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T6856

 

TASMANIAN INDUSTRIAL COMMISSION

Industrial Relations Act 1984
s.29 application for hearing of an industrial dispute

Mr Jonathan Charles Warren
(T6856 of 1997)

and

Country & Rural Pty Ltd

 

COMMISSIONER R J WATLING

HOBART, 15 August 1997

Industrial dispute - termination of employment - finding of unfair dismissal - reinstatement impracticable - payment ordered in full settlement of the dispute - order issued

REASONS FOR DECISION

The applicant in this matter, Mr Jonathan Charles Warren (the applicant), applied to the President, on the 26 March 1997, pursuant to section 29(1A) of the Industrial Relations Act 1984, for a hearing in relation to the termination of his employment from L J Hooker Real Estate Pty Ltd (Launceston).

At the commencement of the hearing Mr S McElwaine of Shaun McElwaine, Barristers and Solicitors, on behalf of the applicant, sought to amend the name of the employer, cited in the application, to that of Country and Rural Pty Ltd. There was no objection to that course of action by Mr Griffiths of Philip Gunton, Barristers and Solicitors, for Country & Rural Pty Ltd (the employer). The Commission granted leave to amend, as it was satisfied that Country and Rural Pty Ltd had been notified of the hearing.

During the course of the hearing, the Commission encouraged the parties, on two occasions, to enter into private discussions in an attempt to settle this dispute. The first, at the beginning of the hearing and the second, after taking evidence from the applicant and Mr Gibbons. However, the parties were unable to settle the matter and it was left to the Commission to determine.

Mr Roland Victor Gibbons - Director - Country and Rural Pty Ltd, and Mr David Wildmore - Manager - L J Hooker Launceston, along with the applicant, gave evidence during the course of the hearing, out of which the following emerged:

The applicant was an experienced real estate agent, having practiced in Queensland for a number of years. He and his wife, came to Tasmania in 1996.

He wanted employment in the real estate industry in Tasmania and he applied to the Commonwealth Employment Service to see what avenues were available. He was informed that he was eligible to participate in, what is known as, the Jobstart Program.

He said it was quite a useful tool when looking for employment and he mentioned it to potential employers, when applying for jobs, that they would be eligible for a wage subsidy under the program.

The applicant commenced employment with the employer in Launceston on 26 August 1996.

The Jobstart agreement provided a wage subsidy to the employer of $150.00 per week for twenty weeks, commencing 26 August 1996 through to 12 January 1997. The agreement also prescribed a probationary period from 26 August 1996 until 22 September 1996 and, from the evidence, it seemed that the probationary period passed without incident and without any adverse comments from the applicant's employer.

The Jobstart agreement required the employer to comply with all customary and statutory obligations, including the provisions of any award. The appropriate award, regulating the real estate industry in Tasmania, is the Estate Agents Award. That award, during the applicant's period of employment, prescribed in Clause 8 - Wage Rates, Division B - Real Estate Salespeople And Management the following:

 

Adults

Base
Rate

Supplementary Payment

Weekly Wage Rate

(b) Real Estate Sales
Consultant, Auctioneer,
Property Manager,
Manager

325.00

24.00

349.00

Some time was taken up during the course of this hearing, discussing whether the applicant was a weekly wage employee or an employee remunerated by way of commission.

The award states inter alia in Clause 33 - Contract of Employment, subclause (c) Letter of Appointment and Employee Classification:

"(v) Where an employee is to be remunerated by any commission and/or incentive payments the letter of appointment shall contain the following additional particulars:

(1) the method of calculating such commission and/or incentive payments and the method by and times at which such commission and/or incentive payments are to be paid.

(2) Where the employee is to be entitled to receive any commission and/or incentive payments after the termination of his employment, the method by and the times at which such commissions and/or incentive payments are to be paid. Provided it shall also be stated that in the case of unconditional sales effected prior to termination of employment which subsequently becomes settled sales, that full commission which would have been paid to that real estate sales consultant as if he were still employed by the estate agent, be paid to that salesman.

(vi) The employer and employee may agree by letter of appointment to a system of commission earnings in lieu of payment of the minimum wage as prescribed in Clause 8 - Wage Rates, subclause 2, Division B - Real Estate Salespeople and Managers.

