Bolton v Refresh Waters Queensland Pty Ltd [2016] FWC 2703 (27 May 2016) [2016] FWC 2703 FAIR WORK COMMISSION DECISION Fair Work Act 2009 s.394 —Unfair dismissal Robert Bolton v Refresh Waters Queensland Pty Ltd (U2016/238) COMMISSIONER SIMPSON BRISBANE, 27 MAY 2016 Application for relief from unfair dismissal – Reasons for termination changed between time of dismissal and determination of unfair dismissal application – No valid reason for dismissal – Compensation ordered. [1] This matter concerns an application under s.394 of the Fair Work Act 2009 (“the Act ”) by Mr Robert Bolton who alleges that the termination of his employment with Refresh Waters Queensland Pty Ltd ( RWQ ) was unfair. [2] The application was filed on the 18 January 2016. Mr Bolton was employed by RWQ on a full time permanent basis from August 2008 as General Manager Brisbane and his dismissal took effect on 4 January 2016. Mr Bolton was also given responsibility for managing the Toowoomba operation of RWQ. [3] The matter was then listed for 9 May 2016. The parties represented themselves and I exercised power to proceed as a determinative conference with the agreement of the parties. 1 There are no jurisdictional issues. Email 31 December 2015 [4] The Applicant submits he was given no prior warning of the termination. The Applicant received an email dated 31/12/2015 from Mr Henry Heng a Perth based director of Refresh Waters Queensland Pty Ltd stating: “Queensland has being doing very badly, continuing to chalk up losses. I’ll be based in Refresh Brisbane for 2 weeks from Mon. 4/1 to Fri. 15/1 returning to Perth office on Mon. 18/1.” [5] Mr Bolton said that he responded “ Have you advised Masa ?” which was a reference to Mashahiro Suka, who is the Managing Director of RWQ and Mr Bolton’s immediate supervisor based in Brisbane. Mr Heng replied “ Masa could not improve the situation that is why I’ll be there. ” Dismissal on 4 January [6] Mr Bolton said that the first he was made aware of his dismissal was on Monday 4 January 2016, the day he was dismissed. He said Mr Heng asked to see him in his office and verbally advised he had been terminated. Mr Bolton said he asked Mr Heng why, and Mr Heng replied that it was a decision of the Board and Mr Bolton would be paid his entitlements. [7] Mr Bolton said he then asked if Mr Heng had something in writing such as a written termination notice and details of his entitlements however Mr Heng had not prepared anything. Mr Bolton said that he mentioned that he should have a support person present, however as this would prolong things Mr Bolton suggested that they record the conversation and continue to which Mr Heng agreed. [8] The Respondent’s written submissions included the following statements: “ 4 . RWQ has been performing very badly and continued to deteriorate under Mr Bolton…” “ 5. Despite being given many opportunities, Mr Bolton failed to carry out instructions that would have turned the business around...” [9] The evidence was that Mr Bolton recorded the 4 January meeting on his mobile phone. Mr Heng accepted that the written transcript of the meeting provided by Mr Bolton appeared to reflect the conversation between them however as he did not have a copy of the recording himself he would not agree to its complete accuracy. 2 On the available evidence I am prepared to accept on balance that the transcript is likely to be an accurate record of the conversation between Mr Heng and Mr Bolton on the day. The transcript records that Mr Bolton said he would proceed without a support person. [10] The transcript records Mr Heng as saying, “ As I mentioned Bob the shareholders have requested that I do the nasty job of terminating your employment ah.” [11] The transcript continued; “Shareholders of Refresh Waters, which include the both Saisan and Refresh Group, not Refresh Waters Queensland. So the decision is actually made in Japan since November, yeah and ah I have asked Eric to work out what is due to you so this is what has been worked out by Eric. We will give you a month’s pay in lieu of notice, you have got outstanding annual leave which you will be paid out in full and as well as you are eligible for long service leave which will be paid out to you as well, yeah. So ah as I have mentioned to you the decision was made on 26 th of November but I told them I don’t want to do it before Christmas even though they would save some money by not paying you over the holiday period I told them look ah I believe in paying what is due so we are paying you up to today and the last be another 6 days pay, yeah. So total Eric says it will be $22,464.00….” [12] Mr Bolton was also paid at termination with the one months’ notice, and 6 extra days pay along with his accrued leave entitlements including long service leave which he would not have been entitled to in circumstances of having been fairly dismissed. Whether that is or is not the case is clearly in dispute. Mr Bolton claimed some underpayment in regard to entitlements and he was advised the Commission did not have power to make orders in regard to that issue. 