PR944224 PR944224 Download Word Document AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION Workplace Relations Act 1996 s.170CE application for relief in respect of termination of employment Dallas Moore and Levelan Pty Ltd (U2003/1322) DEPUTY PRESIDENT HAMILTON MELBOURNE, 5 MARCH 2004 Termination of employment - abandonment of employment - alleged misconduct warranting instant dismissal - alleged unsatisfactory performance - lack of previous warnings - s.76 of the Evidence Act (Cth.) - extensive evidence on alleged unsatisfactory performance - relative skill level, supervision level, mixed responsibility of employee and supervisor - compensation - employee with short service DECISION Introduction [1] On 7 March 2003 Mr.Dallas Moore (`the applicant') lodged an application with the Australian Industrial Relations Commission pursuant to s.170CE of the Workplace Relations Act 1996 (`the Act') for relief in relation to the termination of his employment with Levelan Pty Ltd (`Levelan') . Levelan employs the workforce of the accountancy practice Mitch Karafili & Co (`the firm'). [2] At the time of the termination of the applicant's employment, he was employed as a senior tax/financial accountant with the firm 1 . During his employment, Mr.Moore worked preparing tax returns, financial statements for companies, trusts and individuals, updating the in-house computer system and, from August 2002, office supervision. 2 [3] Mr.Moore claims that his termination of employment, at the initiative of the employer, was harsh, unjust or unreasonable within s.170CE . He claims that there was no valid reason for his dismissal and that procedural fairness was not accorded to him. He asks for compensation. [4] The respondent claims that Mr.Moore abandoned his employment by virtue of his absence from the firm from late afternoon 20 February and all day 21 February 2003. In the alternative it submits that his employment was terminated for serious misconduct or unsatisfactory performance. [5] The amount of evidence in this matter was considerable. I have had regard to all of it, and to the submissions put, in reaching the conclusions set out below. I have not attempted to set all the evidence out in my decision. The Evidence (a) Commencement of Work [6] Mr.Moore commenced work with Levelan in November 2001. There was some dispute as to whether he began with Levelan as a contractor or as an employee. It is likely that Mr.Moore was initially retained as a contractor, but in any event the applicant was certainly a full-time employee from at least April 2002 to the time of his termination 3 . [7] The applicant received a letter dated 30 April 2002, which confirmed his full-time employment status, annual remuneration of $55,000 plus statutory entitlements and associated issues. These associated issues included reference to an agreement to salary reviews every three months, payment for courses with CPA or NTAA and that the applicant should attend study units relating to ethics and tax, an expectation that 75 per cent of his working hours would be chargeable to clients of the firm, a one month notice period and the possibility of a 10% profit sharing arrangement at the conclusion of 12 months employment with the firm 4 . The letter stated: Dear Dallas, Ref: Full Time Employment & associated issues Further to our discussion of April 21st, 2002, this will confirm that discussion that you are to commence employment with Levelan P/L at $55,000 p.a., plus other statutory entitlements, effective 15th April, 2002. During our discussion, we agreed that we would review your salary every 6 months, however I think that we should review your salary every three months. I am quite happy to sit down and discuss issues with you concerning your salary and your ongoing performance in general, on a monthly basis .. I do not have an issue with that whatsoever, and I will leave it entirely up to you when you feel the need to discuss issues like that with me at any time that you wish to do so to call me aside. Additionally, we will pay for courses with CPA or NTAA so that you can attend to both familiarise yourself, and continually update your knowledge. We discussed the first two that you should attend should cover the so called "ethical" units, and tax, and the reason that I want you to do them is because they will give you a basic background as to various issues, tax related issues, and issues concerning chargeable rate, how to keep time sheets and various other issues which I think are very important as far as the running of a private practice is concerned. Further, we discussed that it is the norm in a public practice that a minimum is a 75% chargeable rate. If you can achieve any more, well that is good, but that is the norm in a practice. Other issues that I would like to reiterate as discussed are that all clients are the property of the practice, and they are not to be solicited if you decide not to continue employment with this office. You are not to make contact with a view to taking over any client of this office for a period of no less than two years after your departure from this office. Further, the clients of this practice are not to be approached or matters discussed with them in relation to any recommendation and etc. to go to another accountant. Further, you are not to enter into any type of arrangement where you perform work for and/or through a company for instance, for a client of the practice. You are not to undertake work for a client of this practice through any third party or any other identity that you may decide to use, in order to divert attention from yourself as being the real person behind any such approach. All work that is done in the office must be kept confidential at all times and no client or business is to be discussed with any other party outside of this office. No issues concerning any individual or anything relating to any individual are to be discussed outside this office at any time. Other issues which are important and have come to light recently are that no photocopies of clients tax returns or clients files of any kind are to be removed from the office for any reason other than may relate to banking and etc. or in the instance where we have specific directions from the client for their information to be passed on to a third party. It is imperative furthermore that any instructions that you obtain from a client by telephone or during a conversation are confirmed in writing - and that instruction is imperative to all of us. It is something that unfortunately is not an easy thing to get accustomed to, but we have to do it given the current issues that have arisen all over the place, particularly in relation to where clients instruct the accountant or solicitor to perform certain tasks and then later on they refute having made that instruction. My belief is that if that instruction has been confirmed in writing, that that is a different scenario. It is my understanding Dallas that you are aware of how things are and what it is all about, and after our discussion last night I would have thought that you would now be aware how important it is to keep yourself up to date with the latest tax related rules, legislation, corporations law and etc. Furthermore, as I said to you, at the end of the 12 month period or thereabouts I am quite happy to have you involved in the business with a 10% profit sharing; I do not have an issue with that whatsoever. I may also make that offer to Rose and will have a discussion with her concerning that. So what I am really saying is that it is up to you now to demonstrate and show how you feel about the practice, about public practice .. and decide whether you want to continue a career as a public accountant or whether you want to go and work back in commerce .. it is entirely up to you. In the event that you wish to terminate your employment, I would require not less than one month's notice. Should you wish to add anything further to the foregoing, that I have neglected to mention that you would like diarised, please let me know. Thanks Dallas. Yours Faithfully, MITCH KARAFILI & CO. (b) Mr.Moore's Lack of Knowledge and Experience [8] Mr.Moore was employed in full knowledge of his lack of experience with taxation matters. Mr.Karafili said in his original witness statement: "During the discussion and interview Mr Moore advised that he did not have much experience with Tax, but that he was willing, given the opportunity, to bring himself up to date with all Tax legislation and other accounting standards to fit in with the requirements of Public Accounting standards." 5 (c) Supervision of Mr.Moore by Mr.Karafili [9] Mr.Karafili did not closely supervise Mr.Moore. He said in his witness statement that: "I also had discussions with Mr Moore that it was, and is, my practice that [sic] to allow the staff to self-assess as to their performance and ability and their training requirement" 6 and; "Over time I reminded him that he was on self-assessment." 7 [10] He said in cross examination that: "As a - as the Principle of this business what percentage of your time could you spend supervising the staff?---Supervising the staff - probably 10 per cent - 5 per cent." 8 "What role did you play in mentoring Mr Moore, given that you have already admitted that you spend between 5 and 10 per cent in administrative and supervisory tasks?---I gave Mr Moore every possible mentor I could. Originally we used to have meetings Monday mornings. Mr Moore was considered a senior accountant, receiving a substantial amount of salary which I considered to be a good salary. He was given every opportunity to go and advance himself within industry and Mr Moore was given every opportunity to speak to me any time that he wanted and I think there is enough evidence in my correspondence and it has been implied that Mr Moore did not take that opportunity. I was asking the question about your role of mentoring him, not necessarily the reciprocal - - -?---Would you please define mentoring, does it, what is your definition of mentoring because unfortunately mentoring has got an incredible amount of definitions? Well, we understand or we accept that Mr Moore had no experience in tax or very, very little experience in tax prior to starting with your practice?---Yes. We accept that the best person to be able to give him guidance and direction and control would have been yourself?---Possibility. With him going outside the practice and attending seminars, as I explained, attempted to explain before, is that trying to sit down with somebody and go - you need to spend one or two or three days constantly and that is why people organise courses, they have daily seminars so people attend to this and they bring their knowledge up to date and therefore, when they speak to another accountant that understands tax they are pretty much at par. So, therefore, you can exchange your ideas and talk about it. Do you think the best way of mentoring Mr Moore was to have other people assist him in bringing up to date his knowledge or lack of knowledge, improving on his lack of knowledge?