Adrian Lavender v Electrocity Pty Ltd T/A Humphrys Betta Home Living
[2017] FWC 4221
•12 OCTOBER 2017
| [2017] FWC 4221 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Adrian Lavender
v
Electrocity Pty Ltd T/A Humphrys Betta Home Living
(U2017/4407)
COMMISSIONER HAMPTON | ADELAIDE, 12 OCTOBER 2017 |
Application for relief from alleged unfair dismissal – dismissal based upon alleged improper conduct and unsatisfactory work performance and attitude – small business – breakdown of personal relationship which impacted upon formality of relationship and conduct of the parties – whether complied with small business fair dismissal code – no relevant warning issued – code not followed – whether dismissal unfair – whether valid reason – whether procedurally fair – dismissal unreasonable – remedy – limited compensation determined and ordered.
1. Background and case outline
[1] Mr Lavender has made an application under s.394 of the Fair Work Act 2008 (the FW Act) for a remedy in connection with an alleged unfair dismissal by his former employer, Electrocity Pty Ltd T/A Humphrys Betta Home Living (HBHL).
[2] HBHL is, in effect, operated by Ms Lisa Pearce and is part of a national independent retail franchise group retailing home appliance and furniture. HBHL engages around five employees. Ms Pearce also operates a separate business, selling appliance parts, with one employee. 1
[3] Mr Lavender commenced his employment with HBHL in late 2015 or early 2016 as a sales representative on a full-time basis. At the time, Mr Lavender and Ms Pearce were involved in a personal relationship and no written contract of employment was drawn up and very little by way of formal arrangements were apparently made in connection with that employment.
[4] Mr Lavender was dismissed in early April 2017 on the basis of allegedly:
● unsatisfactory performance and/or conduct including alleged unauthorised filming of staff;
● behaving unprofessionally towards management and customers; and
● leaving the workplace without advising management.
[5] Mr Lavender contends that he was dismissed following the complete breakdown of his personal relationship with Ms Pearce in early March 2017. He submits that his employment was “uneventful” prior to the relationship breakdown aside from one customer complaint which he submits arose from Ms Pearce failing to order certain white goods for the customer.
[6] Mr Lavender contends that after he and Ms Pearce broke off their engagement and separated, he took a period of time off on full pay as suggested by Ms Pearce.
[7] Mr Lavender also contends that no meeting ever took place with Ms Pearce to discuss his work performance, employment termination or otherwise. Further, he submits that he did not engage in any unauthorised filming of staff but rather was asked by Ms Pearce to set up security cameras to prevent shoplifting. He also contends that he was never made aware of any unprofessional behaviour towards management or customers and that he did not leave work without advising management. Rather, the only time he was absent from the workplace was following their relationship breakdown and Ms Pearce was well aware of why he was absent.
[8] Mr Lavender seeks a finding that the dismissal was unfair and an award of compensation.
[9] HBHL contends that Mr Lavender filmed staff members without their knowledge and without authorisation from management. It submits that Mr Lavender also acted in an unprofessional manner toward both staff and customers resulting in customer complaints and that he left the workplace on numerous occasions without advising management.
[10] HBHL further contends that Ms Pearce met with Mr Lavender on 3 March 2017 and he was issued with a verbal warning and advised that due to a number of incidents that had occurred with customers and management that he would be taking immediate leave.
[11] HBHL submits that Ms Pearce met again with Mr Lavender on 6 April 2017 and advised the applicant that his employment would be terminated for unsatisfactory performance and conduct. HBHL contends that it then gave Mr Lavender the option of working out his two weeks’ notice or leaving immediately. Mr Lavender opted for the latter.
[12] Mr Lavender represented himself in this matter and Ms Pearce appeared for HBHL. The application was subject to a determinative conference following consultation with the parties as contemplated by s.399 of the FW Act. This was conducted in a largely inquisitorial manner and given the absence of external representation for either party, appropriate assistance and latitude was provided to facilitate the presentation of each case. 2
[13] There is no dispute that Mr Lavender was protected from unfair dismissal within the meaning of s.382 of the FW Act and there is a valid application before the Commission.
[14] It is common ground that HBHL is a small business within the meaning of the FW Act. 3 The Small Business Fair Dismissal Code4 (the Code) is accordingly potentially relevant.
[15] Given the circumstances of the parties, their competing contentions, and the terms of the legislation, the following major issues must potentially be considered and determined by the Commission:
1. What was the reason (or reasons) for dismissal that might be relevant to the application of the Code – this includes consideration as to what were the grounds relied upon by the employer at the time of the dismissal;
2. Did HBHL comply with the Code – this is directly linked to issue 1 and how that reason and the approach of HBHL fit with the requirements of the Code;
3. If the dismissal was not consistent with the Code, what was the actual conduct and performance of Mr Lavender, based upon evidence before the Commission, and was the dismissal harsh, unjust or unreasonable (unfair); and
4. If unfair, should any remedy in the form of compensation be granted, and if so, how much?
2. The evidence
[16] The parties were given an opportunity to provide witness statements and any other documentary evidence. Mr Lavender provided a short written statement and HBHL relied only upon the Form F3 response document.
