Alfonso Quiroz v KK Tech Exhaust Pty Ltd
[2022] FWC 2677
•5 OCTOBER 2022
| [2022] FWC 2677 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Alfonso Quiroz
v
KK Tech Exhaust Pty Ltd
(U2022/5860)
| DEPUTY PRESIDENT EASTON | SYDNEY, 5 OCTOBER 2022 |
Application for relief from unfair dismissal – valid reason found – downturn in business during COVID-19 – business sold and purchaser not offering employment – dismissal was not harsh, unjust or unreasonable – no remedy ordered – application dismissed.
Mr Alfonso Quiroz worked for KK Tech Exhaust Pty Ltd from 2018 until May 2022. The employer struggled during COVID-19 and could not afford to keep Mr Quiroz employed. At or around the same time Mr Quiroz was dismissed from his employment, the business was sold and the new owner did not want to employ Mr Quiroz. KK Tech decided to dismiss Mr Quiroz in anticipation of the sale of business.
On 31 May 2022 Mr Quiroz made an application to the Fair Work Commission (Commission) under s.394 of the Fair Work Act 2009 (Cth) (FW Act) for a remedy, alleging that he had been unfairly dismissed from his employment with KK Tech Exhaust Pty Ltd (KK Tech). Mr Quiroz does not seek reinstatement to his former position.
Mr Quiroz worked for KK Tech for four years as a motor mechanic. Like many businesses, KK Tech suffered a downturn in trade when the COVID-19 pandemic struck. The owner of KK Tech, Mr Kadir, tried for several months to sell his business, including at one stage proposing to sell the business to his son and Mr Quiroz together. Mr Quiroz appears to have been interested in purchasing the business but did not have access to sufficient funds to do so at the time.
Over the previous six months before his employment finished Mr Quiroz was paid for 38 hours per week but worked variable hours due to the downturn in business.
In late April or early May 2022 Mr Kadir told Mr Quiroz that his employment was finishing because of a downturn in business and also because KK Tech found a buyer for its business.
The evidence of the details and timing of the sale of the business was not clear. It seems that around the same time that Mr Quiroz’s employment was terminated a deposit was received by KK Tech towards the purchase of the business however the sale of business was not completed until after May 2022. At or around this time KK Tech continued to operate the business insofar as KK Tech contracted with customers, paid suppliers and collected monies from clients. There was, however, a suggestion that by May 2022 KK Tech was operating the business on behalf of the new purchaser pending completion of the sale of business. Ultimately nothing turns on the precise arrangements between KK Tech and the purchaser because there is no dispute in this matter that KK Tech terminated Mr Quiroz’s employment.
Mr Daniel Agripa is the principal of the purchaser of KK Tech’s business. Mr Agripa gave evidence in the proceedings and says that he first met Mr Quiroz on 11 April 2022 at KK Tech’s premises. Mr Agripa worked at the business from 11 April 2022, reviewing the business and observing the clientele. Mr Agripa observed Mr Quiroz in his work and decided for various reasons that if he was to purchase the business he would not hire Mr Quiroz.
On 4 May 2022 Mr Kadir spoke to Mr Quiroz and advised him that his employment would be terminated on 18 May 2022. It is not clear whether there was any formal agreement to sell the business by early May, but I am satisfied that by 4 May 2022 Mr Kadir had decided that he could not afford to continue Mr Quiroz’s employment.
Later that day Mr Quiroz sent an SMS to Mr Kadir in the following terms:
“Just so we clear & understand im not needing a resume or a reference letter I need a LETTER OF TERMINATION outlining my start date & termination dated & reason for termination signed by you under the Campbelltown exhaust centre letter head by Monday or Tuesday latest.”
As requested, a letter of termination was provided in the following terms:
“I am writing to you about the termination of your employment with Campbelltown Exhaust Centre.
On 3rd May 2022, you met with myself Bob Kadir. In this meeting, we discussed the downturn in business turnover and profitability in which you agree, due to this reason the business is unable to continue to operate.
Based on your length of service, your notice period is 2 weeks. Therefore, your employment will end on Wednesday 18th May 2022.
As discussed, and worked out together you will also, be paid your accrued entitlements and outstanding remuneration, including superannuation, up to and including your last day of employment.”
Although the termination letter referred to the employment ending on 18 May 2022, it seems that Mr Quiroz had annual leave booked from 14 May 2022.
Mr Quiroz’s last day of work was 11 May 2022. On that day there was an event that Mr Kadir describes as “a confrontation”.
