Despite having a valid reason for sacking a worker, a commission has ruled that an employer must compensate him because the process of dismissal was harsh and unfair. Where did the employer go wrong? 

The worker was employed from early 2024 as an independent sales manager with a wholesale furniture supplier. His work involved selling the company’s products to furniture retailers across Victoria, Tasmania and a small number of accounts in South Australia. 

His contract provided for a potential sales bonus subject to his achieving a specified sales target of $4 million. The worker initially performed well, achieving over 188% of the target in the Spring sales period. His performance then dropped off in the Autumn sales period, when he only achieved around 32% of the target. 

The company director was dissatisfied with his performance and considered it insufficient to justify a full-time sales manager, comparing it unfavourably with the results of other sales managers operating under similar conditions.  

The director was particularly concerned because the company was at that time operating at a loss, and highlighted it with the senior business manager. 

At the time, performance meetings were increasingly infrequent, but the worker was providing daily emails to management with details of customers he’d met with that day, any relevant comments they made, issues raised, and the value of the product sold. He never received replies to his daily reports or any warning regarding his sales performance. 

As the worker saw it, his poor sales performance was due to a number of factors including sales he made being attributed to others or his supervisor’s maintenance of direct contact with customers, the drought’s impact on customer demand, and longer product delivery timeframes compared to competitors, due to limited stock kept in the warehouse. 

On 23 May 2025, the worker was asked to attend what he assumed was a routine sales meeting, but at the meeting he was told his employment was being terminated due to his poor sales performance. 

Following his dismissal, he was unable to get a new job in furniture sales because the post-employment restraints in his employment contract prevented him from undertaking work in competition with his former employer or soliciting business from any of the company’s clients anywhere in Australia for up to 12 months. 

He was 66 years old and recognised that his employment prospects outside furniture sales were limited. 

The worker applied to the Fair Work Commission for a remedy for unfair dismissal. He claimed the sales targets set for him were unreasonable, and said he didn’t want to be reinstated because of the ‘distasteful manner of his dismissal’ and his loss of trust in the company’s management. 
 

In the Commission 

The company director submitted that limited warehouse stock had not adversely affected sales, because two other Victorian sales agents had not experienced similar shortfalls against their targets. 

The director also asserted that the worker had engaged in misconduct by fabricating his call records, as one day’s report duplicated the previous day’s, and by failing to offer customer lower prices in line with a ‘Special Pricing Offer’. 

The worker insisted the duplication of call records was a mistake, not a fabrication, and the director conceded that after the pricing option was drawn to the worker’s attention, there was no repeat of that omission.  

At the time he did not consider these issues constituted misconduct, and he admitted the worker was never given any warning that his employment was at risk due to poor sales performance. 

Deputy President Ian Masson confirmed that the worker was a person protected from unfair dismissal, and that it was not a genuine redundancy. He then considered whether his sacking was harsh, unjust or unreasonable. 

He first observed that the worker had not objected or challenged the sales targets when they were set, and they did not appear to be unreasonable, especially in view of his good performance in the spring period. 

Deputy President Masson rejected the worker’s claimed reasons for his declining sales performance, noting that misallocation of sales only accounted for a vey small proportion of total sales, the drought had not reduced his colleagues’ sales to a similar extent, and his supervisor’s direct contact with customers had not undermined his sales.  

He also rejected the claim that reduced inventory at the warehouse was a factor in the worker’s results. 

The Deputy President was not persuaded that the worker had put forward a credible explanation of the shortfall in his sales, or that the targets were unreasonable. 

He considered that the worker’s poor performance amounted to a valid reason for his dismissal. 

However, he was not satisfied that the worker was notified of the reason for his dismissal before the decision was made, nor was he given any warnings that his employment was at risk, or an opportunity to explain the reasons for his weak performance or why he should not be dismissed. Together, these weighed in favour of a decision that his sacking was unfair. 

It was also harsh, considering that his age and the post-employment restrictions were likely to have had an adverse effect on his prospects for finding another job in the same or similar field. 

Deputy President Masson also found that the worker did not engage in misconduct. Though his dismissal was supported by a valid reason, the employer’s ‘significant procedural failures’ in carrying out the dismissal meant the worker did not have the chance to explain his performance or seek to persuade his employer that he did not deserve to be sacked.  

‘Those procedural failures along with the poor employment prospects of [the worker] due to his age and post-employment restraints are of such significance as to displace the weight I accord to the valid reason.’  

Accordingly, the Deputy President ordered the employer to compensate the worker for the twelve weeks’ pay – $25,380 less taxation – he would likely have received had his employment not been summarily terminated. 
 

What it means for employers 

The case highlights the pitfalls for employers wishing to terminate a worker’s employment, and the need for professional advice on how to proceed. Guidance is available from Business NSW’s Work Advice Line on 13 29 59. 


Read the decision 

Mr Michael Galway v Vivin Imports Pty Ltd [2025] FWC 3277