[17] Mr Lavender also gave sworn evidence.
[18] HBHL relied on the sworn evidence of:
● Ms Pearce – Store Manager; and
● Mr Robert Pearce – Director (retired) and father of Ms Pearce.
[19] Despite ample opportunity to do so, HBHL did not tender any written evidence in connection with this matter including any copies of the alleged complaints, any employment related documentation or notes of any discussions held between the parties. Given the rather informal nature of the employment relationship, I do not draw an adverse inference from the absence of that material. However, it does mean that in the context of a substantially disputed set of facts, there is no objective contemporary evidence to assist the Commission.
[20] I have reservations about the evidence of Mr Lavender and Ms Pearce. Amongst other factors, the personal enmity that now exists following the breakdown of their personal relationship had a significant impact upon the objectivity of their evidence and this has led to reservations about the reliability and consistency of that testimony.
[21] Given the nature of the determinative conference, I have also had the opportunity to observe the exchanges between Mr Lavender and Ms Pearce. Despite the somewhat controlled nature of that environment, those observations inform my assessment of the likely approach adopted to each other in the workplace, at least to some degree.
[22] Mr Lavender has a consistent tendency to be dismissive of issues and his conduct. Ms Pearce has a tendency to exaggerate matters and to conflate issues from their private lives with the workplace issues. Whilst that was inevitable to some degree, this makes the assessment of the actual workplace conduct and performance difficult. Whilst I have a slight preference for the evidence of Ms Pearce as to the disputed facts of the matter, I have treated both of their evidence with considerable caution.
[23] I found that the evidence of Mr Pearce to be objective and I accept it.
3. The general context in which the employment and dismissal occurred
[24] Before dealing with the key factual disputes, the alleged conduct of Mr Lavender and the relevant statutory considerations more generally, it is appropriate to set out the general context in which the relevant events took place.
[25] The respondent is a small retailer that operates as a franchise of the Betta Home Living Retail Group in Gawler, South Australia. HBHL was provided with some services from the parent organisation, which acts as a buying group, and this included some accesses to human resources (HR) and other business and legal advice.
[26] There was some tension between the evidence of the parties regarding when Mr Lavender’s employment began. Mr Lavender contends that this occurred in October 2015. Ms Pearce gave evidence that Mr Lavender began in December 2015 doing some “volunteer” work over the busy Christmas period. This occurred in the context of the personal relationship and Mr Lavender performing some work to help out the business on a trial basis as Mr Pearce, who was at that time working full-time, was due to have a back operation in March 2016.
[27] I indicated to the parties at the determinative conference that “trial work” of that sort may still be indicative of an employment relationship. Mr Lavender indicated that he would accept that his employment began in December 2015 “for the sake of an argument” 5 and there were no concerns raised about that approach by HBHL. I note that given my subsequent findings, I do not need to determine the precise commencement date and have accepted that Mr Lavender was employed by no later than December 2015.
[28] Mr Lavender initially worked as a sales representative, and following Mr Pearce’s surgery was promoted to “2IC”. Mr Lavender was employed on a full-time basis and at the time of his dismissal was earning $865.00 per week (gross).
[29] There were some issues that occurred during the course of the employment including concerns about customer complaints. To the extent that these were discussed at all between Ms Pearce and Mr Lavender, these were general discussions and no formal warnings were given. I note that a more formal approach would not have been consistent with the personal relationship that co-existed the employment and these parties did not at that time generally conduct the employment relationship in that manner.
[30] In early March 2017, the personal relationship between Mr Lavender and Ms Pearce broke down. Ms Pearce indicated that a trial separation was appropriate. At that time, Mr Lavender became very distressed by the break up and was unable to work with Ms Pearce. At her suggestion, Mr Lavender took a period of paid leave and he was paid his leave entitlements during this time.6 His last day of actual work was 6 March 2016.
[31] Based upon the evidence that is before the Commission, I do not consider that there was any meaningful discussion about alleged workplace conduct or that any warnings were given during that meeting. Rather, there appears to have been a mutual recognition that employment at that time was problematic given the impact of the personal relationship breakdown upon Mr Lavender’s ability to work with Ms Pearce. In effect, he was sent on leave to give him time away from the workplace and to avoid him having to deal with Ms Pearce in the aftermath of the relationship separation. This does not however mean that there were not broader concerns held by Ms Pearce about Mr Lavender’s employment and conduct.