In the morning of 11 May 2022 Mr Kadir questioned Mr Quiroz about a vehicle safety inspection he had apparently carried out for a client. Mr Kadir gave evidence that he asked Mr Quiroz three times whether he had performed the inspection on the vehicle, and three times Mr Quiroz denied doing so. Mr Kadir says that “Mr Quiroz became very combative, enraged, and started abusing me verbally.”
Mr Kadir found a record within KK Tech’s computer system of an inspection having taken place (being a record on the “RMS computer”) but could not find a paper copy of the pink slip that was issued, or any record of payment having been received. Mr Kadir formed the view that Mr Quiroz had conducted the inspection and received cash payment from the customer and kept the payment for himself.
Mr Kadir says that after this confrontation Mr Quiroz left at 11:00am and returned the next day, collected all his belongings, left again by 8:15am and never returned to the workplace.
Mr Kadir says that Mr Quiroz’s employment ended after he left on 11 May 2022 because of the confrontation. KK Tech processed Mr Quiroz’s termination payments on 12 May 2022.
Mr Quiroz gave a slightly different account. He says that after a “misunderstanding” on the 11 May 2022 he came unwell, told Mr Kadir that he was unwell and went home early. Mr Quiroz says he went to a doctor on 12 May 2022, who gave him a medical certificate for that day, which he provided to Mr Kadir by SMS. Mr Quiroz says that he collected his tools on 12 May 2022 because his employment was due to end on 18 May and his leave was scheduled to commence on 13 May that would take him through to the end of his employment.
Mr Kadir says that after Mr Quiroz left employment the business received several phone calls and visits from customers that revealed that Mr Quiroz had done work for customers for cash payments made directly to him. Mr Kadir gave an example of a customer visiting the workshop seeking warranty support for work Mr Quiroz had performed on her vehicle but was not able to produce a receipt. The customer said she was a regular customer and had dealt with Mr Quiroz and had paid cash for the work provided. The customers details were in KK Tech’s computer system but there was no record of the specific job described by the customer.
Consideration
Section 387 of the FW Act requires me to take into account the following matters in determining whether Mr Quiroz’s dismissal was harsh, unjust or unreasonable:
(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.
I must consider each of these criteria, to the extent they are relevant to the circumstances of the case.
Was there a valid reason for the dismissal related to the Applicant’s capacity or conduct (s.387(a))?
To be a valid reason, the reason for the dismissal should be sound, defensible or well founded and should not be capricious, fanciful, spiteful or prejudiced. However, in assessing the validity of the reason(s) for dismissal the Commission will not stand in the shoes of the employer and determine what the Commission would do in the same position.
I am satisfied in this case that there were two valid reasons for dismissal.
The first valid reason was the downturn in business caused by COVID-19 and the fact that KK Tech’s business was not profitable. The evidence was that KK Tech’s business was going so badly that Mr Kadir was faced with either selling or closing it. Unfortunately for Mr Quiroz this meant that terminating his employment to save costs is a valid business decision and a valid reason to dismiss him from employment.
The second valid reason was connected to the first. By early May 2022 Mr Agripa had familiarised himself with the business and had decided that Mr Quiroz was not to continue in employment once the business was formally under his control. In the circumstances, this meant that for KK Tech there was no longer any use in keeping Mr Quiroz in employment because the likelihood of a new owner taking him on had evaporated.
I do not find on the evidence that Mr Quiroz’s conduct in allegedly performing work for KK Tech’s customers for direct payment was a valid reason. The incident referred to above only arose after Mr Quiroz had been given notice of dismissal. On the competing accounts of the conversations on 11 May 2022 it seems that Mr Kadir raised the issue with Mr Quiroz and asked him questions, but Mr Quiroz left the workplace before discussions were complete.
The allegation is that Mr Quiroz diverted monies away from his employer, which is a serious matter. The Briginshaw v Briginshaw (1938) 60 CLR 336, [1938] HCA 34 standard applies:
“The standard of proof remains the balance of probabilities but 'the nature of the issue necessarily affects the process by which reasonable satisfaction is attained' and such satisfaction 'should not be produced by inexact proofs, indefinite testimony, or indirect inferences' or 'by slender and exiguous proofs or circumstances pointing with a wavering finger to an affirmative conclusion.”
KK Tech’s evidence did not establish that this conduct took place. That’s not to say it did not occur, but on the evidence before me I could not be comfortably satisfied that Mr Quiroz misconducted himself in this way.
The Small Business Fair Dismissal Code applies because KK Tech was a small business employer, but I do not think it assists KK Tech. I am satisfied that the employer believed on reasonable grounds that the employee’s conduct was sufficiently serious to justify immediate dismissal, but I am not convinced that the conduct was an active reason for dismissal at the time. The more realistic conclusion to be drawn from the evidence is that KK Tech just let Mr Quiroz take his tools and leave because he was so close to the end of his employment by the time Mr Kadir became aware of the conduct.
