Chan Huynh v R Barel & Associates Pty Ltd

[2013] FWC 7701

[2013] FWC 7701

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Chan Huynh
v
R Barel & Associates Pty Ltd
(U2013/8690)

DEPUTY PRESIDENT BOOTH SYDNEY, 4 OCTOBER 2013

Application for relief from unfair dismissal.

[1] In this matter Mr Chan Huynh (the applicant) asks the Fair Work Commission (the Commission) to exercise its discretion under s.394 of the Fair Work Act2009 (the Act) to grant a remedy for unfair dismissal in relation to the termination of his employment from R Barel and Associates Pty Ltd (the respondent) on 28 March 2013.

[2] The application was lodged on 17 April 2013. The respondent refused to attend conciliation and objected to the application on two grounds. First, that it was “frivolous or vexatious or without reasonable cause”, although this objection was not prosecuted. Secondly, that the employer is a small business and the dismissal was not unfair because the respondent complied with the Small Business Fair Dismissal Code (the Code). This argument was heard before me on 2 and 14 August 2013.

[3] Witness evidence was given for the applicant by Mr Huynh and for the respondent by Ms Kosmes. Both parties were self represented and Mrs Huynh acted as advocate for Mr Huynh on some occasions during the course of the hearing.

Relevant Facts

[4] R Barel and Associates is a family owned accounting practice established in 1979. Up until late 2011 Mr Ralph Barel conducted the practice however he suffered a stroke in 2001 and 2009 and in late 2011 he asked his daughter, Ms Renati Barel, to assist him by joining the firm. In July 2012 she became Operations Manager.

[5] Mr Huynh commenced employment with the firm in March 2001 as a trainee bookkeeper and became one of Mr Barel’s most trusted employees. At the time of his dismissal he was described as a registered tax agent.

[6] The applicant’s letter of engagement in 2001 required the applicant to “keep secret all information that you may obtain with regard to R. Barel & Associates, it’s clients and its affairs.” It also prohibited the use of a mobile phone on the premises of the respondent. A policy issued in 2006 prohibited the use of personal email using the firm’s computers and internet access. The applicant concedes that he used his personal mobile phone and email to communicate with clients and as a result client’s contact details were stored on his mobile phone and email address book. This was the subject of documented performance management by the respondent in the period leading up to the applicant’ dismissal.

[7] It was the practice at the firm for employees to prepare their own payslips containing hours of work and calculating the gross and net pay payable for that pay period. The respondent submitted that it was the practice of the firm to pay the employees on the basis of these pay slips. The applicant said that the pay slips were submitted to Mr Barel. These submissions are not inconsistent and I accept them both.

[8] The applicant’s payslip for the fortnight ending 27 February 2013, prepared on 28 February 2013 states an hourly rate of $42 per hour, travel allowances of $350 and overtime meal allowances of $250 resulting in gross pay of $3,750.

[9] On 13 March Ms Barel sent an email to the applicant noting his hours worked from Thursday 28 February 2013 to 13 March 2013 did not include any travel or overtime and asking him to ensure that he does not claim overtime, meal allowance or travel allowance in such circumstances.

[10] The applicant’s payslip for the fortnight ending 13 March 2013, prepared on 14 March 2013, states an hourly rate of $50 per hour, no travel allowances or overtime meal allowances resulting in gross pay of $3,750.

[11] On 14 March 2013 the applicant replied to the email of 13 March 2013 in the following terms:

Dear Renati,

Please be aware that these overtime meal and travel allowances that Ralph agrees to let me and some staff in the office to split our base salary into part allowances in order for us to save tax at the end of the financial year. My base salary is $97,500 or $50 per hour.

If you are not happy about that I will not claim allowances anymore and I will prepare my wages as normal with the correct hourly rate.

Should you have any queries about this matter or require more information please do not hesitate to contact me.

Regards,

Chan.

