A 59-year old national sales and marketing manager had been working for one of the businesses of a family-owned group of businesses since 1991. He worked closely with the two sons of the owner of the businesses who had taken over the business and had a productive working relationship with the sons.
The sales manager was asked by his immediate superior (one of the sons of his employer) to set up a new coffee shop business for his wife. The manager did so but after the business was handed over to the wife of his employer’s son, the wife did not make the business a going concern. After a while, the management of the coffee shop business was handed back to the sales manager.
A few months later, the wife of his boss’s son came to the office screaming at the sales manager claiming that the manager disrespected the boss’s son. Later that afternoon, the boss’s son told the manager that he was to be let go because his wife will leave him if he did not terminate the sales manager.
In January 2020, the manager was called to a meeting where he was informed that he will be terminated from his employment because of the company’s financial difficulties and the need to reduce operational costs. The manager was terminated and given redundancy pay of four weeks. He was also paid two weeks’ notice and told to leave the company premises immediately.
Unfair dismissal claim lodged with Fair Work
The manager lodged a complaint for unfair dismissal alleging that his termination was not due to a genuine redundancy. He claimed that when he was called to the meeting at which time he was terminated, he had not been given prior notice as to the purpose of the meeting. He was not provided with the opportunity to bring a support person and he was never consulted about his termination for redundancy.
Redundancy must be genuine
The Fair Work Commission found that while an employer is allowed to terminate an employee due to redundancy, the redundancy must be genuine. That is, the employee was terminated because his job will no longer be performed by anyone and because the employer had changed the business’s operational requirements.
This contemplates a situation where the employer is restructuring its business to improve efficiency such that the tasks done by a particular employee will be distributed between several other employees. Thus, the employee’s job no longer exists. In this case, there was no restructure of the employer’s business.
Business owner’s evidence not accepted
Although the employer submitted a profit and loss statement that showed that the business suffered a net loss the year prior, it must be understood that the company is only one of a group of companies owned by the same employer. The entirety of the business did not suffer a loss. From this perspective, it can be concluded that there as no valid cause for the dismissal as there was no genuine redundancy.
Employee was successful in its claim
The dismissal was unfair. First, there was no valid reason for the dismissal because the dismissal of the sales manager was not related to his capacity or conduct.
The manger was dismissed by his employer to appease the employer’s wife who demanded the termination of the manager. This was a personal reason and not a reason related to the manager’s conduct or capacity as manager. The manager was not notified of the reason of his dismissal prior to being dismissed and he was not given an opportunity to respond to the reasons why he was to be terminated. His dismissal was sudden. Thus, the manager was unfairly dismissed.
Significant financial compensation awarded to the employee
In determining compensation, the FWC considered that the manager was 6 years away from retirement and he would have worked for the same employer until he retired.
The FWC started with the amount that the manager could have earned for the six years of work prior to his retirement. This should be the basis of computing his loss of earnings.
However, the FWC has power to award only a maximum of 26 weeks’ pay. Twenty-six weeks’ pay amounted to $45,000.
From that sum, the FWC deducted the redundancy pay that the manger was given and all income the manager earned from other sources after he was terminated. The manager tried to mitigate his loss by setting up his own business although the business has not yet turned a profit and so he had not earned any income.
After deducting the amount the manager received as redundancy pay, the manager was entitled to $36, 615. 40.
Tony Podesta v Catering Equipment Discounters Pty Ltd [2020] FWC 3816 (31 July 2020)
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