[32] Mr Lavender attended the workplace on 6 April 2017, on HBHL’s evidence, because he had run out of his accrued leave entitlements. Ms Pearce then had an informal meeting with Mr Lavender. Ms Pearce’s evidence was that as a result of that discussion, Mr Lavender “upped and left”. 7 Ms Pearce sent an email terminating Mr Lavender’s employment on 10 April 2017. HBHL contends that Mr Lavender continued to receive paid leave between 6 and 13 April.
[33] Mr Lavender contends that on 6 April 2017, Ms Pearce called him into her office and told him that his employment would be terminated as “head office will no longer give the business any support with me being there”. 8 Mr Lavender submits that that was the extent of the conversation and he then left. He received the email from Ms Pearce the following week confirming his termination.
[34] Mr Pearce was in the vicinity of this meeting for some of this conversation, but was not directly involved.
[35] Having regard to the evidence that is before the Commission, I find that Mr Lavender resumed his work on 6 April 2017 however he found working with Ms Lavender very difficult and this was very evident to Ms Pearce. During that day, a meeting was conducted involving Ms Pearce and Mr Lavender. In that meeting there was a general discussion about the fact that the employment could not continue. There may have been some reference to allegations that there had been customer complaints and it is likely that Mr Lavender was informed that advice had been sought from the Better Home Living “head office”. I am not satisfied that the alleged unauthorised filming or the work absences were expressly raised by Ms Pearce or discussed in that meeting. I find on balance that during the 6 April 2017 meeting, Mr Lavender was, in effect, informed that it was Ms Pearce’s intention that his employment was to be terminated.
[36] Mr Lavender received the following termination letter by email on 13 April 2017. 9
“Dear Adrian Lavender
Termination of your employment
I am writing to you about the termination of your employment with Electrocity pty ltd trading as Humphrys Betta home living Gawler.
On 3rd March 2017 you met with Lisa Pearce and you were issued with a verbal warning and advised that due to a number of incidences that had occurred both with customers and management that you that you would take immediate annual leave.
On 6th April You met again with Lisa Pearce and in that meeting was advised that your Employment will be terminated. You were given the option to see out your two weeks of employment but you decided to leave immediately. I consider that your Performance/conduct is unsatisfactory and have decided to terminate your employment for the following reasons:
● Unauthorised filming of staff members without their knowledge.
● Acting in an Unprofessional manner towards Management.
● Behaving in an unprofessional manner towards customers on numerous occasions which in turn created customer complaints about you to BSR group Head office.
● Leaving the work premises on numerous occasions without advising Management.
You will also be paid our accrued entitlements and outstanding pay, up to and including your last day of employment. This includes the balance of any time off instead of overtime accrued but not yet taken (paid at the overtime rate applicable when the overtime was worked), and superannuation.
… …” 10
[37] Based upon my findings, the letter contains some significant gloss in the description of the content and outcomes of the meetings held on 3 and 6 April 2017.
[38] Although there is a dispute about whether other payments due on termination were actually paid, it is common ground that Mr Lavender was effectively paid (and received) one week’s pay in lieu of notice. 11
4. What were the reasons for dismissal?
[39] The letter of dismissal relied upon four alleged matters. Not all of these matters were discussed during the meeting on 6 April 2017 and I will later make findings regarding the veracity of those allegations and Mr Lavender’s responses. However, at least for the purposes of the application of the Code, I am satisfied that these four stated reasons were the basis of Mr Lavender’s dismissal.
[40] The position of the parties about each of these allegations is set out below.