3 [13] Mr Heng submitted another Chief Operating Officer had contacted Mr Bolton before 4 January about Mr Bolton’s termination. Mr Bolton accepted he had been contacted by this former employee to advise Mr Bolton that this employee had been terminated and other staff including Mr Bolton were going to be replaced. It did not appear to me from the evidence that the employee in question was acting on instruction from, or on behalf of the Respondent and on that basis this telephone call cannot reasonably be relied upon by the Respondent to support a case that Mr Bolton was afforded procedural fairness. Reasons for termination [14] The two witness statements filed by the Respondent in this matter from Mr Heng 4 and Mr Suka 5 respond to a number of issues raised in Mr Bolton’s outline of submissions, however the two witness statements do not address squarely the reasons for Mr Bolton’s termination. It was the Respondent’s outline of submissions that provided more information concerning the reasons the Respondent says it relied upon to terminate Mr Bolton. [15] In the course of the hearing Mr Heng explained that the Respondent relied principally on two issues as the reasons for the termination of Mr Bolton, those being firstly in connection with an allegation of “ theft ” regarding a mobile phone, and secondly, “ sabotage ” regarding a bottle blowing machine. 6 Mr Bolton generally agreed those were the two key issues. 7 [16] It appears from the evidence the allegation regarding the mobile phone was not an issue known to the employer at the time of termination. Mr Heng said it was the day after his termination when Mr Bolton returned a Samsung phone and not the iPhone issued to him by the Respondent, that Mr Heng became aware of this issue, so it cannot be said it was a reason for termination at the time. 8 It is well established that knowledge of facts acquired after a dismissal should still be considered when determining whether the dismissal is justified or otherwise, even though those facts may have only come to light after the dismissal. 9 [17] The termination letter of 4 January makes no mention of serious misconduct, or misconduct at all. The transcript of the conversation between Mr Heng and Mr Bolton on 4 January during which Mr Bolton was terminated also does not include any reference to serious misconduct, or misconduct. Instead the termination letter advises the following in the fourth paragraph: “ the directors of Saisan Co Ltd and Refresh Group Ltd, being shareholders of RWQ, consider your performance unsatisfactory and have decided to terminate your employment as of today. We are paying you up to today’s pay plus a month’s pay in lieu of notice. In addition your entitlement of annual leave and long service leave will be paid to you. This is per the enclosed calculations provided…” [18] However in the submission filed in response to this application it was submitted: “15. Refresh takes its responsibilities seriously. We have provided evidence that Mr Bolton was terminated for serious misconduct. Either theft or sabotage would in itself be sufficient ground for termination without notice. Despite that, the company paid him a full month’s salary….” [19] As referred to earlier the transcript makes no mention of serious misconduct or misconduct. However it is clear the fact of the delay in the commencement of the operation of the blow moulding machine a central issue. Mobile Phone Issue [20] The Respondents written submission included the following: “8. On 2 Oct 2014, Mr Bolton signed up for a new iPhone – Appendix E. Mr Bolton never used the iPhone but instead gave it to his wife. He then used her old Samsung. This has been confirmed by a RWQ staff. When caught, Mr Bolton gave a lot of excuses about compatibility. By giving company property to his wife without approval or permission, Mr Bolton has stolen from the company. If the iPhone was not suitable for his use, he could have swapped it with another in the company. Our Chief Executive Officer is using an iPhone provided from the pool as the company gets new mobile phones whenever any 2-year plan expires…” [21] Mr Bolton gave evidence to explain the issue regarding the usage of the mobile phone. He said that every two years he received a new phone from the company account, and that he didn’t require anyone’s permission to do that. 10 He stated that the last phone, the one in discussion was an iPhone obtained in 2014. Mr Bolton claimed that prior to that he always used an android phone, either a Samsung or Nokia, and he tried the iPhone at some time but found it difficult to use. He said this was because it was totally app based rather than the android type. He further explained it was not compatible with his car phone kit. Mr Bolton claimed that his wife had a Samsung and he swapped his phone with hers, and the SIM cards were swapped to the phones. The evidence was his wife continued to pay her own bill and in no way was the company charged for her phone use. He further claimed his mobile phone number was on the bottles and he was regularly contacted on that number. Mr Bolton stated he continued to use the phone for the last 14 months of his employment, and on termination returned the Samsung phone. He said the iPhone was broken and his wife replaced it at her expense so he couldn’t give the phone back regardless. 