[12] On same day Mr Barel emailed the applicant outlining the respondent’s approach to the applicant’s remuneration as follows:

Dear Chan,

The Agreement with you and any other staff member that gets any allowances is the following:

● If a staff member works overtime they are paid per hour for that overtime

● If a staff member does work overtime they are entitled to a meal allowance

● If a staff member travels to see a client or travel to pick up papers from a client they are entitled to a travel allowance

Please note that in accordance with Australian Taxation Law, an employer is not allowed to pay overtime or allowances if an employee does not do the overtime or is not entitled to the allowances. The Tax break is purely for people who actually work overtime and claim travel and meal allowances because they are entitled to them.

The agreement was that your hourly rate is $42 per hour and because you were working overtime and travelling to see clients you received the entitled allowances. Your base salary is not and never has been $97,500, nor has your hourly rate ever been $50. You only ever earned $97,500 previously because it included allowances you were previously entitled to.

I certainly hope that you were not just simply claiming allowances without working overtime and seeing clients previously. We were not monitoring your movements at the time so took you on your word in your payment slips. If so please inform me if you did claim any overtime or allowances you were not entitled to so I can correct our records, notify the tax department and then calculate how much money you were overpaid and will now will owe to R. Barel & Associates.

Unfortunately I cannot just let employees raise their rate by $8 per hour simply because they are no longer entitled to allowances that have provided an additional $8 per hour in the final calculation.

Therefore please note that your rate is $42 per hour and it is not appropriate to prepare a payslip that states your hourly rate is $50.

I will update your payslip myself so you will be paid what you are entitled to.

From now on, please remove all allowances and hand in your payslip with the correct hourly rate you are entitled to of $42 per hour.

If you have any queries or require more information please do not hesitate to contact me.

Kind regards,

Ralph.

[13] On the same day the applicant sent an email to Ms Barel in the following terms:

Hi Renati,

Please do not play game with me. If you do not paid the correct wages as per previous email, then further action will be required.

Do not force me to do something that is not necessary.

Regards,

Chan.

[14] On Friday 15 March 2013 Ms Barel replied to the applicant in the following terms:

Hi Chan,

I have no idea what you are talking about or why you are making threats. We are obliged to adhere to the Tax Laws of Australia and if you are not entitled to allowances we cannot pay them nor can we increase your hourly rate to compensate.

Your behaviour and conduct is now becoming a problem for R. Barel & Associates as we have spent several hours coaching you weekly on your issues and conduct even included weekly coaching session in your weekly Job flow meetings. You have been coached on the following issues in the hope that you would improve over the weeks however you have become more hostile and have now started making threats:

● Non disclosure to RBA management of your client work activities and required deadlines that has resulted in R. Barel & Associates not being able to meet client deadlines

● Misrepresentation of R. Barel & Associates and its management team resulting in a loss of reputation of R. Barel & Associates with some long time clients

● Non authorised use of personal email and phone to communicate to clients resulting in your personal possession of client information which was not approved by R. Barel & Associates.

● Not cooperating with the Accounting Manager assigned to assist you to deliver on tight deadline for a very angry client after they came in and complained

● Informing and/or circulating to clients internal R. Barel & Associates email correspondence planning documents that were not authorised to be sent to clients resulting in loss of credibility for R. Barel & Associates management team and the form in general.

● Making threats based on your decision to raise your hourly rate due to the fact that you are no longer entitled to receive overtime pay and meal and travel allowances. (this is a new issue that came up this week).

Please note that if your conduct does not improve and you continue to make threats, I will have no choice but to provide you with a formal warning.

If you have any queries or require more information please do not hesitate to contact me.

Kind regards,

Renati

[15] On the same day later in the afternoon Ms Barel was conducting a meeting with Ms Kosmes Administration manager and the Accounting Manager. The applicant entered the room the meeting was being held in and an altercation occurred between Ms Barel and the applicant concerning his remuneration. It was Ms Kosmas’s evidence that “the Accounting Manager saw the employee’s angry, aggressive and hostile demeanour and ran scared out of the Operation Manager’s Office”. 1 The applicant concedes there was a heated conversation, but denies that it amounted to “heated outbursts”. Ms Kosmas also gave evidence that the applicant “started yelling and insisting that the Operations Manager pay him what he wanted otherwise he would make the company regret it”2. Mr Chan provided information in his Form F2 Application for Unfair Dismissal that he was invited to speak to Mr Barel about his remuneration however he gave evidence that he was mistaken about this as he conceded that Mr Barel was not on the premises that day. I found Ms Kosmas to be a calm and consistent witness. I found Mr Chan to be agitated and in relation to the information in his Form F2 and his oral evidence inconsistent. Allowing for the undoubted stress of a Commission hearing I prefer the evidence of Ms Kosmas, as to this issue, over that of Mr Chan.

