Clint Ledden v Envirotech Pty Ltd
[2020] FWC 2920
•4 JUNE 2020
| [2020] FWC 2920 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Clint Ledden
v
Envirotech Pty Ltd
(U2018/12731)
COMMISSIONER JOHNS | SYDNEY, 4 JUNE 2020 |
Application for an unfair dismissal remedy – Jurisdictional objection – Genuine redundancy.
Introduction
[1] On 29 September 2019 Mr Ledden made an application to the Fair Work Commission (Commission) pursuant to s.394 of the Fair Work Act 2009 (Cth) (FW Act) seeking a remedy for unfair dismissal. The application is in respect of the termination of his employment on 9 September 2019 by Envirotech Pty Ltd (Respondent/Employer/Envirotech), an environmental and engineering consultancy firm. Mr Ledden seeks an order that the Respondent pay compensation to him.
[2] Mr Ledden also has a claim about unpaid work-related expenses in the amount of $700.86. Two days after the termination of his employment Mr Ledden raised the non-payment of the work-related expenses with the Managing Director of Envirotech, Daniel Mathew. Two weeks later Mr Ledden sent a follow up email. On 25 September 2019 Mr Mathew indicated he would “respond tomorrow”. Discourteously Mr Mathew never responded. However, it is apparent that Mr Mathew decided not to reimburse the expenses properly incurred by Mr Ledden in respect of fuel, tyre repair, car washing and parking. Whilst it is very clear that, in deciding not to reimburse Mr Ledden, Mr Mathew is acting unfairly that is not a matter that can be dealt with by the Commission. Notwithstanding, Mr Mathew should do the right thing and reimburse the $700.86. Mr Mathew should stop being so nasty and spiteful.
[3] On 12 November 2019 the Respondent filed a response to the unfair dismissal application. It objected to the Commission exercising jurisdiction in relation to the matter on the basis that, it contended, the dismissal was a case of genuine redundancy.
[4] If the termination was a genuine redundancy then Mr Ledden’s application for an unfair dismissal remedy must be dismissed. If the termination was not a genuine redundancy it becomes necessary to determine if termination of employment was unfair.
[5] Conciliation was attempted, but the dispute remained unresolved. Consequently the matter was listed for a jurisdictional hearing on 21 January 2020 and 21 April 2020.
[6] At the determinative conference:
a) the Applicant represented himself.
b) the Respondent was represented by Mr Daniel Mathew, its Managing Director
[7] In relation to the matter, the parties filed the following materials. In coming to this decision the Commission, as presently constituted, has had regard to the filed material, the oral evidence and other documents tendered during the determinative conference:
EXHIBIT NO. | DESCRIPTION |
1 | Form F2 – Application |
2 | Form F3 – Employer’s response |
3 | Respondent’s Outline of Argument – Objections |
4 | Respondent’s Outline of Argument – Merits |
5 | Witness Statement of Daniel Mathew |
6a | Employment Agreement |
6b | Signed Letter of Offer |
6c | Letter of Termination |
6d | Consultation meeting regarding redundancy |
7 | Applicant’s Outline of Argument – Objections |
8 | Witness Statement of Clint Ledden |
9a | Email of 9 July 2019 |
9b | Email of 2 August 2019 |
9c | Email of 29 August 2019 |
9d | Email of 5 September 2019 |
9e | Email of 21 August 2019 |
9f | Email of 11 September 2019 |
9g | Email of 25 September 2019 |
9h | Employment contract, cl17 |
9i | Email of 20 August 2019 |
10 | Envirotech Pty Ltd webpage – “About Us” |
11 | Email from D Mathew dated 10 February 2020 |
12 | Email from C Ledden dated 16 February 2020 |
13 | Confidential documents filed by D Mathew |
14 | Email from C Ledden dated 7 April 2020 |
15 | Email from D Mathew dated 9 April 2020 |
16 | Sales Projections Document |
Background
[8] I make the following findings of fact:
a) On 5 February 2019 Mr Mathew made an offer of employment to Mr Ledden. Mr Ledden accept the offer on 6 February 2019. The employment was intended to commence on 25 February 2019.
b) However, on 18 February 2019 the Applicant commenced his employment early. He was employed on a full-time basis as the Respondent’s Business Development Manager. He reported to the Operations Manager, Simon Doberer and the Managing Director, Mr Mathew.
