In a recent decision the Fair Work Commission has found that a furniture imports business unfairly dismissed an underperforming salesperson who was subject to employment restraints that restricted his work opportunities after the employment ended.
The Facts
The employee was employed to sell the employer’s furniture products to furniture retailers in his sales territory.
In sales meetings and updates he was notified that he was significantly below his sales target and needed to improve his performance.
On 23 May 2025 he was called by the employer and told that his employment was terminated due to failure to meet his budget targets. The termination was also confirmed by letter.
The employee applied for unfair dismissal.
In his application the employee said that he had been unable to get a new job in furniture sales because of post-employment restraints in his employment contract that prevented him from undertaking work in competition with the employer or from soliciting business from any of its clients anywhere in Australia for up to 12 months.
He also said that he has tried looking for other sales roles, but the nature of the employment contract post-employment restraint clause limited the possibility of working in furniture sales, which was his only experience over the last 20 years.
The Decision
The Deputy President allowed the application, finding that:
- Although there was a valid reason for dismissal, as the employee was well behind his sales target, the termination process was unfair, and the outcome was harsh.
- The employee was not notified of the reason for dismissal or given an opportunity to respond to it before he was dismissed.
- He was not formally warned that his employment was at risk due to his poor sales performance.
- Even if there was a question over the legal enforceability of the post-employment restraints, the employee had reasonably treated them as lawful, and the negative impacts upon his employment prospects favoured a finding of harshness.
Implications
Where an employee is eligible to apply for unfair dismissal, employers should be careful to follow a process that includes notifying the reason for dismissal and giving an opportunity to respond to it before deciding about dismissal.
Employers should also carefully review their employment contracts to ensure that employment restraint clauses are not unnecessarily restrictive, as that can be considered by the Fair Work Commission as a factor in assessing if the outcome of dismissal was fair.
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