The agreement to pay commission earnings in lieu of the minimum wage does not negate the employers obligation to pay the difference between commission earned and the minimum wage in any pay period for which the employee's commission earnings does not equate to the minimum wage.

PROVIDED that where the employer is required to make up the difference between the commission earnings and the minimum wage during any pay period that amount shall be absorbed against future commission earnings."

It was acknowledged by Mr Roland Gibbons (on behalf of the employer) that the above mentioned provisions were not observed, however, he was in no doubt that, at the time the applicant started work, the terms and conditions of his employment were clearly explained. Mr Gibbons said that the applicant knew that he would be remunerated by way of commission and that advances paid as per the minimum wage prescribed in the award, would be absorbed against future commission earnings. The applicant, Mr Gibbons stated, was informed that there was a limit of $3,000.00 the company would provide by way of advancement.

The applicant submitted that the terms under which he was employed were verbal and that Mr Gibbons took him through his duties as a sales representative and the company's requirements so far as training was concerned. However, the applicant also understood that:

  • he would receive 38 percent of the commission earned on sales and the employer would receive the balance; and

  • he was to receive payments which would be debited against subsequent commission receipts before he would get the benefit of the commission;

but he denied that he was advised that the general advance of salary against the commission could not exceed $3,000.00.

Performance Discussions

The applicant said that during his employment he had discussions with his employer, on approximately three or four occasions, about his performance and future prospects. On each occasion those discussions took place with Mr Gibbons. He said the discussions were, as with any principal, to the effect of questioning performance; future prospects for business; how the employee was going; and what sort of things he had on the go.

The applicant recalled being invited to Mr Gibbons office in December 1996 to discuss his performance and the level of advances he had received. He said that Mr Gibbons discussed "the amount of sales that I had made at that particular point in time, and he reminded me that he was paying wages and that he hoped that my sales would pick up so that ..... wages could be covered"1.

Mr Gibbons said that he had arranged the meeting in December 1996 when the applicant's advances were in excess of $3,000.00, which he felt was the employer's limit. However, he acknowledged that he did not specifically point out or remind the applicant that the company's limit was $3,000.00. He said the meeting ended on the basis that he was going to keep a close eye on the applicant's performance and on the commissions coming in and the costs going out.

In mid-January 1997, there was another meeting between the applicant and Mr Gibbons, and on that occasion he made the applicant aware that his advances were $7,000.00. The applicant said, Mr Gibbons had some concerns about how he (the applicant) was performing and this led to discussions about what business he had in the 'pipeline'. Mr Gibbons said that he also expressed concern to the applicant over the level of his advances. He said even though the applicant had some properties listed for sale, there were no contracts or they were not sold.

Once again, at this meeting, it was not brought to the applicant's attention that the company's limit on advances was $3,000.00. Mr Gibbons said, in the earlier part of the applicant's employment, his advances were permitted to run over the $3,000.00 as they were expecting his performance to lift.

The January meeting concluded. And in answer to a question from Mr Griffith "So, what was incumbent upon Mr Warren to do, the time he left your office after the January meeting?2" Mr Gibbons responded, "Well, Mr Warren had a lot of things happening and in fact as it turned out, a lot of those did not happen."3

Mr Gibbons acknowledged that at the December or January meetings he did not tell the applicant that he had to reach certain targets and if those targets were not met by a particular date then his employment may be terminated.

The applicant said that it was mentioned to him on two occasions, by Mr Gibbons, that he considered his sales had not been quite up to expectation, however, the applicant responded by informing Mr Gibbons of what he was trying to achieve in sales; what listings were in train; and what prospects he had with buyers.

The applicant said that at no time during those discussions was he given a specific warning, nor were any specific concerns expressed about the continuation of his employment.

Pre- dismissal discussions

On or about the 12 March 1997, Mr Gibbons was reviewing all advances; pay sheets; listings; and real or potential contracts being returned by each employee. This was done in the presence of Mr Wildmore, who had recently joined the company as licensee and a director.

Mr Gibbons told Mr Wildmore that he would put down on paper what the applicant owed; the commissions known to be arriving in respect to the applicant; and what advances the employer was obliged to pay the applicant, if it ran out to 25 April 1997. Mr Gibbons said it was going to end up costing the employer $7,500.00.

