Struck out: court rejects manager's 'evil' accusations

Cases

Struck out: court rejects manager's 'evil' accusations

A court has rejected a baseball manager's claim for unfair dismissal, adverse action, breach of contract and unpaid commissions. It noted the employer was "incapable of committing the sort of evil of which the applicant accuses them".

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A former general manager of baseball team the Brisbane Bandits has lost his claim for unfair dismissal, adverse action, breach of contract and unpaid commissions.

He brought the claim against his employer, the Australian Baseball League. 

It was held that the non-renewal of the manager's contract, thereby terminating his employment, on the grounds of poor performance did not constitute unfair dismissal or adverse action. And the applicant lost any hope of winning payments of commission as a clause in the employment contract gave an absolute discretion to the employer as to whether or not commissions would actually be paid.

US citizen Mr K was brought to Australia to be the general manager of the Brisbane Bandits, a team owned by the Australian Baseball League (ABL), which itself is jointly owned by the Australian Baseball Federation and Major League Baseball of the US.

His contract of employment offered a base salary, commission and expenses.

However, the employment relationship went very badly wrong right from the start with Judge Vasta of the Federal Circuit Court describing the manager as finding himself in a “chaotic existence”.

Chaotic existence


Although appointed in late September 2013, Mr K did not have a valid work visa upon arrival in Australia in October 2013. It took until late March 2014 – some four to five months – to get that visa and be paid.

Judge Vasta found that the ABL took an “inordinate amount of time” and was “tardy” in making appropriate payments to suppliers and staff. For instance – between November 2013 and June 2014 – Mr K sent more than 40 emails to his employer, the ABL, about a wide variety of matters.

These included complaints about, and requests for, other staff of the ABL not being paid, requests for reimbursement of expenses, and requests for the ABL to pay suppliers. 

Performance targets and performance


Mr K was subject to a series of performance targets focused on acceptable losses (as opposed to profit targets as the Brisbane Bandits was effectively a start-up), net income and expenses.

Judge Vasta found the performance of Mr K “was always going to be judged” against those criteria and that the targets had been set deliberately low to ensure the ABL was “not being unrealistic in what it was setting for Mr K”. 

However, Mr K was unable to meet these targets, to which he attributed to being “parachuted in” seven months late in a 12-month timeframe, a lack of resources (staff, equipment, marketing collateral, lead lists and “fewer volunteers than it takes to operate a coffee machine”) along with the pressures of managing the many start-up problems of the Brisbane Bandits. 

Nonetheless, the managers of the ABL were disappointed with Mr K’s performance and spoke “sternly” about it to him, adding that he would have to improve if he wanted to say employed by the ABL.

They then appointed a local person as CEO of the Brisbane Bandits. The new CEO happened to be a sponsor of the team, had considerable business acumen, was a local business person and had an extensive network of personal contacts within the baseball industry. 

The new CEO started in mid-June and had an immediate effect, landing a series of sales in his first week. This reinforced the view of the managers within the ABL that Mr K was performing poorly. 

Forming – and ending – employment


Mr K’s one-year contract started on 24 September 2013 with the clause that a “renewal may be reviewed at any time after 1 January 2014 but no later than 30 June 2014”. It was therefore due to expire on 23 September 2014. 

The ABL wrote to MR K in late June, saying that he was underperforming as measured against the performance targets and that “upon review” it would not be renewing Mr K’s “current contract”. But, it added, with the new CEO appointment there was an opportunity to turn things around. The ABL would therefore reassess the performance to the end of the contract noting that it “may” offer an extension, renewal or some other arrangement. 

Towards mid-August 2014 the new CEO had formed the view – which he expressed to the ABL – that Mr K was not being productive in his role, was “negatively affecting morale” at the office of the Bandits and that it was unnecessary to keep Mr K in his role until the expiry of the contract one month later. 

Accordingly, the ABL phoned, then sent a letter, to Mr K saying they would not renew his employment contract and were giving him one month’s notice of termination. They also advised that they did not require Mr K to work that month. He was paid wages and accrued annual leave. 

The claim


Mr K considered that he was owed payment of a variety of business-related expenses and that he had been unfairly dismissed. He also claimed he had suffered adverse action by the ABL in that it unfairly dismissed him and failed to renew his contract because of his extensive complaints about a lack of resources and payments to staff and suppliers.

He also considered that the ABL was in breach of contract and claimed for pain and suffering, payment of commissions, expenses and the opportunity to earn further income. 

The court’s decision


Judge Vasta firstly considered whether Mr K had in fact been dismissed. Under s386 of the Fair Work Act a person is not dismissed if he or she was employed under a contract of employment for a specified period of time and the employment has terminated at the end of the period.

The ABL had an obligation to “review” renewal, which Judge Vasta said it did when it wrote to Mr K about his underperformance, saying his contract may not be renewed.

Mr K argued that that there was an overwhelming inference that  his employment would continue past the expiry of the contract because the ABL said it may offer an extension, renewal or other arrangement. But Judge Vasta pointed to the word “may”, saying the ABL had said that it “may do those things but equally [it] may not”.

The judge therefore found that Mr K’s employment had simply come to an end because the contract itself had come to an end and he was therefore not dismissed. 

The judge added that as the contract did not contain any clauses obliging the ABL for a renewal or extension then it “was a matter solely at the discretion of the [ABL]”.

Consequently, because there was no dismissal then there was no adverse action. Judge Vasta then took the somewhat unusual step of considering – even though there was no adverse action – whether or not the ABL and its managers had discharged the reverse burden of proof in adverse action cases.

The judge concluded that the ABL had indeed done so, saying that it was “absurd” as the ABL and its managers had in fact taken all responsibility for the “less than professional way” in which they had carried out business. 

“For an employer to commit 'adverse action' upon a person for saying something that the employer accepts as being justified, would have to be one of the greatest evils in Australian industrial history… I cannot accept that [the ABL and its managers] were anything other than forthright and honest and incapable of committing the sort of evil of which the applicant accuses them,” Judge Vasta said. 

Finally, Judge Vasta turned to the issue of sales commissions. Firstly, he accepted that all commissions and reimbursements had in fact been made. Secondly, he pointed to the clause in the contract of employment that said: “All commission payments are ultimately at the sole discretion of the ABL”.

This, Judge Vasta ruled, clearly states that it is a matter for the ABL as to whether or not commissions should be paid.

Judge Vasta dismissed the whole application. 

K v Australian Baseball League Pty Ltd & Ors [2016] FCCA 1722
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