Industrial Relations Commission of New South Wales CITATION: Toal and Project Realty Group Pty Ltd [2005] NSWIRComm 1016 APPLICANT: Leila Bama Toal PARTIES: RESPONDENT: Project Realty Group Pty Ltd FILE NUMBER(S): 4439 of 2004 CORAM: McLeay C CATCHWORDS: Termination of employment - unfair dismissal - real estate sales - estoppel not found - no probation - adequate training given - warnings about poor sales performance - allegation of sexual harassment - new draft agreement for payment on basis of commission only - late payment of wages - respondent refused to pay wages - witness credibility - dismissal unjust and unreasonable - order for compensation made LEGISLATION CITED: Industrial Relations Act 1996 HEARING DATES: 11/26/2004; 12/20/2004 DATE OF JUDGMENT: 02/09/2005 APPLICANT: Mr H S Cullinan, Agent LEGAL REPRESENTATIVES: RESPONDENT: Mr B Compton, Solicitor Leverage Australia Pty Ltd DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: McLEAY C 9 February 2005 Matter No IRC 4439 of 2004 Leila Bama Toal and Project Realty Group Pty Ltd Application by Leila Bama Toal re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION [2005] NSWIRComm 1016 1 This is an application by Leila Bama Toal for unfair dismissal against Project Realty Group Pty Ltd pursuant to section 84 of the Industrial Relations Act 1996. The application shows that Ms Toal was dismissed from the position of real estate salesperson on 14 July 2004. The applicant had been employed by the respondent since 2 February 2004. 2 The matter was set down for conciliation on 10 August. When the matter was not resolved by conciliation, directions were issued regarding the filing and serving of witness statements. The matter was listed for hearing on 26 November with final submissions on 20 December 2004. 3 At the hearing, the applicant was represented by Mr H Cullinan, agent, who called evidence from Ms Toal. The respondent was represented by Mr B Compton, solicitor, who called evidence from Mr Anthony Judd, General Manager, Mr John Kessey, Sales Supervisor, and Mr Greg Chamberlain, Operations Manager. ESTOPPEL 4 Mr Compton submitted that the applicant obtained the position with the respondent on the basis of an alleged database of purchasers. The database did not materialise. She was employed, trained and supervised by the respondent on the basis of this contention, submitted Mr Compton. He further submitted that it is a fundamental principle of contract law that contracts are vitiated and voided on the basis of misrepresentation. Because the contract of employment is void, the applicant is estopped from bringing a claim for unfair dismissal, submitted Mr Compton. 5 The basis of the estoppel claim was that the database did not materialise. However, Ms Toal presented in evidence a handwritten list of names and telephone contact numbers. She also gave oral evidence that four of her leads led to the purchase of properties. Mr Compton provided, amongst the list of salient facts in his written submissions, that Ms Toal closed three deals with the assistance of Mr Kessey, and that three other sales, representing two persons, were from the applicant's database. It follows that the allegation of misrepresentation cannot be found on the available evidence, as a database was produced and resulted in sales. The claim for unfair dismissal, therefore, is not estopped on the basis of the contract of employment being void. CONSIDERATION 6 There was dispute as to the date on which the letter of dismissal was sent by the respondent to Ms Toal. It was dated 14 July and she said it was received by her on 18 July, yet a number of witnesses for the respondent said it was sent at the end of July. Nonetheless, the body of the letter reads as follows: As of this date your services are no longer required by this company. Therefore any previous arrangement made with this company is terminated as of today. Please return the hardware (mobile telephone -02 XDA2) issued to you by the company for use with your sim card which remained on the corporate account to allow you a cheaper call rate. 7 Clearly, no reason was provided in writing at the time for the termination of the contract of employment. In submissions, Mr Compton gave the reasons for dismissal as the applicant's failure to attend appointments and her failure to sell property. In the alternative, he submitted that she abandoned her employment by travelling to Coffs Harbour without the prior approval of the respondent. The application in these proceedings showed that the reason provided to the applicant was her refusal to sign an agreement to work as a commission-only salesperson. PROBATION 8 The issue of probation needs to be examined separately. 