Aleksandra Cvejic v Academy Services Pty Ltd
[2015] FWCFB 8264
•17 DECEMBER 2015
| [2015] FWCFB 8264 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604 - Appeal of decisions
v
Academy Services Pty Ltd
(C2015/7007)
VICE PRESIDENT HATCHER | SYDNEY, 17 DECEMBER 2015 |
Permission to appeal against decision [[2015] FWC 5905] and order [PR572619] of Deputy President Hamilton at Melbourne on 7 October 2015 in matter number U2015/5932.
Introduction
[1] Ms Alexandra Cvejic has filed a notice of appeal under s.604 of the Fair Work Act 2009 (FW Act) in which she seeks permission to appeal against a decision of Deputy President Hamilton issued on 7 October 2015 1 (Decision) and an order issued on the same date2 (Order). In the Decision the Deputy President found that the dismissal of Ms Cvejic by her former employer, Academy Services Pty Ltd (Academy), was harsh, unjust or unreasonable, and ordered that she be paid four weeks’ remuneration as compensation. Ms Cvejic’s appeal seeks to challenge the quantification of the compensation awarded to her.
[2] Ms Cvejic was dismissed by Academy on the ground of redundancy. The Deputy President found that this was not a genuine redundancy, as defined in s.389 of the FW Act, because Academy did not comply with the consultation requirements in the applicable modern award or enterprise agreement as required by s.389(1)(b). The Deputy President found that the “extent of the consultation was a conversation with the applicant then a letter of termination on 25 March 2015”. He went on to find, having regard to the matters identified in s.387, that the dismissal was harsh, unjust or unreasonable. Turning to remedy, the Deputy President declined to order reinstatement on the basis of evidence adduced by Academy that it was losing work and that Ms Cvejic’s reinstatement would endanger someone else’ employment. In respect of compensation, the Deputy President said:
“[11] In the alternative I am required (s.392) to consider an order of compensation in lieu of reinstatement. The applicant sought 6 months pay. She submitted that she would have been employed beyond the period of 2-3 weeks during which consultation pursuant to the agreement or award would have taken place and that in the circumstances employment would not have ceased at the cessation of the consultation period. She submitted that there was much to discuss including shorter hours of other employees, alternative employment areas, the nature of the productivity test used to select the applicant for redundancy, and other matters. However, Mr Hoffman gave evidence that I accept. I do not believe that there is a sufficient evidentiary basis for finding that employment would have continued beyond the 2-3 week consultation period. Mr Hoffman gave convincing evidence about the nature of the employment difficulties that the company had, the restrictions of the agreement, the prospects of alternatives to redundancy for the applicant, and other matters.”
[3] Having made that assessment, the Deputy President then applied the provisions of s.392(2) and the usual principles for quantification of compensation in unfair dismissal cases to arrive at the outcome of four weeks’ pay.
[4] Ms Cvejic, represented by her union, United Voice, submitted that the Decision insofar as it concerned the quantification of compensation was in error in two respects. First, it was said, the evidence was incapable of supporting the finding that Ms Cvejic would have not been employed beyond the two or three week period it would have taken Academy to comply with the consultation provisions in the applicable enterprise agreement. The evidence demonstrated, it was submitted, that Ms Cvejic had a superior work record which meant that the selection of her for redundancy could have been demonstrated to have been flawed. The evidence before the Deputy President that Ms Cvejic was selected because of a poor assessment of her productivity was hearsay only and could not be relied upon. The alternatives to redundancy, such as sharing of available hours of work, redeployment or an offer of voluntary redundancy were never explored. All these matters meant that if consultation had occurred, there was a real chance that Ms Cvejic’s redundancy might have been avoided and that consequently she might have continued in her employment indefinitely.
