1 Fair Work Act 2009 s.394—Unfair dismissal David Sanderson v Brightest Australia Pty. Ltd. (U2025/20028) DEPUTY PRESIDENT FAROUQUE MELBOURNE, 6 MAY 2026 Unfair dismissal – whether part 3-2 of the Act applies to applicant’s employment – where applicant worked in New Zealand – part 3-2 of the Act applies – dismissal not compliant with Small Business Fair Dismissal Code - dismissal harsh unjust or unreasonable – compensation ordered Introduction [1] The applicant filed an unfair dismissal application under s 394 of the Fair Work Act 2009 (Cth). The applicant was dismissed by the respondent effective on 8 December 2025. [2] The matter was heard at by Determinative Conference on 28 April 2026. The applicant represented himself and gave evidence on his own behalf. Mr Bandara, the Chief Executive Officer of the respondent, appeared for the respondent. Mr Bandara and Ms Balasuriya, Accountant employed by the respondent, gave evidence on behalf of the respondent. Ms Balasuriya’s evidence was essentially confined to matters relating to the making of the contract of employment, which, as noted below was relevant to the jurisdiction of the Commission to determine the application. [3] At the conclusion of the Determinative Conference, I adjourned for a short period and returned and delivered by ex tempore reasons. This decision constitutes my ex tempore reasons as revised from the transcript. Factual Background [4] The applicant’s employment with the respondent commenced employment on 16 September 2024. The applicant was employed in a sales role. The applicant is resident in New Zealand. Apart from insubstantial and incidental activities, the applicant undertook sales of the respondent’s products in New Zealand. The applicant was at all material times, based in New Zealand. The respondent is a company which builds applications for Android and iPhone. The respondent’s product in New Zealand is sold by way of a monthly subscription service. New Zealand customers were sold a monthly subscription (Flexi Plan) during which the respondent builds an ‘App’ to meet the customer need. [2026] FWC 1633 DECISION [2026] FWC 1633 2 [5] On 8 December 2025, the respondent sent the applicant an email notifying him of his immediate dismissal. The email indicates that he was terminated for performance reasons. [6] The applicant’s contractual terms and conditions are set out in an Employment Agreement. The terms of the employment in the Employment Agreement relevantly provided as follows: (a) salary denominated in New Zealand dollars; (b) the job title was of “Project Consultant” reporting to the VP of Project Consulting (Schedule 2); (c) the applicant was responsible for managing sales, developing a sales plan, meeting agreed targets and promoting the organisation’s presence in New Zealand (Schedule 2); (d) the applicant had “KPIs/Targets” of “Achieving minimum of 5 Flexi Plans a month” (Schedule 2); (e) Clause 13 (Disciplinary Procedures) relates to misconduct or performance and was in the following terms: 13. DISCIPLINARY PROCEDURES 13.1 Where an act or omission of an Employee relates to misconduct or poor performance (except in cases of serious misconduct where summary dismissal is warranted as hereinafter provided) a warning procedure by the Employer will be instituted. This warning procedure is as follows: First Offence A verbal warning will be given, to be confirmed in writing. The purpose of this step is to bring to the Employee's attention the performance or discipline problem. The verbal warning is the opportunity to explore reasons for the Employee's behaviour and discuss any barriers to improvement. A written copy of the verbal warning will be provided to the Employee and will also appear on the Employee's personal file as a record of the conversation. Second Offence This step involves a formal meeting between the Employer and Employee about a discipline or performance problem. A written warning is then issued. This step is appropriate for a more serious breach of work standards or rules, or repeated breaches. The written warning shall address the following: a statement of the problem; identify any rule that has been broken; outline any consequences which may result from the breach or misconduct; the corrective action required of the Employee; the proposed action by the Employer if the Employee's behaviour does not approve; a reference to the previous verbal warning(s) (which were also confirmed in writing) and the date(s) given. [2026] FWC 1633 3 Third Offence Written warning or dismissal. Dismissal is a step that is only taken when an Employee has been through all of the above disciplinary steps and no improvement has resulted, or when an Employee commits an offence so serious that suspension, investigation or dismissal should result. (f) Clause 24 (Performance Target) was in the following terms: 24. PERFORMANCE TARGET 24.1 Notwithstanding any other term and condition of this Agreement, it is a condition of the Employee's employment with the Employer that the Employee meets the sales performance targets specified below (the "Performance Target"):- - The Employee has an individual Monthly Sales Target of onboarding 5 Flexi Plans. 24.2 Notwithstanding any other term and condition of this Agreement (including without limitation clause 13), should the Employee fail to meet the Performance Target in any given month counted per quarter, the employer may terminate the Employees employment on one (1) weeks written notice being given or such lesser time as the Employee is permitted to terminate the Employee under any applicable award or statute (whichever time period is the lesser). 