WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION PARTIES MAURICE MARCUS BROWN, APPLICANT v. ADCORP AUSTRALIA LIMITED, RESPONDENT CORAM SENIOR COMMISSIONER A R BEECH DATE THURSDAY, 8 JANUARY 2004 FILE NO. APPLICATION 445 OF 2003 CITATION NO. 2004 WAIRC 10432 _________________________________________________________________________________________________________ Result Application alleging unfair dismissal granted. Catchwords Termination of employment – Harsh, oppressive and unfair dismissal – Dismissal for not bringing in new business – Whether position included that requirement – Satisfactory completion of probation without that requirement – Dismissal unfair – Compensation ordered – Industrial Relations Act 1979 (WA) s 23 & s 29(1)(b)(i) Representation Applicant Mr M. Richardson (as agent) Respondent Mr R. Grigoroff (as agent) _________________________________________________________________________________________________________ Reasons for Decision 1 The claim before the Commission by Mr Brown is that he was unfairly dismissed. His evidence in chief, given by way of a statement which became exhibit 1, is that he was interviewed by Mr Ian Mackie for the position of creative accounts manager. He was told that the salary was $50,000 per annum with a bonus of 1% of the sales generated from any new clients that he brought into the business. Mr Brown’s evidence is that he was not told by Mr Mackie that the position was to develop new business nor that the bringing in of new clients was a responsibility of the position. At no time were targets discussed at the interview. He was told that the position was to manage the creative advertising work of the company. Mr Brown’s evidence is that if the position had been advertised as being primarily a new business development position he would not have applied for it because he is a recent migrant to Australia and knows very well the need to have a work history and an established network for a business development role. 2 After the interview, Mr Brown was offered the position. He commenced employment with the respondent on 21 October 2002. The respondent sent him a written employment contract (attachment MBB2 to exhibit 1) which was signed by both Mr Brown and Mr Mackie. Of relevance to the matters before the Commission, the employment contract contains the following provisions— (1) The position title is Account Manager. (2) There is an “incentive to participate in the Adcorp incentive programme”. An incentive of 1% of sales will be paid for media sales in accordance with an agreed new business target. This target will be negotiated upon commencement of each financial year. (3) There is an annual performance review. It evaluates performance against the following criteria— • Standard of work performed, considering quality and deadline requirements. • Contribution to Adcorp’s profitability and productivity. • Relationships with other staff i.e. assistance and support given to people “with which (sic) you work”. 84 W.A.I.G. WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 289 (4) There is a probationary period as follows: “Your employment is subject to the satisfactory completion of a three month probation period. Either party may terminate employment without notice during this time”. (5) The contract provides that the employee’s employment may be terminated by giving the employee four weeks’ written notice. In that event, the employer may elect not to require the employee to continue to work for part or whole of the notice period and may, in its absolute discretion, make a payment to the employee in lieu of the period of notice not worked. 3 Mr Brown was employed for almost five months. His evidence is that nothing happened at the conclusion of his probationary period of three months. He was not given any letter regarding his performance nor was there any discussion with him about it. He was not given any indication by Mr Mackie that the company was dissatisfied with his work at any time during his probationary period which expired on 21 January 2003. 4 Neither was there any “new business target” discussed with him. His evidence is that the first discussion that he had regarding budgets was an informal chat after a production meeting on approximately 18 February 2003. Mr Mackie told him he was required to achieve $200,000 of new business per year and that he was not achieving that target. Mr Mackie told him he was expected to generate $200,000 in sales from new clients that Mr Brown introduced to the company. 5 Mr Brown’s evidence is that his position was not concerned with media sales. There was an incentive for which he would be paid 1% of sales but it was only an incentive. Mr Brown had understood that his first priority was to ensure that the existing clients were happy with the work that had been done and that all work was up-to-date. Part of his job was to develop more creative advertising business from existing clients and this would best be achieved by ensuring those clients were happy with the work that they had already given the company. His job primarily was to manage the creative advertising work secured by Adcorp. New clients would be referred or introduced to him by other staff such as Ms Uren the business development manager. Mr Brown’s evidence is that he did play an important part in securing new business from existing clients. 