[5] Second, it was submitted that the Deputy President erred in principle in his approach to the assessment of quantification. The failure of Academy to consult meant that Ms Cvejic lost the chance to persuade Academy not to make her redundant. Compensation should therefore have been quantified by reference to that chance in accordance with the case authority concerning the principle for assessing loss by reference to future events. That meant, it was submitted, that the following approach taken by Deane, Gaudron and McHugh JJ in Malec v JC Hutton Pty Ltd 3should have been adopted:
“When liability has been established and a common law court has to assess damages, its approach to events that allegedly would have occurred, but cannot now occur, or that allegedly might occur, is different from its approach to events which allegedly have occurred. A common law court determines on the balance of probabilities whether an event has occurred. If the probability of the event having occurred is greater than it not having occurred, the occurrence of the event is treated as certain; if the probability of it having occurred is less than it not having occurred, it is treated as not having occurred. Hence, in respect of events which have or have not occurred, damages are assessed on an all or nothing approach. But in the case of an event which it is alleged would or would not have occurred, or might or might not yet occur, the approach of the court is different. The future may be predicted and the hypothetical may be conjectured. But questions as to the future or hypothetical effect of physical injury or degeneration are not commonly susceptible of scientific demonstration or proof. If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring. The probability may be very high - 99.9 per cent - or very low - 0.1 per cent. But unless the chance is so low as to be regarded as speculative - say less than 1 per cent - or so high as to be practically certain - say over 99 per cent - the court will take that chance into account in assessing the damages. Where proof is necessarily unattainable, it would be unfair to treat as certain a prediction which has a 51 per cent probability of occurring, but to ignore altogether a prediction which has a 49 per cent probability of occurring. Thus, the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability.”
[6] Thus, it was submitted, the Deputy President erred by not taking into account the degree of probability that Ms Cvejic would have been employed beyond the consultation period had it occurred and quantifying compensation in accordance with that degree of probability. This meant that she received an amount of compensation significantly lower than she should have, which constituted a manifest injustice. The issues raised by the appeal, and the manifest injustice which occurred, meant that permission to appeal should be granted in the public interest.
Consideration
[7] An appeal under s.604 of the FW Act is an appeal by way of rehearing and the Commission’s powers on appeal are only exercisable if there is error on the part of the primary decision maker. 4 There is no right to appeal and an appeal may only be made with the permission of the Commission.
[8] This appeal is one to which s.400 of the FW Act applies. Section 400 provides:
(1) Despite subsection 604(2), the FWC must not grant permission to appeal from a decision made by the FWC under this Part unless the FWC considers that it is in the public interest to do so.
(2) Despite subsection 604(1), an appeal from a decision made by the FWC in relation to a matter arising under this Part can only, to the extent that it is an appeal on a question of fact, be made on the ground that the decision involved a significant error of fact.
[9] In the Federal Court Full Court decision in Coal & Allied Mining Services Pty Ltd v Lawler and others, Buchanan J (with whom Marshall and Cowdroy JJ agreed) characterised the test under s.400 as “a stringent one”. 5 The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment6. In GlaxoSmithKline Australia Pty Ltd v Makin a Full Bench of the Commission identified some of the considerations that may attract the public interest:
“... the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters.” 7
[10] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error. 8 However, the fact that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal.9
[11] Section 392 of the FW Act applies to the assessment of compensation in relation to dismissals which have been found to be unfair and in relation to which reinstatement has been determined to be inappropriate. Section 392(2) sets out a number of matters which must be taken into account, one of which (in paragraph (c)) is “the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed …”. Founded upon but supplementing the statutory requirements, the Commission has traditionally applied what is known as the “Sprigg formula”, derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul Licensed Festival Supermarket. 10 The approach was articulated in the context of the FW Act provisions in Bowden v Ottrey Homes Cobram and District Retirement Villages11. Under that approach, the first step to be taken in assessing compensation is to consider s.392(2)(c) - that is, to determine what the applicant would have received, or would have been likely to receive, if the person had not been dismissed. In Bowden this was described in the following way:
“[33] The first step in this process - the assessment of remuneration lost - is a necessary element in determining an amount to be ordered in lieu of reinstatement. Such an assessment is often difficult, but it must be done. As the Full Bench observed in Sprigg:
‘... we acknowledge that there is a speculative element involved in all such assessments. We believe it is a necessary step by virtue of the requirement of s.170CH(7)(c). We accept that assessment of relative likelihoods is integral to most assessments of compensation or damages in courts of law.’