11 [22] Mr Bolton gave evidence that there had been no wrongdoing with respect to the issue of the mobile phone. Mr Bolton said the main thing was the SIM card that had all the company contacts. 12 Mr Bolton said the cost of the Samsung phone was $548 and the cost of the iPhone was $417 dollars. RWQ included with its submission a copy of a receipt which was said to be for the purchase of the iPhone at a cost of $1,008 dollars. Mr Heng said the company practice was that if a staff member doesn’t use the phone it goes into a pool which is used to allocate to other staff or it is sold to staff. Mr Heng said Mr Bolton was not entitled to give the phone away to whomever he chooses. 13 There was further evidence going to whether with Blue Tooth technology Mr Bolton could have used the iPhone in his car. [23] I have considered the competing positions on this issue. It seems Mr Heng was of the view Mr Bolton never intended to use the company iPhone and merely let his wife use it from the beginning. I am inclined to the view that Mr Bolton did not act with any intent to commit theft, and I accept his evidence that he had difficulty with the iPhone and that was the reason behind retaining the SIM card but swapping the devices. I would accept that he should have explained to his employer the difficulties he was experiencing with the iPhone and attempted to resolve the issue that way, rather than to have taken a unilateral decision to swap his work phone with his wife’s privately owned Samsung android phone that he was more comfortable with. When I asked Mr Heng what steps had been taken by the company to explain its policy regarding mobile phones to Mr Bolton his response was to the effect that Mr Bolton knew that the phone did not belong to him. 14 [24] When considering the totality of the circumstances Mr Bolton was in the role of a manager of the business in Queensland with considerable autonomy without clear instruction on a RWQ policy regarding phone use. Mr Bolton should have advised his employer what he had done, and it was inappropriate to simply swap the devices given the iPhone did not belong to him. However when the iPhone was later damaged and on his termination he gave RWQ the Samsung phone which had belonged to his wife. It does not appear to me he was seeking to gain some financial or other advantage though his actions. Given his level of seniority and my finding he did was not seeking to commit theft or deliberately mislead RWQ, I do not regard this after acquired knowledge as providing a valid reason for dismissal, and would have only justified some lesser form of discipline. Alleged sabotage of Introduction of Bottle Blowing Machine [25] RWQ said the following in its written submission. “9. The company did a cost/benefit analysis and purchased 2 blow-moulding machines, one for Perth and another for Brisbane. They are similar models and both arrived in Feb 2014. Mr Bolton objected to the installation of the machines since it was first ordered – Appendix F. Perth had their machines installed and fully operational in May 2014. Unfortunately, Mr Bolton came up with repeated excuses including that the factory does not have enough power supply. This was despite actual measurement having been taken of the Perth machine that showed maximum electrical requirement of only 50 amperes when RWQ had power supply of 90 amperes before the power upgrade. Perth also sent its technician twice to Brisbane to help get the machine going. After each visit, Mr Bolton came up with new excuses why the machine is no longer working.” [26] Later in the same submission the Respondent said as follows: “12. Brisbane and Perth both received similar model machines at the same time. Perth had it up and running smoothly since May 2014. Brisbane was still struggling to get it going in December 2015 – one and a half years later. Brisbane had the opportunity to learn from Perth and draw on its experience so there is no reason why this happened. It is evident Mr Bolton had intentionally sabotaged the company’s operations. Mr Bolton alleged the machine had a lot of problems. Then why is Perth so happy with their machine?...” [27] Mr Bolton gave evidence that there were multiple problems with the installation of the blow moulding machines, and provided explanations for the delay in operation. Mr Bolton said in his statement that the blow moulding machines required an upgrade to the power supply, the construction of 2 rooms