c) The Applicant’s role involved “cold calling customers, setting [up] sales meetings, account management and customer retention”. At the commencement of his employment the Applicant was supported by “one person … employed in Sales Administration.”
d) The Applicant was paid $90,000 per annum. In addition, Mr Ledden received a car (valued at $18,000), mobile phone, laptop and superannuation contributions were made on his behalf.
e) On 7 March 2019 there was a Sales Meeting. The Minutes of that meeting record that “Envirotech Sales have significantly increased from 2018 to 2019. Up by nearly 300%.”
f) Around July 2019 the Respondent employed Samantha MacBain. Her job title was “Sales and Business Manager.” One of her jobs was to oversee the work of the Applicant.
g) On 2 August 2019 Ms MacBain advised the Applicant that:
i. Project creates were 3.4% below budget.
ii. The company needed “a minimum of 47 project creates per week to hit our budget.”
h) On 20 August 2019 Ms MacBain met with the Applicant. Following the meeting Ms MacBain wrote to the Applicant in the following terms:
“Further to our conversation this morning, can you please have 40 completed feedback calls done by COBE today. As discussed, I would like you to concentrate on completing the calls. If you come across an issue with the project, please hand over the details to the team leaders for them to action. Once they have resolved the issue, they are to send you the outcome so you are aware of what has happened. Please do not get caught up with long meetings about issues. I would like you to hand the details over quickly, that the team members get to work on resolving/actioning the problem and updating you with the outcome.
Also, in regards to the structural design enquiry from [client name] we can assist with the proposal. Dan has a subcontractor that can undertake this work. Of course, this falls under the Envirotech banner and we don’t discuss that we are outsourcing this with the client as we will manage the project overall from here.
Please send the details through to sales once you receive them and copy me in. Please also note in the email to sales to come and see me in regards to the project.
I would like an update on your progress before you go to lunch and then again at 3:45 pm. Please leave all completed forms on my desk before you leave today.
If you have any questions, please come and see me.”
i) On 21 August 2019 Mr Mathew wrote to all staff were advised that:
“…
The forecast is very close to the budget of 598 [project creates] (2.8% below) but there are still 29 days of trading left.
Also, the end of 3rd quarter forecast of 582 is actually 26.5% higher than the end of 3rd quarter actual for 2018.
This result is attributed not only to those working on the front-end of the business (e.g. marketing & new relationships) but more importantly everyone within this business (reception, sales & projects) trying to give our clients a positive experience, so they will return and also tell their colleagues.
Well done & “keep it up” everybody.”
j) On or around 24 August 2019 the Applicant successfully passed the probation period provided for in the Contract of Employment. No conduct or performance issues were raised with the Applicant during the probation period.
k) On 28 August 2019 Mr Mathew wrote to staff in the following terms:
“Strong start to the week so far – 12 project activations in 2 days … let’s keep it going. Remember the Project Activation targets I discussed yesterday. Discuss with the Sales Manager and each other.”
l) On Friday, 6 September 2019 Mr Mathew met with Mr Ledden and told him that he (Mr Mathew) was happy with his (Mr Ledden’s) performance. 1
m) At 10 am on Monday, 9 September 2019 Mr Mathew met with Mr Ledden. What was said in the meeting is contested. However, this much is agreed:
i. Mr Mathew told Mr Ledden:
A. he liked him as a person,
B. he is sorry,
C. but the role is now redundant, 2
D. “something about forecasts or not meeting the budget”, 3
E. “to return all the company’s items, the car, phone, laptop”,
F. “leave a soon as possible” 4
G. he would call Mr Ledden an Uber
H. Envirotech would provide Mr Ledden with a reference. Mr Ledden declined the offer.
n) At about 3 pm on 9 September 2019 Mr Mathew wrote up some notes of the meeting (Exhibit 6d). Those notes would have the reader believe that Mr Mathew said the following things to Mr Ledden (all of which are denied by Mr Ledden):
i. “business expenses need to be reduced.”
ii. “one of those expenses is staff.”
iii. “This is a result of significant financial losses incurred by previous staff Simon Doberer and Shane Maloney and a failure to meet forecast revenue values.”
iv. he had considered redeployment options, but there is no suitable redeployment. There was no further discussion about redeployment. Mr Ledden was not invited to further discuss the same.