24.3 CEO of Elegant Media reserved total rights to change the performance target at any time. [7] The applicant gave evidence that operation of the Employment Agreement required him to sell 75 Flexi Plans during the duration of his employment. The applicant indicates that he made sales of 32 Flexi Plans. It seems that a number of these 32 ‘sales’ did not actually result in the customer making any payment. For example, in the period from August 2025 – December 2025, the applicant acknowledges that five sales did not proceed. [8] The applicant was not given any express warnings regarding his performance in conformity with clause 13 of the Employment Agreement. I note that the respondent refers to two emails entitled “Performance Warning” sent by the VP Project Consulting to the applicant on 22 July 2025. [9] The first email by the VP Consulting to the applicant was in the following terms: Hi David, As you are aware, last month and so far this month only 2 Flexis have been signed, 1 each month. The one signed last month was already given a lot of time to kickoff, and is now asking to reschedule to the next month which may not happen at all. Also, the one signed this month has requested to start at the end of the next month which we don't know if it will happen. We need to get our sales together as soon as possible. We don't have a lot of time. Regards, [2026] FWC 1633 4 [10] The applicant responded to the email and noted that he had been unwell but had worked through that period despite medical certification. The applicant said further as follows: .... In regard to the two deals you mentioned, both are progressing as planned. The clients are committed and genuinely interested in getting their apps developed, which is encouraging. That said, the quality of new leads coming through remains quite low. As you’re aware, many of them simply don’t have the budget—even with your generously discounted pricing. It’s difficult to create something from nothing, and unfortunately, we can’t produce wine from water. When you mention that there isn’t much time, could you please elaborate a little? I’d appreciate a bit more context around that. [11] The VP Project Consulting sent a response to the applicant in the following terms: Hi David, Yes, I understand that time when you were sick. With regards to the Flexi signed last month, we already gave the client almost a month (signed on 28th June) to start and now we are giving him another month to start i.e. 20th of August. It does not look like going as planned at all. We are already struggling with the numbers and on top of that the clients who have signed are not starting which makes the situation even worse. The people who ask for a month or so to start the project, the chances of them ever starting is only 50%. A good example is the one above, given a month already, now asking for another month. Yes, we can get bad leads but not all leads can be bad, we still can find some potentials. Here it's going reverse, the ones signed are also not starting as mentioned above [12] While the two emails of 22 July 2025 sent by the VP - Projects to the applicant, in their subject line referred to “Performance Warning”, the content of the email is more in the nature of an exhortation to improve rather than a clear indication to the application that he may face the prospect of dismissal due to poor performance. [13] The respondent says that the applicant’s supervisor gave him verbal warnings. The supervisor was not present at the Determinative Conference and did not give evidence of such warnings. The applicant denies he was given such warnings. Mr Bandara says that he gave the applicant warnings. The applicant says that his did not occur and he had only spoken to Mr Bandara a few times during the course of his employment. In his evidence, Mr Bandara was not able to provide any specificity as to when he gave the application the alleged warnings. Based on the evidence before me, I am not satisfied that the application was given any verbal warnings by Mr Bandara in the nature of an indication that his performance was inadequate such that his employment would be terminated if his performance did not improve. If any such discussions did occur, my impression is that they were nothing more than a general discussion around the nature of the sales outcomes, which was not sufficient to constitute a verbal warning. [14] The applicant says that there were regular weekly sales meeting involving himself and two other Australian located sales employees with the VP – Project Consulting. The applicant also says that in the period between about February to April 2025, weekly meetings were also held with the members of the respondent’s marketing team to try to improve the quality of the leads which were generated by the respondent’s marketing activities. However, the applicant [2026] FWC 1633 5 says those meetings ceased in April of 2025, or thereabouts when the manager responsible for marketing simply ceased attending those meetings. I accept the applicant’s evidence on this account, [15] The applicant says that his inability to meet the sales targets was due to the poor quality of sales leads generated by the respondent’s online campaigns involving search engines and Facebook. The applicant says that from about August to December 2025, he introduced new sales procedures to obtain payment from new customers within 24 hours of making a sale. However, even after this period, it is evident that at least five of the sales he made did not result in the clients making payment to the respondent. The applicant says that