to house the units, repair install and commission of all components (2 large compressors, 3 filters, 1 air receiver (not Australian Certified) 1 air dryer, 1 chiller, 1 heating unit and 1 blow moulding machine), and the construction of a mezzanine floor for storage. Mr Bolton said the blow mould equipment was not wired to Australian electrical standards and needed to be rewired at considerable cost. Mr Bolton alleged that Mr Heng purchased a poor quality Chinese machine, and that it still has an air receiver tank that is in breach of Australian Standard AS 1210. He claimed the machinery should have been installed by an engineer yet he was expected to do the work. He further stated that this took a considerable amount of time and the installation of a new power transformer by Energex was required as “we” lacked sufficient internal power. [28] Mr Heng asserted that sufficient power was available and referred to measurement of the same machine in Perth requiring a maximum electrical requirement of only 50 amperes when RWQ had 90 amperes before the power upgrade. Mr Bolton said he had two separate companies T H Cock, and Electromech both assess the power requirements and both concurred that more power was needed than was available from the street, and this was approved by a directors meeting on 29 July 2014. [29] Mr Bolton asserted he spent a lot of time with electricians trying to fix the machines. He said he had the engineer over from Perth to help and they had the machine working as best it could given the circumstances. He said there were still issues affecting the operation of the machine that could not be resolved by himself, the Perth engineer or the local electricians. [30] Mr Bolton stood by his email of 19 November questioning the purchase of the blow moulding machine by the Respondent, considering the company where RWQ was purchasing its bottles from at the time was constantly having problems with breakdowns. 15 [31] The evidence is the machine arrived in February 2014. 16 It is apparent Mr Heng formed the view Mr Bolton was deliberately not being cooperative in the successful introduction of the blow mould machine in the Queensland operations because in Perth the machine was up and operating well before the Brisbane machine. Mr Bolton gave evidence that Perth had the requisite power and premises to install the machines successfully, and the Brisbane location didn’t. 17 He was required to get quotes and tenders to be submitted for board approval, as well as the problem identified by the electrical contractors concerning power which required Energex to put a new transformer on the road, remove the old one and do a cabling of power which required the cutting of concrete coming into the building and installation of meter boxes. Mr Bolton said it took Energex 6 or 8 months to complete the necessary works. 18 [32] Mr Bolton claimed in the meantime he was going ahead with installing the machines and getting everything ready for the day he had power. He said the machine had to be rewired, there was no emergency stop switches and the machine did not comply with Australian Standards. He said the gearbox in one of the machines was devoid of oil and it was a massive job to pull it out and replace it. Mr Bolton said the chiller machine had problems because there were non-stainless steel parts used in the water and they had to be replaced. Mr Bolton claimed the machine in the end was up and running but at certain times it would explode, and when that happened all the doors would fly off and the situation would be very dangerous. 19 Mr Bolton said at the same time he was still doing sales, marketing, accounts, bottling and ‘everything else’. [33] Mr Heng said the Perth machine was operational by May 2014 and preparations were done in Perth before the arrival of the machine. He said the (Brisbane) machine was up and running in August/September 2015, 15 months later. Mr Bolton said it was much shorter. 20 Mr Heng said the Japanese Vice President of the company was upset about the length of time it was taking to upgrade the power and had even gone to the Consulate General about it. 21 Mr Heng said the warranty on the machine had expired before it was operational. [34] Mr Bolton said the machine in Brisbane was different to the machine in Perth and there was issues even the engineer could not help with. 22 [35] Mr Bolton gave evidence and explanations regarding the delay in having the blow moulding machine operational, including the advice of two separate electrical companies concerning the power issues, delays in getting Energex to perform necessary work and the other difficulties with the machine. Having observed him and considered his evidence, I am not satisfied he was deliberately working against the successful introduction of the machine, nor that he was deliberately trying to ‘sabotage’ the business as has been suggested. Hiring Worker who could only work for 3 months [36] RWQ also said in its