The meeting concluded at 10.30 am.
o) On 6 September 2019 Mr Mathew held an impromptu meeting with the Applicant. Mr Mathew told him that “our sales [are] about 3% behind forecast sales for the quarter to date.” Mr Mathew told Mr Ledden he was happy with his performance.
p) On 9 September 2019 (i.e. 7 months after commencing employment) the Applicant’s employment was terminated. He received a letter from Mr Mathew confirming the same (Exhibit 6c).
q) A payment was made to the Applicant in lieu of notice. 5 He was entitled to 1 weeks’ notice under his contract of employment consistent with the National Employment Standards (NES). No redundancy pay was paid. Because Mr Ledden had worked for less than 1 year he was not entitled to any redundancy payment under the NES.
r) By the time that his employment ended, the size of the Sales Department had grown. After the termination of his employment the Sales Department included Ms MacBain, Molikha Dy and Elicia Gee.
s) On 28 October 2019 Ms Gee’s position of Sales Administrator was made redundant. However, Ms Gee reappears on the Respondent’s payroll activity in the month of December 2019. Mr Mathew failed to explain this.
t) On 11 November 2019 Ms Dy resigned.
Was the Applicant protected from unfair dismissal?
[9] An order for reinstatement or compensation may only be issued where the Commission is satisfied the Applicant was protected from unfair dismissal at the time of the dismissal. Section 382 of the FW Act sets out the circumstances that must exist for the Applicant to be protected from unfair dismissal and, in the present matter, the Respondent does not submit that the Applicant was not protected.
[10] There being no dispute, the Commission, as presently constituted, is satisfied the Applicant has completed the minimum employment period and earned less than the high income threshold. Consequently, the Commission, as presently constituted, is satisfied the Applicant was protected from unfair dismissal.
[11] I will now consider if the dismissal of the Applicant by the Respondent was unfair within the meaning of the FW Act.
Was the dismissal unfair?
[12] A dismissal is unfair if the Commission is satisfied, on the evidence before it, that all of the circumstances set out at s.385 of the FW 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.
Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.”
Was the Applicant dismissed?
[13] 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 FW Act. Section 386 of the FW Act sets out the meaning of “dismissed”. In the present matter it is common ground that the Respondent dismissed the Applicant.
[14] Consequently, the Commission, as presently constituted, finds that the Applicant was dismissed from him employment with the Respondent within the meaning of s.386 of the FW Act.
Was the dismissal consistent with the Small Business Fair Dismissal Code?
[15] A person has not been unfairly dismissed where the dismissal is consistent with the Small Business Fair Dismissal Code. In the present matter the Respondent was not, at the time of the dismissal, a small business. At the time of the dismissal the Respondent employed 20 people.
[16] Consequently, the Commission as presently constituted, finds the Respondent was not a small business employer within the meaning of s.23 of the FW Act.
Was the dismissal a genuine redundancy?
[17] The Respondent submits I should dismiss the application because the dismissal was a case of genuine redundancy. Section 389 of the FW Act defines the meaning of genuine redundancy:
“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.”
Was the Applicant’s job no longer required to be performed because of operational changes?
[18] To be satisfied the dismissal was a case of genuine redundancy, I must be satisfied that the role of Business Development Manager within Envirotech was no longer required to be performed by anyone because of operational changes undertaken by the Respondent. The Respondent contended that this was the case.
[19] In its Outline of Argument the Respondent contended that,
“As a result of failure to meet forecast revenue values and also significant financial losses on some projects, business expenses (including staff numbers) needed to be reduced.”
[20] I explored this contention with Mr Mathew. The following exchange then occurred. 6
Mr Mathew: The forecast periods are quarterly, January through to March, and April through to June.
Commissioner Johns: What was the forecast revenue value in the first quarter, January to March?
Mr Mathew: I don't have that information here.
Commissioner Johns: I call for that document. What was the forecast for the period quarter, April to June?
Mr Mathew: I don't have the information here.
Commissioner Johns: I call for that document. There would have been a quarter, July to September 2019, as well?
Mr Mathew: Correct.
Commissioner Johns: What was the forecast for that period?
Mr Mathew: I do not have that information here.
Commissioner Johns: I call for that document. So you say that there was a failure to meet the forecast. What was the size of the failure in January to March 2019?
Mr Mathew: I do not have that information today.
Commissioner Johns: I call for the document which evidences that. What was the size of the failure in the quarter, April to June 2019?
Mr Mathew: I do not have that information here.