6 One week later, on 25 February 2003, Mr Mackie gave Mr Brown a warning letter (attachment MBB3). The letter stated that it was a first written warning that Mr Brown’s performance did not meet required standards and must show dramatic improvement if his employment was to continue. The letter stated that Mr Brown was aware of budget requirements when he commenced his employment and his year-to-date figures did not even go close to the target. It stated there needed to be a distinct increase in Mr Brown’s new business activity. It stated that Mr Mackie’s expectations “over the next four weeks” were that the respondent begins to see a clear indication of growth in his sales performance. Continued non-performance would demonstrate that Mr Brown was not taking reasonable steps to improve and unless there were extenuating circumstances, continued failure would result in the termination of Mr Brown’s employment. 7 Mr Brown’s evidence is that he was shocked when he read the letter. He believes that the issue of achieving agreed budgets was completely false because until a few days before being given the warning letter Mr Brown had been totally unaware of budget targets. He had never been supplied with monthly and year-to-date figures on a regular basis and had not been made aware of budget requirements when he commenced in the position. 8 He replied to the warning letter in detail on 3 March 2003 (attachment MBB4). Mr Brown wrote, in part, that at no time at his interview had it been explained to him that his role would be measured solely against new account acquisitions. Rather, his core function would be to manage all collateral creative work that passed through the company irrespective of its source. Further, in relation to budgets, Mr Brown reminded Mr Mackie that there had only been one discussion, within the previous fortnight, when a new business budget was discussed. Mr Brown stated that he had every intention of sourcing new business. He asked Mr Mackie to clarify what constituted new business from the point of view of Mr Brown’s department. He stated that he could relate to an annual budget figure that has to be met which would need to be achieved through a combination of existing and new business. Mr Brown concluded by stating that he looked forward to “driving towards building a strong and loyal client base”. He received a reply from Mr Mackie which clarified “new business”. 9 In the fortnight prior to 19 March 2003 Mr Mackie asked Mr Brown to send him an e-mail detailing the new business opportunities Mr Brown had identified. Mr Brown did so. 10 On the morning of 19 March 2003 Mr Mackie asked him to provide him with a list of the current jobs he was working on. Mr Brown did so. Fifteen minutes later Mr Mackie called Mr Brown into the office and advised him that he was dismissed. Mr Mackie gave him a final pay advice form for Mr Mackie to sign to show that he had received his final payment. Mr Brown signed the form (attachment MBB7). It shows “salary in lieu” for the period 19 March 2003 to 9 April 2003, a period of three weeks. Mr Mackie asked Mr Brown to pack up his personal effects and leave as soon as possible which is what Mr Brown then did. 11 The following day, Mr Mackie phoned Mr Brown to tell him that the company would make a payment of four weeks’ pay in Mr Brown’s final payment. Mr Brown received an amended final pay advice form by e-mail (attachment MBB8). That form shows “salary in lieu” for a period of four weeks. 12 During the period between receiving the warning letter and his dismissal, Ms Uren had shown Mr Brown a new business report which recorded new business secured by the company. Mr Brown’s evidence is that he had not seen that report, and had been unaware of its existence, until that point. A copy of it was given to him subsequent to his dismissal by Ms Uren (attachment MBB 8A). 13 In cross-examination, Mr Brown maintained his evidence that he had not been advised by Mr Mackie of the requirement to seek new business from new clients. The requirement had not been discussed with him at all. He maintained that he had not been given any budget. Rather, he had spent time managing the creative accounts, quotations, briefings, production and invoicing of the output of the other two creative staff employed. 14 Mr Brown called evidence from Ms Uren who had been employed as the company’s business development manager. She stated her role was to bring in new clients to the agency and pass the accounts to other personnel including Mr Brown. Mr Brown and she would then proceed to roll out the marketing plan. Her evidence was that she involved Mr Brown at an early stage because Ms Uren had time pressures on her for her own work. She stated Mr Brown’s role was to work with clients that she brought in to the company on a creative basis to meet their advertising objectives. 