Former Manager receives significant penalties in successful adverse action claim

Former Manager receives significant penalties in successful adverse action claim

A former senior company executive has won significant compensation after the Court determined that he had suffered adverse action by his employer in the termination of his employment. The case provides guidance on the types of issues courts will consider when assessing the quantum of compensation in such situations.

The Manager was employed for several years by Asaleo Personal Care Pty Ltd (Asaleo), a producer of menstrual products and toilet paper.

The initial claim was triggered after the Manager complained about being demoted following a restructuring of his department. He later filed an anti-bullying application with the Fair Work Commission.

Immediately following his complaint, his superiors at Asaleo presented him with a Performance Improvement Plan (PIP) on 3 March 2020. When he refused to participate, the company used his ‘refusal to participate in that process as a pretext for dismissing him’, and dismissed him from his employment on 11 March 2020, with the payment of two months’ notice in lieu.

The Court found that Asaleo had taken adverse action against him for a prohibited reason, the presentation of the PIP and the termination of his employment.

The subsequent determination of applicable financial penalties for the adverse action was determined by the Federal Circuit and Family Court of Australia Judge Heather Riley.

Both parties agreed before Judge Riley on the sum of $22,552.80 plus interest to compensate for the economic loss the Manager suffered, as per section 545(1) and (2b) of the Fair Work Act 2009 (the FW Act).

In addition, the Manager claimed $20,000 for the ‘severe impact on my mental health and wellbeing’, citing episodes of ‘sleeplessness, irritability and withdrawing from social situations’. Despite the absence of supporting medical documentation, Judge Riley accepted that the Manager had suffered distress during the process and awarded him $7,500 plus interest for non-economic loss.

In addition, Judge Riley imposed two pecuniary penalties on Asaleo, 35% of the maximum penalty or $22,050 for the performance improvement plan and $44,010 for dismissing the Manager, which is 70% of the maximum.

In her determination, she noted,

The respondent altered the applicant’s position to his prejudice by presenting him with a performance improvement plan, and then dismissed him. The dismissal on the grounds of alleged misconduct is a matter that will remain on the applicant’s CV, and will require explanation … it remains a stain, and it is possible that, in the world where the applicant works, as a senior executive in procurement, a negative slant on the whole episode will prevail over the view taken by the court”.

Judge Riley was quite scathing of Asaleo’s lack of contrition, noting

“The respondent has shown no contrition. The respondent vigorously defended the proceedings through a two day trial. The respondent made no admissions, has taken no corrective action and has not apologised”.

The Manager also sought compensation for breach of contract for its failure to conduct formal annual performance reviews after August 2016. However, Judge Riley dismissed this claim on the basis that he had received pay raises in 2016, 2017, 2018 and 2019 and had, in fact, been promoted to a more senior position in 2018 and had, therefore, not suffered any loss from the technical breach of contract.

L v Asaleo Personal Care Pty Ltd (No 2) [2022] FedCFamC2G 264 (13 April 2022)

For queries about performance management, appraisal processes, breach of contract, or other employment questions, please contact Dean Cameron at Workforce Advisory Lawyers – We Know Employment Law on 0417 622 178, 1300 925 529 or via email to dean.cameron@workforceadvisory.com.au

Disclaimer: This information is provided as general advice on workplace relations and employment law. It does not constitute legal advice, and it is always advisable to seek further information regarding specific workplace issues. Liability limited by a scheme approved under professional standards legislation.

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