---I am sorry but I cannot accept your word mentoring because mentoring to me is something that, as a professional, I am not sure that you can use." 9 "You have made a number of references to saying to Mr Moore about that you work on the basis of self assessment, is that correct?---Self assessment, yes. Now, do I interpret self assessment is that it is up to an employee to determine how well they are performing or otherwise?---Self assessment means that, you know, to - you know what is expected of you to perform and as a professional my understanding of interpretation is - and been around for years - most of the professional works on self assessment. They know that the job they are supposed to perform. They know their responsibilities. They know what level they are at the time and they assess themselves. They say, okay, I have achieved that, I haven't achieved that and they are honest enough to tell you as to what if and buts. At page 8, Mr Karafili, of your witness statement you constantly remind - you have stated that you constantly reminded him he was on self assessment?---That is right." 10 (d) Mr.Moore Satisfactory Employee and Asked to Attend CPA Courses [11] In late August 2002 Mr.Moore received a letter from Mr.Karafili 11 which stated: Dear Dallas, After being here now for a considerable time, I do not have any issues with your performance. I would like you to .. even though you continuously communicate with me, possibly if you can, a bit more .. see about that; and the other thing is that I want you to take complete and absolute responsibility for the office, including staff, administrative issues and lodgment program and everything else that goes with it. As I promised you at the beginning, I think that we should sit down and review your current salary and your position. Also, as I have asked and requested, that you should attend to various CPA courses and etc. so therefore I can have you registered as a tax agent, and then you can sign tax returns if I am not here. I will have further discussions with James and everybody else, but I think that you should consider your position and have a chat to me so that we can take it a step further. The reason that I have not said anything for a while, is that because everybody is pretty much new, and had to be given an opportunity to settle down. I think that you should make complete use of Nen, and if you have difficulty or any problems with anybody else, just let me know, but I think that once I discuss the issues with you, I will advise everybody in writing so everybody knows exactly their position and where they stand. Looking forward to hearing from you and hoping that we can have matters put into place for all concerned. I reiterate, that I think that Nen should be made more use of, and I am not sure how Nen is working with Rose, but I think that you should take her under your wings and teach her as much as you can, and sometimes you possibly should take her with you when you visit clients. Yours Faithfully, MITCH KARAFILI & CO. [12] Mr.Moore's work responsibilities subsequently increased to reflect this new arrangement 12 but although he did attend professional development seminars, he did not attend any CPA courses. [13] Mr.Karafili gave evidence that in December 2002, Mr.Moore was responsible for missing several tax lodgement deadlines 13 . Mr.Karafili stated that he discussed these issues with Mr.Moore at the time, that he was concerned about these omissions, but did not terminate his employment ` because he would agree to be more careful. I also always took the view that it was worth persevering with him because my past experience with other employees had taught me that it was worthwhile' 14 . No formal warnings, certainly no written warnings, were it appears given, and no formal assessment process of Mr.Moore's performance was put in place to monitor any further problems. (e) 17 February 2003 Wage Increase for Mr.Moore, Work Instructions [14] On 17 February 2003 Mr.Moore received a handwritten memorandum from Mr.Karafili 15 . This memo stated: Dallas Further to our discussions in reference to your employment at my office. 1. Your salary to increase from current to $65,000 to commence as at 21/2/2003. 2. (a) You are to take control of ALL TAX LODGMENT PROGRAM. (b) You must give me a report on weekly basis at the end of each week or beginning of every week. 3. Your time spent on clients must be chargeable at not less than 75%. The balance can be spent on administration or improve the chargeable rate 4. ALL clients belong to the practice and you must not solicit my clients or do any other work other than for this practice. If you are to terminate your employment you will not [solicit any clients of the practice? 16 ] ... [the rest of this paragraph is illegible] 17 5. I NEED A COMPLETE REPORT WITH THE NEXT DAY OR SO CONCERNING LODGMENT PROGRAM. If you wish to discuss this any further talk to me. [15] There is some dispute in relation to whether this salary increase was to come into force on the date referred to in the memo, 21 February 2003, or as the applicant contends, as verbally agreed between Mr.Karafili and himself, in November of the previous year. Both Mr.Karafili and Mr.Moore gave oral evidence on this issue, none of which was conclusive. On balance I accept that the memorandum is an accurate representation of the decision on this issue. [16] Mr.Karafili said that the pay increase was given `based on performance and his ability to manage the job', but that he was not happy with aspects of his performance, and that he, Mr.Karafili, took Mr.Moore's word that he would improve 18 . Mr.Moore gave evidence that he believed the salary increase was a `reward' for his performance, and the memorandum giving as it did a substantial increase was ` a positive letter '. In summary he seemed to view the letter and pay increase as a reflection of his satisfactory work performance 19 . (f) 20 February 2003 Mr.Karafili Strongly Criticises Mr.Moore's Work Performance [17] On 20 February 2003 Mr.Moore received a letter detailing alleged deficiencies in his work performance 20 : Dear Dallas, Further to our discussion yesterday, the main points of discussion were as follows: 1. You said, and you have continuously maintained, that you were not interested in improving your knowledge, or obtaining further knowledge and understanding about the new Tax Laws, or Corporations Laws or any other legislation that is introduced that may affect either the practice or the clients. 2. You have come into the office as and when you please now for quite a considerable period of time; you do not come in at the prescribed hours, you always come in after 9am, and you go when you think that it is appropriate to go. You do not tell anyone why you are going, or when you are going .. you just go. 3. I had many discussions with you before Xmas where I pretty much gave you a free hand in relation to supervising and keeping the Tax Lodgement program up to date and knowing exactly what each and every file is about. You have not done that - other than for you to say that you have sent me some emails. Those emails were sent long time ago with very little information or relevance. 4. You have given Eddie D'Alzotto of Total Forklifts some advice - and you know, or you ought to or should know, that that is a conflict of interest .. where you have two individuals and a company which is a separate legal identity. By your own admission today you did not know the structure of Total Forklifts but you have been involved pretty much from day one, and where you have looked after the file. You have not even bothered to look at the file, and if you have, you have rung other people for advice and for explanation, but you have failed to contact the people who understand insolvency and solvency, or me. As I have said to you, any time that you wanted advice you were to contact Gess Rambaldi, and you were to attend the monthly briefings of Pitcher Partners .. which you have not done now for some time because according to you, it is not important. 5. After reading your email yesterday, together with the issue of Total Forklifts, I have come to the unavoidable conclusion that your job is not important, it is only a means to an end; you have no intention of progressing your career nor pursuing your career. 6. You told me today that James had a lot of files nearly complete and we should get him in for a couple of days to finalise those files. I would have thought that you would be supervising James and you would have known exactly at what stage or level those files were at -- but again that had no interest to you. If James comes in for two or three days, why should the practice incur an unnecessary cost - a cost that should have been avoided if you were to take the responsibility of supervision. 7. With regard to your chargeable time, we have had to write off an incredible amount .. you have charged a lot of time to "admin" and as far as I am concerned, you have done no "admin" .. neither have you been involved in administration, and if you were, I should have been informed of what - if anything, took place. 8. I am not prepared to have somebody like you on my staff where really there is no interest other than a substantial increase in pay -- which you got. That salary is an investment, from which the practice would expect a return. Unfortunately there is no return from you, nor do you want to provide the return. For all intents and purposes you have other interests other than the interest of business and practice. 9. We are trailing behind again quite considerably with the Tax Lodgement Program, because again you have showed no interest, and nor do you care. 10. In relation to Richard Kaucic, you spent over a week or so there - whatever it was, and you achieved very little of value. I have had to send another accountant there, who has been there for three or four weeks, sorting out the mess and showing the client which petrol station is making a profit and which is not. I instructed that you were to remain there until that job was complete, but for whatever reason, you did not feel comfortable .. you felt that Richard was not giving you the attention that you needed and you did not pursue the issue and you did exactly the same with Mitropoulos'. 