15 In cross-examination she maintained her evidence that her primary role was to bring in new business from new clients and that it was not Mr Brown’s primary role to bring in new business from new clients. There were other employees who had to bring in new clients to a lesser extent than she did and Mr Brown was one of those employees (transcript p.24). 16 In re-examination Ms Uren clarified her evidence stating that it was definitely her job, David Hamilton’s job and Yvette Annus’s job to bring in new business. She did not believe it to be Mr Brown’s job to do so but she did see him work on a proposal to get the WA Turf Club on board “as a creative client for the creative studio” (transcript p.26). 17 For the respondent, evidence was called from Mr Mackie. He had been, at the relevant time, the company’s general manager. He was responsible for the day-to-day running of the respondent’s WA business, its profit and growth. 290 WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 84 W.A.I.G. 18 His evidence is that Mr Brown’s position was multi-functional. It was to grow existing client sales and create new business for, and from, new clients. Mr Mackie rejected Mr Brown’s evidence that Mr Brown had not been informed of the budgets and his responsibility for bringing in new business from new clients. 19 Mr Mackie stated that he does not have any actual recollection of his interview with Mr Brown for the position. He is therefore unable to say from his memory whether or not the new business role and budget targets were, or were not, actually discussed. Rather, Mr Mackie made it plain that he had interviewed many people in his time as general manager and he is quite confident that he would have mentioned those things. Further, his statement is that Mr Brown would have received the budget reports via e-mail because he understood that Mr Brown’s name would be on the e-mail address list. However, he did not actually recall if it was. He acknowledged receiving Mr Brown’s reply to the warning letter. Mr Mackie thought he was being open with Mr Brown and that Mr Brown did not understand the role required of him. 20 Mr Mackie was cross-examined on his evidence. While he stated that he was not able to remember what was actually said at the interview with Mr Brown word for word, he believes he said what he has said at every interview. He is sure that he spoke about the respondent’s budget requirements and the business development role. He remembers splitting the budget from a departed employee between Mr Brown and another employee to yield $10,000 to $15,000 per month for Mr Brown. In Mr Mackie’s view there was no primary role for Mr Brown, because his role was the same as any account manager. He was adamant that Mr Brown knew that part of the job was cold-calling and that he could lose his job if this work was not done to a sufficiently high degree. 21 Mr Mackie stated that he had paid no attention to the probationary employment clause in the employment contract. Mr Mackie’s evidence is that it was apparent to him in mid-February that Mr Brown was not capable of doing the job. In his view, Mr Brown was looking after two parts of the role but not the third part of the role. He decided to dismiss Mr Brown because he could see no improvement after the warning letter had been given. He stated he did not need to speak again to Mr Brown before reaching the decision to dismiss him. The contacts given to him by Mr Brown in the e-mail response to the request for new business opportunities showed Mr Mackie that Mr Brown still did not understand what was required. 22 In relation to the new business report (attachment MBB8A) Mr Mackie conceded that it showed that Mr Brown did not have a budget allocation adjacent to his name. Mr Mackie said that the report was “inaccurate”. 23 That concludes my summary of the evidence before the Commission which I found to be relevant to the issues I have to decide. 24 My conclusions on the evidence are as follows. I found Mr Brown’s evidence to be clear and credible. Where his evidence conflicts with that of Mr Mackie I prefer the evidence of Mr Brown for these reasons. Mr Brown is adamant that the role of new business from new clients and meeting a budget was not discussed at the interview. His evidence was not broken down in cross-examination. In contrast, Mr Mackie concedes that he is unable to remember was what said, particularly word for word. 25 Further, Mr Brown’s letter in reply to the letter of warning stated that these matters were not mentioned at the interview and also that the first Mr Brown knew of any targets was after the discussion in February. I note that Mr Mackie’s brief reply to Mr Brown’s letter did not take issue with these parts of Mr Brown’s letter. I would have expected Mr Mackie to have refuted those statements if he did not believe them to be true. Mr Brown’s letter is therefore an unchallenged record of what had not occurred at the interview written at a time well before these Commission proceedings. I therefore place considerable weight on it. It is quite consistent with Mr Brown’s evidence. 