Salesman dismissed for poor performance

Cases

Salesman dismissed for poor performance

A sales consultant's unfair dismissal claim has failed after a tribunal ruled the employer had complied with the Small Business Fair Dismissal Code.

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A sales consultant's unfair dismissal claim has failed after the Fair Work Commission found the employer had complied with the Small Business Fair Dismissal Code.

The consultant had failed to meet his sales budget on several occasions before the engineering company took action and dismissed him.

Background


Ronald Law worked as a sales consultant for engineering company Linehan Enterprises Pty Ltd (Linehan) from February 2015 to October 2017. He was dismissed for poor performance.

The company built manual handling equipment including motorised trollies and lifting devices for businesses which were predominately in the healthcare industry.

Mr Law’s role in the business was to visit prospective clients and assess their manual handling procedures before designing and then selling such devices.

He was expected to generate $500,000 in sales per year.

In Mr Law’s first financial year (2015/2016) he generated $380,000 in sales. The managing director, Mr Linehan, said that Mr Law's figures were ‘quite promising’ at first. From June 2016, this all changed and he began to have concerns.

In December 2016, Mr Linehan and Mr Law met and discussed his spiralling performance. It was submitted that Mr Linehan offered advice and assistance.

Mr Law reportedly said: ‘It’s not necessary, it will turn around... It’s just quiet out there and the orders will come.’

Mr Law was urged to visit clients outside of the healthcare industry and call on old customers to revamp his revenue. He was warned that if things did not improve that he may have to be let go.

Mr Law submitted that even though a meeting took place, it was not formal. He also pointed out that there were orders that had not been added to the final figures which meant the final sum was inaccurate.

The following year, Mr Law’s sales figures were $195,487. Another meeting took place whereby similar instructions, advice and assistance was provided.

Mr Law responded by suggesting he go part-time however the company required a full-time consultant.

Mr Linehan said: ‘I am just going to have to make a decision real quick here very soon if things don’t turn around.’

When the sales did not improve after the final quarter, Mr Linehan called Mr Law into the office and told him he was letting him go.

Judgment


The Fair Work Commission found that the respondent was a ‘small business employer’ within the meaning of s23 of the Fair Work Act 2009 as it had 12 employees at the time of the dismissal.

Commissioner Gostencik found that the dismissal was consistent with the code because:
  • Mr Linehan gave Mr Law a reason as to why he was at risk of being dismissed both in December 2016 and again in July 2017 by stating that if sales figures did not improve he may have to ‘let him go’.
  • There was a valid reason for letting him go as Mr Law had the mental and physical capacity to do the job but he was not performing to the required standards. The reason for his dismissal, being the ‘consistent and continued failure to meet the sales budget puts the employee at risk of being dismissed’ was sound, defensible and well-founded.
  • Although the warning was given verbally, there is no requirement under the code for it to be in writing or for it to be a formal affair. The commissioner found that alerting Mr Law to the possibility that he could be ‘let go’ if things did not improve satisfied a warning.
Mr Law was provided with an opportunity to respond on both occasions and improve his performance. The Commission was also satisfied that he was offered additional assistance and training. Mr Law did not have a support person present but it was noted that this was not a requirement under the Code.

The Commission found Linehan had complied with the code and the employee had not been unfairly dismissed.

Mr Ronald Law v Linehan Enterprises Pty Ltd T/A Service Assist (U2017/10776) [2018] FWC 57
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