11. I gave you instructions to help the Mitropoulos' and assist them and set up systems and or/whatever was necessary. You went there a couple of times and you did not follow them up whatsoever. That was quite disappointing, because unfortunately the whole reflection than came back to me. 12. You have nothing at current on your working file and I am not sure what you do for most of the day. I am not going to create or charge clients for the work that has not been done. 13. You have known for some considerable time that Richard Kaucic had a Summons from the ATO and I instructed you to obtain all the relevant information to do that return. From my understanding, you made one or two phone calls every time I asked you to make a call, and you didn't pursue the issue any further. 14. I am not prepared to entertain your working lifestyle that you think that you should have at the cost of my practice -- not only in dollar terms but also with the possibility of losing clients. You furthermore said that you were going on holiday sometime in March or April, without considering the lodgement program or any other matter that the practice may require. Finally I am extremely disappointed that you have rung other Accountants outside my office without my consultation or advice first. You are to consider your position very carefully. I will give you a couple of days to think about it, and I will have a discussion with you on Monday - and you make your decision. Yours Faithfully, MITCH KARAFILI & CO. [18] This letter referred to a meeting on 19 February between the applicant and Mr.Karafili and outlined 14 performance issues. Mr.Moore claims that the 19 February meeting centred on work being undertaken for a particular client, Total Forklifts. Only at the conclusion of the meeting was a performance issue raised, Mr.Moore's lack of attendance at CPA courses 21 . Mr.Moore further claims that this issue was not discussed extensively. (g) Mr.Moore's Initial Response to Critical Letter [19] Mr.Moore gave evidence that he was both shocked and upset by the content of the letter as `Mr.Karafili had not raised concerns about my performance before and, in fact, had given me a significant pay rise 3 days earlier ', and a `positive' letter 22 . [20] Mr.Moore left the office on receipt of the letter and did not attend work the following day, 21 February 2003. Mr.Moore was contacted by phone on 21 February by Ms.Julie Torrens, Office Manager of the firm, in respect of outstanding time sheets. They also had a discussion about what the letter meant, with Mr.Moore interpreting it as meaning that Mr.Moore was required to leave the premises and Ms.Torrens apparently disagreeing 23 . [21] Mr.Karafili also wished to speak to Mr.Moore. He wished to discuss an important deadline that fell that day. He attempted unsuccessfully to contact Mr.Moore on his mobile phone a number of times on 21 February 2003 24 . He left messages to call him back on the applicant's mobile phone, but did not expand on the purpose of his call 25 . Mr.Moore did not respond to the messages although I consider it likely he received them. (h) 21 February 2003 Letter - Mr.Karafili Says that Mr.Moore Abandoned His Employment [22] Mr.Moore received a letter from Mr.Karafili on 21 February 2003 which stated: "Upon my return to my office yesterday, on or about 4pm, I went to your office to discuss certain issues with you and obviously when you were not there, I enquired as to your whereabouts, and I was told that you left the office without any proper reason or explanation to me. Obviously from that I have concluded that you have abandoned your place of employment." 26 [23] On receiving this letter Mr.Moore telephoned the office and spoke to Ms.Torrens 27 . (i) Mr.Moore's Response to Mr.Karafili's Letter of 20 February Criticising Work Performance [24] From home, Mr.Moore prepared the following written response to Mr.Karafili's letter of 20 February 2003, which Mr.Moore intended to take with him to the meeting with Mr.Karafili 28 : Re: Letter dated: 20th February 2003 1. I do not believe this is true. I am constantly reading the Master Tax Guide (which I purchased personally as there was no copy in the office), Tax Pack, Taxvibe emails and referencing the Australian Tax office website. I recently approached you to do a self managed super fund course which you rejected, stating that it was too costly and that a contact you know would be providing our training. I am constantly approached by my colleagues for my views on any tax matters that may arise in the office. 2. On reviewing my appointment letter, I could not find any reference to start and finish times. Over the Christmas and January period the office was very quiet and did not warrant me being here unnecessarily. Quite some time ago I left the office early and I advised Julie that I would make the time up the next day, the following day you informed me that this was not necessary as we were professionals and should use our own judgements in such matters. 3. On gaining control of the lodgement program I was very motivated to bring it up to speed, and with the assistance of Julie who sent letters to all clients to inform them of what was required and when it was required. James, Rose, Nen and myself worked very hard to achieve the 2nd of December lodgement deadline. The only clients that were outstanding were those clients who did not provide the information or needed correspondence from yourself to complete. As in the case of Andrea Williams Pty Ltd. I relayed this to you several times and requested that you spend 2-3 hours with each staff member in order to complete these returns, which did not eventuate. There was no appreciation of the effort put in by the team. 4. I am not completely clear about what you mean by conflict of Interest. Per my understanding of conflict of interest I do not believe this is an issue with regards to Eddie Dalzotto of Total Forklifts. I have always treated both parties with due care. As the clients relationship grew worse, Lino Aldretta was concerned that on paying out his motor vehicle Eddie Dalzotto would not pass on the registration papers as they were addressed to Total Forklifts office. To releave Lino Andretta of his concerns I contacted Eddie Dalzotto to ensure that the registration papers were passed onto Lino Andretta which they were. As per our meeting on 21st February 2003, where we discussed the issue of Kaye Andretta still holding 50% shareholding in Total Forklift. I was of the view that the two parties had gone there separate ways. Lino and Kaye Andretta had gotten on with there lives and wanted nothing to do with Total Forklifts. They were no longer involved in anyway with the company, not the day to day operations of the company, they paid no expenses in relations to the company so I held the view that the Andretta's should not be entitled to 50% ownership of the business, at which point you agreed with this view and then went on to state that "YOU DID NOT CARE". I had previously raised this concern in passing with Julie Torrens and she too advised that she had advised you of this matter. I have been involved with Total Forklifts since the start of my employment with your office. At that stage, the company structure had already been set-up and I was only involved with operational issues. As soon as concerns were raised about the ownership issue I checked the facts and raised those issues with you. I do not see why there is a problem with me seeking advice outside the practice on non specific matters if this means to supply the most beneficial information on the clients of the practice. I have attended a Pitcher Partner seminar and I constantly review critical point emails. You have stated several times that Gess Rambaldi would attend the office to talk on the topic of Liquidation and other issues yet this has never happened. 5. I do not understand what you mean. 6. In my role as supervisor I was not informed or consulted that James would not be available full time after the Christmas period, this was a decision that you had made. However I have had discussions with James about the progress of his clients and am aware in a broad way what stage his major clients are at. I believe the cost of bringing James back for 2-3 days would be much less than the cost involved for me or someone else to familiarise themself with all his clients and client files to the extent he has the clients confidence and knowledge of detail. This can be shown when Les Grima recently stated that James was familiar and knows issues involved and why was there a new Accountant required to work on his file. 7. Refer point 2 in relation to not much work around Christmas. In my role as supervisor I have spent a considerable amount of time helping and assisting James and Nen on various queries which I do not think is appropriate to charge the client. In my role as supervisor I also ensure that the latest versions of Solution 6 software is installed on all computers and this is done to ensure that all employees work at there most efficient. I have raised these issue with you. 8. I am confused by your statement does this mean that you no longer want me as an employee? I disagree strongly with this point in relation to wages. As stated in my appointment letter dated 15th April 2002, my salary would be reviewed on a 3-6 monthly basis which has never happened. You stated on several occasions that my salary would be increased as of 1 November 2002. As I raised to you in an email and in discussions, on my full time appointment my salary was reduced $200-$300 per week. In essence my responsibilities have increased yet my salary has remained constant. I do not understand what you mean by other interests other than the interest of the business and practice. Is this in reference to comments you have made in passing to make a choice between training greyhound or progressing with this practice. 9. There are several reasons why there are returns outstanding. We have lost an experience accountant, we are employing a graduate accountant to take on more responsibilities which takes time in learning and training. As you have constantly remarked Rose's commitment is not all that it should be. I used my initiative in requesting that we bring James back into the practice on a number of occasions to help with the workload yet this has fallen on deaf ears. 10. I disagree with this point as during my time at the clients office I continually encountered hurdles when dealing with the principal and staff members. Richard Kaucic's group of companies have not lodged a Tax return since on or about 1997. This indicates and as I found it, he has no interest in bringing his accounts up to speed. I did not feel as though the client was making himself available so that my time could be spent at its most productive which I advised you. At that time you placed a time constraint on this client, If I was allowed 3 to 4 weeks at the client I would have completed all items. The bulk of the work was completed the outstanding items were to be furnished by the clients if he had any concerns he was to contact myself which has not occurred. 