submissions that Mr Bolton engaged a worker to work on the blow moulding machine who had already informed him that he could only work for 3 months. The Respondent complained that a technician came from Perth to show the new worker how to change over moulds for different sizes. It was said Mr Bolton’s incompetence resulted in unnecessary training and expenses. Mr Bolton stated that the worker had previous experience in a bottle making company. Mr Bolton accepted that he knew this employee intended to leave in three months but he didn’t want to pass up someone who had experience making bottles before. Mr Bolton further claimed that he was a great worker who had trained other staff, which allowed Mr Bolton to step back. He further claimed that the employee had helped solve some problems. The decision of Mr Bolton to engage the employee that he did in the circumstances does not appear of itself to provide justification for his termination. Decline in Profitability of Brisbane and Toowoomba Operations [37] The Respondent also relies upon the declining profitability of the Brisbane and Toowoomba businesses as a reason for Mr Bolton’s dismissal. The Respondent alleged that the profitability of the businesses was going backwards under Mr Bolton. Mr Bolton referred to a range of factors that he said were contributing to the decline in profitability including the global financial crisis, mine closures and floods. Mr Heng referred to Sydney, Melbourne and Kalgoorlie all doing better than the Queensland operations. The evidence in regard to this issue was very general and not of much assistance in making an objective assessment of the Respondent’s allegation and whether it was the unsatisfactory performance of Mr Bolton, or factors outside his direct control that was the cause of the decline in profitability. There was not sufficient evidence provided by the Respondent for me to make a finding that it was Mr Bolton’s performance in his role that was the cause the decline in profitability. On that basis I am not satisfied on the evidence it provided a valid reason for termination. Intimidation of Japanese Directors [38] The Respondent’s submission raised an issue that on one occasion Mr Bolton intimidated the Japanese directors by pointing to a certificate on the wall and saying that as a Justice of the Peace he is an official of the court. Mr Heng said that this created the impression that Mr Bolton would cause trouble for the directors should they do anything to the business. Mr Bolton explained that as a Justice of Peace he signs documents, and he had been asked to witness documents for the company that had been signed in Japan. Mr Bolton stated that he refused to sign them. He further explained that he did not object to witnessing documents provided the person was present. When Mr Heng was given an opportunity to respond on this matter, he said that this was Mr Bolton’s context of the background to this issue, but that Mr Bolton had created an atmosphere of intimidation and fear. 23 Mr Bolton’s explanation is a reasonable one. If it was the case he was being asked to witness a document in the manner he alleged it was entirely appropriate that he refused. There is nothing arising from the issue which reflects poorly on Mr Bolton. Harsh, Unjust or Unreasonable [39] In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account each of subsections 387(a) to (h) to the extent that they are relevant. [40] As set out above I have not found that any of the reasons that the Respondent seeks to rely on as a valid reason for the dismissal related to Mr Bolton’s capacity or conduct were a valid reason. Mr Bolton was not notified at the time of his dismissal of the reasons relied upon in the proceedings in the Commission. The reasons provided on the day of dismissal according to the transcript of the 4 January 2016 meeting and the termination letter of the same date are confined to performance issues in his role as a manager and the falling profitability of the Brisbane and Toowoomba operations. The allegation of sabotage was only first raised after termination. The allegation concerning the phone was not raised as it had not come to the Respondent’s attention at the time of termination. It is noted that the Respondent provided Mr Bolton a positive written reference after he was terminated. [41] Mr Bolton was not given the opportunity to respond to allegations of sabotage or theft. In the course of the meeting on 4 January whilst issues concerning the blow mould machine and the general profits of the Queensland operations were discussed, there was not a proper opportunity for Mr Bolton to respond on those issues regarding his capacity or conduct. This is because it is apparent from the transcript of the meeting that the decision to terminate Mr Bolton had already been made, and Mr Heng says as much at the commencement of the meeting. [42] Whilst Mr Bolton was not refused a request for a support person, and agreed