a number of sales failed or were cancelled after the customer was passed to the Project Manager, being the person who was responsible for then transacting the work. The application says the failure of the sales then, was not due to any default on his part. [16] In any event, on 8 December 2025, the applicant received a text message indicating that his employment was terminated and then an email, which was in the following terms: Dear David, I am writing to inform you that your contract with Elegant Media is terminated with immediate effect, effective today 08/12/2025. This follows a notice period of 7 days as per your contract. This decision has been made after careful consideration and is due to the performance not meeting the standards and expectations required for your role. Your final salary, including any accrued entitlements, will be processed and provided to you in accordance with Elegant Media's policies. Dinithi will contact you with regards to the above. We appreciate your contributions during your time with Elegant Media and wish you the best in your future endeavours. Regards, Whether Part 3-2 (Unfair Dismissal) Fair Work Act applies [17] The first issue to determine is whether Part 3-2 (Unfair Dismissal) of the Act actually applies to the applicant in relation to the dismissal. As noted above, the applicant was resident in New Zealand and performed work in New Zealand. [18] In Doessel Group Pty Ltd v Joanna Pascua [2025] FWCFB 43 (21 February 2025) (Pascua), a Full Bench of the Commission set out the provisions of the Act relating to the territorial operation of Part 3-2 (Unfair Dismissal). The Full Bench observed that the operation of those provisions is such that “Part 3-2 is extended to operate with respect to any Australian- based employee in relation to the employee’s Australian employer without territorial limitation” (see Pascua at [39]). [19] The meaning of the terms “Australian-based employee” and “Australian employer" is set out in s 35 of the Act, which provides as follows: 35 Meanings of Australian Employer and Australian-based employee (1) An Australian employer is an employer that: (a) is a trading corporation formed within the limits of the Commonwealth (within the meaning of paragraph 51(xx) of the Constitution); or [2026] FWC 1633 6 (b) is a financial corporation formed within the limits of the Commonwealth (within the meaning of paragraph 51(xx) of the Constitution); or (c) is the Commonwealth; or (d) is a Commonwealth authority; or (e) is a body corporate incorporated in a Territory; or (f) carries on in Australia, in the exclusive economic zone or in the waters above the continental shelf an activity (whether of a commercial, governmental or other nature), and whose central management and control is in Australia; or (g) is prescribed by the regulations. (2) An Australian - based employee is an employee: (a) whose primary place of work is in Australia; or (b) who is employed by an Australian employer (whether the employee is located in Australia or elsewhere); or (c) who is prescribed by the regulations. (3) However, paragraph (2)(b) does not apply to an employee who is engaged outside Australia and the external Territories to perform duties outside Australia and the external Territories. [20] It is clear that the respondent is an “Australian employer” with the meaning of s 35(1) of the Act. The respondent is an employer which is a trading corporation formed within the limits of the Commonwealth within the meaning of paragraph 51(xx) of the Australian Constitution. [21] The applicant meets the primary definition of an “Australian-based employee” set out in s 35(2)(b) of the Act as he is employed by an Australian employer being the respondent. However, the applicant would not be an “Australian-based employee” if he is an employee “engaged outside Australia or the external Territories to perform duties outside Australia and the external Territories” (s 35(3)). [22] For an employee, who otherwise falls within the definition of being an “Australian- based employee” by operation of s 35(2)(b), to be excluded by s 35(3), that employee must have both been “engaged outside Australia” and engaged to perform work outside Australia and its external Territories (See Munjoma v Salvation Army (NSW) Property Trust as Trustee for the Social Work [2013] FWC 3337 (Munjoma)1. [23] Therefore it is necessary for me to consider whether the applicant falls within both limbs of the exclusion in s 35(3). [24] In relation to the first limb, it is apparent that the applicant is engaged to perform work outside Australia and its external territories. He was resident in New Zealand and engaged to sell the respondent’s products in New Zealand to New Zealand customers. To the extent that he performed any work in Australia or directed to Australian customers, it is my view that such work is merely incidental and insubstantial and not sufficient (See Cohen v iSOFT Group Pty Limited [2013] FCAFC 49 at [54]). Therefore, the applicant falls with the first limb of the exclusion in s 35(3). [25] However, as noted above, the applicant will not fall within the exclusion in s 35(3), unless he also falls within the second limb being that he was engaged outside Australia. It is [2026] FWC 1633 7 clear that the current state of the case law is such that the issue of whether the applicant is engaged outside Australia requires analysis and determination of the place where the contract of employment was formed (see Pascua at [45] – [49] and the authorities referred to therein). [26] The formation of a contract of employment requires analysis and