9 Ms Toal commenced with the respondent on 2 February 2004. A document headed "Job Description for Ms Leila Toal 05/02/2004" and signed by the Sales Manager Mr Kessey (who also signed the letter of dismissal) reads as follows: Ms Toal will be employed as of 05/02/04 in the position of a self employed contractor (Client Manager). The compensation package for this position is as follows. An advance of commission of $675.00 per week will be paid as from 12/02/04. This advance will continue provided business is forthcoming. Cessation of the advance will be determined by management, however advances are normally suspended when the advance reaches more than 50% of business in the pipeline. Total commission per sale will be $2000.00. Self generated leads resulting in a sale, will attract a further $1500. All commission is subject to a percentage of profit per deal. Deals with $20,000 company gross profit result in 100% commission being paid. Less than $20,000 will be paid as a percentage of the gross. I would like to take this opportunity to welcome you to PRG and wish you every success in your new position. There was no mention of probation in this document. 10 Ms Toal denied she was given an employment agreement on her first day at work; Mr Judd said she was. This dichotomy is explained by the document itself which does not purport to be an employment agreement and is not in the style of other documented employment agreements, but was referred to as such by Mr Kessey. In his evidence Mr Kessey referred to the document as "a letter of employment setting out the terms of her position". He said, and Ms Toal agreed, that: The applicant was clearly informed before she started work as to the terms and conditions of her employment. 11 I accept that Mr Kessey was referring to the above "Job Description for Ms Leila Toal 05/02/2004" when he said she was provided with an agreement on commencement of her employment. Ms Toal, in denying that she was provided with an agreement, did not comprehend that document in the same terms as Mr Kessey. As to Mr Judd, either he was unaware of the type of document provided to Ms Toal, or he attempted to mislead the Commission in regard to it. As it is not necessary for me to determine which of these options is correct, I allow Mr Judd the benefit of accepting the former option. 12 The Employment Agreement signed by Ms Toal dated 1 April 2004 does not refer to an engagement as a self-employed contractor but refers to employment as a salaried Salesperson. It incorporates a base salary of $675 per week. A further Agreement dated 14 April and signed by both parties made the same representations. Additionally, the reference to a probationary period was deleted and details about vehicle use were added. The Agreement dated 14 April was subsequently registered with the Real Estate Association of NSW. 13 I am satisfied that the applicant was not employed on a trial or probationary basis. TRAINING 14 Mr Kessey was Ms Toal's direct supervisor. Mr Kessey said: During the initial training period I realized that the Applicant did not pick up many things in the procedure but being enthusiastic and with her previous success I set about helping the Applicant probably far more than other Client Managers have needed. ...... The Applicant spent considerable time in my office receiving training, sometimes discussing day to day issues and while she seemed very interested she sometimes had trouble in grasping the concept. I found training difficult with the Applicant as she often missed the important sections of the content and it would take days sometimes to find out that she did not know an important step in our procedure. Then after careful explanation she would learn the step. I found at times the Applicant misinterpreted what had been said to her. On a number of occasions, Mr Judd and I would discuss what we had said to the Applicant. The Applicant's interpretations of these discussions never related to exactly what was said to her. Ms Toal agreed with the first two of these paragraphs and disagreed with the third. 15 Following a sexual harassment claim against Mr Kessey and subsequent apology from him, Ms Toal agreed to continue to be supervised by Mr Kessey. 16 In all, I am satisfied that Ms Toal was provided with suitable training for the job, and that any alleged lack of training did not affect her sales performance. WARNINGS AND DISMISSAL 17 Mr Judd gave evidence that, on 27 April, he advised the applicant that her employment could not continue, based on her lack of work performance. Mr Judd said that he extended her period of probation when the applicant pleaded to be allowed to continue. Ms Toal did not agree that this discussion took place. 18 At a further meeting on 30 April, Mr Judd said that Ms Toal raised an allegation of sexual harassment against Mr Kessey, her supervisor. She subsequently put the allegation in writing. Mr Judd said that he investigated the allegation and reported the outcome to Ms Toal in writing. Ms Toal denied receiving the letter. She also denied receiving an offer which Mr Judd said he made to her, that she be supervised directly by him. 19 Following the sexual harassment claim, Mr Kessey said he agreed to apologise to Ms Toal, even though he would be apologising for something he did not do. Ms Toal claimed the apology was given "because he had acted wrongly". 