[16] Ms Barel asked Mr Chan to leave the premises and subsequently Ms Kosmas sent an email to the applicant directing him to take paid leave in the following terms:

Dear Chan,

Please note that you were asked to leave the premises of R. Barel & Associates today at 4pm because the Operations Manager and myself took your latest verbal threats made today at 3.55pm seriously and there was a risk that based on your threats against the Operations Manager, Ralph Barel (the principal) and R. Barel & Associates the firm that you may destroy or take company or client (soft and hard documents) with you or make changes to the data accessible by your computer.

As of today at 4pm, you will be put on paid leave until we decide what can be done about this problem I will contact you with an update next week. I suggest you use this time to reflect on your conduct.

Please note that you are not permitted to contact any of our clients and if you have any documentation (soft or hard copy) belonging to clients of R. Barel & Associates or R. Barel & Associates, please ensure that you phone me immediately and make arrangements to return it.

You are not authorized to complete any work for any Clients of R. Barel & Associates until you return to this office and receive written permission, nor are you authorised to contact any clients of R. Barel & Associates during this time.

Please note that if you have any queries you are permitted to contact me in my capacity as HR Manager at the office on 02 9386 4686.

Kind regards,

Mary.

[17] The respondent believed that the applicant was in contact with clients subsequent to his enforced leave. Ms Kosmas gave evidence that she received phone calls from clients disparaging the respondent. She said that a NAB branch manager told her that the applicant’s wife had accompanied a client to the bank for an interview in connection with a loan. In his evidence the applicant denied that he or his wife had attended NAB.

[18] On 22 March 2013 the respondent terminated the employment of the applicant from 28 March 2013 on the grounds of misconduct with four weeks pay in lieu of notice.

[19] The relevant sections of the termination letter are:

“With reference to the recent abusive outbursts to accounting and management staff, issuing of threatening emails and discussing confidential information with clients of this practice. This conduct is in complete violation of the terms of your employment.

In addition you have breached the following codes of conduct:-

● Breaching non disclosure principals. (sic)

● Defamation of the business to existing clients.

● Using confidential client information to poach clients of the business

● Informing and/or circulating to clients internal R.Barel & Associates email correspondence and planning documents that were not authorized to be sent to clients resulting in loss of credibility for R.Barel & Associates management team and R. Barel & Associated in general.

● Claiming hours of work and overtime not actually undertaken and overcharging for your services.

On the basis of your conduct we have no other alternative but to terminate your employment

As you have been employed with us for over 5 years you will be paid 4 weeks in lieu of notice. We will calculate your other entitlements and pay them to you within 30 days. We will arrange for all your entitlements to be paid into your bank account using EFT.”

[20] The respondent completed the Small Business Fair Dismissal Code Checklist

Legal framework

[21] The Tribunal exercises its discretion in relation to an application for an unfair dismissal remedy pursuant to Part 3-2 Unfair Dismissal of the Act.

Section 396 of the Act requires me to consider the matters contained therein before proceeding to consider the merits of the application. Section 396 reads as follows:

396 Initial matters to be considered before merits

The Commission must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:

(a) whether the application was made within the period required in subsection 394(2);

(b) whether the person was protected from unfair dismissal;

(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;

(d) whether the dismissal was a case of genuine redundancy.