11. I strongly disagree with this point. I set systems up for the Mitropoulos' to follow and constantly contacted there office to ensure these systems were adhered to via telephone. In my opinion any further time spent at the client would have been of minimal benefit for the cost involved. Tacea Mitropoulos thanked me personally for all my efforts and stated the reason they were leaving the practice was because their monthly bill had quadrupled. 12. I disagree with this point. My work in progress file shows that many of my files require assistance from yourself to complete such as the Cararra Super Fund which I had to postpone meetings with Brian Maddigan on or about 3 occasions because you were not available per emails dated 25/10/02 & 15/01/03. While I have been waiting for your availability I have made myself available to other staff members to work on adhoc projects. 13. With regard to this point, I have contacted the client numerous times to obtain information which I had no response. I do not see it as my role to drive to the clients office and physically demand records. 14. Your concern in relation to the possibility of losing clients is unfounded refer Tacea Mitropoulos' comments. With regard to my holidays I raised this with you recently and you verbally agreed that it would be no problem. In relation to you point about ringing other Accountants I find it very difficult to contact you and I do not see using my initiative to obtain information to supply the best possible advice to the practices' clients as a bad thing. Yours Faithfully, Dallas Moore (j) 24 February 2003 - Mr.Moore Refused Entrance to Workplace, Receives Entitlements [25] Mr.Moore gave evidence that he arranged with Ms.Mirka Carmelli and Ms.Torrens to meet with Mr.Karafili on Monday, 24 February. On 23 February Mr.Karafili left a message on Mr.Moore's mobile telephone telling him not to attend the office on Monday, and stating that Mr.Moore `was no longer employed with the firm, as he had walked away from his job' 29 . Mr.Moore did in fact attend the premises on Monday morning, 24 February, dressed for work 30 . He said he received Mr.Karafili's message only just before his scheduled meeting with him 31 . Ms.Carmelli, part-time employee of the firm, had been instructed by Mr.Karafili to refuse Mr.Moore entrance to the office on the morning of the scheduled meeting 32 , and she did so refuse him entrance. [26] On 4 March 2003 Mr.Moore received a letter enclosing a cheque for outstanding annual leave entitlements, calculated with reference to a $55,000 annual salary 33 . [27] There was considerable unpleasantness between Mr.Karafili and Mr.Moore following the cessation of employment which included Mr.Moore obtaining police to escort him to his former place of work on 25 February to pick up his personal possessions, a complaint to the police about their conduct from Mr.Karafili in a letter dated 25 February 2003 34 , which included allegations that the police became abusive on the telephone and a request by Mr.Karafili that they leave the premises, letters from Mr.Karafili to Mr.Moore dated 29 May 2003 and 2 June 2003 alleging amongst other things that Mr.Moore's `mate tried to attack me, it appeared that you had orchestrated the whole affair in order for you to gain unearned monies' 35 , and a wish by Mr.Moore during proceedings to conceal his current address because of concerns he allegedly had that Mr.Karafili would contact his new employer. [28] Mr.Karafili relies on the allegations in his letter of 20 February 2003 in support of his claim that Mr.Moore's performance warranted dismissal. Mr.Moore relies on his written response to those allegations in reply 36 . Consideration of Issues (a) Abandonment of employment or Termination of Employment? [29] In Ellis v Conaust Australia 37 Murphy JR expressed the view that: "The concept of abandonment of employment is only a species of conduct which can be characterised as a repudiation of the employment contract. The issue here is to ascertain whether as a matter of contractual principle what happened was the termination of the employment at the initiative of the employer. Such an exercise requires an analysis of what happened to ascertain what was the real causal event which gave rise to the termination of the employment". [30] Whelan C agreed with this approach in Belleville v Helsalen Pty Ltd 38 . [31] The intention of the employee is also an important consideration. In Persirides v Greer Industries Pty Ltd 39 Williams SDP found that although the employee failed to attend work and although he could have made more effort to notify the employer why he was absent, he did not have the intention of leaving his employment. [32] It is necessary to first examine the circumstances of Mr.Moore's absence from work. Mr.Moore received a letter on 20 February 2003, which contained a lengthy and detailed list of accusations to the effect that he was not performing well in his job, and which ended in a clear indication that his job was not safe or depended on substantial change on his part: " I will give you a couple of days to think about it, and I will have a discussion with you on Monday - and you make your decision ". While some of these allegations were not entirely a surprise to Mr.Moore, many were, and the tone in which they were made and the threat to his job was certainly a surprise. Mr.Moore had only three days previously received a substantial increase in pay accompanied by a letter, both of which could reasonably be interpreted as supportive of his performance in the job, although the letter did contain instructions about work. I accept that Mr.Moore interpreted the letter and wage increase as broadly endorsing his performance in the job. Yet only three days later Mr.Moore's performance in the job was the subject of very serious accusations by his employer. I accept that Mr.Moore was both surprised and extremely upset by the 20 February letter. Given the threat to his job and his state of mind I accept that he probably saw the letter as implicit permission to absent himself to have a detailed think about these performance issues. Ms.Torrens confirms that was his interpretation on 21 February in her witness statement. Certainly the letter did not seem to allow for work as usual. Such detailed and critical allegations required a detailed considered response of some kind. Mr.Moore spent at least part of his absence in preparing a detailed response to the allegations, as was reasonable. That was work related activity. That is the background of and reason for his absence from work. [33] The absence was also for a very short period, in the order of one day's absence. [34] There is no evidence that Mr.Moore intended to immediately bring his employment relationship to an end. In fact he prepared a defence of his performance, and telephoned the firm to confirm his attendance at a meeting with Mr.Karafili on 24 February, and attended the firm on 24 February dressed and ready for work. All of this presumes a wish and intention to continue in employment. Mr.Moore believed his job or job performance was under challenge and intended to defend his performance and his job. [35] It does appear that there was an important deadline to be met on 21 February 2003 for a client of the firm, Mr.Kaucic, that both Mr.Karafili and Mr.Moore were engaged in work for that client, and that Mr.Moore was absent on 21 February, the day of the deadline. Mr.Karafili said that financial reports had to be provided by 21 February to the Bank on behalf of Mr.Kaucic, otherwise `they would have cancelled the loan they offered.' 40 Mr.Moore said in cross examination that he had done `quite a bit of work' on that file, and Mr.Karafili had discussed Mr.Kaucic's cashflow report with him, but that he did not know the `exact date' of the deadline 41 . He said that he spoke to Ms.Torrens on 21 February who never mentioned that deadline or issue, and that Mr.Karafili did not mention it in the letter he sent to Mr.Moore on that day 42 . Ms.Torrens agreed that her witness statement did not contain a reference to her informing Mr.Moore of this deadline, and she agreed that it was not her responsibility to inform Mr.Moore of deadlines 43 . On the evidence, Mr.Karafili seems to have had overall responsibility and control of the work for Mr.Kaucic and I doubt that he ever or anyone else ever informed Mr.Moore of the exact date of the 21 February deadline. Nor in the circumstances is it at all clear that Mr.Moore should necessarily have known in any event of the deadline. I am unable to conclude that Mr.Moore's absence on 21 February was a deliberate breach by him of his obligation to provide certain work on that day such as to amount to a repudiation of the contract of employment. [36] While it is true that Mr.Karafili left messages for Mr.Moore, he also communicated with him by letter asserting an abandonment of employment without attempting to ascertain whether or not it was, or providing for Mr.Moore to clarify his intentions. His employee, Ms.Torrens, said in her witness statement 44 that she spoke to Mr.Moore on 21 February and knew that he interpreted the 20 February letter as requiring him to absent himself from work, again an indication that there was no attempt to abandon employment. [37] The absence was, in other words, understandable if perhaps not fully justifiable, there was no intention to end the employment relationship, there was no repudiation of the contract of employment, and Mr.Karafili did not act to ascertain Mr.Moore's intentions or to put to him a direction to return to work or face abandonment of employment, and might have known of Mr.Moore's interpretation of events. The evidence does not support a conclusion that Mr.Moore abandoned his employment. [38] In my view Mr.Karafili's telephone message leading to Ms.Carmelli's action, on instructions from Mr.Karafili, to refuse Mr.Moore entry to the firm's premises on 24 February 2003 " was the real causal event which gave rise to the termination of the employment " 45 . There was in my view a termination of employment at the initiative of the employer within s.170CE . [39] It is now necessary to consider the tests set out in s.170CG(3)(a) - (e) of the Act. (b) Section 170CG(3)(a) - Was there a valid reason for the termination? [40] The respondent claims that if Mr.Moore is found not to have abandoned his employment: "... the applicant not attending work on the 21st demonstrated a gross misconduct - well it was serious misconduct. In effect, it was a gross disregard for his work and his responsibilities towards the client." 