Anne Clayworth v Vita Property Group Pty Ltd

[2012] FWA 5380

Note: An appeal pursuant to s.604 (C2012/4614) was lodged against this decision.

[2012] FWA 5380

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Anne Clayworth
v
Vita Property Group Pty Ltd
(U2012/5412)

COMMISSIONER WILLIAMS PERTH, 28 JUNE 2012

Termination of employment - genuine redundancy - Small Business Fair Dismissal Code.

[1] This matter involves an application made by Mrs Anne Clayworth (the Applicant) under section 394 of the Fair Work Act 2009 (the Act) for an unfair dismissal remedy. The respondent is Vita Property Group Pty Ltd (the Respondent).

[2] The matter was the subject of a conciliation conference however the matter was not resolved and has been referred to me for determination.

Background

[3] The Applicant was employed in the position of Property Manager/Office Administrator at the beginning of August 2010. The Applicant was the sole employee of the Respondent.

[4] On 10 February 2012 the Respondent’s Director, Mr Agapitos, told the Applicant that the company was in dire financial trouble and that consequently he had to terminate her employment effective immediately.

The evidence

[5] At the hearing of this matter the Applicant was self represented and Mr Agapitos represented the Respondent.

[6] Evidence was given by both the Applicant and Mr Agapitos.

[7] Having considered their evidence I find the following are the facts on this matter.

[8] The Applicant was employed on 2 August 2010 as the Property Manager/Office Administrator. As noted in the first paragraph of the Applicant’s contract of employment 1 with the Respondent this position was offered and accepted ‘... with the longer term view of moving to a sole office administrative/personal assistant role within Vita Property Group.’

[9] The Applicant’s salary was $65 000 per annum.

[10] Mr Agapitos at this time was just starting up this new business.

[11] In November or December of 2010 the Respondent also employed a licensed Property Manager however this employee was terminated after three months.

[12] In late February 2011 the Respondent employed another Property Manager however she left the Respondent’s employment in July 2011.

[13] After this the Applicant suggested to Mr Agapitos that she obtained her license as a property manager and commenced a course of study to obtain that license.

[14] At this time the Applicant was administering the office and managing a property portfolio of approximately 31 properties.

[15] In September 2011 Mr Agapitos employed his sister-in-law who was an experienced Commercial Property Manager who brought with her five large properties to be managed.

[16] On 10 February 2012 Mr Agapitos spoke to the Applicant and told her that the company was in dire financial trouble and that he may have to dismiss his sister-in-law and that he was waiting to speak to his accountant to see what he needed to do to keep the business afloat.

[17] Later in that conversation Mr Agapitos then told the Applicant that he had to terminate her employment effective immediately.

[18] Mr Agapitos’ evidence was that at this time the business was struggling with cash flow and the Applicant would have been aware of the financial difficulties. The Applicant was also aware that in order to assist with the business finances he had rented out his family home and had moved in with his mother-in-law.

[19] Mr Agapitos says that having given the Applicant five months to work as the Property Manager the company was suffering because she was not able to cope with an increase in the number of properties she managed beyond approximately 35. This limitation was constraining the business.

[20] His evidence was that an average full-time property manager should have the capacity to handle up to 120 properties.

[21] Five days after dismissing the Applicant, on Wednesday, 15 February 2012 the Respondent advertised online for a Receptionist/Front Office Manager. This position was not filled.

[22] Mr Agapitos however says that two to three weeks after dismissing the Applicant he employed a Receptionist/Property Manager who undertakes almost the same role that the Applicant had done and whom is being paid a salary less than the Applicant 2.

[23] The Respondent’s business now has 80 properties that it manages with one full-time Property Manager who manages 55 to 60 of these properties and the balance are being managed by a part-time Property Manager. The Respondent has recently appointed a Business Development Manager to bring on further properties to manage 3.

[24] Since the dismissal the Applicant has been working two days a week as a temporary Property Manager and then commenced new full-time employment on 18 June 2012.

Consideration

[25] Section 385 of the Act below explains that a person has not been unfairly dismissed if Fair Work Australia is satisfied that the dismissal was a case of genuine redundancy or if the dismissal was consistent with the Small Business Fair Dismissal Code.

“385 What is an unfair dismissal

A person has been unfairly dismissed if FWA 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.”

[26] Section 389 of the Act below explains what a case of genuine redundancy is.

“389 Meaning of genuine redundancy

(1) A person’s dismissal was a case of genuine redundancy if:

(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and

(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

(a) the employer’s enterprise; or

(b) the enterprise of an associated entity of the employer.”

[27] In this instance the Respondent is a small business and it is necessary to consider whether the Respondent has complied with the Small Business Fair Dismissal Code as is explained in section 388 of the Act below.

“388 The Small Business Fair Dismissal Code

(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.

(2) A person’s dismissal was consistent with the Small Business Fair Dismissal Code if:

(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and

(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.”

[28] Considering these matters in turn, Mr Agapitos has explained that the business did have some real financial difficulties at the time the Applicant was dismissed which may well have necessitated some changes in the operational requirements of the employer’s enterprise.