4.1 Unauthorised filming
[41] Ms Pearce gave evidence that around October 2016 she discovered a hidden spy camera in her home and subsequently inappropriate footage including that apparently taken from the workplace using such cameras that had been set up by Mr Lavender. Ms Pearce submitted that she had allowed Mr Lavender to set up additional security cameras in the workplace to prevent theft but that the unauthorised filming related to other hidden cameras that Mr Lavender had set up without management knowledge. 12 This included footage of Ms Pearce’s office and the HBHL maintenance room and show room.13
[42] HBHL contends that Ms Pearce spoke to Mr Lavender about the cameras and the private footage and that the applicant admitted that this had occurred and would not happen again. 14
[43] Mr Lavender contends that he did not take any unauthorised video footage in the workplace. 15 He further submits that Ms Pearce did not have any discussions with him regarding filming, beyond concerns that she raised about some private video footage.16
4.2 Unprofessional conduct toward management
[44] Ms Pearce gave evidence that Mr Lavender would undermine her authority in front of staff including by making business decisions without consulting her 17. Ms Pearce contended that she spoke to Mr Lavender about this issue several times.18
[45] Mr Lavender contends that he did not undermine Ms Pearce and that there were never any discussions about his behaviour towards her. 19
4.3 Unprofessional manner leading to complaints to head office
[46] HBHL contends that it received more than a dozen complaints about Mr Lavender including two that went to the Betta Home Living head office. 20 Ms Pearce gave evidence of an incident in February 2017 where Mr Lavender had been arguing with two customers and “was ready to basically jump over the counter and he was getting very very aggressive”21 and Ms Pearce had to physically remove him. Ms Pearce submits that she spoke to Mr Lavender after the incident and told him that he could not speak to customers in that manner.22
[47] Ms Pearce contends that Mr Lavender was verbally warned on multiple occasions about his behaviour. 23
[48] Mr Lavender’s evidence was that he did have a disagreement, or argument, with a customer but that this was a “lapse of judgement”. He contends that there were no (disciplinary) discussions with him regarding customer complaints. 24
4.4 Leaving work without authorisation
[49] Ms Pearce gave evidence that if she and Mr Lavender were in an argument, he would leave the workplace without notifying anyone and not return and would not answer his phone. 25 Ms Pearce contends that she spoke to Mr Lavender on numerous occasions about the need to tell her if he was leaving. After the relationship breakdown with Ms Pearce in March 2017, HBHL contends that Mr Lavender threatened to quit.26
[50] Mr Lavender contends that he did not leave the workplace without advising Ms Pearce and in any event that there were never any discussions about this. 27 Further, he denied that he had indicated an intention to resign.
[51] Although not formally relied upon by HBHL, the evidence 28 of Ms Pearce was that the relationship breakdown, and Mr Lavender’s response to that event in particular, was also an obvious factor in the decision to end the employment.
5. Was the dismissal consistent with the Code?
[52] HBHL is a Small Business within the meaning of the FW Act and this means the Commission must initially consider the implications of the Small Business Fair Dismissal Code established by s.388 of the FW Act (the Code).
[53] Section 385 of the FW Act provides as follows:
“385 What is an unfair dismissal
A person has been unfairly dismissed if the FWC is satisfied that:
(a) the person has been dismissed; and
(b) the dismissal was harsh, unjust or unreasonable; and
(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and
(d) the dismissal was not a case of genuine redundancy.
Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.”
[54] This means that if Mr Lavender’s dismissal was consistent with the Code, it cannot be considered to be unfair within the meaning of the FW Act. Section 396 of the FW Act also requires, in effect, that matters arising from s.385 are to be decided before dealing with the merits of the application.
[55] The Code as declared is set out as follows:
“The Code
Summary Dismissal
It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.
Other Dismissal
In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.
The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement. The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.
Procedural Matters
In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.
A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.”
[56] Accordingly, for an employer to believe on reasonable grounds that the conduct of the employee was serious enough to justify immediate dismissal, the employer must establish that it did in fact hold the belief that:
● the conduct was by the employee;
● the conduct was serious; and
● the conduct justified immediate dismissal.
[57] HBHL does not contend that there was any basis to support a summary dismissal on the grounds of serious misconduct and there is no evidence to support any such reasonable belief in any event. 29
[58] The alternative question is whether the requirements of the Code in relation to the “Other dismissals” have been met. This requires, in this case, a consideration as to whether:
● HBHL gave Mr Lavender a reason why he was at risk of being dismissed;
● The reason was a valid reason based on Mr Lavender’s conduct or capacity to do the job;
● Mr Lavender had been warned verbally or preferably in writing, that he risked being dismissed if there was no improvement; and
● HBHL provided Mr Lavender with an opportunity to respond to the warning and gave him a reasonable chance to rectify the problem, having regard to the applicant’s response. Noting that rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.
[59] I note that the “procedural matters” element of the Code did not arise in this case.
[60] Based upon the evidence before the Commission, I am not satisfied that Mr Lavender was ever warned that he risked being dismissed if there was no improvement. That is, to the extent that any of the earlier discussions could even be described as warnings, (which is not consistent with my findings) there was no suggestion of a warning of the kind contemplated by the Code.
[61] The warning, and the consequent opportunity to respond, are required parts of the Code. Accordingly, I am not satisfied that the dismissal was consistent with the Code.
6. Was the dismissal unfair within the meaning of the Act?
[62] Given the above findings, I need to consider whether the dismissal of Mr Lavender was unfair.
[63] Section 387 of the FW Act provides as follows:
“387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:
(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and
(b) whether the person was notified of that reason; and
(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and
(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and
(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and
(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and
(h) any other matters that the FWC considers relevant.”
[64] It is clear that s.387 of the FW Act contemplates that an overall assessment as to the nature of the dismissal must be made by the Commission. In so doing, the FW Act sets out a number of considerations that must, where relevant, be weighed up in totality.
[65] It is convenient therefore to use the various provisions of s.387, with reference to the relevant circumstances, to outline my consideration of the matter.