20 On 28 May Mr Judd said he met with Ms Toal about her work performance. Again he agreed to continue her employment "until the end of the probationary period". Ms Toal denied the conversation. 21 Mr Kessey deposed: During the Applicant's employment with PRG Mr Judd and I had regular meetings, discussing the abilities and value of the employed staff. We both questioned the Applicant's worth but decided to continue her employment because of her referral base and the fact that she always was just about to close more deals. We had several interviews with the Applicant and she was put on notice several times for missing appointments. Ms Toal's written response to this was as follows: Noted. I agree that I brought a purchaser referral base to PRG. 22 The evidence showed that Ms Toal had missed a number of appointments with prospective clients. The respondent had attempted to overcome the various difficulties which she reported regarding receiving messages about appointments and the like, even though no other employees had reported any similar problems, by sending them through email, online database and SMS. Ms Toal did not deny she had been put on notice several times for missing appointments. It follows that evidence of Mr Kessey supports that of Mr Judd in regard to warnings given. 23 Ms Toal agreed that she missed appointments with clients between 9 and 13 July. She said this was because she was not being paid. 24 Ms Toal made no sales in June or July. Mr Chamberlain described her as a non-performer. Mr Cullinan submitted that the applicant's contract did not set out any sales targets. 25 Mr Judd said the applicant had told Mr Chamberlain that she was going to Coffs Harbour for two weeks to consider her future. Because they did not hear from her, it was decided to terminate her employment at the end of July, by way of a letter dated 14 July. 26 On 14 July, Mr Chamberlain said that he spoke to the applicant by telephone, when he asked "are you intending to be put back on the roster so that you can attend appointments?" She replied that she was going to Coffs Harbour for a couple of weeks to consider her future. Mr Chamberlain advised Mr Judd of this response. Ms Toal's version of the call was that she said she could be put back on the roster "if they intend paying me". Otherwise, she said, "I might as well go to Coffs Harbour". 27 Ms Toal said she received the letter of termination about 18 July on her return from Coffs Harbour. The letter gave no reason for the dismissal. Mr Judd's comment was that "the applicant was terminated in her probation period". 28 As to the date of termination, it matters little when it was sent or received. On its face, it took effect at the date on which it was written, namely, 14 July 2004. NEW DRAFT AGREEMENT 29 A draft document in the form of an Australian Workplace Agreement ("AWA") was provided to Ms Toal in early July 2004, as it was to all other employees of the respondent attending a regular sales meeting. The AWA was not personalised in any way. The respondent's witnesses said it was circularised for discussion purposes and, as at the time of hearing, has not been signed by any employees. The draft AWA provided for payment by commission only. 30 The applicant's evidence was that the draft AWA was distributed shortly after she was told that the respondent was looking at "changing the way you are paid for your work and changing your employment status". She said that she was then told by Mr Kessey that: The Company can't pay you weekly wages any more, that's it. 31 At a meeting on12 July, Ms Toal said that Mr Judd said: I am not going to pay you the wage as before, we want you to work and be paid under the new AWA Agreement. What we want you to do, if you want to continue with us is to bring back the AWA signed by you. 32 On 13 July, Ms Toal said that Mr Kessey contacted her by phone and said: Why don't you just continue doing appointments. In two or three weeks you might be paid again. to which Ms Toal said that she replied: No. You can't do that. You got me to sign an Agreement back in April. As far as I am concerned you must continue to pay me. If you don't continue to pay me I might as well go to Coffs Harbour with my partner as stay and work for nothing. ISSUES OF PAYMENT 33 The evidence relevant to the non-payment of wages was as follows: 1 The initial Job Description provided on 5 February setting out the terms and conditions of employment indicated payment on a commission only basis with payment to be made at $675 per week as an advance of commission. The pay records show that payment was recorded by the employer on a credit/debit system offset against commission earned. 2 The Job Description was replaced by an employment agreement signed by both parties on 14 April, providing for a base salary of $675 per week. 3 As per the note at 6.1C of the agreement, only licensed salespersons can be engaged on commission only. Ms Toal was registered, but not licensed. It follows that the basis of payment set out in the Job Description was not appropriate to the circumstances. 