“Patently defective” dismissal costs absent employer $40K

Failure to participate in proceedings before the Fair Work Commission (FWC) has cost a Victorian employer dearly, with tens of thousands awarded in compensation to a dismissed employee purportedly sacked for being abusive and incorrectly invoicing quotes. Demonstrating a continued inability to respect the jurisdiction of the FWC, the same employer was penalised a second time within mere months, with a redundant worker being awarded nearly $20,000 compensation for his unfair dismissal.

In April, Deputy President Colman determined that the grouting services business had unfairly dismissed a Salesman days before Christmas in 2023, when the employer failed to produce evidence to substantiate its claims that the worker was terminated for failing to attend on site to provide a quote on 21 December; being abusive to a customer who raised a complaint, also on 21 December; and, not following the employer’s pricing policy on quotes, resulting in customers complaining they could not understand the inclusions of quoted works. 

The extent of the employer’s evidence consisted of a Form F3, which attached four documents including the employer’s notes of the customer complaint received 21 December; two undated online customer reviews claiming an unidentified tradesman had failed to attend to perform a scheduled quote, which the employer’s notes attributed as the Salesman’s customers; and, an invoice, said to have been prepared by the Salesman, accompanied by the employer’s note reading, “[Salesman’s] quote. Should be a prebuild item, underpriced, Customer unhappy and was refunded in full”. The employer ignored the directions of the Commission and failed to file submissions or witness statements or attend the Hearing.

The Salesman’s evidence identified he was issued three separate warning letters by email on 22 December 2023, which he was not afforded opportunity to respond to, then his employment was terminated with immediate effect, though this was not clear until he received his final pay slip days later because the employer had not answered the Salesman’s calls.

Deputy President Colman determined there was no evidence to support the allegation that the Salesman had failed to attend on site to provide quotes or that the negative online reviews could be identified as having originated from the Salesman’s customers (or potential customers). The Deputy President also rejected the claim that the Salesman had breached the employer’s quote pricing policy in his invoicing, pointing out that the employer failed to provide the stated policy or sufficiently explain what the Salesman “ought to have done or why any omission was sufficiently serious to warrant a warning, let alone a decision to terminate his employment”. Deputy President Colman noted the Salesman offered a “perfectly sensible” explanation as to why the pricing on one of his quotes altered (pertaining to the availability of a suitable tradesman during the Christmas period) adding the suggestion that the Salesman had “effectively stolen from the company is absurd”.

The Salesman was accepted to be a credible witness, which led the Deputy President to determine the allegation that a customer had complained about the Salesman on 21 December to have been substantiated, particularly in light of the fact the Salesman was “candid about the fact that he and [the customer] did not ‘hit it off’, and that she had ‘challenged’ his view of the problem”. Although insisting he was “not intentionally rude”, the Salesman conceded he could appreciate how the customer might have interpreted the exchange as “sarcastic”. Deputy President Colman found that the Salesman was “sarcastic and therefore rude” to the customer, which had the risk of bringing the company into disrepute, and “constituted a valid reason for dismissal and qualified as misconduct”.

Looking beyond the fact the substantiated customer complaint constituted a valid reason for dismissal, Deputy President Colman found the termination of the Salesman to be harsh, and therefore unfair, observing that the Salesman was not aware of the reasons for his termination until after he was dismissed, and he was not given any opportunity to respond to the employer’s concerns. Furthermore, the Deputy President described the “hastily sent” warning letters issued to the Salesman as “superficial and perfunctory”, with the second and third being “ill-adapted copy-overs of the first that did not even correct the mistake in the third paragraph… where the sentence abruptly ends”. Labelling the termination process “patently defective”, Deputy President Colman concluded:

“…the company made no genuine effort to raise its concerns with [the Salesman], and sent him at the last moment a flurry of letters so that it would have some basis to say that he had been warned. In fact, [the Salesman] was given no opportunity at all to defend himself. Even taking account of the relatively small size of the business, this was a grossly inadequate procedure.”

In settling upon a compensation amount Deputy President Colman accepted that the Salesman would likely have remained employed for a further period of a year had he not been terminated, but a 25% reduction was applied for the Salesman’s misconduct (being rude to a customer) along with a further 15% reduction for contingencies, resulting in an award of $39,205.34 (gross).

The Deputy President elected not to apply a deduction for the Salesman failing to actively pursue work in the same field post-dismissal, noting that the Salesman held concerns about a restraint clause in his contract, which, as he understood it, prohibited him from working in the same industry for a period of 12 months. On consideration of the restraint clause, Deputy President Colman expressed:

“One wonders why such restraint of trade provisions are so commonly found in the contracts of ordinary workers and whether they really protect any legitimate business interest of the employer, or merely serve to fetter the ability of workers to ply their trade, and to reduce competition for labour and services. Ordinarily, one would expect a person to have applied for jobs in the sector of their expertise as a reasonable step in mitigating loss. However the presence of a non-compete provision in his contract explains [the Salesman’s] decision not to do so. Although the provision is most likely unenforceable on the basis that its scope is unreasonable, an ordinary worker cannot be expected to know this, and it is understandable that [the Salesman] would not want to risk embroiling himself in a legal controversy by acting contrary to an express provision in his contract.”

Goddard v Richtek Melbourne Pty Ltd [2024] FWC 979 (16 April 2024)

In July, the same employer, operating under a new name, again failed to participate in FWC proceedings with respect to the unfair dismissal application of the company’s former grouting Sales Manager. The Sales Manager had been notified of the termination of his employment “upon the apparent grounds of redundancy” on 5 December 2023, while absent on approved leave for his honeymoon. The email provided him one week’s notice of termination. He was not consulted at all prior to the receipt of the email.

Deputy President Bell concluded:

“The dismissal was harsh, unjust and unreasonable because no valid reason was established for the dismissal, the circumstances of the notification while on a honeymoon were particularly poor, and there was no other matter or circumstance that is otherwise relevant to indicate that, on an overall assessment, a different conclusion should be arrived at whether the factors in s 387 are taken together or assessed individually.”

Perhaps fortuitously for the employer, the Sales Manager had secured alternative full-time employment by March 2024, meaning the award of compensation was limited to a 12-week period post-dismissal, from which the Sales Manager’s earnings during the period of $4,769 were deducted, resulting in a compensation amount of $18,307 (gross), plus superannuation.

Deputy President Bell commented, “while I was initially concerned about the financial viability of [the employer], there was ultimately no material before me that would satisfy me that any further deduction is appropriate, other than taxation”.

Sturrock v Richtek Melbourne Pty Ltd [2024] FWC 977 (1 July 2024)