Section 387(a) – whether there was a valid reason for the dismissal related to Mr Lavender’s capacity or conduct (including its effect on the safety and welfare of other employees)
[66] Valid in this context is generally considered to be whether there was a sound, defensible or well-founded reason for the dismissal. Further, in considering whether a reason is valid, the requirement should be applied in the practical sphere of the relationship between an employer and an employee where each has rights, privileges, duties and obligations conferred and imposed on them. That is, the provisions must be applied in a practical, common sense way to ensure that the employer and employee are each treated fairly.30
[67] It is also clear from the authorities that the reason for termination must be defensible or justifiable on an objective analysis of the relevant facts before the Commission. That is, it is not enough for an employer to rely upon its reasonable belief that the termination was for a valid reason.31 Equally, facts justifying dismissal, which existed at the time of the termination, should be considered, even if the employer was unaware of those facts and did not rely on them at the time of dismissal.32
[68] I have earlier set out the contentions of the parties regarding each of the four matters relied upon by HBHL as the valid reasons. As set out above, I am required to consider the veracity of those matters based upon the evidence that is before the Commission. My findings about these matters are also made in the context of the personal relationship between Mr Lavender and Ms Pearce, and its breakdown, but only to the extent that such impacted upon the lack of formality in the employment relationship and their behaviour and conduct in the workplace.
[69] Having considered all of the evidence that is before the Commission I find as follows in relation to the four matters formally relied upon by HBHL.
Alleged unauthorised filming of staff members without their knowledge
[70] This is a difficult issue. There are private matters that have impacted upon both the conduct of the parties in connection with these events and their evidence about the same. The allegation is also very serious but the evidence of Ms Pearce about this issue was consistent and convincing.
[71] On balance, I find that Mr Lavender did possess some video footage of staff members, predominately Ms Pearce, which was apparently filmed by him in the workplace without the knowledge or permission of management. This was footage beyond that taken by the authorised security and surveillance equipment. This was not appropriate and represented misconduct.
Acting in an Unprofessional manner towards Management
[72] I am satisfied that this occurred on occasions and took place in front of customers. It is difficult to determine the extent or significance of this conduct given the state of the evidence. This conduct was also in my view influenced by the existence of the personal relationship and the lack of formality in the employment relationship which resulted.
Behaving in an unprofessional manner towards customers on numerous occasions which in turn created customer complaints about you to BSR group Head office
[73] I am also satisfied that this conduct took place and that some customer complaints were made concerning Mr Lavender’s conduct. However, the absence of evidence about when this occurred, and the precise circumstances under which the conduct took place, make it difficult to make more definitive findings. There was no direct evidence about the complaints made to “head office”.
Leaving the work premises on numerous occasions without advising Management
[74] The evidence supports the notion that this did occur, at least on some limited occasions. This includes in the aftermath of the relationship breakdown and arguably this was not an unreasonable occurrence in that particular context and was supported by Ms Pearce at that time.
[75] In addition to these four matters, HBHL now rely upon the incapacity for Mr Lavender to work with Mr Pearce in the context of the relationship breakdown. The impact of that breakup upon Mr Lavender was evident in the proceedings and confirmed by the largely common evidence that an ongoing working relationship was not feasible in the circumstances of what is a very small business.
[76] On balance, I am satisfied that there was a valid reason for dismissal, albeit, not the extent of grounds contended by HBHL.
Section 387(b) – whether Mr Lavender was notified of the reasons for dismissal
[77] This consideration requires the Commission to assess whether the applicant concerned was relevantly notified of the reasons leading to the dismissal before that decision was taken.33
[78] The evident purpose of this consideration is that notification of the valid reason to terminate must be given to the employee before the decision to terminate the employee is made and the notification needs to be in explicit and clear terms.
[79] Mr Lavender was notified of some but not all of the reasons for dismissal. That notification came in the context of a discussion where the intention to terminate the employment had, in effect, already been communicated.
Section 387(c) – whether Mr Lavender was given an opportunity to respond to any reason related to his capacity or conduct
[80] This consideration is linked to s.387(b).
[81] The process contemplated by the FW Act does not require any formality and is to be applied in a common sense way to ensure the employee has been treated fairly. This question becomes whether Mr Lavender was aware of the precise nature of the employer’s concern about his conduct and had a reasonable opportunity to respond to these concerns.34
[82] Given the manner in which the earlier discussions and the dismissal discussion took place, Mr Lavender was not given a reasonable opportunity to respond to the capacity and conduct related issues relied upon by the employer.
Section 387(d) – any unreasonable refusal by the respondent to allow Mr Lavender a support person
[83] There is no evidence that a relevant request was made by Mr Lavender.