Commissioner Johns: I call for any document that evidences that.
Mr Mathew: Yes.
Commissioner Johns: What was the size of the failure in the quarter, July to September 2019?
Mr Mathew: I do not have that information here.
Commissioner Johns: I call for any document that evidences that.
Mr Mathew: Fine.
Commissioner Johns: You then go on to say that there were significant financial losses on some project. What project?
Mr Mathew: I do not have that information here. I'll provide that.
Commissioner Johns: I call for evidence of any projects which had financial losses.
Mr Mathew: Yes.
Commissioner Johns: Those documents must demonstrate the budget on those projects - - -
Mr Mathew: Yes.
Commissioner Johns: And the revenue on those projects - - -
Mr Mathew: Yes.
Commissioner Johns: So we can see what is described as a significant financial loss on those projects.
Mr Mathew: Okay. Fine.
Commissioner Johns: You say that staff numbers were reduced from 20 to nine?
Mr Mathew: Correct.
Commissioner Johns: I call for any document which evidences that. The best records of those are just payroll records. So if you've had a payroll record for the period ending - - -
Mr Mathew: Yes.
Commissioner Johns: Relevantly in September 2019, and a payroll record for the period ending 9 December, that will demonstrate to me the reduction.
Mr Mathew: Okay.
And further: 7
Commissioner Johns: When did you decide to make the applicant redundant?
Mr Mathew: When was the decision made? I – the decision was made on the day before.
Commissioner Johns: Sunday, the 8th?
Mr Mathew: … – yes, Sunday the 8th.
Commissioner Johns: And you were the sole decision-maker?
Mr Mathew: Correct.
Commissioner Johns: And how did you come to make that decision on that day?
Mr Mathew: Looking at the financial records, the state of the financial records of the business.
Commissioner Johns: What did you look at?
Mr Mathew: The expenses to the business, the revenue versus the expenses, and the loss, the resulting losses.
Commissioner Johns: There was a particular document you were looking at, was there?
Mr Mathew: Profit and loss.
Commissioner Johns: What was the period for that profit and loss statement?
Mr Mathew: January through to March; April through to June.
Commissioner Johns: I call for those documents.
[21] In answer to the call for documents, on 10 February 2020, Mr Mathew advised the Commission that documents relating to budget forecasts and losses in the relevant periods were unavailable. Further, that profit/loss statements in respect of the March and June quarters in 2019 were unavailable. That is to say, Mr Mathew was unable to produce any of the documents that he said he reviewed and relied upon when he made the decision on 8 September 2019 to make Mr Ledden’s position redundant. The unavoidable conclusion is that, when Mr Mathew gave the sworn evidence on 21 January 2020 about what documents he reviewed/relied upon as a part of his decision making, he was making up that evidence. When I put this squarely to Mr Mathew he responded “I have no comment.” 8
[22] On 20 February 2020 the Respondent submitted financial documents on a confidential basis. I have had regard to those documents and explored them with Mr Mathew. Those documents demonstrate that:
a) Between the March quarter 2019 and June quarter 2019:
i. total income dropped 13%.
ii. payroll expenses increased 12.4%
iii. overall expenses increased
iv. an operating profit turned into an operating loss
b) Between the June quarter 2019 and September quarter 2019 (i.e. figures that would not have been available to Mr Mathew when he made the decision on 8 September 2019 to terminate the Applicant’s employment):
v. total income dropped 19%.
vi. payroll expenses increased 9.7%
vii. overall expenses decreased by 3.3%
viii. there were continuing operating losses.
c) In relation to staff numbers:
i. In August 2019 the Respondent had 19 staff (inclusive of the Applicant),
ii. In September 2019 the Respondent had 20 staff (inclusive of the Applicant),
iii. No records were produced for October 2019,
iv. No records were produced for November 2019,
v. In December 2019 the Respondent had 15 staff,
vi. In January 2020 the Respondent had 13 staff
vii. On 30 January 2020 the Respondent had 11 staff.
[23] It is apparent that the position of Business Development Manager was abolished. Further, it is apparent that the duties comprising that position were dispersed to others remaining in the Sales Department. However, having considered all the evidence in this matter I am not satisfied that the position was “no longer required to be performed … because of operational changes”. The documents produced on 20 February 2020 demonstrate revenue challenges for Envirotech. However, it is curious that, in this environment, payroll expenses increased. On 9 September 2019 only Mr Ledden’s employment was terminated. There appears to have been no other strategy to reduce labour costs. It is not clear what (if any) documents Mr Mathew had in front of him on 8 September 2019 when he made the decision to terminate Mr Ledden’s employment the day after. Who knows what was actually motivating Mr Mathew. Mr Mathew was not a witness of truth.