[34] Lost remuneration is usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment. We refer to this period as the ‘anticipated period of employment’...”
[12] Having determined this starting point amount, various adjustments are made in accordance with s.392 and the formula for matters including monies earned since dismissal, contingencies, any reduction on account of the employee’s misconduct and the application of the cap of six months’ pay. However the assessment cannot simply be made robotically since, as the Full Bench in Smith v Moore Paragon Australia Ltd emphasised, the Commission’s overarching obligation is to ensure that the level of compensation is in an amount that is considered appropriate having regard to all the circumstances of the case. 12 In the same decision the Full Bench noted that the first step in the assessment referred to above “necessarily involves assessments as to future events that will often be problematic”.13
[13] It is clear that the Deputy President correctly commenced assessing compensation by taking the “first step” of determining the remuneration Ms Cvejic would have received, or would have been likely to receive, if she had not been dismissed. This necessarily involved a determination of how long she would have been employed, or would have been likely to be employed, but for the dismissal. It is the conclusion which the Deputy President reached on this score that is challenged by Ms Cvejic.
[14] We do not consider Ms Cvejic’s submission that the evidence was incapable of supporting that conclusion as being reasonably arguable. As stated in paragraph [11] of the Decision, the Deputy President relied upon the evidence of Mr Mark Hoffman, the Chief Executive Officer of Academy, to reach the conclusion that he did. Mr Hoffman gave evidence that Academy had recently lost 27 contracts in South Australia, that at Ms Cvejic’s worksite none of the employees wanted to lose their job or hours, and that Ms Cvejic herself was working the minimum shifts allowed by the enterprise agreement. This evidence all supported the conclusion that Ms Cvejic’s redundancy was unavoidable because the alternatives of redeployment, voluntary redundancy or sharing of available hours were not practicable.
[15] Mr Hoffman also gave evidence that Ms Cvejic was selected for redundancy on the basis that her direct managers had advised him she and one other employee who was also made redundant were the least productive employees at the site, and that he relied upon their advice to that effect. Ms Cvejic’s submission that this evidence was hearsay and had no probative value, and that there was no direct evidence adverse to her work performance, with respect, misses the point. The Deputy President was not required to determine whether, in an objective sense, Academy was correct in selecting Ms Cvejic for redundancy. Nor is this what he did. His task was to make an assessment as to the likelihood of Ms Cvejic’s employment continuing beyond the two to three week period that consultation would have taken but for the dismissal. Mr Hoffman’s evidence supported the conclusion that had Ms Cvejic not been dismissed in breach of the consultation requirements of the enterprise agreement, he would nonetheless have still relied on the assessment of her contract managers to select her for redundancy. That is, the evidence in this respect went to the likelihood of Ms Cvejic still being selected for redundancy after a consultation process, not to whether she was correctly selected in objective terms.
[16] We consider that the Deputy President’s approach in assessing the “first step” of compensation was consistent with section 392(2)(c) and the authorities concerning the Sprigg formula. Section 392(2) requires a conclusion to be reached as to what would have been the most likely outcome in terms of remuneration received had the dismissal occurred. In reaching this conclusion, it is of course necessary to take into account the competing possibilities as to what might have occurred. But once a firm conclusion is reached, as the Deputy President did here, that a particular outcome would most probably have transpired, then the “first step” in the assessment must involve a quantification of the remuneration that would have been earned pursuant to that outcome. That is an approach consistent with that taken by the Full Court of the Industrial Relations Court of Australia in Kenefick v Australian Submarine Corporation (No 4) 14 (underlining added):
“As to the question of valuing the loss, it is inescapable that, in order to properly determine the loss (if any) sustained by each appellant, there should be brought into consideration the chance that he would in any event have had his employment very soon terminated. That is logically so because what is really being compensated is each appellant’s loss, predicated upon the chance that his employment would not have been so terminated had the employer obeyed the law. A chance that his employment would not have been terminated, but for the unlawful termination, cannot be separated from the chance that his employment would have been so terminated. The evaluation of those chances results in an assessment of whether the employment would probably have been otherwise terminated or not.”
