Chiu Wong v Honey World Travel

[2014] FWC 7466

[2014] FWC 7466

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Chiu Wong
v
Honey World Travel
(U2014/5370)

DEPUTY PRESIDENT LAWRENCE SYDNEY, 23 OCTOBER 2014

Application for relief from unfair dismissal.

[1] On 9 March 2014 Ms Chiu Kwan San Wong (the Applicant) lodged with the Fair Work Commission, pursuant to s.394 of the Fair Work Act 2009 (the Act) an application for a remedy for unfair dismissal against her former employer Honey World Travel (the Respondent).

[2] The F2 form stated that the Applicant was employed in July 2009 and was notified of dismissal on 28 February 2014. Her dismissal took effect on the same day. Other documentation and the Applicant’s oral evidence (Transcript PN74) indicated she commenced employment in February 2009.

[3] The Applicant claims she was dismissed by a text message because she had taken sick leave and to avoid the payment of Long Service Leave.

[4] The Respondent counters that the Applicant, who was an Accounts Assistant in the travel agency in Sussex Street, Sydney, was guilty of serious misconduct because of theft of over $7,000 from the business. They also point to a number of alleged performance issues including delaying payment to suppliers, failure to pursue debtors and properly maintaining the accounts. They also say that she was absent from work without authorisation. The Respondent had six employees and submits that it has complied with the Small Business Fair Dismissal Code.

[5] A telephone conciliation took place on 23 April but was unsuccessful.

[6] I conducted a programming conference by telephone on 28 July 2014.

[7] The hearing took place on 7 August 2014.

[8] The Applicant was represented by Mr R. Lee, solicitor and the Respondent by Mr M. Son, solicitor. I granted permission to both representatives to appear pursuant to s.596 of the Act.

[9] The Applicant relied on a submission and witness statement filed on 8 June 2014.

[10] The Respondent failed to comply with the Directions of 28 May 2014 to file, but tendered a witness statement of Ying Lin, the sole director of the Respondent, at the hearing which it relied on (Exhibit S1).

[11] The hearing was conducted as a determinative conference.

Protections from Unfair Dismissal

[12] An order for reinstatement or compensation may only be issued where I am satisfied the applicant was protected from unfair dismissal at the time of the dismissal.

[13] Section 382 sets out the circumstances that must exist for the applicant to be protected from unfair dismissal:

“382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.”

[14] There is no dispute, and I am satisfied the Applicant has completed the minimum employment period, is below the high income threshold, and was probably covered by a Modern Award. Based on information provided by the Respondent after the hearing, it appears that the Applicant’s average salary was $413.00 per week Consequently, I am satisfied that she was protected from unfair dismissal.

Was the dismissal unfair?

[15] A dismissal is unfair if I am satisfied, on the evidence before me, that all of the circumstances set out at s.385 of the Act existed. Section 385 provides the following:

“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.

Was the Applicant dismissed?

[16] A person has been unfairly dismissed if the termination of their employment comes within the definition of “dismissed” for purposes of Part 3–2 of the Act. Section 386 of the Act provides that:

“386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.”

[17] There is no dispute that the Applicant was dismissed and that subsection 385(d) does not apply. The issue of the Small Business Code is considered later in this decision.

Harsh, unjust or unreasonable

[18] Having dealt with each of s.385(a) and (d) of the Act, I must consider whether I am satisfied the dismissal was harsh, unjust or unreasonable. The criteria I must take into account when assessing whether the dismissal was harsh, unjust or unreasonable are set out at s.387 of the Act:

“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 specialist 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.

Approach of the Commission

[19] The ambit of the conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 at 465 by McHugh and Gummow JJ as follows:

“... It may be that the termination is harsh but not unjust or 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.”

[20] Vice President Ross, as he then was, in B Rose v Telstra Corporation Limited (1998) Q9292 (Rose) restated the above proposition and also stated:

“In my view whether there has been a `fair go all round’ is a matter which I think is relevant and hence I am to have regard to it determining whether the termination was harsh, unjust or unreasonable. It is not necessarily determinative but it is a factor to be taken into account.”

Overview of the Parties’ Submissions

[21] The Applicant submits her dismissal was harsh, unjust or unreasonable because:

● The Applicant submits that she was dismissed by telephone message and therefore without any notice or opportunity to respond.

● She denies issues of fraud/missing funds were raised with her prior to her dismissal.

● She denies that there were any issues with her performance.

● She seeks compensation for lost wages. There were also claims for unpaid entitlements.

● The Applicant’s evidence was that she did not receive the termination letter until the day of the conciliation, 23 April 2014.

[22] The Respondent submits that the Applicant’s dismissal was not harsh, unjust or unreasonable because:

● Ms Lin’s evidence was that the Applicant was guilty of breach of policy and neglect of her duties.

● She was guilty of unauthorised absences which are described in Exhibit S1. Ms Lin concedes that she dismissed the Applicant by a text message on 28 February 2014. On about 10 March a letter confirming the termination was sent.