[24] Consequently, it is hard to avoid the conclusion that there was some other, undisclosed, reason for the termination of Mr Ledden’s employment. It was not performance related because, before me, Mr Mathew gave evidence that “the performance of the applicant was irrelevant.” 9
[25] Very recently in Rachael Goldberg v The Advice Spot t/a The Advice Spot 10 his Honour Deputy President Sams observed that,
[86] As the objector in this matter, the onus was on Mr Hill to provide cogent and reliable evidence of the financial difficulties he claimed were the reason for the applicant’s redundancy. In the usual case, this will require the production, sometimes on a confidential basis, of the financial records of the business, including audited business tax returns, bank statements or a registered accountant’s evidence of the state of the business finances and the like. On the state of the material relied on by Mr Hill, I cannot be satisfied that he has discharged this onus to the appropriate evidentiary standard.
[26] While not necessarily strictly accepting the need that a respondent in an unfair dismissal case discharge an onus when it contends that a jurisdictional objection applies, in the present matter, whatever the true reason for the dismissal of Mr Ledden, Mr Mathew has not satisfied me that it was “because of operational changes.”
[27] Consequently, having considered all the evidence in the matter the Commission, as presently constituted, is not satisfied that, as a result of changes in operations, the role of Business Development Manager within Envirotech was no longer required to be performed. The role ceased, but the causal link with changes in operations has not been established by the Respondent.
Did the Respondent have any obligation to consult?
[28] I must now consider whether the Respondent complied with any obligation in a modern award or enterprise agreement that applied to the Applicant’s employment to consult about the redundancy.
[29] In the present matter Applicant was not employed pursuant to any Award or enterprise agreement as defined by the FW Act. Consequently, there was no obligation to consult with the Applicant about the operational decision. There being no obligation to consult, s398(1)(b) of the FW Act is not relevant in the present matter.
[30] In any event, to the extent that Mr Mathew attempt to characterise the discussion on 9 September 2019 as consultation, it was not. There was no consultation. The decision was delivered as a fait accompli.
Was redeployment reasonable in all the circumstances?
[31] Section 389(2) provides that even if the Commission is satisfied that,
(a) the role of Business Development Manager was no longer required to be performed by anyone because of operational needs (which I am not), and
(b) all consultation obligations in a modern award or enterprise agreement that applied to the Applicant’s employment were complied with (not relevant in the present matter),
a dismissal will not be a genuine redundancy if redeployment was reasonable in all the circumstances.
[32] Whether redeployment of an employee is considered reasonable will depend on the circumstances that exist at the time of the dismissal. 11
[33] In determining whether the redeployment was reasonable a number of matters may be relevant including:
a) whether there exists a job or a position or other work to which the employee can be redeployed; 12
b) the nature of any available position;
c) the qualifications required to perform the job;
d) the employee’s skills, qualifications and experience; and
e) the location of the job in relation to the employee’s residence and the remuneration (pay and entitlements) which is offered. 13
[34] In the present matter the evidence does not support a finding that there was any other job that the Applicant could have been redeployed into.
Conclusion about genuine redundancy
[35] For the reasons set out above, the Commission, as presently constituted, is satisfied that:
a) the Applicant was protected from unfair dismissal,
b) the dismissal was not a case of genuine redundancy within the meaning of s.389 of the FW Act because the Respondent has not satisfied me that, when the decision was made on 8 September 2019 it was because of operational changes.
Harsh, unjust or unreasonable
[36] Having determined that the termination of Mr Ledden’s employment was not a case of genuine redundancy I must now consider whether I am satisfied the dismissal was harsh, unjust or unreasonable.
[37] The ambit of the conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd (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.”
[38] The criteria the Commission must take into account when assessing whether the dismissal was harsh, unjust or unreasonable are set out at s.387 of the FW 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 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.”
[39] Ordinarily I would be under a duty to consider each of these criteria in reaching my conclusion. 14 However, because the dismissal was not a case of genuine redundancy the consideration of the matters specified in s.387(a), (b) and (c) are neutral, unless in the circumstances another valid reason is identified. No other valid reason was identified by the Respondent.