to have the meeting on the basis it was recorded, in reality he had a very limited opportunity to have a support person present to assist at any discussions relating to dismissal. This is because the decision had been made and it was going to be communicated to him that day regardless. Accordingly, Mr Bolton was advised by Mr Heng at the meeting that it was to be his last day at work. [43] Whilst there is inconsistency between the reasons for termination given by the Respondent on 4 January and the reasons given in the unfair dismissal case, to the extent that the dismissal was for unsatisfactory performance there is no evidence that Mr Bolton was given any warnings by the Respondent about his performance. [44] The Respondent does not fall within the meaning of a small business employer. Mr Heng said the Respondent did not have a dedicated HR manager but had an accountant who acts as the HR manager by default. An accountant is a not a HR specialist. It is likely this impacted on the procedures followed in effecting the dismissal. [45] There are no other matters relevant for consideration. Having considered each of the relevant factors I am satisfied that the termination of Mr Bolton in the circumstances was harsh, unjust and unreasonable and therefore unfair. Remedy [46] Mr Bolton made clear he did not seek reinstatement, but instead sought six months wages. 24 Section 392(2) provides that in determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case. This includes the effect of an order on the viability of the employer’s enterprise. Mr Heng asserted an order would affect the viability of the enterprise but did not provide specific evidence to support that assertion. There is insufficient evidence for me to discount any order I make on the basis of s.392(2)(a). Mr Bolton’s length of service was from August 2008 to January 2016. [47] It is apparent form the evidence that senior management within the company structure were dissatisfied with Mr Bolton. The performance of the Queensland business was inferior to other operations across the country, and in all likelihood his employment with RWQ was unlikely to last a significant period given the strain the relationship was under. It is my view had he been given a reasonable opportunity to address the issues that were relied upon to terminate him, then Mr Bolton would have would have remained in employment for in the order of another three months. Mr Heng said he was paid one month’s salary on termination which was calculated I understand from his evidence as one twelfth of $75,000. One twelfth of $75,000 equates to $6,250 dollars. 25 That figure must be deducted from the three months referred to above equating to a figure of two months wages, or $12,500. I do not intend to make any deduction on account of the mobile phone issue as it could not have contributed to the employers decision to dismiss Mr Bolton given Mr Heng said he only became aware of the issue after the termination. [48] Mr Bolton gave evidence that he has attempted to mitigate the loss he has suffered by applying for jobs through Seek. He said he has received responses. He said he questioned who would want a 64 year old manager so he decided to become a student, and he is currently doing a course in a Diploma of Finance and Mortgage at the Institute of Strategic Management at the University of New South Wales which will take until March 2017 to complete. He said he has not earned any other income since termination. He said he is hoping to do some broking work for Aussie Home Loans as well which may lead to earning commission but that has not happened as yet. I do not intend to make a deduction on account of any remuneration earned by Mr Bolton from employment or other work during the period between the dismissal and the making of the order for compensation, or the amount of any income reasonably likely to be so earned by Mr Bolton during the period between the making of the order for compensation and the actual compensation as there is an insufficient basis to do so. [49] The amount of $12,500 does not exceed the compensation cap. An order requiring Refresh Waters Queensland Pty Ltd to pay Mr Bolton the sum of $12,500 dollars taxed according to law will be issued separately with this decision. COMMISSIONER 1 Transcript PN 9-13 2 Transcript PN 35-PN 48 3 Transcript PN 25 4 Statement of Henry Heng 5 Statement of Masahiro Suka 6 Transcript PN 50-PN 76 7 Transcript PN 100 8 Transcript PN 62 9 Australia Meat Holdings Pty Ltd v McLauchlan Dec 648/98 S Print Q1625 10 Transcript PN 101 11 Transcript PN 103 12 Transcript PN 106 13 Transcript PN 116 14 Transcript PN 124 15 Transcript PN 139 16 Transcript PN 142 17 Transcript PN 147 18 Transcript PN 150 19 Transcript PN 155 20 Transcript PN 190 21 Transcript PN 192 22 Transcript PN 195 23 Transcript PN 373-376 24 Transcript PN 278 25 Transcript PN 318 Printed by authority of the Commonwealth Government Printer <Price code {B}, PR579709>