46 [41] In the alternative, the respondent submits that the performance issues outlined in Mr.Karafili's letter of 20 February constitute a valid reason for dismissal. Serious Misconduct [42] Regulation 30CA of the Workplace Relations Regulations provides a description of serious misconduct in the following terms: " (1) For paragraph 170CM(1)(c) of the Act, serious misconduct includes: (a) wilful, or deliberate, behaviour by an employee that is inconsistent with the continuation of the contract of employment; and (b) conduct that causes imminent, and serious, risk to: (i) the health, or safety, of a person; or (ii) the reputation, viability or profitability of the employer's business. (2) For subregulation (1), conduct that is serious misconduct includes: (a) the employee, in the course of the employee's employment, engaging in: (i) theft; or (ii) fraud; or (iii) assault; or (b) the employee being intoxicated at work; or (c) the employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee's contract of employment. (3) Subregulation (2) does not apply if the employee is able to show that, in the circumstances, the conduct engaged in by the employee was not conduct that made employment in the period of notice unreasonable. (4) For this regulation, an employee is taken to be intoxicated if the employee's faculties are, by reason of the employee being under the influence of intoxicating liquor or a drug (except a drug administered by, or taken in accordance with the directions of, a person lawfully authorised to administer the drug), so impaired that the employee is unfit to be entrusted with the employee's duty or with any duty that the employee may be called upon to perform." [43] In Furey v Civil Service Association of WA (Inc) 47 the employer submitted that the employee's absence from work amounted to serious misconduct. Farrell JR held that although the employee in this case had failed to contact the employer in regards to leave arrangements, this was not the result of a conscious decision on the employee's part. In addition, the employer's request that the employee contact them was not sufficiently precise or emphatic to support a finding of serious misconduct (and the resulting summary dismissal). Thus, the Court held that the grounds for termination arose from the employee's misjudgement and procrastination, which did not amount to serious misconduct. [44] Mr.Moore's behaviour on 21 February can be similarly viewed. I have concluded that although he knew that the report was required as soon as possible, he did not know that it was required specifically on 21 February. In addition, the concluding phrase in the letter of 20 February is ambiguous enough to allow for Mr.Moore's interpretation, given his state of upset. Mr.Moore's absence from the office on 21 February does not constitute serious misconduct and therefore does not warrant summary dismissal. Unsatisfactory Performance [45] Mr.Karafili's letter of 20 February 2003 sets out a number of alleged issues in respect of Mr.Moore's performance: a lack of desire to undertake further training; sporadic attendance; not keeping the tax lodgement program up to date; inappropriately advising a client and not identifying a potential conflict of interest; a lack of commitment to the firm; not supervising staff at an appropriate level; not making budget for chargeable time; not fulfilling obligations to clients (eg. tax lodgement program, Warradale, Richard Kaucic, Mitropoulos, Total Forklifts); taking annual leave at an inappropriate time; and ringing Accountants outside the office for advice. ` A lack of desire to undertake further training' [46] Mr.Karafili claims 48 that Mr.Moore said and `have continuously maintained' that he was not interested in improving his knowledge through training on tax and corporations and other relevant law. Mr.Moore, in his response, says that he does not believe that this is true. In his examination in chief he said that he attended five courses, a two-day tax-effective structures course, a superannuation course, a debt collection course, a tax update course, and a critical point course. He says he did not undertake a CPA course, because he said: `I made no firm commitment to Mr Karafili and basically I was on a steep learning curve with this new position, learning about tax and related issues, and also I had a young family that occupied a lot of my time outside of hours .' 49 . [47] In cross examination he admits that Mr.Karafili wanted him to familiarise himself with the CPA, and asked him by letter to undertake courses 50 . He also in cross examination went through his diary and identified from that the following courses that he says he undertook: 4 July - tax seminar, 11 September - debt collection seminar, 21 May - effective tax structures, and a critical point seminar 51 . He says that he also studied the Master Tax Guide. It may be that Mr.Moore did not do enough in the way of CPA accredited seminars, but he certainly did engage in at least some training, including on taxation issues. Mr.Karafili conceded in cross examination `that he could have attended all these courses' 52 , but maintained that he should have attended `CPA Chartered NTAA' 53 . I accept that Mr.Moore attended the courses he said he did, that he attempted to train himself in tax issues by attending some courses and by reading in the area, but that he was to some extent deficient in not attending CPA courses as was expected by Mr.Karafili. I also think that if the issue was so important more forceful action should have been taken by Mr.Karafili at an earlier stage on this issue. Mr.Karafili did raise it with Mr.Moore, for example by letter in August 2002, but he did not specifically ensure that his requests were carried out. ` Sporadic attendance' [48] Mr.Karafili claims 54 that Mr.Moore came and went as he pleased, did not keep `prescribed hours' and did not tell anyone why he was going or when . Mr.Karafili said that `I cannot pinpoint it precisely, exact time, but Mr.Moore came in late quite often'. He later says that Mr.Moore came in to work late `a few times. I think the girls will be able to answer that much more appropriate, sir, than I' , and later still says that he cannot recall Mr.Moore ever being there at 8.30 am. He also said Mr.Moore did not make up time later. 55 Mr.Moore, in his written reply, says that his appointment letter contained no reference to starting and finishing times, that in the Christmas/January period the office was quiet, and that Mr.Karafili had on one occasion informed him that making up time for one period of absence was not necessary `as we were professionals'. In examination in chief and cross examination he denied coming and going as he pleased, denied coming in late or leaving early, and denied that the formal office hours were 8.30am to 5.30 pm 56 . It may be that Mr.Moore was flexible in his hours of work. Mr.Moore appears to have formed the view that his working hours were consistent with what was expected of him in his contract of employment, and this was not an unreasonable view on the evidence before me of what he was told, his relations with other staff including Mr.Karafili, and how the office operated. It would have been open to Mr.Karafili to direct him to work in a different manner but this was not done until 20 February 2003. Mr.Karafili's letter of 20 February 2003 is the first occasion on which he appears to have formed a firm view on Mr.Moore's working hours. Before that Mr.Karafili did not appear to closely supervise or specify matters such as hours of work, and it appears expected Mr.Moore to do the work that needed doing as a professional. keeping the tax lodgement program up to date' [49] Mr.Karafili claims 57 that Mr.Moore did not perform adequately in keeping the tax lodgement program up to date. He says that Mr.Moore placed the program where it would not be physically accessible 58 . This was denied by Mr.Moore, who said that one copy of the program was in his in-tray, that everyone knew this, and that another copy was `pinned to the wall of another office where did the lodgements from, so - and when we lodged each tax return we crossed those clients off the lodgement program. 59 . Mr.Moore says in his written response that it was kept up to date, and that the only clients outstanding were those that had not provided information or where correspondence from Mr.Karafili himself was required to be completed. He claims that he told Mr.Karafili this on a number of occasions, requested Mr.Karafili spend 2-3 hours with each member of staff to complete the work, but this `did not eventuate'. This issue is discussed later. advising a client and not identifying a potential conflict of interest' [50] Mr.Karafili alleges 60 that Mr.Moore gave advice to one of a number of persons with an interest in the business Total Forklifts , in circumstances where he was acting for them, and where giving advice to one would involve a conflict of interest because of conflict between them. Mr.Karafili says that on 20 February 2003 he saw Mr.Moore providing `incorrect information. I had to step in, and stop him from giving further advice' 61 Mr.Moore said that the conversation with Total Forklifts was on 18 February 2003, and denies that he was giving advice, and was simply providing information 62 . Mr.Moore says in his written reply essentially that he was attempting to develop a satisfactory resolution to disputes between the parties involved, that Mr.Karafili had said that he `agreed with this view' , but also said that he `did not care'. In my view Mr.Karafili had grounds for concern about a potential conflict of interest. It is possible that Mr.Moore may not have strictly followed Mr.Karafili's instructions in circumstances where both were involved in the matter and Mr.Karafili was entitled to expect that his directions would be followed. However, that is not clear on the evidence. I am also unable to find that Mr.Moore's explanations are implausible or unlikely. They may be correct. A resolution of the sort discussed by Mr.Moore might have been advantageous to the client and a benefit to the practice and not a conflict of interest. The evidence is largely inconclusive, although I am inclined to believe that it is likely that a warning could have appropriately been given to correct a failure to strictly follow instructions. The matter did not however justify dismissal. lack of commitment to the firm' [51] Mr.Karafili alleges 63 in his letter of 20 February that Mr.Moore essentially was not willing to do what was required for a career with the firm. Mr.Moore says that he does not understand the allegation. This issue amounts to an overall assessment of Mr.Moore's work, an assessment that I discuss later in this decision. supervising staff at an appropriate level' [52] Mr.Karafili says that 64 Mr.Moore failed to properly supervise another employee, `James' , who had a lot of files to be finalised, and should have known `exactly at what stage or level those files were at' , but did not. Mr.Moore responds that `the cost of bringing James back for 2-3 days would be much less than the cost involved for me or someone else