[40] Matters arising from the redundancy (e.g. if relevant, a failure to consult with an employee) fall within s.387(h). 15
[41] Therefore, in relation to the dismissal of the Applicant I am satisfied that:
Valid reason – s.387(a)
(a) The Respondent did not assert that the reason for the dismissal of the Applicant was related to his capacity or conduct. Consequently, there cannot have been, and there was not, a valid reason for the dismissal related to his capacity or conduct.
(b) In all the circumstances of this case I regard this element of s.387 as a neutral consideration in respect of whether the dismissal of the Applicant was harsh, unjust or unreasonable.
Notification of the valid reason and opportunity to respond – s.387(b); (c)
(a) The matters in s.387(b) and (c) of the FW Act deal with whether there was procedural fairness in respect of a reason for dismissal related to capacity or conduct.
(b) The dismissal of the Applicant was not related to capacity or conduct.
(c) Consequently, in all the circumstances of this case I regard this element of s.387 as a neutral consideration in respect of whether the dismissal of the Applicant was harsh, unjust or unreasonable.
Unreasonable refusal by the employer to allow a support person – s.387(d)
a) Where an employee protected from unfair dismissal requests a support person be present to assist in discussions relating to the dismissal, the employer should not unreasonably refuse that person being present.
b) In the present matter this is not a relevant consideration.
c) In all the circumstances of this case I regard this element of s.387 as a neutral consideration in respect of whether the dismissal of the Applicant was harsh, unjust or unreasonable.
Warnings regarding unsatisfactory performance - s.387(e)
(a) The Respondent did not assert that the dismissal of the Applicant related to his unsatisfactory performance, so this matter is not relevant to my consideration as to whether the dismissal was harsh, unjust or unreasonable.
(b) In all the circumstances of this case I regard this element of s.387 as a neutral consideration in respect of whether the dismissal of the Applicant was harsh, unjust or unreasonable.
Impact of the size of the Respondent on procedures followed and Absence of dedicated human resources management specialist/expertise on procedures followed - s.387(f); (g)
(a) The size of a Respondent’s enterprise may impact on the procedures followed by it in effecting a dismissal. Further, the presence of dedicated human resource management or expertise in a Respondent’s enterprise should ensure a higher standard of management of human resources.
(b) In all the circumstances I am satisfied that the size of the Respondent and the non-existence of an internal dedicated human resource function had an adverse effect on the dismissal of the Applicant. Mr Mathew’s process left much to be desired.
(c) However, in all the circumstances of this case I regard this element of s.387 as a neutral consideration in respect of whether the dismissal of the Applicant was harsh, unjust or unreasonable.
Any other matters that the FWC considers relevant – s.387(h)
[42] Having considered each of s.387(a)-(g) of the FW Act, it remains necessary to now consider subsection 387(h) in respect of the Applicant. Section 387(h) provides the Commission with a broad scope to consider any other matters it considers relevant.
[43] Once I have considered s.387(h) in combination with each of ss.387(a)- (g) of the FW Act, I must then decide (in respect of the Applicant) if, in all the circumstances, the termination of the Applicant’s employment was harsh, unjust or unreasonable. Deciding whether the termination was ultimately unfair involves the exercise of discretion.
[44] Although s.387 includes matters that the Commission must take into account in deciding how to exercise its discretion, the discretion conferred is otherwise expressed in general, unqualified terms. Of course, the discretion conferred must be exercised judicially, that is to say not arbitrarily, capriciously or so as to frustrate the legislative purpose. Further, the discretion is also confined by the subject matter, legislative context and purpose. 16
[45] In exercising the discretion, guidance can be drawn from s.381 of the FW Act. It provides that:
“381 Object of this Part
(1) The object of this Part is:
(a) To establish a framework for dealing with unfair dismissal that balances:
a. The needs of business (including small business); and
b. The needs of employees; and
(b) To establish procedures for dealing with unfair dismissal that:
a. Are quick, flexible and informal; and
b. Address the needs of employers and employees; and
(c) To provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.
(2) The procedures and remedies referred to in paragraphs (1)(b) and (c), and the manner of deciding on and working out such remedies, are intended to ensure that a “fair go all round” is accorded to both the employer and employee concerned.