Section 387(e) – if the dismissal is related to unsatisfactory performance by Mr Lavender– whether he has been warned about that unsatisfactory performance before the dismissal
[84] This consideration relates to performance of the job. Performance in this context includes the employee’s capacity to do the work, and the diligence and care taken with that work.35
[85] I have found that there were general discussions about work and conduct expectations however these were not warnings of the kind contemplated by this consideration.
Section 387(f) – the degree to which the size of the respondent’s enterprise would be likely to impact on the procedures followed in effecting the dismissal
Section 387(g) – the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal
[86] I deal with these two considerations together. HBHL is a small business and this is likely to have affected the procedures it adopted. It did however have access to HR expertise and relied upon that advice, at least to some extent.
Section 387(h) - other matters considered to be relevant
[87] Amongst other considerations, the Commission should consider the impact of the dismissal upon the applicant given all of the circumstances. This includes consideration as to whether the dismissal was harsh in the sense that it was disproportionate to the actual conduct found by the Commission.36
[88] Further, a dismissal may, depending upon the overall circumstances, be considered to be harsh on the applicant employee due to the economic and personal consequences resulting from being dismissed.37 Mr Lavender lost his employment and this has had both economic and other consequences. He was ultimately paid one week’s notice and I note that under the National Employment Standards 38 he was due to receive a minimum of two weeks’ notice.
[89] Mr Lavender also has some physical limitations and this is likely to make the consequences of the loss of his employment more significant.
[90] It is also evident to me that in the context of a very small business and the acrimonious breakdown in the personal relationship, the employment relationship was not sustainable even in the medium and longer terms. This was, to some significant degree, acknowledged by Mr Lavender in his evidence. 39
Conclusions on the dismissal
[91] I have weighed all of the factors and circumstances of this application.
[92] In Byrne and Frew v Australian Airlines Pty Ltd,40 the following observations were made by McHugh and Gummow JJ:
“It may be that the termination is harsh but not unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”
[93] In determining matters in this jurisdiction, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in that position.41 The Commission is also directed to ensure a “fair go all round”. This is reinforced by the objects of this Part of the FW Act in s.381 including ss.(2) which provides as follows:
“(2) The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a “fair go all round” is accorded to both the employer and employee concerned.”
[94] As revealed in various decisions of the Commission (and the Court), each case must be considered in its own circumstances and it is appropriate, amongst other factors, to have regard to whether the procedural deficiencies made any difference to the fairness of the outcome.42 As a result of s.387(f) and (g) of the FW Act, I have also taken into account the circumstances of the business and the impact on the procedures adopted.
[95] There were legitimate concerns about Mr Lavender’s conduct but these were not raised with him in a procedurally fair manner. There were competing views about some of those matters and the denial of any real opportunity to have that taken into account is an important factor given the scheme of the FW Act. In addition, the absence of the appropriate notice payment due under the legislation is also a factor.
[96] However, there was little prospect that employment could continue in any meaningful manner in this business, given the breakdown of the personal relationship and Mr Lavender’s response to that event, and this is a significant factor to be weighed into the consideration of this matter.
[97] Having considered all of the relevant circumstances, I am satisfied that the dismissal was unreasonable, albeit on the limited basis set out above.
7. Remedy
[98] Mr Lavender does not seek reinstatement to his former position but rather compensation.
[99] Division 4 of Part 3-2 of the FW Act relevantly provides as follows:
“Division 4—Remedies for unfair dismissal
390 When the FWC may order remedy for unfair dismissal
(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:
(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and
(b) the person has been unfairly dismissed (see Division 3).
(2) the FWC may make the order only if the person has made an application under section 394.
(3) the FWC must not order the payment of compensation to the person unless:
(a) the FWC is satisfied that reinstatement of the person is inappropriate; and
(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.
Note: Division 5 deals with procedural matters such as applications for remedies.
… …
392 Remedy—compensation
Compensation
(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.
Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the FWC considers relevant.
Misconduct reduces amount
(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.
Shock, distress etc. Disregarded
(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.
Compensation cap
(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:
(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the dismissal.
(6) The amount is the total of the following amounts:
(a) the total amount of remuneration:
(i) received by the person; or
(ii) to which the person was entitled;
(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and
(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.
393 Monetary orders may be in instalments
To avoid doubt, an order by the FWC under subsection 391(3) or 392(1) may permit the employer concerned to pay the amount required in instalments specified in the order.”
[100] The prerequisites of ss.390(1) and (2) have been met in this case.
[101] Section 390 of the FW Act makes it clear that compensation is only to be awarded as a remedy where the Commission is satisfied that reinstatement is inappropriate and that compensation is appropriate in all the circumstances. Mr Lavender does not seek reinstatement and in any event I consider that this would be inappropriate.
[102] As set out above, under the FW Act, it is then necessary to consider whether compensation in lieu of reinstatement is appropriate.