Mr Wildmore, in his evidence, stated that at the meeting with Mr Gibbons, on the morning of the applicant's termination, Mr Gibbons produced a list of his concerns and " we decided that his [the applicant's] performance wasn't up to the standard we would expect in the business.4"

A copy of the notes made by Mr Gibbons were given to Mr Wildmore. They discussed them and it was agreed that Mr Wildmore would speak with the applicant.

Mr Gibbons said the capacity and/or conduct of the applicant were not at issue; the issue was that his advances were going up faster than his commissions were coming in.

Dismissal

On the morning of 13 March 1997 the applicant submitted a written report to Mr David Wildmore as he had requested him to do. The report was about what the applicant called "the high jacking of prospects and unfair treatment on the floor.5"

The applicant said, at 1.00 pm on that day, all the staff were going out on a group inspection and he was asked would he be ready. The time of the group inspection was not in dispute.

It was agreed, at approximately 12.50 pm on the 13 March 1997, the applicant was called into Mr Wildmore's office. Mr Wildmore said the invitation was issued in the following terms: "John, I'd like to see you in the office to sit down and discuss your current situation with the business"6.

The applicant said, in his evidence, that Mr Wildmore told him at that meeting, "Look, I have been having a look at the books and I didn't realise that you were so far behind on your sales.7" He went on to say that Mr Wildmore said "Under these conditions I think that you'd better go and clean your desk out immediately.8"

The applicant said he was given no chance to argue the point or discuss the matter because Mr Wildmore just got up and walked out of the office and went on the group inspection, and he was left to clean out his desk and go.

Mr Wildmore said the meeting lasted about ten minutes, during which time he told the applicant that he had been reviewing the figures and asked him "how he thought he could catch up" and "what did he have in the pipeline that was going to settle that would allow him to catch up.9"

Mr Wildmore said that he put to the applicant that he could not see how he (the applicant) could catch up and he agreed that the words "Look, I think you'll have to go, in fact, you can go immediately, clear your desk.10" would have formed part of the conversation.

Mr Gibbons, when giving his evidence, stated that the reason for terminating the applicant's employment was because "he wasn't producing sufficient results to cover the costs to the company.11"

The applicant received one week's salary in lieu of notice, plus his entitlements.

Finding

As stated earlier, some time was taken up during the course of this hearing discussing whether the applicant was a weekly wage employee or an employee remunerated by way of commission. Indeed, comments were made about alleged breaches of the award and the Jobstart agreement.

It is not my intention, in this decision, to make any finding on those issues as the Commission lacks jurisdiction to deal with them via this application. However, I am satisfied that the applicant saw himself as an employee who would receive payments which would be debited against subsequent commission receipts before he would get the benefit of the commission.

Having heard the submissions of the parties and after having the benefit of hearing the witnesses, I have arrived at the following conclusions:

At the meetings, held between Mr Gibbons and the applicant, in December 1996 and January 1997, the applicant's work performance and the level of wage advances were discussed. However, I am not convinced that the employer made it clear to the applicant, either at the time of his appointment to the position or during the December and January meetings, that there was an upper limit on the advance on salary against commissions which could not be exceeded, and if it was exceeded, then it could lead to the applicant's employment being terminated.

In any case, it seemed to me that the upper limit on advances was flexible, given the fact that Mr Gibbons acknowledged, in his evidence, that the applicant was allowed to run over the $3,000.00 in expectation of a lift in his work performance.

It is understandable that advances on salary could not go on indefinitely without some return to the employer. Nevertheless, I am of the view that it was the duty of the employer to clearly indicate to the applicant, exactly what was required of him, in terms of work performance, and also the consequences if those requirements were not met.

This did not happen during the December and January meetings, nor was the applicant given a specific task(s) arising out of those meetings or a reasonable period of time to improve his performance or to achieve specific goals.

Given the foregoing, I would have to conclude that the December and January meetings were not formal disciplinary or performance-based counselling sessions. They could be best described, as the applicant put it, "... basically just a general discussion as any floor manager would have with a sales representative.12"

Therefore, the first occasion the applicant knew that his employment could be in jeopardy, was on the actual day of his dismissal, i.e. 13 March 1997, and only then, after the meeting had commenced.

A day(s) before the applicant was terminated, a meeting(s) took place between Mr Gibbons and Mr Wildmore. In my view, they concluded there was no saleable listings recorded for the applicant; the level of his advances were too high; and generally, his performance was not up to the standard they expected. As a result, his employment was to be terminated and they decided the amount of notice to be given to the applicant.