consideration of the geographic location of the elements of offer and acceptance. The evidence around this subject matter was a little bit unclear. Neither of the parties was able to provide a very clear sequence of the supply and exchange of the contractual document being the Employment Agreement. In that regard, I do note that the parties in their filings have supplied two separate copies of the document constituting the Employment Agreement. [27] The applicant supplied a copy of the Employment Agreement which was signed by him and him only on the 8th of December 2024. The respondent supplied a copy where most pages of the contract were signed by the applicant on 10 September 2024 with one page, being Schedule 2, signed by and dated by him on 12th of September 2024, with the respondent signing on 10th of September 2024. The two copies are relevantly identical, except that the applicant’s version gave a start date of 9 September 2024 and the respondent’s version gave a start date of 16 September 2024. [28] During the course of the Determinative Conference the respondent also provided two separate email chains, which contain various parts of email exchanges between the parties regarding the execution of the Employment Agreement. [29] As best as one can piece this rather unsatisfactory evidence together, it seems apparent that the operable contract was the Employment Agreement supplied by the respondent. In that regard, the offer was made by the respondent to the applicant by the sending via email of an unsigned Employment Agreement. The applicant then signed the Employment Agreement and the main signature page on 10 September 2024. He appears to have omitted to sign the Schedule 2 page by oversight and signed each other page where signature was required on the 10 September 2024. He then emailed the Employment Agreement to the respondent, and the respondent appears to have then identified some omission in terms of the signing of the schedule 2 page. The respondent otherwise signed the document on the 10 September 2024. It appears that thereafter it resent the executed copy to the applicant and the applicant then signed the Schedule 2 page on the 12 September 2024. [30] The relevant legislation regarding acceptance of an offer by way of electronic communication is the Electronic Transactions Act 2000 (Vic) and also the comparable legislation being the Electronic Transactions Act 1999 (Cth). Relevantly, the effect of both pieces of legislation is that the place of receipt of a document is the place where the contract is made (s13B of both Acts). [31] It seems that the offer was made by the respondent, the applicant accepted the offer by sending of the email on the 10 September 2024 and the act of acceptance occurred upon receipt by the respondent of the email from the applicant to the respondent on 10 September 2024. So, the formation of the contract occurred in Victoria, Australia on the 10 September 2024. [32] Consequently, in my view, the applicant was not engaged outside Australia because the contract was formed in Australia. The applicant does not fall within the second limb of the [2026] FWC 1633 8 exclusion in s 35(3). Consequently, the effect of this is that the exclusion in s 35(3) does not operate because the applicant does not meet both of the two limbs of the exclusion. Noting that the applicant otherwise falls then within the primary definition of an “Australian-based employee” within s 35(2) of the Act, it seems apparent that Part 3-2 of the Act does apply to the applicant. Whether dismissal was in compliance with the Small Business Fair Dismissal Code – s 388 [33] It is next necessary for me to consider whether or not the Small Business Fair Dismissal Code (the Code) applies to the respondent at the time that the dismissal took effect and if so, whether the dismissal was in compliance with the code. [34] This is because the combined operation of s 385 and s 388 of the Act specifies that if, immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person's employer was a small business employer and the employer complied with the Code in relation to the dismissal, the dismissal will not be an unfair dismissal. [35] The respondent is a small business employer as it employs fewer than 15 employees. [36] The Code relevantly provides that: The small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee's conduct or capacity to do the job. The employee must be warned verbally or preferably in writing that he or she risks being dismissed if there's no improvement. A small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee's response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer's job expectations. [37] I am not satisfied that the respondent gave the applicant a verbal or written warning that he risked being dismissed if there was no improvement in his performance. I note that the emails of 22 July 2025, whilst in the title says “Performance Warning”, made no mention to the applicant of the risk of dismissal. I am also not satisfied that the applicant was given a verbal warning that he risked being dismissed if there was not improvement in his performance. Consequently, I am not satisfied that the applicant’s dismissal was in compliance with the Code. Whether Dismissal Harsh, Unjust or Unreasonable – s 387 [38] As I am m not satisfied that the dismissal of the applicant was in conformity with the Code it is necessary for me to consider whether the dismissal of the applicant's employment was harsh, unjust, or unreasonable (s 387). The considerations to be taken into account in determining whether a dismissal is harsh, unjust