to familiarise themself with all his clients and client files to the extent he has the clients confidence and knowledge of detail.' It is clear that Mr.Karafili and Mr.Moore failed to work together effectively. Beyond that I am unable to reject Mr.Moore's explanation and proposals. making budget' [53] Mr.Karafili says 65 that Mr.Moore is interested in an increase in pay and other interests not in the business and practice and does not provide a return to the practice . He says that Mr.Moore was told to have billable hours of 75 per cent, and failed to achieve that despite being reminded 66 . He denies that supervising people and the other duties would make a dent in billable hours, and denies that the 75 per cent target was suitable for a tax expert with years of experience or a graduate accountant, rather than Mr.Moore with his inexperience 67 . Mr.Moore in his written response says he has done various things for the business, namely helping and supervising James and Nen on various queries, ensuring the latest version of Solution 6 software is installed on all computers. In cross examination Mr.Moore agrees that 75 per cent was the goal mentioned once in a letter, and perhaps one or two other times by Mr.Karafili 68 . He also says that the billable time was quite good and that it was hard to achieve the goal because of spending a lot of time training and updating the computer system, ie. on administration 69 . He does not deny in cross examination failure to achieve billable hours in for example the first and second week of February, but also explains that in January `there was very little to do. There was, you know, the odd return had come in, but there was very little work - like, obviously most of our clients were away... I could only do what was there. 70 ' In my view the evidence shows firstly that a goal for billable hours was set, secondly that there was some limited discussion between Mr.Karafili and Mr.Moore about achieving it, thirdly that Mr.Moore's explanation of administrative duties and possibly inexperience and lack of work in February are by no means implausible or unlikely, and on the evidence I cannot safely reject them, that the billable hours goal was just that, a goal or target, and finally that the employer can set standards in this and other areas but that acquiescence in or toleration of alleged breach of those standards to some extent undermines any claim that failure to achieve those standards is inappropriate. In this case I accept that Mr.Karafili had a concern about Mr.Moore's billable hours but he was not so concerned that he did other than indicate general approval for Mr.Moore's overall performance by expanding his duties and providing a pay increase. Again, this indicates the nature of Mr.Karafili's assessment of Mr.Moore's performance in this and other areas. `Not fulfilling obligations to clients' (eg. tax lodgement program, Warradale, Richard Kaucic, Mitropoulos, Total Forklifts ) [54] There was a deadline for the preparation of a detailed financial report (profit and loss and cashflow) report on the affairs of a client, Mr.Kaucic and his business Warradale. The report was being prepared for Suncorp in Queensland, in connection with a loan 71 . The deadline was 21 February, when Mr.Moore was absent. As a result of the deadline being missed Mr.Karafili was required to do catch up work over the weekend, and to fly to Queensland. Mr.Moore denied ever being informed of the deadline 72 , and there is no clear evidence to the effect that he was told. There is also a conflict of evidence on whether or not Mr.Moore prepared a report and printed it out, with Mr.Moore saying he did prepare and print it out 73 , and Mr.Karafili denying that he had seen a report and that `if he was to give me a report it would have been just a trial balance'. 74 I think it likely that Mr.Moore prepared at least a trial balance, and perhaps more. I am unable to ascertain which elements of the project were Mr.Moore's and which Mr.Karafili's. They shared responsibility in what appears to be a less than satisfactory arrangement. I think that this is the reason for an important deadline being missed, and requiring catch up work on Mr.Karafili's part. I do not accept that Mr.Moore knew of or even necessarily should have known of the deadline for Mr.Kaucic's report. Mr.Karafili seems to have had an important role in the matter. [55] In relation to previous work for Warradale and for another client, Mitropoulos, Mr.Karafili said that Mr.Moore failed in his performance 75 . Mr.Moore said that Mitropoulos did leave Levelan, but was happy with Mr.Moore's work, and that he had a document from them which said that. He explained his work for Warradale, indicating that there were outstanding queries which were documented, a copy of which was sent to the client 76 . I am unable on the evidence to reject Mr.Moore's explanation. [56] Mr.Karafili says 77 that they were trailing behind quite considerably with the tax lodgement program, and attributes this to Mr.Moore's lack of interest and care. Mr.Moore says there are several reasons why there were returns outstanding including loss of an experienced accountant, Rose's work is not what it should be, and because we need James back. Mr.Moore's suggestions for work that needed to be done on the tax lodgement program were not, it appears, accepted. Mr.Moore asked Mr.Karafili for help with the program, but this was not provided in Mr.Moore's view. [57] I am unable to allocate full blame for problems in the tax lodgement program to Mr.Moore in circumstances where there was overlapping responsibility, and I am unable to conclude that his suggestions were wrong, inadequate or unreasonable. Mr.Moore was told to take responsibility for the program in August 2002 in full knowledge that he was not fully skilled in taxation matters, apparently had difficulties with the program in December 2002, and again on 17 February 2003 was told to take responsibility for the program and to provide weekly reports. Mr.Karafili seems to have had difficulties with Mr.Moore's performance with the lodgement program from late 2002, but still apparently considered his performance sufficient to provide him with a pay rise and to direct him to take full responsibility for it in February 2003. Again this suggests that before that letter Mr.Moore and Mr.Karafili shared the work, and did so in an unsatisfactory and less than effective manner, and that Mr.Karafili considered his performance on the program acceptable, perhaps without much investigation of his performance or detailed discussion with him about the problems that might have existed. [58] Even if there was poor performance in these matters I am unable to say whether it arose out of Mr.Moore's conduct or the conduct of others, including Mr.Karafili. For example, I accept that there was a problem with Mr.Kaucic's report, and the tax lodgement program. Yet while Mr.Karafili and Mr.Moore worked together on both it is not clear who was to blame for the problems. Mr.Moore and Mr.Karafili appear not to have had an effective working relationship. Communication between them seems to have been poor, intermittent and unsystematic. `Taking annual leave at an inappropriate time' [59] There was little or no evidence led in respect of this alleged performance issue. `Ringing Accountants outside the office for advice'. [60] Mr.Moore rang persons outside the office for advice. Mr.Karafili objects to this. Mr.Moore defended himself: 'I find it very difficult to contact you and I do not see using my initiative to obtain information to supply the best possible advice to the practices' clients as a bad thing' . I am on the evidence before me unable to reject Mr.Moore's explanation. Again, the evidence suggests that communication between Mr.Karafili and Mr.Moore was not good, that Mr.Moore was struggling at times in the job, and that Mr.Moore was not supervised or mentored to any great degree. `Solution 6' [61] The respondent alleged that Mr.Moore had not updated the Solution 6 computer system appropriately or in a manner which reflected the time attributed to this task in his time sheets. It called Mr.Merton Oxha, an accountant employed at the firm for approximately eight months throughout 2003, in support of this allegation. Mr.Oxha "... was in charge of looking after and updating most of the computer systems and software ..." 78 amongst other things at the firm. [62] Mr.Oxha described his experience with Solution 6 as: "[c]ommencing from my second year of university studies we started using Solution 6 as part of our subjects, or electives as you may call it. At the start it was basically a brief outline of what Solution 6 was and what it enabled us to do in the future. And then once I started at Mitch's office, I started a more detailed knowledge of Solution 6, attending seminars and courses, learning a little bit more about the software and got up to full speed." 79 [63] Mr.Oxha said that the Solution 6 system had not been updated for as long as three years. This belief was based on a conversation he had with a Solution 6 helpline representative and his examination of the system which, he said: "...[was] being used on our system and the version which the 2003 update disk was trying to install, I found that there was a difference in between the letters and the numbers which are used to identify the - basically the month of update or the updates available at the time. So it was found that the update disk was a 5.1E version, where our system was still operating under a 5.1 version." 