Similarly the matters uncovered after Mr Quiroz left employment could also have constituted valid reasons for dismissal but, on the state of the evidence, I do not find were actually valid reasons for dismissal. There is no barrier for the Commission to receive and consider evidence of facts that were not known to the employer at the time of the dismissal, as long as the facts existed at the time of dismissal (per Hyde v Serco Australia Pty Limited T/A Serco Australia Pty Limited[2018] FWCFB 3989 at [71]).
After Mr Quiroz left employment KK Tech received information from several clients that strongly suggested that Mr Quiroz had misconducted himself during his employment by diverting income away from the business. These matters are also serious matters that KK Tech would have to prove to the Briginshaw v Briginshaw standard. Mr Kadir referred to such matters in his evidence but that evidence does not rise to the required standard.
Was the Applicant notified of the valid reason (s.387(b))?
Sections 387(b) and (c) direct the Commission’s inquiry to matters of procedural fairness. In general terms a person should not exercise legal power over another, to that person’s disadvantage and for a reason personal to him or her, without first affording the affected person an opportunity to present a case (per Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at 151 [70] citing FAI Insurances Ltd v Winneke (1982) 151 CLR 342; Kioa v West (1985) 159 CLR 550; Annetts v McCann and others (1990) 170 CLR 596).
In context, the inquiry to be made under s.387(b) is whether the employee was “notified” of that reason before the employer made the decision to terminate (per Sydney Trains v Trevor Cahill[2021] FWCFB 1137 at [60]). The reference to “that reason” is a reference to the valid reason(s) found to exist under s.387(a) and the reference to being “notified” is a reference to explicitly putting the reasons to the employee in plain and clear terms (per Bartlett v Ingleburn Bus Services Pty Ltd [2020] FWCFB 6429 at [19]).
The SMS and email exchange between Mr Quiroz and Mr Kadir leaves me in no doubt that the reasons for dismissal were openly discussed between both men and that Mr Quiroz was told of the reason for his dismissal.
Was the Applicant given an opportunity to respond to any valid reason related to their capacity or conduct (s.387(c))?
The opportunity to respond to which s.387(c) refers is an opportunity to respond to the reason for which the employee may be about to be dismissed.
Mr Quiroz was given a proper opportunity to respond to the reasons for dismissal. In the circumstances there was very little that could be said by Mr Quiroz to alter KK Tech’s decision, but I am satisfied that during the meeting on 4 May 2022 Mr Quiroz was given an opportunity to respond to the reasons given by Mr Kadir.
I also note the evidence from Mr Kadir that at an earlier stage Mr Quiroz was given the opportunity to buy the business with Mr Kadir’s son.
Did the Respondent unreasonably refuse to allow the Applicant to have a support person present to assist at discussions relating to the dismissal (s.387(d))?
This factor is not a relevant consideration in this matter. Mr Quiroz was the only employee.
Other factors – s.387(e)-(h)
As the dismissal did not relate to unsatisfactory performance, the fact that Mr Quiroz was not warned about unsatisfactory performance (s.387(e)) does not affect the fairness of the dismissal.
Similarly, the size of KK Tech’s enterprise (s.387(f)) and the absence of dedicated human resource management expertise (s.387(g)) do not affect the fairness of the dismissal.
There are no other relevant matters (s.387(h)) that impact upon the fairness of the dismissal of Mr Quiroz.
Is the Commission satisfied that the dismissal of the Applicant was harsh, unjust or unreasonable?
I have made findings in relation to each matter specified in section 387 as relevant. I must consider and give due weight to each as a fundamental element in determining whether the termination was harsh, unjust or unreasonable and therefore an unfair dismissal.
I find that the dismissal of Mr Quiroz was not harsh, unjust or unreasonable.
It was reasonable for KK Tech to dismiss Mr Quiroz in the circumstances. The consequences for Mr Quiroz were significant however the decision to dismiss him was logical and reasonable when the business was not profitable, was in the process of being sold and there was no ongoing position available with the purchaser.
The dismissal was procedurally fair – KK Tech communicated with and cooperated with Mr Quiroz through the process, including once concerns about misconduct emerged.
There were no mitigating circumstances that rendered the dismissal harsh.
Accordingly, I will make an order dismissing Mr Quiroz’s application.[1]
DEPUTY PRESIDENT
Appearances:
Mr A Quiroz, Applicant
Ms M Katri for the Respondent
Hearing details:
2022.
Sydney (By Video using Microsoft Teams)
September 2.
[1] PR746504.
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