4 The method of payment was discussed by the parties on several occasions, and payment was delayed on three separate occasions during the course of the applicant's employment. 5 Mr Chamberlain confirmed that the applicant had been paid later than the due date on several occasions during the period of her employment. 6 A draft AWA was provided to sales staff on 4 July, incorporating payment by commission only. On 8 July Ms Toal did not receive her regular pay. She received it on 13 July after meeting with Mr Judd and Mr Kessey. Prior to the meeting Mr Kessey had advised the applicant: "The company can't pay you weekly wages any more, that's it." As a result of the combination of circumstances, Ms Toal believed that the respondent was refusing to continue to pay her the agreed weekly salary. 34 Mr Cullinan in final submissions raised the possibility of constructive dismissal. If the Commission were to find that the applicant abandoned her employment, Mr Cullinan submitted that the respondent's action in not paying the applicant, while expecting her to work without wages, amounted to a constructive dismissal. This issue does not require consideration, as I am satisfied that the applicant did not abandon her employment. Rather, she refused to attend appointments when she was not paid and left for Coffs Harbour to consider her future only after she had been informed that she would not be paid her agreed salary beyond 8 July. 35 There was no indication given to Ms Toal that her salary would be paid after 8 July, despite her request for reassurance at the meeting on 13 July and her telephone conversation with Mr Chamberlain. Rather, all indications, from Mr Kessey and Mr Judd, were otherwise. Her previous experience of receiving delayed payment was not helpful, and the intervening distribution of the draft AWA was reasonably taken by her to be a further indication of the respondent's intention to employ her on a commission only, or non-salary, basis. Even if these discussions resulted in some level of misunderstanding on Ms Toal's part, as noted earlier in this decision, the factual circumstances speak for themselves. In all the circumstances, I am satisfied that Ms Toal's employment was terminated effectively by the respondent's refusal to pay wages, being a breach of its duty under the employment agreement. 36 Because Ms Toal had been refused payment that she was entitled to receive, I find that the termination was by way of a constructive dismissal. It was unjust to deny her payment to which she was entitled under her contract of employment. It was unreasonable to expect her to work without pay. The problems faced by the respondent in regard to Ms Toal's work performance should have been dealt with by other, more appropriate, methods, rather than by a refusal to pay her wages. 37 In addition, and at a later date, the respondent issued a letter of dismissal terminating the employment relationship. In my view, the correspondence confirmed the action of the respondent. 38 In determining an appropriate order, I acknowledge that the applicant has done some part-time work in the hospitality industry, which she commenced two months after the date of her dismissal. I accept that she was actively seeking work prior to that date, but I must also take into account that she gave misleading evidence in regard to one of the three interviews which she said she attended as part of that process. WITNESS CREDIBILITY 39 Unfortunately, on the basis of inconsistencies in the evidence provided, it is necessary to comment on certain aspects of credibility of the applicant and one of the witnesses for the respondent. 40 Ms Toal said that reference to probation had been deleted in both documents provided to her. On the documents provided in evidence, this was not so. Whether or not there was a reference to probation in the first document makes no difference to the question of probation, but raises concerns about the truthfulness of the applicant and whether, at times, she may have exaggerated the facts to suit herself. 41 Mr Cullinan submitted that Mr Judd's evidence was "far from satisfactory", in that he could not convincingly explain the existence of three separate employment contracts, all in the applicant's name, and that he did not check the details contained in the signed contract before dismissing the applicant. He could not explain why the letter of dismissal was dated 14 July, when he said that the dismissal occurred at the end of July. 42 Mr Cullinan submitted that the evidence of the applicant should be accepted where there are disputed facts. When questioned about mitigating her loss following her dismissal, the applicant nominated a position she had applied for. This was later found to be incorrect in that she had attended an interview for the nominated position while still employed by the respondent. Mr Cullinan submitted that the applicant's incorrect answer was not deliberate, and it did not impeach her credibility. 