80 [64] Mr.Oxha agreed in cross examination that he was not an expert in Solution 6 81 . He was uncertain about whether a 5.1B version of the program existed although he was " pretty sure " that it did, he was uncertain of the commencement date of 5.1A, and he appeared reliant on the helpline representative he contacted by telephone when having difficulties updating the system. [65] Section 76 of the Evidence Act 1995 (Cth) provides that: "Evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed. " [66] There are exceptions to this rule provided for in the Act, including where a witness has " specialised knowledge " (s.79). In the circumstances such an exception would not apply to Mr.Oxha's evidence. I am not bound by the rules of evidence 82 , but that does not mean that those rules are irrelevant. They can be of assistance to the Commission in assessing the weight to be given to evidence 83 . Approaching Mr. Oxha's evidence simply on the basis of the facts which he gives evidence about, my opinion remains the same. [67] In the circumstances I do not believe that it would be safe to accept Mr.Oxha's overall conclusions about Solution 6, and I am unable on the limited evidence to form my own view. Mr.Oxha, to his credit, was quite frank about the limits of his knowledge and his dependence on the alleged advice of others. I have no reason to believe that Mr.Oxha performs his duties other than competently or faithfully. However, I find the evidence regarding Mr.Moore's alleged performance failures on this issue to be inconclusive. Conclusion [68] Mr.Karafili and Mr.Moore do not appear to have had an effective working relationship. They worked together for some time, including jointly on work such as Mr.Kaucic's report to the bank and the tax lodgement program. An employer is entitled to specify reasonable standards of work and to hold employees to that. Mr.Moore was still an employee, although more was hoped of him in the future. In the future he was seen as potentially a partner. However, the ordinary process of setting standards of work for an employee and then ensuring that they were achieved, did not seem to operate effectively with respect to Mr.Moore. Standards or requirements were specified to some limited degree in Mr.Karafili's letters of April and August 2002, concerning CPA or NTAA courses, a minimum 75 per cent chargeable rate, clients not to be privately solicited for work, instructions taken by telephone to be put in writing, more communication between Mr.Moore and Mr.Karafili, and working with Nen. However little was done, it appears, to assess whether these employer requirements were met, beyond for example limited reminders that Mr.Moore was expected to undertake CPA or NTAA courses and requests to do what was required for the tax lodgement program. Not much detailed interaction between Mr.Moore and Mr.Karafili seems to have taken place in relation to that program. Mr.Karafili wanted the work done, but did not assess what Mr.Moore was doing with the program or it appears respond to his suggestions, or act to help Mr.Moore if he was having difficulties. [69] Mr.Moore appeared to consider that his standard of work was acceptable, even more, given the expansion of his duties in August 2002 to include what was said by Mr.Karafili to be `complete and absolute responsibility for the office ', and his pay increase on 17 February 2003. There is nothing on the evidence which shows that Mr.Karafili had a different view until 20 February 2003. On or around that date he appears to have investigated Mr.Moore's performance and decided that it was seriously inadequate in key areas. If it was, it had been so for some time and had been acquiesced in, accepted, or left uncorrected. Within reasonable limits, it is for the employer to specify what standard of work is required. There are objective measures, of course, but they are measures which are best assessed by the employer. On the evidence before me I am unable to say that Mr.Moore was guilty of serious misconduct which amounted to a repudiation of his contract, or which justified dismissal. The evidence is inconclusive about most of the accusations of poor performance levelled at Mr.Moore. [70] Firstly, it is unclear on the evidence whether there was any poor performance in some areas. For example, his hours of work might have been on occasion irregular but seem predominantly from the point of view of his employer to have been whatever was required to perform in the job, within reasonable limits, something that is not unknown in professional or similar jobs. There were formal hours for the office but Mr.Moore's hours were apparently accepted and acquiesced in, or can reasonably be considered within the scope of the directions he was given. [71] Second, in any event, if there was poor performance I am unable to allocate blame for it to Mr.Moore in most cases. I do not consider that Mr.Moore's performance was free of difficulties. However, there are issues of skill level, joint responsibility and supervision to consider. [72] Mr.Moore and Mr.Karafili worked together on the various projects, but did not appear to work together effectively. Their communication and coordination was poor, requests and suggestions from each were not really responded to. [73] Mr.Moore was also relatively inexperienced in for example taxation matters, and was also to some degree left with the responsibility of developing his skills and setting his own standards. He was not it appears supervised, assessed, mentored, guided, or reviewed in any detailed or systematic manner by Mr.Karafili until 20 February 2003. Mr.Karafili, for example, said in relation to the 17 February 2003 wage increase `I just gave him a pay increase, I trusted him by him telling me that everything is up to date; everything is hunky dory.' 84 Mr.Karafili was busy with the demands of a demanding and busy practice and expected Mr.Moore to do what was required to perform as a professional. To the extent to which Mr.Moore's performance was reviewed the conclusions reached by Mr.Karafili and communicated to Mr.Moore were overall largely positive and supportive, although there were some reservations. [74] In conclusion, I do not consider that it has been established that Mr.Moore's performance justified dismissal, let alone summary dismissal for serious misconduct. Warnings, directions, ultimatums, and similar measures would have been appropriate but not dismissal. There was no valid reason for dismissal. (c) Section 170CG(3)(b) - Notification of that Reason [75] There was no valid reason for dismissal, and Mr.Moore was not notified of one. He received a letter dated 20 February 2003 describing deficiencies in his performance. He also received a letter dated 21 February 2003 alleging that he had abandoned his employment. I have found that neither of these explanations constitutes a valid reason for termination. In Chubb Security Australia Pty Ltd and John Thomas 85 a Full Bench of this Commission said that in those circumstances s.170CG(3)(b) has no application: "Further, it is not, we think, possible to have regard to s.170CG(3)(b) until a finding has been made with regard to s.170CG(3)(a). Section 170CG(3)(b) refers to `that reason'; that is `a valid reason', being the term used in s.170CG(3)(a). If there is no valid reason, s.170CG(3)(b) has no application. Neither, we think, has s.170CG(3)(c)." 86 (d) Section 170CG(3)(c) - Opportunity to Respond [76] Mr.Moore was not given any opportunity to respond to the issues described in the letter of 20 February nor to the claim made by Mr.Karafili that he had abandoned his employment. Ms.Torrens delivered the letter dated 20 February to Mr.Moore. Mr.Moore denied discussing that letter with Mr.Karafili on that day, saying that they instead had a heated discussion about Total Forklifts and what should be done there, apart from the CPA issue 87 . I think that is a likely version of what happened. The letter dated 21 February was delivered in a taxi to Mr.Moore's home. When Mr.Moore arrived for a meeting on 24 February, which was discussed with Ms.Torrens by telephone on 21 February, but was not confirmed by her, he was prevented from entering the office and told that Mr.Karafili was not available. (e) Section 170CG(3)(d) - Warnings of Unsatisfactory Performance [77] The respondent claimed that Mr.Moore had performed poorly at certain periods throughout his employment. It was also claimed that Mr.Karafili had spoken to Mr.Moore about some of these issues 88 . However, Mr.Karafili gave evidence a number of times that he did not closely supervise Mr.Moore: "I also had discussions with Mr Moore that it was, and is, my practice that [sic] to allow the staff to self-assess as to their performance and ability and their training requirement" 89 and; "Over time I reminded him that he was on self-assessment." 90 [78] These "reminders" cannot in all fairness be considered warnings. While Mr.Karafili did from time to time raise issues and indicate some expectations of performance they were not in the form of warnings, and were not specific as to performance or consequences sufficient to constitute warnings. [79] Mr.Karafili's letter of 20 February 2003 was Mr.Moore's first formal warning of unsatisfactory performance. (f) Sections 170CG(3)(da) - (db) - Size of Undertaking, Human Resource Management Expertise [80] The firm itself is relatively small, and there is no dedicated human resource section. The actions of the firm, including deficiencies in procedural fairness, should be considered in that context 91 , and provides some weight for the respondent's submissions. It is desirable that employers act with a knowledge of the law and procedural requirements, but it is also understandable that there may be at times shortcomings in the conduct of businesses of this size. (g) Section 170CG(3)(e) - Other matters [81] I have taken account of all the submissions and evidence. (h) Conclusion [82] I find that Mr.Moore was not afforded a `fair go all round' having regard to the findings set out above, and find that the termination of Mr.Moore was harsh, unfair and unreasonable. [83] This matter is an extremely unfortunate one. Mr.Karafili, at some time after 17 February 2003 when he decided to provide Mr.Moore with a pay increase, examined Mr.Moore's performance and was very concerned about a number of issues 92 . He was a very busy man, with onerous responsibilities as the leader of a small firm, and had placed considerable trust in Mr.Moore, who was a key employee of whom he expected and hoped much 93 . Mr.Moore, on the other hand, was horrified and shocked by the tone and nature of the accusations in the 20 February letter, so soon after an apparently positive review and pay increase 94 . I do not doubt Mr.Karafili's sincerity, nor that of Mr.Moore, and I doubt that either will easily put this experience behind them. It is however essential that they do. Discussion of Remedy (a) Reinstatement Not Sought [84] Reinstatement is the primary remedy. However, in this case the applicant does not seek reinstatement. I will, therefore, consistent with s.170CH(6) consider an order for payment of an amount in lieu of reinstatement. (b) Should a Compensation Order Issue [85] I have determined that the termination was harsh, unjust or unreasonable. Under s.170CH(1) I may now make an order. In the circumstances an order of reinstatement is not appropriate (s.170CH(3)). I think it is appropriate to make an order requiring the employer to pay the employee an amount in lieu of reinstatement (s.170CH(2) and (6)). Under s.170CH(7), in determining an amount for the purposes of s.170CH(6) I must have regard to certain factors. (c) Sections 170CH(2) and (7)(a) - Effect on Employer Viability [86] No issues of effect on employer viability were raised. (d) Sections 170CH(2) and (7)(b) - Employee Length of Service [87] Mr.Moore was employed in a full-time capacity for at least 10 months. His period of employment was short. I have had regard to this, as required by the Act. (e) Sections 170CH(2) and (7)(c) - Remuneration the Employee Would Have Received, Sections 170CH(2) and (7)(d) - Employee Efforts to Mitigate Loss [88] A Full Bench of this Commission concluded in Sprigg v. Paul's Licensed Festival Supermarket 95 that: `For the reasons given by Ross VP in Shorten it is desirable that a consistent and predictable technique for determining an amount to be ordered in lieu of reinstatement should emerge in Commission practice.' 