26 I found the fact that the new business report did not show any budget for Mr Brown to be quite significant and the evidence that it was an “inaccurate” document quite unconvincing. That contemporaneous document, prepared by the company, supports Mr Brown’s evidence. 27 Further, I found the evidence of Ms Uren to be given in a patently straightforward and honest manner. Her evidence was not shaken in relation to her understanding of Mr Brown’s primary role. It was Mr Brown’s primary role to work with clients that she brought in to the company. It was not Mr Brown’s primary role to bring in new business from new clients. That evidence is supportive of Mr Brown’s evidence. 28 I therefore find that Mr Brown was employed as a creative account manager. A part of his job was devoted to new business but this was not a primary role. A budget target was not set for him. His employment was subject to a three month probationary period and during those three months Mr Brown evidently devoted little time to new business from new clients because of the other creative management work he was doing. However, at no time during the three month period, nor at the conclusion of the period, did the respondent state to Mr Brown that he was not performing in the job to the respondent’s satisfaction. 29 It is important to note that probation is a period of time in which an employee can be trained to do the work and in which an assessment can be made of his or her aptitude and capacity to do the work once trained or partly trained: Mann v Ross (1999) 97 IR 385 at 390 . An employee on probation can expect to be counselled and informed if he or she is not meeting a requirement of the position and warned of the possible failure of meeting that requirement: East Kimberley Aboriginal Medical Service v The Australian Nursing Federation (2000) 80 WAIG 3155 at [49]. Probation is an extension of the hiring process. The fact that the respondent made no assessment of Mr Brown during, or at the conclusion, of his probation entitled Mr Brown to believe that he had performed his duties to the respondent’s satisfaction. If he had not produced sufficient new business from new clients to the respondent’s satisfaction, he would have been told and his employment would not have continued beyond the probationary period. However he was not told and at the end of the probationary period he became a permanent employee in the terms of the contract of employment. 30 It is simply not open to Mr Mackie to ignore the probationary period in the contract of employment. That period is as binding on the company to observe it as it is upon the employee. The fact that he did so demonstrates poor management. It also means that the company cannot fairly say that by mid-February Mr Brown was not doing the job and should be given a written warning when up to 21 January 2003 it had accepted all of the work he had done without any criticism whatsoever. Mr Brown could not have been fairly warned for not doing something which he had not been previously required to do. The warning letter which was sent to him was therefore quite out of order where it referred to “a number of discussions and meetings”, being aware of budget requirements and targets and being supplied with monthly and year-to-date figures on a regular basis. 31 Further, the letter of warning gave Mr Brown four weeks to show an improvement. However, Mr Brown was not given four weeks. He was dismissed after three weeks. It is not to the point for the respondent to say that there was not going to be an improvement in four weeks therefore the respondent did not need to wait. The point is that the respondent itself did not follow its own warning procedure. 32 In any event, for the respondent to have allowed Mr Brown to work without criticism for a period of almost four months and then give him less than four weeks to meet a budget in an area of his position that was not his primary role or face dismissal seems quite unreasonable. The respondent had given Mr Brown three months to demonstrate that he was capable of doing all aspects of the job. If, as is the case here, on or about 19 February 2003 the respondent for the first time drew attention to a new requirement to meet budget, simple fairness would indicate that Mr Brown should be given at least an equivalent period to do so to demonstrate his capacity. 84 W.A.I.G. WESTERN AUSTRALIAN INDUSTRIAL GAZETTE 291 33 In considering Mr Brown’s claim of unfair dismissal I also take the following into account— 34 (1) The written contract of employment did not accurately reflect even Mr Brown’s position title. The position he held was creative account manager but the title of the position in his employment contract was account manager. Any requirement of the position to find new business from new clients, a requirement which the respondent thought important enough to warrant dismissal if it is not met, is not even stated in the contract of employment. 