[22] The application was made within the period required in s. 394(2). Mr Huynh is a person who is protected from unfair dismissal pursuant to s.382 of the Act because he has been employed by the respondent for over 12 years, well in excess of the minimum employment period of 12 months for a small business employer and his remuneration was below the high income threshold. There is no suggestion that his dismissal was a case of genuine redundancy. It was accepted by the applicant that the respondent is a small business and I find that the respondent was a small business pursuant to s.23 of the Act. The respondent completed the Small Business Fair Dismissal Code Checklist.

[23] In order to determine whether the applicant was unfairly dismissed I must first consider whether the dismissal was consistent with the Small Business Fair Dismissal Code. Section 385 of the Act is relevant and reads as follows:

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) 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.

[24] If I find that dismissal was not consistent with the Small Business Fair Dismissal Code I must consider whether the dismissal was harsh, unjust or unreasonable. However if I find that the dismissal was consistent with the Small Business Fair Dismissal Code I must find that the applicant was not unfairly dismissed and dismiss his application.

[25] The Small Business Fair Dismissal Code is referred to in section 388 which reads as follows:

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.

[26] I have found that the respondent was a small business employer at the relevant time so I must consider whether the responded complied with the Small Business Fair Dismissal Code.

[27] The Small Business Fair Dismissal Code was declared on 24 June 2009 pursuant to subsection 388 of the Act in the following terms:

Commencement

The Small Business Fair Dismissal Code comes into operation on 1 July 2009.

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.

[28] The Code is intended to provide special assistance to small business employers. The Explanatory Memorandum to the Fair Work Bill 2008 said:

216. There will also be special assistance for small business employers through the Small Business Fair Dismissal Code and a 12 month qualifying period for small business employees. Therefore, small businesses will have 12 months in which to assess the performance of an employee and terminate their employment if necessary. This will be adequate time for a small business to assess the performance of an employee.

217. Small businesses tend not to have the resources to employ dedicated human resources professionals to help them manage dismissals. By providing a clear process and guidance to follow when dismissing an employee, the Code may help to mitigate any increase in unfair dismissal claims from small business employees, and provide certainty to small business when they need to dismiss an employee.

219. Overall the new system has more of a focus on early intervention and informal processes over the previous system. It will increase access to unfair dismissal remedies for employees while still imposing certain conditions on access that will benefit business, particularly small business.

[29] The approach to be taken to the application of the Code was helpfully set out by a Full Bench of Fair Work Australia (FWA) in John Pinawin T/A Rose Vi.Hair.Face.Body v Mr Edwin Domingo 3. FWA was renamed the Fair Work Commission from 1 January 2013. At paragraphs 27 – 30 the Full Bench said:

[27] Deputy President Bartel in Narong Khammaneechan v Nanakhon Pty Ltd ATF Nanakhon Trading Trust T/A Banana Tree Cafe  4 said:

“[60] At the outset it is appropriate to note that unlike a consideration of the dismissal of an employee of a business that is not a small business employer, the function of FWA is not to determine on the evidence whether there was a valid reason for dismissal. That is, the exercise in the present matter does not involve a finding on the evidence as to whether the applicant did or did not steal the money. The application of the Small Business Fair Dismissal Code involves a determination as to whether there were reasonable grounds on which the respondent reached the view that the applicant’s conduct was serious enough to justify immediate dismissal. As such, the determination is to be based on the knowledge available to the employer at the time of the dismissal, and necessarily involves an assessment of the reasonableness of the steps taken by the employer to gather relevant information on which the decision to dismiss was based.”

[28] Senior Deputy President O’Callaghan in Harley v Rosecrest Asset Pty Ltd T/A Can Do International 5 said:

“[8] For an employer to believe on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal, it is firstly necessary for the employer to establish that the employer did in fact hold the belief that as a matter of fact that (i) the conduct was by the employee; (ii) the conduct was serious; and (iii) that the conduct justified immediate dismissal. This is to be contrasted to the provisions of s.387(a) where FWA, in determining whether there was a valid reason for the dismissal, must find whether the conduct in fact occurred. 