[17] We do not consider that there is any warrant for taking an approach whereby, for example, an assessment is made that the employee would have had a 20% chance of staying in employment for another 12 months, and thereby 20% of the remuneration for a 12 month period is added to the starting point amount. We note that such an approach was deprecated by Brennan and Dawson JJ in Malec v JC Hutton Pty Ltd in the following terms:
“Although we agree with the general thrust of the reasoning on this point in the judgment of Deane, Gaudron and McHugh JJ., we think it undesirable for damages to be assessed on the footing of an evaluation expressed as a percentage. Damages need not be assessed by first determining an award on the footing that the hypothetical situation would have occurred and then discounting the award by a selected percentage. Damages founded on hypothetical evaluations defy precise calculation. We should add that we would not favour the use of the term "probability" to describe the possibility of occurrence of a situation when the possibility is minimal.” 15
[18] Whatever be the correct position for the assessment of damages at common law, we consider that the posited approach is inconsistent with s.392(2)(c). In unfair dismissal cases, compensation is necessarily assessed in accordance with the framework of s.392.
[19] It was not argued by Ms Cvejic that the possibility of her employment having continued beyond two to three weeks should have been considered as a contingency which operated to adjust the starting point amount. We express no view about that as a general proposition. It could not have availed Ms Cvejic in any event because it is clear from the Deputy President’s findings that that he considered that there was no real possibility of any continuation of her employment beyond the two to three week period.
[20] Nothing in this decision should be taken to suggest that redundancy consultation provisions in modern awards and enterprise agreements are to be treated as perfunctory exercises in which the relevant redundancies are a foregone conclusion. Proper consultation is not just informing employees of redundancy decisions already taken; it has as an essential element that employees will be given a meaningful opportunity to present their views and that such views will be taken into account before a definite decision is made. 16 We do not consider that anything in the Deputy President’s Decision contradicts this proposition. However the particular circumstances of Academy, as demonstrated by the evidence, precluded a conclusion that in this case redundancy could have been avoided through consultation.
[21] The approach taken by the Deputy President in assessing compensation was orthodox, and the outcome was supported by the evidence. We do not consider that any arguable case of appealable error has been identified, nor had any issue been raised which would otherwise attract the public interest.
Conclusion
[22] We do not consider that the grant of permission to appeal would be in the public interest. In accordance with s.400(1), permission to appeal must therefore be refused.
VICE PRESIDENT
Appearances:
S. Blewett from United Voice on behalf of A. Cvejic.
K. Luke solicitor for Academy Services Pty Ltd.
Hearing details:
2015.
Sydney:
26 November.
1 [2015] FWC 5905
2 PR572619
3 (1990) 169 CLR 638
4 Coal and Allied Operations Pty Ltd v AIRC (2000) 203 CLR 194 at [17] per Gleeson CJ, Gaudron and Hayne JJ
5 (2011) 192 FCR 78 at [43]
6 O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398 at [69] per Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others (2011) 192 FCR 78 at [44] -[46]
7 [2010] FWAFB 5343 at [27], 197 IR 266
8 Wan v AIRC (2001) 116 FCR 481 at [30]
9 GlaxoSmithKline Australia Pty Ltd v Makin[2010] FWAFB 5343 at [26]-[27], 197 IR 266; Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth[2010] FWAFB 10089 at [28], 202 IR 288, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663 at [28]
10 Print R0235, (1998) 88 IR 21
11 [2013] FWCFB 431
12 PR942856, (2004) 130 IR 446 at [32]
13 Ibid
14 [1997] IRCA 216
15 (1990) 169 CLR 638 at 640
16 See CEPU v QR Limited [2010] FCA 591, (2010) 198 IR 382; QR Limited v CEPU [2010] FCAFC 150, (2010) 204 IR 142
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