Note: the expression “fair go all round” was used by Heldon J in in re Loty and Holloway v Australian Workers’ Union [1971] AR (NSW) 95.”
[46] In respect of Mr Ledden I consider the following matters to be relevant to the determination of whether him dismissal was harsh, unjust or unreasonable:
a) Ultimately the job was made redundant (despite the Respondent not being able to establish that it was genuinely so) on 9 September 2019. It has not been replaced.
b) the dismissal came “out of the blue”. The Respondent did nothing to put the Applicant on notice that his job was on the line before sacking him on 9 September 2019.
c) there was no consultation with the Applicant.
d) the termination occurred late in the calendar year when it is more difficult to obtain employment.
[47] Having considered each of the matters specified in s.387, the Commission, as presently constituted, is satisfied that, overall, and having regard to the obligation to afford a “fair go all round” the dismissal of the Applicant was harsh.
[48] Accordingly, the Commission, as presently constituted, finds Mr Ledden’s dismissal was unfair within the meaning of the FW Act.
Remedy
[49] Section 390 of the FW Act sets out the circumstances in which I may make an order for reinstatement or compensation:
“390 When the FWC may order remedy for unfair dismissal
(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:
(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and
(b) the person has been unfairly dismissed (see Division 3).
(2) The Commission may make the order only if the person has made an application under section 394.
(3) The Commission must not order the payment of compensation to the person unless:
(a) the FWC is satisfied that reinstatement of the person is inappropriate; and
(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.
Note: Division 5 deals with procedural matters such as applications for remedies.”
[50] I have already dealt with the issues at s.390(1)(a)–(b) above. The Commission, as presently constituted, is satisfied the Applicant was protected from unfair dismissal pursuant to s.382 of the FW Act and the Applicant was dismissed unfairly. An Order dismissing the jurisdictional objection will be issued with this Decision.
[51] As a consequence of the above, the Commission is now required to determine whether to order:
a) the reinstatement of the Applicant or, in circumstances where reinstatement is inappropriate,
b) compensation if it is satisfied such an order is appropriate in all the circumstances.
Reinstatement
[52] The Applicant seeks compensation as the primary remedy. Regardless of the remedy sought by the Applicant, s.390 of the FW Act requires I first determine whether reinstatement is appropriate before I may consider an order for compensation.
[53] In the present matter it is clear that, after the Respondent terminated the employment of the Applicant, it continued to reduce its staffing. I stated above that there is no evidence of a role the Applicant could have been redeployed into. Consequently, in these circumstances the Commission, as presently constituted, is satisfied that an order for reinstatement is inappropriate.
Compensation
[54] Section 390(3)(b) provides the Commission may only issue an order for compensation to the Applicant if it is appropriate in all the circumstances.
[55] Noting that I have found that the Respondent treated the Applicant harshly, the Commission, as presently constituted, is satisfied that an order for compensation is appropriate in all the circumstances of this case.
[56] Section 392 of the FW Act sets out the circumstances that must be taken into consideration when determining an amount of compensation, the effect of any findings of misconduct on that compensation amount and the upper limit of compensation that may be ordered:
“392 Remedy—compensation
Compensation
(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.
Criteria for deciding amounts
(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:
(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the FWC considers relevant.
Misconduct reduces amount
(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.
Shock, distress etc. disregarded
(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.
Compensation cap
(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:
(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the dismissal.
(6) The amount is the total of the following amounts:
(a) the total amount of remuneration:
(i) received by the person; or
(ii) to which the person was entitled;
(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and
(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.”
[57] The method for calculating compensation under s.392 of the FW Act was dealt with by a Full Bench of the Commission in Bowden, G v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge 17 (Bowden). In that decision the Full Bench set out the order in which the criteria and other factors should be applied, taking into account authority under the Workplace Relations FW Act 1996 in Sprigg v Paul’s Licensed Festival Supermarket18 and Ellawala v Australian Postal Corporation.19
[58] Recently, in Rachael Goldberg v The Advice Spot t/a The Advice Spot 20 his Honour Deputy President Sams observed that,
[118] In a more recent Full Bench decision, Hanson Construction Materials Pty Ltd v Pericich [2018] FWCFB 5960, it has been made clear that the Sprigg Formula is not to be applied in a rigid manner. At [39], the Full Bench said:
[39] The strict application of the approach set out in Sprigg v Paul’s Licensed Festival Supermarket (Sprigg), and endorsed in subsequent decisions, would yield an order that Mr Pericich be paid compensation of 1 weeks’ pay. Sprigg is a useful servant, but is not to be applied in a rigid determinative manner. In deciding the amount of a compensation order the Act directs that the Commission ‘must take into account all of the circumstances of the case’ including the particular matters set out at s.392(2)(a) to (g).’ (my emphasis)
[59] In Goldberg, his Honour then held,
[124] In applying the principle in Hanson, and in consideration of all of the circumstances of the case, I consider that the application of the Sprigg formula, produces an inappropriate and unjust outcome.