● The Applicant was alleged to have received a benefit from an overseas trip for herself and family members.

[23] The termination letter stated that:

● The Applicant had been advised at a 7 January meeting that she needed to reimburse payments, that the 2012-2013 accounts were not complete, and that instructions about the purchase of travellers cheques were not followed.

● The Applicant refused to attend a meeting with a newly appointed accountant on 19 February.

● On 19 and 22 February, the Applicant was absent without notification or authorisation on sick leave for which there was no medical evidence.

● The Applicant was paid four weeks in lieu of notice.

Valid Reason - s.387(a)

[24] In Container Terminals Australia Limited v Toby [2000] Print S8434, a Full Bench said ‘In our view, the consideration of whether there was a valid reason for termination is a separate issue from the determination of whether a termination was harsh, unjust or unreasonable’.

[25] Northrop J in Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 said:

“In its context in s.170DE(1), the adjective “valid” should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s.170DE(1). At the same time the reason must be valid in the context of the employee’s capacity or conduct, or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must ‘be applied in a practical, commonsense way to ensure that the employer and employee are each treated fairly ...”

[26] In Parmalat Food Products Pty Ltd v Wililo, [2011] FWAFB 1166, the Full Bench held:

“The existence of a valid reason is a very important consideration in any unfair dismissal case. The absence of a valid reason will almost invariably render the termination unfair. The finding of a valid reason is a very important consideration in establishing the fairness of a termination. Having found a valid reason for termination amounting to serious misconduct and compliance with the statutory requirements for procedural fairness it would only be if significant mitigating factors are present that a conclusion of harshness is open.”

[27] The Full Bench majority in B, C and D v Australian Postal Corporation T/A Australia Post [2013] FWCFB 6191 provides a useful summary of the approach to be taken by the Commission in weighing the factors to be considered under s.387:

“[20] Northrop J’s reasoning anticipated the reasoning of the High Court in Victoria v Commonwealth – that s.170DE(2) by its operation could render invalid a reason that would otherwise have been a valid reason. The fact that some dismissals are “harsh, unjust or unreasonable” notwithstanding the existence of a “valid reason” means that the class of dismissals that are “harsh, unjust or unreasonable” is greater than the class of dismissals where there is no “valid reason” for the dismissal.

[21] Section 387 specifies a range of matters that must be considered in each case. Section 387(h) requires consideration of “any other matters that FWA considers relevant”. In any given case, there will be a range of matters, beyond those specified in s.387(a) to (g), that rationally bear upon whether the dismissal is “harsh, unjust or unreasonable” and thus are “relevant matters” that must be considered pursuant to s.387(h).

[22] Often it will not make any difference to the ultimate outcome whether a particular circumstance is considered pursuant to s.387(a) in determining whether there is a valid reason, or as a relevant matter pursuant to s.387(h), leading to the ultimate determination of whether the dismissal was “harsh, unjust or unreasonable”. However, in some cases it may matter greatly. That will tend to be so when the particular misconduct, shorn of the personal circumstances of the employee and the broader context beyond the particular acts or omissions that are said to constitute the misconduct, is clearly a matter that a reasonable employer is entitled to take seriously. This is such a case.

...

[34] In considering whether there was a valid reason for a dismissal under s.387(a), the reason(s) being considered are the employer’s reason(s). In a misconduct case, the Commission is concerned with whether the misconduct in fact occurred, not with whether the employer has reasonable grounds to believe that it occurred (eg. Yew v ACI Glass Packaging Pty Ltd (1996) 71 IR 201, Sherman v Peabody Coal Ltd (1998) 88 IR 408; Australian Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1). ”

[35] Subject to that, as indicated by Northrop J in Selvachandran, “valid reason” is assessed from the perspective of the employer and by reference to the acts or omissions that constitute the alleged misconduct on which the employer relied, considered in isolation from the broader context in which they occurred. It is the reason of the employer, assessed from the perspective of the employer that must be a “valid reason” where “valid” has its ordinary meaning of “sound, defensible or well founded”. As Northrop J noted, the requirement for a valid reason “should not impose a severe barrier to the right of an employer to dismiss an employee”.

[36] A failure to comply with a lawful and reasonable policy is a breach of the fundamental term of the contract of employment that obliges employees to comply with the lawful and reasonable directions of the employer. In this way, a substantial and wilful breach of a policy will often, if not usually, constitute a “valid reason” for dismissal.

. . .

[58] Reaching an overall determination of whether a given dismissal was “harsh, unjust or unreasonable” notwithstanding the existence of a “valid reason” involves a weighing process. The Commission is required to consider all of the circumstances of the case, having particular regard to the matters specified in s.387, and then weigh:

(i) the gravity of the misconduct and other circumstances weighing in favour of the dismissal not being harsh, unjust or unreasonable;

against

(ii) the mitigating circumstances and other relevant matters that may properly be brought to account as weighing against a finding that dismissal was a fair and proportionate response to the particular misconduct.”