35 (2) The probationary period of employment was not observed at all by the respondent (as I have already stated). 36 (3) The respondent did not even dismiss Mr Brown in accordance with his contract of employment. It dismissed Mr Brown orally when the contract required the dismissal to be in writing. Further, the contract required four weeks’ salary in lieu of notice to be paid but at the time of dismissal Mr Brown was dismissed with three weeks’ salary in lieu of notice. 37 It was quite unfair for Mr Brown to have been dismissed in the manner, and for the reasons, that he was dismissed. I therefore find that his dismissal was unfair. 38 Mr Brown does not seek reinstatement. The respondent objects to reinstatement. I consider that the passage of time and the breakdown in the relationship between the respondent and Mr Brown leads to the conclusion that reinstatement is impracticable. For the same reasons, I find that re-employment is impracticable. 39 I turn to consider compensation for the loss and injury caused by the dismissal. In this regard, the evidence given by Mr Brown that he was out of work for 130 days before commencing new employment on 28 July 2003, that he looked diligently for alternative employment during that time, that he had to borrow money from his parents to meet financial commitments, that he attended TAFE training college and attempted to do small design and print broking from home was not cross-examined. I therefore accept that evidence. 40 Compensation is payable to Mr Brown for the loss caused by the dismissal. One issue to be considered is how long he is likely to have remained with the respondent had the dismissal not occurred. Mr Brown’s evidence from the tenor of his reply to the letter of warning is that he had every intention of sourcing new business. Mr Mackie’s evidence is that he did not believe Mr Brown understood the position and that Mr Brown was not capable of doing the job. 41 The extent to which Mr Brown would have been able to find new business from new clients is not entirely clear from the evidence. Further, it is to be noted that it was not his primary role and that there is no criticism of his performance in his primary role. However, I consider that once he agreed to source new business he should have been given a period equal to the probationary period to demonstrate he could meet the requirement. That period, together with a further four weeks’ notice (to take into account the possibility his employment may have fairly been ended if he did not meet the requirement) is a period of time not significantly shorter than the period of time Mr Brown was unemployed following his dismissal. On the evidence I consider it quite likely that Mr Brown’s employment would have lasted for that period of time. 42 I consider that Mr Brown has attempted to mitigate his loss for the reasons given above. There is no suggestion that Mr Brown earned any other income during the above period of time. 43 The compensation to be ordered will be the salary Mr Brown would have earned between the date of his dismissal and 28 July 2003 less four weeks being the pay in lieu of notice he has received. The compensation will also include the value of the superannuation contributions to be made on his behalf as per his employment contract, together with the value of annual leave that would have accrued, for that period of time. An order will issue requiring the payment to him of the money which represents the loss outlined above. 44 Mr Brown also claims compensation for injury caused by the dismissal. Mr Brown’s evidence in this regard is that he was shocked at the dismissal. He felt he had been cheated because of the efforts he had put in. He also felt angry and upset. He became worried about his financial situation. He had to borrow money from his parents. He stated that he lost self confidence and felt he had lost control of his life. His hands had been shaking and he felt sick to the stomach when he telephoned his wife shortly after he had been dismissed. 45 The word “injury” as that is used in s.23A of the Industrial Relations Act 1979 is not defined. Dismissal in virtually every case will cause the employee disappointment distress and a host of unpleasant personal feelings Manuel v Pasminco Cockle Creek Smelter (1998) 83 IR 135 at 162. There needs to be unusual or exacerbating circumstances before such an order is made (Coms 21 Limited v Liu and Others (2000) 47 AILR 4-229) although not every claim for injury necessarily involves expert evidence of emotional trauma. I do not regard the evidence in this matter as demonstrating an injury above and beyond what might normally accrue in the circumstances of a dismissal and do not consider that Mr Brown’s evidence demonstrates injury for which compensation ought now be awarded. The claim for compensation for injury is not made out and will be dismissed. 46 The Minute of a Proposed Order now issues. _________ 2004 WAIRC 10596