96 [89] Such a consistent technique emerged from Sprigg , and has generally been applied by the Commission, with lost remuneration an important but not exclusive element: `Steps 1 to 4 set out as part of principle 5 in Shorten in our view continue to be appropriate and relatively necessary steps in the estimation and appropriate assessment of remuneration lost. Remuneration lost is a necessary element in determining an amount to be ordered in lieu of reinstatement. Any amount provisionally arrived at by application of these steps is subject to whatever offsetting weight is given to other circumstances, including those that need now to be taken into account under paragraphs 170CH(7)(a),(b) and (e).' 97 [90] This is a conclusion that the amount arrived at by calculating lost remuneration would appropriately be reduced in some circumstances by `whatever offsetting weight is given to other circumstances' such as short service, effect on viability, or other matters, factors required to be taken into account by s.170CH(7)(a),(b) and (c). Principle 5 in Shorten 98 was in the following terms: `Lost remuneration is a fundamental element in assessing compensation though it is not the only matter that may be considered: Kup-Geir v. Open Family (Australia) Inc.' 99 [91] In the matter before the Commission in Sprigg, the employee had been employed for ten years, which it described as a `substantial period ', and the Commission concluded that having regard to that and the lack of any evidence about the effect of any order on viability `we see no good reason to reduce the amount that might otherwise be awarded' 100 . The circumstances in other matters will of course be different on occasion. [92] Mr.Moore seeks the maximum compensation available under the Act, six months remuneration. In a document entitled Lost Income as a result of unfair dismissal from Levelan Pty Ltd 101 Mr.Moore details the bases for his claim: Wages 4 months @ $65k plus superannuation 22,345.00 1 month @ difference amount paid labouring at $14.48 per hour compared to $38.86 per hour if employed at $65k plus super 3,207.20 Backdating pay increase to November 2002 3,353.85 Difference between current wage $60k plus superannuation and wage at Levelan Pty Ltd from 21 July 2003 to 4 December 2003 1, 991.35 Anticipated days leave to attend AIRC on 4th & 5th December and leave taken to attend original hearing date on 28th October (3 days in total) 769.41 31,666.80 Legal Costs Legal fees already incurred 3,403.41 Fees for employment consulting services - pending 8,000.00 Phone calls 200.00 11,603.41 Travel Costs Travel between current residence and CBD - 180km either way at $0.60 per kilometre. 3 return trips 25th October to obtain adjustment witness statement, 28th October to attend adjourned arbitration and 4th December arbitration 648.00 648.00 Relocation Costs Rent $100 per week for 3 weeks prior to family moving from Melbourne 300.00 Truck rental and fuel 350.00 Reconnection costs of Utilities 350.00 Damaged Items 400.00 1,400.00 45,318.21 [93] The respondent submitted that if compensation was awarded the applicant's short employment history, the applicant's alleged unsatisfactory performance history which they argue would have resulted in termination in any event and whether the applicant appropriately mitigated his loss, should be taken into consideration 102 . I have had regard to these submissions and others in the steps I propose to take, as will be seen below. [94] The first step in Sprigg is to estimate the remuneration the employee would have received or would have been likely to have received, if the termination of employment did not take place. The second step is to deduct moneys earned or to be earned up to the date of the anticipated period of employment, and to have regard to the applicant's attempt to mitigate his loss. The third step is to discount the amount of compensation for contingencies (see Slijka v. J.W.Sanders Pty Ltd 103 , Sprigg 104 , and Ellawalla v. Australian Postal Corporation 105 ). The fourth step is to take into account the impact of taxation. I leave this for determination by the parties. (f) Section 170CH(2) and (7)(e) - Any Other Relevant Matter [95] I have taken into account all the evidence and submissions. (g) Section 170CH(8) - The Legislative Cap [96] The fifth step pertains to the legislative cap on compensation. Section 170CH(8), limits the compensation to an amount not in excess of the amount of remuneration that the employee would have received in the six months immediately preceding the termination had the termination not occurred. Decision on Remedy [97] In my view, the relationship between Mr.Karafili and Mr.Moore was such that employment would have ended eight weeks after the receipt by Mr.Moore of the 20 February 2003 letter of allegations about his performance, if Mr.Karafili had not acted to end employment as he did. I also note the short service of Mr.Moore. The compensation is based on the wage rate applying at the time of termination, that established on 17 February, which took effect on 21 February according to the terms of the letter 106 , and I have already concluded that termination of employment took effect on 24 February. This is the actual economic loss 107 . Mr.Moore has taken appropriate steps to mitigate his losses 108 . On the basis of the steps in Sprigg an order of $10,700 is appropriate, which takes account of all the relevant factors including lost remuneration and Mr.Moore's short service 109 . Sprigg makes it clear, as it must do given the statutory requirements, that compensation may be reduced on account of short service. There appear to be few decisions in relation to this issue, but having regard to the circumstances and the statutory requirements some reduction of the amount of compensation is appropriate. An order implementing this decision is contained in PR944261 . The amount earned in labouring of $2,209.47 was 110 not earned during the two months after his termination and is therefore not deductible from the amount of compensation. BY THE COMMISSION: DEPUTY PRESIDENT Appearances: Mr D Renehan for Mr D Moore Ms M Corbisiero for Levelan Pty Ltd Hearing Details: 2003 Melbourne December 4, 5, 18. Printed by authority of the Commonwealth Government Printer <Price code G> 1 Exhibit R1, Witness Statement of Dallas Moore, para. 2; Exhibit R3, Letter dated 30 April 2003 2 PN131 3 Exhibit R3, Letter dated 30 April 2003 4 Exhibit R3, Letter dated 30 April 2003 5 Exhibit C10, Witness statement of Mitat Mitch Karafili, 2; PN2611 - 2612 6 Exhibit C10, Witness Statement of Mitat Mitch Karafili, 6 7 Exhibit C10, Witness Statement of Mitat Mitch Karafili, 8 8 PN2662 9 PN2759 - 2763 10 PN2823 - 2825 11 Exhibit R4, Letter dated 29 August 2002 12 Exhibit R1, Witness statement of Dallas Moore, para. 3, 4 13 PN2387 14 Exhibit C11, Witness statement of Mitat Mitch Karafili, para. 7 15 Exhibit R5, Memo dated 17 February 2003 16 The respondent's interpretation, PN3660 17 The respondent submitted that it was not relying on the illegible part of this memorandum at PN3662 18 Exhibit C11, Supplementary Statement of Mitch Karafili, para. 18 19 PN1911 20 Exhibit R7, Letter dated 20 February 2003 21 PN160 22 Exhibit R1, Witness Statement of Dallas Moore, para. 9 - 10; PN1856; 1910 - 1911 23 Exhibit C13, Witness Statement of Julie Marie Torrens; PN3328 24 Exhibit C12, Telephone record 25 PN3289 - 3293 26 Exhibit R8, Letter dated 21 February 2003 27 PN3342 28 Exhibit R14, Mr Moore's Response dated 23 February 2003 29 Exhibit C11, Supplementary Statement of Mitch Karafili, para. 27 30 PN3384 31 Exhibit R1, Witness Statement of Dallas Moore, para. 19 32 PN3386 33 Exhibit R1, Witness Statement of Dallas Moore, para. 25 34 Letter attached to Exhibit C10, Witness Statement of Mitat Mitch Karafili 35 Letters attached to Exhibit C10, Witness Statement of Mitat Mitch Karafili 36 PN3643 37 IRCA, unreported, VI 2211/95, 26 September 1995 38 Whelan C, Print Q8756, 16 November 1998 39 Williams SDP, Print S0137, 15 October 1999 40 PN2530-2531 41 PN1580-1581 42 PN1949 43 PN3289-3293 44 Exhibit C13, Witness Statement of Julie Marie Torrens, para. 10 45 IRCA, unreported, VI 2211/95, 26 September 1995 46 PN3816 47 FCA, unreported, WAG 82/97, 19 June 1998, Farrell JR 48 Exhibit R7, Letter dated 20 February, para. 1 49 PN132-133 50 PN919-922; PN682-684 51 PN859 52 PN2667 53 PN3053 54 Exhibit R7, Letter dated 20 February 2003, para. 2 55 PN2992-2997 56 PN143-44;PN1503;PN757-759 57 Exhibit R7, Letter dated 20 February 2003, para. 3 58 Exhibit C11, Supplementary Witness Statement of Mitch Karafili, para. 8 59 PN134 60 Exhibit R7, Letter dated 20 February, para. 4 61 Exhibit C11, Supplementary Witness Statement of Mitch Karafili, para. 20 62 PN1732-1733 63 Exhibit R7, Letter dated 20 February, para. 5 64 Exhibit R7, Letter dated 20 February, para. 6 65 Exhibit R7, Letter dated 20 February, para. 7 66 PN2634-2636; 2649-2653 67 PN2649-2653; 2658-2660 68 PN707-8 69 PN711 70 PN1119-1122; 1221 71 PN1568-1570; 2534-2539 72 PN1579-1581; 1584, 1615; PN1943-1944 73 PN1579-1581; 1584, 1615; 1947-1949 74 PN2558-2562 75 Exhibit C11, Supplementary Witness Statement of Mitch Karafili, para. 8, para. 9, para. 10, para. 15 76 PN135-136 77 Exhibit R7, Letter dated 20 February, para. 8 78 PN2249 79 PN2252 80 PN2257 81 PN2293 82 s.110 of the Act 83 King v. Freshmore Vic Pty Ltd , Ross VP, Williams SDP, Hingley C, Print S4213, para. 60-63. 84 PN2522 85 McIntyre VP, Marsh SDP and Larkin C, Print S2679, 2 February 2000 86 Ibid, para. 41 87 PN1761-1764 88 Respondent's Outline of Submissions, para. 5 89 Exhibit C10, Witness Statement of Mitat Mitch Karafili, 6 90 Exhibit C10, Witness Statement of Mitat Mitch Karafili, 8 91 Hall v Aristoc Offset, Hamilton DP, PR916208, 5 April 2002 92 PN2522 93 PN2372 94 Exhibit R1, Witness Statement of Dallas Moore, para. 9 - 10 and PN1856, 1910 - 1911 95 Munro J, Duncan DP, Jones C, Print R0235, 24 December 1998, para. 6 96 Ibid, para. 31 97 Ibid, para. 35 98 Shorten and Others v Australian Meat Holdings (1996) 70 IR 360 99 Quoted in Sprigg at para. 26 100 Ibid, para. 36 101 Exhibit R18 102 Respondent's Outline of Submissions, para. 46 103 (1995) 67 IR 316 at 328 104 At para. 39 105 Ross VP, Williams SDP, Gay C, Print S5109, 17 April 2000, para. 36 - 44 106 Exhibit C5, Letter dated 17 February 2003, salary of $65,000 plus eg. superannuation. 107 See Maluk v. Sutton Tools Pty Ltd , Print R0426, Ross VP 108 Exhibit R15 109 s.170CH(7)(b) 110 Exhibit R2, Applicant's Outline of Submissions, para. 31