Pty Ltd t/a The Royal Exchange Hotel v Mulhall (2002) 117 IR 357, [51]. See also Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002), [92]; Edwards v Justice Giudice [1999] FCA 1836, [6]–[7].
24 Nguyen v Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australia Chapter [2014] FWCFB 7198, [9].
25 (1998) 88 IR 21.
27 Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries [2016] FWCFB 7206, [16].