Industrial Relations Commission of New South Wales CITATION: Walsh -v- Sangra Holdings Pty Ltd trading as Enterprise Marine [2006] NSWIRComm 1094 APPLICANT John Owen Walsh PARTIES: RESPONDENT Sangra Holdings Pty Ltd trading as Enterprise Marine [ACN:003 502 752] FILE NUMBER(S): 5923 of 2005 CORAM: Cambridge C CATCHWORDS: Unfair dismissal - termination of employment - alleged refusal of employee to accept changes to pay arrangements - absence of substantive basis - procedural errors - denial of natural justice - dismissal held as harsh, unreasonable and unjust - compensation Ordered. LEGISLATION CITED: Industrial Relations Act 1996 [NSW] HEARING DATES: 02/06/06 DATE OF JUDGMENT: 06/02/2006 EXTEMPORE JUDGMENT DATE : 06/02/2006 APPLICANT Mr M Easton, Barrister LEGAL REPRESENTATIVES: RESPONDENT Mr C Tocchini, self represented DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES COMMISSIONER CAMBRIDGE 2 June 2006 Matter No IRC 5923 of 2005 John Owen Walsh -v- Sangra Holdings Pty Ltd trading as Enterprise Marine Application by J Walsh re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996. EXTEMPORE DECISION [2006] NSWIRComm 1094 1 This matter involves a claim for unfair dismissal. The claim was made pursuant to section 84 of the Industrial Relations Act 1996 [NSW], (the Act). The claim was filed on 17 November 2005, by John Owen Walsh (the applicant), and named the respondent employer as Sangra Holdings Pty Ltd trading as Enterprise Marine (the employer). 2 Following unsuccessful conciliation conducted by Connor C the matter has proceeded to Arbitration today, 2 June 2006. The Commission now issues this Extempore Decision in accordance with internal protocols established in conjunction with Practice Direction number 17. The Commission reserves determination in respect to any subsequent issue and publication of considered reasons for judgement which may be made at a later date. 3 The applicant was employed as a Salesperson for a period of approximately 2 years and 9 months. The employer relevantly operates a marine sales and service business specialising in the sale and service of Yamaha brand motors and trailable boats. 4 The applicant was dismissed by way of a letter dated 28/10/2005. The letter of dismissal was made in response to a letter that the applicant had sent to the employer on the preceding day, 27 October. The exchange of correspondence primarily concerned an alteration that the employer sought to make to the basis upon which the applicant was paid wages and commissions. In brief, the applicant objected to the alterations as he believed that it represented an immediate reduction of $240 per week in his base salary, exclusive of any commissions. Further, the applicant protested at the alleged inadequate notice given of the alterations to the pay structures. 5 The employer's letter of dismissal indicates surprise and disappointment at the applicant's objections to the alterations to the pay structures. The letter of dismissal states, inter alia, "Your refusal to assist us in the light of your poor sales and inflexibility leaves me with no other alternative than to terminate your employment effective today." 6 Although there was some contest about exactly what impact the alterations to the pay structures might ultimately have on the "take home" pay of the applicant, there could be no doubt that the changes were significant and would potentially reduce the immediate "take home" pay of the applicant to the order of $240 per week. Even if the applicant's commissions on sales generated commensurate of greater total "take home" pay, his immediate income stream would be significantly decreased. In addition, these significant alterations were not properly explained in writing and with adequate notice. Alterations of this nature and magnitude should be the subject of clear documentary explanation well before any proposed implementation. 7 Therefore the applicant had legitimate right to complain and object to the alterations which would potentially reduce his "take home" pay dramatically. Although the employer may have wanted the applicant to be more accommodating and accepting of the changes, the employer's approach to the introduction of these changes was anything but conducive to a harmonious outcome. Frankly, the employer mismanaged the matter and the applicant's response was understandable and predictable. 8 The Commission understands and appreciates that in a small business environment there may be greater informality with communications between employer and employee(s). Consequently, the formal tone of the applicant's letter of 27 October 2005 might have understandably upset the proprietor, Mr Tocchini. The emotion that appears to have developed with the exchange of correspondence may explain certain irrational conclusions that quickly emerged. In particular, Mr Tocchini seemed to overlook the applicant's stated offer to "work together to resolve this issue" and instead took the applicant's formal response to represent "Your refusal to assist us...". 9 Regrettably there was no calm consideration of prospects for negotiating an agreed reconfiguration of pay and commission structures that might be advantageous to both the employer and the applicant. The apparent offence that the employer took to the applicant's formal correspondence seems to have ignited a hasty, knee jerk reaction in the form of dismissal. Decisions made in haste and or anger will usually be regretted. 10 The Commission finds that the dismissal of the applicant was harsh, unreasonable and unjust. The dismissal was harsh, unreasonable and unjust because it was without proper basis and implemented with deficient process. The applicant was not provided with proper opportunity to make out a defence or offer explanation. Had there been such an opportunity, the applicant may have been persuaded that a reconfiguration of pay and commission structures would not lead to a reduction in overall remuneration. Similarly, the employer may have modified any reconfiguration to avoid or mitigate any short term cash flow impacts for the applicant. The alleged refusal of the applicant to assist the employer with a reconfiguration of remuneration arrangements was not properly established nor tested. Therefore the primary substantive basis for dismissal can not be established as a finding of fact. 11 Consequently the Commission is prepared to find in favour of the applicant. Reinstatement or re-employment of the applicant would be impractical. Therefore the Commission is prepared to provide for Relief by way of monetary compensation. The amount of compensation has been determined having regard for sections 89(5) and 89(6) of the Act. 12 The Commission is obliged to also record that there was some disturbing evidence about amounts paid to the applicant in cash. The cash payments and other aspects of the payments of commissions may constitute undisclosed remuneration made in a manner that avoided proper taxation treatment. Accordingly a copy of this Decision and the transcript of proceedings will be provided to the investigations branch of the Australian Taxation Office for that agency's consideration and appropriate action. 13 As the Commission has Determined that the dismissal of the applicant was harsh, unreasonable and unjust, the following Orders are now made: ORDERS 1. The Commission Orders, pursuant to sections 89(5) and 89(6) of the Act, that the employer pay to the applicant an amount of compensation of $18,450.00. This amount is a gross figure and appropriate taxation treatment is a matter for the Parties. 2. The amount of compensation specified in Order 1 above is to be paid by the employer to the applicant within twenty one days from today, 2 June 2006. oooOOOooo 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.