Home - Employee retrenched for poor sales not unfairly dismissed: FWC

UpdatesAug 02, 2019

Employee retrenched for poor sales not unfairly dismissed: FWC

In a recent Fair Work Commission (FWC) hearing, an employee who was retrenched for not meeting his sales targets argued that the termination of his employment was not a genuine redundancy and he was unfairly dismissed.

In a recent Fair Work Commission (FWC) hearing, an employee who was retrenched for not meeting his sales targets argued that the termination of his employment was not a genuine redundancy and he was unfairly dismissed.

The sales and marketing manager was recruited from overseas on a Temporary Skill Shortage Visa by the University Preparation College in Sydney. His job was to get prospective students from South America and Europe to sign up for vocational courses at the college.

He was given an annual target of 40 students per year, but only managed to sign up two in the space of eight months.

About six months into the job, the employer warned him that his position could be made redundant.

After some discussion about what the employee was going to do, an agreement was made that he would take leave without pay for a month and travel overseas at his own expense to find market opportunities. If he was successful, he could resume his job.

When the employee returned without any success, he received a termination letter from the college’s CEO which stated:

“After more than nine months of trying to enter the South American and European markets without tangible success, the senior management has decided to leave these two markets and reallocate our resources to concentrate on our traditional markets in Asia.

In light of this decision, we are sorry to inform that the position of Sales and Marketing Manager (South American and European Markets) has been abolished and your employment with UPC will unfortunately be ended [sic] on 7th April, 2019.

We are going to inform the Home Affairs Department about the decision. Please contact your migration lawyer who can advise you further about your immigration status.

We are regretted about the decision and we wish you successful [sic] in your career development.”

The employee filed an unfair dismissal application the same day.

He claimed he wasn’t told that his performance was based on results and that he had been coerced into signing the leave without pay request because the employer had threatened to cancel his and his partner’s visas. He further added that he was owed about $12,000 in expenses.

Repugnant, unacceptable, possibly illegal – but not malicious

In the hearing, FWC Deputy President Peter Sams said that proposing that an employee works without pay to save their job was “a particularly repugnant and totally unacceptable -if not a possible illegal request”, however he found that the employer was not “motivated by any mala fide intent”.

“One should never attribute to malice that which is easily explained by naïveté or ignorance. I believe they were genuine in their intention to keep the applicant ‘on the books’,” Deputy President Sams said.

“That said, I can understand why the applicant may have later felt he was pressured into entering the LWP arrangement. Not only was his future employment in jeopardy, but his visa and his relationship was at risk.

“Without attempting to second guess [the employer’s] motives, in retrospect, it seems to me [the employer] would have been better advised to have foreshadowed the possibility of [the employee’s] redundancy much earlier; say, a month or two, while [the employee] was still being paid.

Employee should have seen the writing on the wall

In determining whether the termination was a genuine redundancy, Deputy President Sams said there was “an inescapable conclusion in circumstances where [the employee] was engaged for a specific purpose which was not fulfilled”.

“His role was unequivocally to target, explore and secure market opportunities in South America and Europe; nothing could be clearer from his contract of employment. He had expressly agreed to a target of 40 students in a year,” Deputy President Sams said.

“When after eight months it was two, ‘Blind Freddy’ would have known his specific role was in jeopardy. To argue it was not his fault, and he tried his best, is not the point.

“To further argue this was a poor management decision is to ignore the reality that regrettably, poor management decisions, even risky ones, will sometimes be reviewed and abandoned. This is inherently the right of any businesses.

“Sadly, employees are often the collateral damage; hence the protection of the National Employment Standards (‘NES’) in the Act, and other Award and agreement provisions dealing with the personal impacts of a redundancy on an employee and their family.

“It is not clear whether [the employee] was provided with one week’s notice according to the NES, for his nine months of employment. I do not accept that the one month’s LWP was a true period of notice. Although I cannot order such a payment (as it is beyond the Commission’s jurisdiction), I strongly recommend he be paid a further one weeks’ pay in lieu of notice.”

Deputy President Sams concluded that the dismissal was not unfair. He said it was out of his jurisdiction to deal with the dispute about unclaimed expenses.


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