43 In his affidavit admitted in evidence, Mr Judd said, relevantly: The employment agreement signed by the Applicant provided for a probationary period of three (3) months with the possibility of extending the probationary period to six (6) months. This was not true. The documents do not contain such provisions. Mr Judd's loose use of information balances out my concerns regarding Ms Toal's evidence. 44 Mr Judd's evidence about chasing Ms Toal via Ms Jolliffe, the accounts manager, to sign an agreement supposedly provided at the commencement of the employment is unsubstantiated. Ms Jolliffe was not called to give evidence. I am satisfied that any delay in completing the employment agreement and registering it with the Real Estate Association was not caused by the applicant. 45 During cross-examination, Ms Toal's responses showed that she was confused or gave confusing answers on several occasions. In particular, during cross-examination, her responses to issues regarding training, timing of delayed payments and the receipt of the letter of dismissal, for example, were inconsistent and confusing. This evidence supported the views expressed by Mr Kessey about his difficulty with training Ms Toal and with other communication issues. 46 Both Ms Toal and Mr Judd seem to recall only what is in their favour, and have provided details which would be known to be incorrect if they had checked. On balance, the outcome is not sufficiently weighed in favour of one or the other of these witnesses, and I have taken into account any inconsistencies or other shortcomings in the evidence of these two witnesses in the findings I have made. CONCLUSION 47 I am satisfied that the termination of the applicant's employment was not related to her complaint about sexual harassment. 48 On the evidence, it is clear that the applicant was under-performing as a salesperson, she had been adequately trained and she had been warned that her employment would be terminated if her output did not increase. I am satisfied that her applications for other positions made during her period of employment with the respondent were not prompted by any alleged sexual harassment, but by her understanding that her position with the respondent was in jeopardy if she did not make sales. The evidence shows that no sales were made in the latter weeks of her employment. 49 However, the respondent attempted to have the applicant work without pay. This is not acceptable. Refusal to pay her salary was a breach of the respondent's duty as an employer. The respondent tried to continue to gain any benefit that might be forthcoming from the applicant's services while treating her as though she was a licensed salesperson on a commission-only agreement. The respondent was aware that the applicant was not licensed and that it was not lawful to employ her as a salesperson on a commission-only basis. This was confirmed by the employment agreement signed by both parties. In short, the respondent effectively dismissed the applicant by refusing to pay her salary. 50 Despite any communication issues with the applicant, I am satisfied that she withdrew her services - refusing to attend appointments - only after she had been told she would not receive regular salary payments. The respondent's intentions not to pay the applicant were supported by earlier indications including late salary payments and the intervening distribution of a draft AWA incorporating payment as commission only. On this basis, the claim that the applicant abandoned her employment must fail. 51 The letter of dismissal dated 14 July confirmed that the termination of the applicant's employment was at the hands of the respondent. Although no reasons were given at the time I accept the respondent's submissions that the intention of the respondent was to dismiss the applicant because of her lack of sales. 52 Whether the dismissal was by way of refusal to pay salary or by way of correspondence dated 14 July, it must be found that the dismissal was at the initiative of the respondent. While there were previous warnings issued, no particular date of dismissal had been set. However, the applicant was told she would not be paid and asked to continue her work, prior to the dismissal letter being issued. This was both unjust and unreasonable. 53 I find the applicant was dismissed in a way that was unjust and unreasonable. Accordingly, I make the following orders. ORDERS 1. I order the respondent to pay to Leila Toal an amount of $3375, being 5 weeks' wages at the rate of $675. 2. The amount of compensation specified in order 1 is to be paid by the respondent within 21 days of the date that these orders take effect. 3. These orders take effect from today, 9 February 2005. __________________ DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.