[29] However his evidence also demonstrates that this was not a case where the Respondent no longer required the Applicant’s job to be performed by anyone because of these changes in the operational requirements.

[30] Indeed the evidence is that very shortly after dismissing the Applicant another employee was employed to undertake substantially the same duties as the Applicant 4.

[31] Consequently the dismissal of the Applicant does not fall within the definition of a genuine redundancy in section 389 of the Act.

[32] With respect to the Small Business Fair Dismissal Code the relevant parts are set out below:

“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.”

[33] This is not a case of summary dismissal and so would come under the heading of ‘Other dismissal’.

[34] In this instance the reason given by the Respondent to the Applicant for her dismissal was that the company was in dire financial trouble. The evidence however is that this was not the full reason for the Respondent wanted to dismiss the Applicant. The full reason had to do with the view that Mr Agapitos had come to that he needed a fully experienced property manager whom would be able to manage a larger number of properties than the Applicant apparently had the capacity to given her very limited experience in this field.

[35] There is no evidence that the Applicant was ever warned verbally let alone in writing that she risked being dismissed because she was not able to manage the volume of properties which the Respondent felt was reasonable and necessary for the business to prosper.

[36] Clearly then the Applicant’s dismissal was not consistent with the Small Business Fair Dismissal Code.

[37] Consequently it is necessary to decide whether or not the dismissal was harsh, unjust or unreasonable. Matters that must be taken into account in determining this are set out in section 387 of the Act below.

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA 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 FWA considers relevant.”

[38] In this case there was a valid reason for the dismissal of the Applicant related to her capacity which was that she was not able to manage the volume of properties which the Respondent required her to. I stress this is not to criticise the Applicant at all. The Respondent employed the Applicant knowing full well she had no experience as a property manager. As events transpired she volunteered to take on this role for the Respondent because Mr Agapitos had twice employed experienced property managers who proved to be unsatisfactory.

[39] I accept the evidence is that the Applicant worked diligently to meet the Respondent’s requirements to the extent of undertaking study largely in her own time and unsupported by the employer to gain her licence as a property manager to assist Mr Agapitos.

[40] However, notwithstanding her efforts, it is the case that the Applicant was not able to manage the number of properties that Mr Agapitos expected her to and this was having some financial impact on the business.

[41] In terms of notification the Applicant was not notified of the full reason for her dismissal at any stage and certainly not prior to being dismissed. The stated reason, the financial difficulties of the business, was only part of the reason the Respondent had decided to dismiss her for. Consequently the Applicant did not have an opportunity to respond to the reason for her dismissal and no warnings of what might in other circumstances be viewed as unsatisfactory performance were given to the Applicant.

[42] The employer is the smallest of businesses and the procedures followed were flawed in a number of ways. The size of the business and the absence of dedicated Human Resource Management specialists or expertise unsurprisingly meant that procedural best practice was not followed.

[43] The Applicant had been employed for approximately 18 months at the time of dismissal.

[44] The evidence is that the Respondent’s Director is not experienced in business nor in employment matters. I also accept that in a very small business such as this the problem identified of there being a limit to the number of properties under management was not one that could be ignored. However in ensuring that there has been a fair go all round there is also a need to recognise that the Applicant should not be criticised for her lack of experience that was known to the Respondent from the beginning. This is a case where it is not appropriate to apportion blame but rather to accept that there was a mismatch between the experience of the employee and the reasonable needs of the employer.

[45] Acknowledging the above however in terms of the legislation and the case law the fact that the Respondent was not fully open as to the reasons for the dismissal and the fact that the Applicant was not given an opportunity to modify her performance or in some other way address the Respondent’s concerns means that the dismissal was harsh, unjust or unreasonable and so the Applicant has been unfairly dismissed.

Remedy

[46] I am satisfied in this case that reinstatement is not appropriate but that an order for compensation should be made.

[47] Given the disadvantages which the Respondent had concluded flowed from the Applicant’s limited property management experience and capacity my view is that if the matter was dealt with properly by the employer the Applicant’s employment would not have continued longer than a further six weeks past the date of dismissal.

[48] The Applicant was entitled to payment in lieu of two weeks wages.

[49] The Applicant has promptly acted to mitigate her loss and following her dismissal she has been working two days a week. Consequently for the period remuneration would have earned with the Respondent but was not because of the dismissal the Applicant should be compensated only for the three days a week she has not been working.

[50] The Applicant’s salary of $65 000 per year amounts to $1250 gross per week.

[51] Reduced by the amount she had been working, i.e. two days out of five, 60% of this amount is to be paid as compensation being $750 per week times four weeks (the six weeks less than two weeks payment in lieu of notice) which gives a total of $3000 gross.

[52] My decision is that an appropriate amount of compensation in the circumstances is a payment of $3000 gross from which tax would be deducted and an order to that effect will issue in conjunction with this decision.

COMMISSIONER

Appearances:

A Clayworth on her own behalf

S Agapitos on behalf of the Respondent.

Hearing details:

2012.
Perth:
June 22.

 1   Exhibit A1, Attachment 1.

 2   Transcript PN39, 43 and 46.

 3   Ibid., PN36 and 37.

 4   Ibid., PN39, 43 and 46.

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