It was left to Mr Wildmore to speak to the applicant.

Even though Mr Wildmore indicated in his evidence, that during his meeting with the applicant on the 13 March 1997 (the day the applicant was dismissed):

  • he informed the applicant that he was $6,000.00 behind;

  • he asked him how he was going to catch up; and

  • he informed the applicant that, if there was no business coming in, then his employment would be terminated;

nevertheless, he was only carrying out a predetermined course of action. In answer to a question from the Commission - "So you and Mr Gibbons agreed ... at that meeting on the morning of termination that ... he [the applicant] had to be terminated?" Mr Wildmore responded "That would be the thrust of the conversation - yes.13"

I have grave doubts that the applicant was given an adequate opportunity to respond to the questions and statements of Mr Wildmore, especially given the fact that the whole dismissal process was completed in a maximum of ten minutes.

On balance and given the foregoing, I would have to conclude that, whilst the employer may have had a valid reason for dismissing the applicant, nevertheless, it was unfair in that the dismissal process lacked procedural fairness. The procedural irregularity deprived the applicant of his chance to take such action as he thought necessary in an effort to retain his employment.

Remedy

The applicant in this matter sought reinstatement, however, it was Mr McElwaine's submission that he saw some practical difficulties at the end of the day. The Commission was urged to take the view that reinstatement was not a practical solution in this case because of the size of the business and the employment relationship.

This submission was accepted by Mr Griffiths for the employer.

Whilst the submissions on the question of reinstatement were limited, nevertheless, I am of the view, given the evidence in this matter, that an Order for reinstatement would be impracticable and likely to impose unacceptable problems relating to harmony within the employer's business. Therefore, I decline that course of action.

I now turn to consider the question of compensation.

Mr McElwaine submitted that whilst he did not presume to suggest what was a fair and adequate compensation payment in these circumstances, nevertheless, he suggested that the Commission should have regard for:

  • the applicant's age (56 years);

  • the general prospects of further employment;

  • the dismissal has harmed his reputation in the community.

While Mr Griffiths, for the employer, strongly submitted that the dismissal was not unfair, in that the employee had an opportunity to defend himself, however, his secondary position was that, if the Commission was required to look at the question of compensation, then the matters relevant in the calculation were:

  • there was clear evidence that the applicant must have known that the "writing was on the wall";

  • that if he was given notice in an appropriate manner, then he would only be given a small number of weeks in order to improve his performance or be retired from employment. This, he said, would give the applicant only a brief period of additional employment.

  • the matter should have been dealt with much earlier and could have been if the original date had not been changed without giving the employer an opportunity to make some submissions.

It is not the role of the Commission, nor is it empowered, to award money in the nature of damages at common law and it does not intend doing so on this occasion.

In assessing compensation in this matter, it is appropriate that I consider what would have been likely to occur, but for the denial of procedural fairness. Whilst the Commission does not accept, as a matter of course, that the applicant would have been dismissed, on the other hand, it should not assume, in the particular circumstances, that his employment would have continued indefinitely.

The facts and circumstances in this case clearly indicate that the applicant's work performance, so far as the employer was concerned, was less than satisfactory. It was acknowledged by the applicant, for example, that the employer had informed him on two occasions that his sales had not been up to expectation.

It is not disputed that the applicant's advances on salary were increasing. This could not go on indefinitely without some return to the employer. Therefore, it would have been appropriate for the employer to clearly indicate to the applicant, that he had a limited period of time in which to take such action as he thought necessary to improve his performance, in an effort to retain his employment.

A period of five weeks would not have been unreasonable in the circumstances of this case.

Given the applicant's length of service with the employer and the fact that he was deprived of a specific period of employment in which to improve his performance, I hereby Order pursuant to s.31 of the Industrial Relations Act 1984, that Country and Rural Pty Ltd to pay to Mr Jonathan Charles Warren of 239 Charles Street, Launceston, Tasmania 7250 an amount of $1,745.00 within a period of 21 days from the date of this Order.

 

R J Watling
COMMISSIONER

Appearances:
Mr S McElwaine (of Counsel) for Mr Jonathan Charles Warren
Mr Griffiths (of Counsel) for Country & Rural Pty Ltd (trading as LJ Hooker Launceston)

Date and place of hearing:
1997
May 23
July 10
Launceston

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