[9] Secondly, it is necessary for the employer to establish that there are reasonable grounds for the employer holding the belief. It is thus necessary for the employer to establish a basis for the belief held which is reasonable. In this regard it would usually be necessary for the employer to establish what inquires or investigations were made to support a basis for holding the belief. It would also ordinarily be expected that the belief held be put to the employee, even though the grounds for holding it may not be. Failure to make sufficient inquiries or to put the accusation to the employee in many circumstances might lead to a view that there were no reasonable grounds for the belief to be held.”

[29] We believe that the approach and observations in these two decisions are correct. There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.

[30] Acting reasonably does not require a single course of action. Different employers may approach the matter differently and form different conclusions, perhaps giving more benefit of any doubt, but still be acting reasonably. The legislation requires a consideration of whether the particular employer, in determining its course of action in relation to the employee at the time of dismissal, carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. Those circumstances include the experience and resources of the small business employer concerned.

[30] I need to consider whether Ms Barel believed on reasonable grounds that Mr Chan’s conduct was sufficiently serious to justify immediate dismissal.

Consideration

[31] The respondent cited a number of reasons, based on the applicant’s conduct, for his dismissal. I am not required to make findings as to whether this conduct occurred, as I would be if I were seeking to establish whether there was a valid reason for dismissal. Neither am I seeking to establish whether, if it occurred, it would constitute serious misconduct. The proper application of the Code requires only that I form a view as to whether Ms Barel believed the conduct occurred, believed it was conduct that was sufficiently serious to justify immediate dismissal (notwithstanding that she chose to pay him the equivalent of four week’s pay upon termination) and had reasonable grounds for so believing.

Verbal abuse and intimidating behaviour

[32] It is not in dispute that on 15 March the applicant had an angry verbal exchange with Ms Barel. I accept that Ms Barel and Ms Kosmas were alarmed and concerned for the safety of themselves and their staff and were intimidated by this behaviour.

Inappropriate contact with clients of R. Barel and Associates

[33] There is a factual dispute between the applicant and the respondent as to whether client contact was made later than the time of receipt of the letter of termination. Mr Chan denies ever contacting a client once he received the letter of termination however Ms Kosmas cites examples of clients contacting the respondent. The applicant concedes that he was in possession of client contact details and there is a history of the applicant using his personal mobile and email to confer with clients. In these circumstances Ms Barel had reason to suspect that inappropriate client contact had taken place.

Fraudulent travel allowance and meal allowance claims

[34] The applicant’s explanation for the inclusion of travel allowance in his pay slips was that he had received a $2 per hour pay rise from $34 to $36 per hour from 1 January 2007 and Mr Barel suggested that it be paid as a travel allowance amounting to $150 per fortnight of 75 hours. Pay slips tendered featured this amount as well as, from time to time, overtime and meal allowances. This was rejected by Mr Barel in his email to the applicant on 14 March 2013.

[35] It was clearly inappropriate to claim for travel allowance, overtime and meal allowances that were not due. The firm is an accountancy practice. The applicant is a registered tax agent. Clients and authorities are entitled to have confidence that accountants will comply with the law, including taxation laws. The applicant was on notice that Ms Barel expected this and the applicant was resistant and defiant in the face of this expectation. The factual basis of the respondent’s complaint was not at issue, rather the applicant claimed it was authorised by Mr Barel. However after this was contradicted by Mr Barel the applicant aggressively contested the situation with Ms Barel. I am satisfied that in these circumstances Ms Barel believed the applicant had defrauded the business and had reasonable grounds for so believing.

Conclusion

[36] I find that the respondent formed a belief that the applicant’s conduct was sufficiently serious to justify immediate dismissal. In the circumstances the respondent’s belief that this conduct was sufficiently serious to justify immediate dismissal was reasonable. Accordingly the respondent complied with the Code and the applicant has not been unfairly dismissed. His application is dismissed. An order will issue with this decision.

DEPUTY PRESIDENT

Appearances:

Mr Chan Huynh, applicant in person

Ms Renati Barel, Operations Manager for the respondent

Hearing details:

2013

Sydney

2 August

14 August

 1   Exhibit R10

 2   Ibid

 3  [2012] FWAFB 1359

 4  [2010] FWA 7891.

 5  [2011] FWA 3922

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