[28] The evidence in this matter was not particularly satisfactory. There were brief conflicting witness statements from the Applicant and Ms Lin. The oral evidence of both was given through an interpreter. There was a paucity of documentation. There were also a number of extraneous issues such as the employment of the Applicant’s husband and whether payment in kind for airfares had been made.

[29] On the balance of probabilities, I am satisfied that there was a valid reason for the dismissal. I have decided this because:

● I accept Ms Lin’s evidence that there were difficulties with the company’s accounts and payments arising from the Applicant’s failure to carry out her duties.

● The work and timekeeping arrangements for the Applicant appeared flexible but there is evidence that she was not at work without notification or explanation on a number of occasions.

● The accusation that the company suffered financial loss due to the Applicant was not answered by her.

● The Applicant did not attend the counselling meeting on 19 February to deal with the performance issues raised by Ms Lin. There was no satisfactory explanation.

Notification of a Valid Reason - s.387(b)

[30] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made, Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41] in explicit terms, Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151 and in plain and clear terms, Presvisic v Australian Quarantine Inspection Services Print Q3730. In Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 a Full Bench of the Australian Industrial Relations Commission dealing with similar provision of the Workplace Relations Act 1996 stated the following:

“[73] As a matter of logic procedural fairness would require that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. Much like shutting the stable door after the horse has bolted.”   Ibid at 151.

[31] The Applicant was dismissed by text message on 28 February 2014. She was not notified of the reason for her dismissal, as provided for in s.387(b). Offsetting this is the practice of communicating by text message between the Applicant and Ms Lin about working arrangements as a matter of general practice.

Opportunity to Respond - s.387(c)

[32] An employee protected from unfair dismissal must be provided with an opportunity to respond to any reason for dismissal relating to the conduct or capacity of the person. This criterion is to be applied in a common sense way to ensure the employee is treated fairly and should not be burdened with formality RMIT v Asher (2010) 194 IR 1, 14-15.

[33] Although Ms Lin had raised performance issues with the Applicant in the recent past, I find that the Applicant did not have an appropriate opportunity to respond to the dismissal.

Unreasonable refusal by the employer to allow a support person - s.387(d)

[34] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, the employer should not unreasonably refuse that person being present.

[35] This issue did not arise.

Warnings regarding unsatisfactory performance - s.387(e)

[36] I find that Ms Lin did provide warnings to the Applicant about unsatisfactory performance but these, not surprisingly given the nature of this case, were relatively informal.

Impact of the size of the Respondent on procedures followed - s.387(f)

[37] The Respondent was a small business with six employees. I find that this did have an impact on the procedures followed which were not satisfactory.

Absence of dedicated human resources management specialist/expertise on procedures followed - s.387(g)

[38] Given the nature of the small business, there was no dedicated human resource advice.

Any other matter that the FWC considers relevant

[39] Section 387(h) allows the Commission to consider any other matters it considers relevant. These must be considered in the context of the object of Part 3 - 2 of the Act contained in s.381(2) to “ensure that a ‘fair go all round’ is accorded to both the employer and the employee concerned”.

[40] There is no other factor that I believe should be taken into account.

[41] Although there were procedural deficiencies in the dismissal, I find that these do not outweigh my conclusion as to valid reason.

Small Business Fair Dismissal Code

[42] Section 396 provides that whether a dismissal was consistent with the Small Business Fair Dismissal Code (the Code), must be decided before the merits of an application are decided. The fact that a dismissal is not consistent with the Code is a matter to be considered under s.385(c) in determining whether a dismissal is unfair. Compliance with the Code is a defence to the unfair dismissal claim.

[43] The Respondent sought to rely on the Code to buttress their case towards the end of the hearing. No substantive argument was put. The Applicant did not respond to this point.

[44] Section 388 provides for the Minister to declare the Code by legislative instrument. This was done on 24 June 2009.

[45] The Code provides:

“Small Business Fair Dismissal Code

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.”

[46] There was little evidence to support an argument that the Respondent had complied with the procedural steps set out in respect of the dismissal. There were allegations of fraud but insufficient evidence to establish their veracity. There were no suggestions of police involvement. Ultimately the Applicant was provided with a payment in lieu of notice. I have already noted that the warnings provided to the Applicant were inadequate. They were not sufficient for the Respondent to rely on that aspect of the Code.

[47] In the circumstances, I have not taken into account the Respondent’s argument that it had complied with the Code when reaching my decision. Given my overall conclusions, it is not necessary in any event.

Conclusion

[48] In accordance with s.381(2) of the Act, I am satisfied that each party has been accorded a ‘fair go all round’.

[49] Having considered each of the matters specified in s.387, I am satisfied that the dismissal of the Applicant was not harsh, unjust or unreasonable.

[50] The application for a remedy for unfair dismissal is therefore dismissed. An order (PR556980) in these terms will be issued with this decision.

DEPUTY PRESIDENT

Appearances:

R. Lee solicitor, for the Applicant

M. Son solicitor, for the Respondent.

Hearing details:

2014

Sydney:

August 7.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR556864>