or unreasonable are set out in section 387 of the Act. [2026] FWC 1633 9 [39] I am satisfied that the applicant was not meeting the sales targets. However, it seems to me that the significant and substantial reason why he was not meeting the sales target targets was that the respondent’s general marketing endeavours were generating inadequate or insufficient quality of leads. The applicant, and indeed the respondent attempted to improve the quality of leads. Furthermore, the applicant did initiate additional measures which were directed to generating his own leads, such as engaging in networking. The applicant also, as I've noted above, took steps to institute new procedures to endeavour to obtain payment from the client within 24 hours of closing the sale. However, despite these endeavours, this was not sufficient for the applicant to meet the sales targets. In a sense, there was probably not much more that the applicant could do to further to sell products. [40] I am not satisfied ultimately that the poor sales outcome of the applicant was due to his poor performance. I also note in that regard, and I accept the applicant's evidence, that the other two Australian sales employees were also not making their sales target. The applicant's performance itself was not perhaps sufficiently inadequate. [41] However, it does seem to me that the respondent had, ultimately, a valid reason to dismiss the applicant's employment in circumstances where, and I accept Mister Bandara's evidence in this regard, there was simply insufficient sales being generated to justify the applicant’s continued employment because of what were objectively low sales. It just simply was not in a sense, commercially viable, and the applicant accepted in his evidence that the model of the product was not commercially viable in New Zealand. [42] The applicant was not given, in my view adequate warning. The email, as I've noted above, 22 July 2025 is not sufficient. Furthermore, the applicant was certainly not given warning or taken through any disciplinary procedure (clause 13) of the Employment Agreement. I am mindful that in clause 24, alleviated in its own terms, the respondent from undertaking that disciplinary process if the sales targets was not met. However, regardless of clause 24, the applicant, in my view, was not given warning verbal or written. I also note that on 8 December 2025, the applicant was notified by email and text message that his employment was terminated. The applicant was not invited to a meeting to discuss the potential termination or the prospect of termination and to hear his response prior to the decision being made. The applicant was not provided with any opportunity to respond to a proposed dismissal before the termination occurred. I accept the applicant's evidence that there was no process which gave the applicant an opportunity to say anything about whether or not his employment should be terminated for reasons related to his asserted under performance. [43] I am mindful and I have taken into account the fact that the respondent is a small business and in circumstances of being a small business would impact negatively upon its ability to follow procedures relating to a dismissal. Furthermore, it is apparent that the respondent lacks any dedicated human resources management specialists or expertise which likely negatively impact it on its ability to meet procedures to affect the dismissal. [44] Taking into account all of the matters that I have referred to, I am satisfied that the dismissal was harsh, unjust or unreasonable. Remedy – ss 390 & 392 [2026] FWC 1633 10 [45] In circumstances where I have determined that the dismissal was harsh, it is necessary for me to turn my mind to the question of remedy. [46] The applicant does not press for reinstatement. In any event, I do not consider that reinstatement is appropriate and consequently, it is appropriate for me to consider whether an order for compensation should be made and the extent of such order under Section 392 of the Act. [47] I have taken into account the fact that the respondent is a small business, I've taken account the fact that the respondent that the applicant has served a period of 15 months with the respondent, which is not an excessively long period. I've also considered the duration of the likely employment had the employment not been terminated in the circumstances which were harsh and just or unreasonable. In my view, the likely duration of the employment was not likely to be very long at all. The fundamental circumstances were that, despite 15 months service, sufficient sales were not occurring so as to justify a view that the employment would have lasted for any significant period at all. In my view, the employment would not have lasted a period in excess of two weeks. [48] I have taken into account the fact that the applicant has made efforts to obtain alternative employment and made efforts to mitigate his loss. The applicant has indicated that he has not obtained any other employment, since the dismissal took effect. In all of the circumstances, I consider that it is appropriate to order the respondent to pay the applicant the sum equivalent to two weeks’ gross pay and I will issue a separate order to that effect. DEPUTY PRESIDENT Appearances: D Sanderson, Applicant D Balasuriya, for the Respondent Hearing details: 2026. Melbourne (by video using Microsoft Teams): April 28. Printed by authority of the Commonwealth Government Printer [2026] FWC 1633 11 <PR799774> 1 See also Winter v GHD Services Pty Ltd [2019] FCCA 775; (2019) 285 IR 331 at [15] (Heffernan J).