[103] A Full Bench in McCulloch v Calvary Health Care Adelaide43 (McCulloch) confirmed, in general terms, that the approach to the assessment of compensation as undertaken in cases such as Sprigg44 remains appropriate in that regard.
[104] Section 392(2) of the FW Act requires me to take into account all of the circumstances of the case including the factors that are listed in paras (a) to (g). Without detracting from the overall assessment required by the FW Act,45 it is convenient to discuss the identified considerations under the various matters raised by each of the provisions.
The effect of the order on the viability of HBHL
[105] HBHL contended that it was a small business, and that an award of compensation would have an impact on what Ms Pearce described as a very marginal business. However, there was no evidence to support that notion and this issue is unlikely to arise given my later findings.
The length of Mr Lavender’s service with HBHL
[106] Mr Lavender had been employed with HBHL for just over 16 months. This is not a long period of service.
The remuneration Mr Lavender would have received, or would have been likely to receive, if he had not been dismissed
[107] This involves in part a consideration of the likely duration of Mr Lavender’s employment in the absence of what I have found to be an unfair dismissal. That is, the establishment of the anticipated period of employment.46
[108] Given my findings, it is evident that the proper course of action here would have been for HBHL to have put the allegations to Mr Lavender and then made an informed decision having provided natural justice. In all of the evident circumstances it is reasonable to assess the compensation in this matter on the basis that the applicant would, on the balance of probabilities, have remained in employment for a further period of no more than two weeks from the time of being formally dismissed. At that point, it would have been reasonable to have concluded the employment. This is also realistic given the impact of the breakdown in the personal relationship and Mr Lavender’s response to that situation which made continuing employment in the context of this business extremely problematic.
[109] The projected remuneration that Mr Lavender would have received based upon the anticipated period of employment would therefore have been no more than two weeks’ wages. This amounts to $1,730.
The efforts of Mr Lavender to mitigate the loss suffered by him because of the dismissal
[110] I accept that Mr Lavender has made reasonable efforts to mitigate his losses. This included the job seeking obligation that accompany the receipt of Centrelink benefits.
[111] No discount to the amount of compensation is warranted based upon this consideration.
The amount of any remuneration earned by Mr Lavender from employment or other work during the period between the dismissal and the making of the order for compensation
The amount of any income reasonably likely to be so earned by Mr Lavender during the period between the making of the order for compensation and the actual compensation
[112] Mr Lavender obtained a casual position, performing full-time hours on a regular basis, in early July 2017. As the remuneration earned from this employment relates to a period well outside of the projected period of employment, I do not propose to make a deduction from the compensation amount on the basis of this income.
[113] Mr Lavender was paid one week’s pay in lieu of notice and this payment should be taken into consideration.
Any other matter that the FWC considers relevant and the remaining statutory parameters
[114] I have taken into account the projected nature of the anticipated loss of remuneration over a very short period and given the circumstances of this case, it is not appropriate to make a further allowance for contingencies.47
[115] There is some demonstrated misconduct that should be taken into account as provided by s.392(3) of the Act. In normal circumstances, this would lead to some reduction in the amount of compensation that would be awarded. In this case, any such reduction would, in effect, take the compensation below the statutory notice period required by the Act.
[116] In accordance with s.392(4) of the FW Act, I make no allowance for any shock, distress or humiliation that may have been caused by the dismissal.
[117] The maximum compensation limit in this case is the lesser of 26 weeks remuneration or the statutory cap of $69,450.48
[118] Taxation would be payable on any amount determined.
Conclusions on remedy
[119] I have projected the remuneration loss as being no more than two weeks from the date that the dismissal took effect. It is agreed that Mr Lavender was paid one week’s notice.
[120] In all of these particular circumstances, I consider that the compensation should amount to one week’s loss of remuneration. Based upon Mr Lavender’s remuneration, that amounts to $865.00. I do not consider that an award of compensation beyond that amount is appropriate in this matter.
8. Conclusions and Orders
[121] I have found that the dismissal of Mr Lavender did not comply with the Code and was unreasonable given the absence of natural justice in the manner of the dismissal and the amount of notice he was provided with.
[122] I have concluded that having regard to the considerations established by s.392 of the FW Act, it is appropriate that an award of compensation be made equivalent to one week’s wages. An order 49 to that end is being made in conjunction with this decision.
[123] I would note that it has not been necessary to deal with the dispute between the parties about whether any other payments due upon the cessation of employment were actually paid to Mr Lavender or placed into an account that he did not have access to. That issue, and any related dispute about payments due under the employment contract, if a determination is to be pursued, are matters for a Court of competent jurisdiction and not the Commission.
COMMISSIONER
Appearances:
A Lavender, the applicant, on his own behalf.
L Pearce on behalf of Electrocity Pty Ltd T/A Humphrys Betta Home Living.
Hearing details:
2017
Adelaide
14 August.
1 The parties agreed that the number of employees would not exceed 15 even if the number was to be calculated as a combination of both businesses. Therefore, it was not necessary for me to determine whether Ms Pearce’s second business was an associated entity within the meaning of the FW Act.
2 This was done in a manner consistent with the statutory charter of the Fair Work Commission. See the discussion of some of the relevant considerations for a similar Tribunal in Minogue v HREOC [1999] FCA 85.
3 Ibid – the respondent employed significantly less than 15 employees at the time of the dismissal.
4 Section 388 of the FW Act.
5 Transcript PN587.
6 Transcript PN378-397.
7 Transcript PN401.
8 Transcript PN601.
9 The termination letter was originally sent to an email address of Mr Lavender’s mother on 10 April 2017 but ultimately received by him on that day.
10 Termination letter attached to F3 Employer Response.
11 Confirmed by both parties – transcript PN818 to PN858.
12 Transcript PN246—259.
13 Transcript PN264.
14 Transcript PN262 and PN268.
15 Transcript PN445-456.
16 Transcript PN456-460.
17 Transcript PN276.
18 Transcript PN280.
19 Transcript PN481-489.
20 Transcript PN308.
21 Transcript PN318.
22 Transcript PN323.
23 Transcript PN327.
24 Transcript PN507-511.
25 Transcript PN345.
26 Transcript PN368-374.
27 Transcript PN512-515.
28 Transcript PN368.
29 See Ryman v Thrash Pty Ltd t/a Wisharts Automotive Services[2015] FWCFB 5264 for a discussion of the relevant requirements.
30 Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 as cited in Potter v WorkCover Corporation, (2004) 133 IR 458 per Ross VP, Williams SDP, Foggo C and endorsed by the Full Bench in Industrial Automation Group Pty Ltd T/A Industrial Automation [2010] FWAFB 8868, 2 December 2010 per Kaufman SDP, Richards SDP and Hampton C at par [36].
31 See Australia Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1; King v Freshmore (Vic) Pty Ltd AIRCFB Print S4213 per Ross VP, Williams SDP, Hingley C, 17 March 2000; Edwards v Giudice (1999) 94 FCR 561; Crozier v Palazzo Corporation Pty Limited t/as Noble Park Storage and Transport AIRCFB Print S5897 per Ross VP, Acton SDP and Cribb C, 11 May 2000 and Rode v Burwood Mitsubishi AIRCFB Print R4471 per Ross VP, Polites SDP, Foggo C, 11 May 1999.
32 Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359, 373, 377‒378; Australia Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1, 14. See also Dundovich v P & O Ports AIRC PR923358 8 October 2002, per Ross VP, Hamilton DP, Eames C at [79]; Lane v Arrowcrest (1990) 27 FCR 427, 456; cited with approval in Byrne & Frew v Australian Airlines Ltd (1995) 185 CLR 410, 467 and 468.
33 See Trimatic Management Services Pty Ltd v Daniel Bowley [2013] FWCFB 5160.
34 RMIT v Asher (2010) 194 IR 1. See also Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at [75].
35 See Anetta v Ansett Australia Ltd (2000) 98 IR 233.
36 Australia Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1.
37 See also Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 465.
38 Section 117(3) of the FW Act.
39 Transcript PN597.
40 [1995] HCA 24.
41 Walton v Mermaid Dry Cleaners Pty Ltd (1996) 142 ALR 681 at [685]; Miller v University of New South Wales (2003) 132 FCR 147 at [13].
42 See Crozier v Palazzo Corporation Pty Limited t/as Noble Park Storage and Transport AIRCFB Print S5897 per Ross VP, Acton SDP and Cribb C, 11 May 2000 and Villani v Holcim (Australia) Pty Ltd [2011] FCAFC 155 as examples.
43 [2015] FWCFB 873.
44 Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR 21. See also Bowden v Ottrey Homes Cobram and District Retirement Villages Inc T/A Ottrey Lodge[2013] FWCFB 431.
45 Smith and Others v Moore Paragon Australia Ltd (2004) 130 IR 446.
46 McCulloch v Calvary Health Care Adelaide[2015] FWCFB 873.
47 See the discussion of contingencies in McCulloch at [20] – [23]; Bowden v Ottrey Homes Cobram and District Retirement Villages Inc T/A Ottrey Lodge[2013] FWCFB 431, at par [52]; Ellawala v Australian Postal Corporation AIRC Print S5109, per Ross VP, Williams SDP and Gay C, 17 April 2000 and in Enhance Systems Pty Ltd v James Cox AIRC Print PR910779, per Williams SDP, Acton SDP and Gay C, 31 October 2001.
48 Section 392(5) of the Act.
49 PR595327.
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