[60] The Sprigg amount would have resulted in Ms Goldberg receiving $1,300. His Honour awarded her $6,500.
[61] I will now consider each of the criteria in s.392 of the FW Act. First, I will apply the Sprigg test. Then taking into account all the circumstances of the case, I will apply the pub test.
Remuneration that would have been received: s.392(2)(c)
[62] The Applicant’s remuneration with the Respondent was $90,000 per annum.
[63] I should now determine the period of time the Applicant would have remained employed by the Respondent, or would have likely remained employed with the Respondent, had they not been dismissed.
[64] Noting the financial performance of the Respondent and decline in the staffing numbers of the Respondent after September 2019 and also taking into account the failure to consult with the Applicant, it seems to me that, more likely than not, the employment would have ended by reason of redundancy some short time after September 2019 and certainly by December 2019.
[65] I find that the Applicant would have continued to be employed by the Respondent for no more than 1 month had he not been dismissed. The amount the Applicant would have received is therefore $7,500.
Remuneration earned: s.392(2)(e)
[66] I should deduct the 1 weeks’ notice paid to the Applicant (leaving a balance of $5,769.23).
Other matters: s.392(2)(g)
[67] I find it is not appropriate in the circumstances that a contingency should be applied.
[68] Further, under s.392(2)(g) 21 I should consider whether, in all the circumstances of the case, the remedy I propose (being 1 month payment less the 1 weeks’ notice paid to the Applicant) satisfies the “fair go all round” test.22 That test is akin to a reasonableness test. In my days at law school, a generation ago, one might have asked what the man on the Clapham omnibus23 (a hypothetical ordinary and reasonable person) might think about the outcome. Now, in the Australian vernacular, it is described as the “pub test”.
[69] Noting that the Applicant:
a) was not a high income earner,
b) was employed for a relatively short period of time,
c) would likely have lost his job in any case by reason of quarter on quarter operational losses occasioned by the Respondent, and
d) notwithstanding the above, was treated appallingly by Mr Mathew,
I am satisfied that, in the exercise of my discretion, the award of $5,769.23 strikes the right balance. Having applied the the Sprigg formula, it has not produced an inappropriate or unjust outcome.
Viability: s.392(2)(a)
[70] On 20 April 2020 Mr Mathew wrote to the Commission in the following terms:
“The economic downturn resulting from COVID-19 government restrictions has had a significant impact on Envirotech.
I’ve decided to hibernate the business until further notice…”
[71] No other explanation or evidence was provided.
[72] I find an order for compensation in the amount proposed will not affect the viability of the Respondent’s enterprise.
Length of service: section (s.392(2)(b))
[73] The Applicant’s service was relatively short. However, I find that the Applicant’s period of service with the Respondent, being 7 months, should not affect the amount of compensation to be ordered.
Mitigating efforts: s.392(2)(b)
[74] In considering whether the Applicant has taken steps to mitigate the loss suffered as a result of the dismissal I should take into account whether the Applicant acted reasonably in the circumstances. 24 The Applicant was dismissed late in the calendar year. This year the economy has worsened. The Applicant’s inability to obtain alternative employment is not his fault.
Misconduct: s.392(3)
[75] I have not found any misconduct by the Applicant that contributed to the dismissal.
Shock, Distress: s.392(4)
[76] I note that the amount of compensation calculated does not include a component for shock, humiliation or distress.
Compensation cap: s.392(5)
[77] I must reduce the amount of compensation to be ordered if it exceeds the lesser of the total amount of remuneration received by the Applicant, or to which the Applicant was entitled, for any period of employment with the employer during the 26 weeks immediately before the dismissal, or the high income threshold immediately prior to the dismissal.
[78] The high income threshold immediately prior to the dismissal was $148,700.
[79] The amount the Applicant would have earned, or to which the Applicant was entitled, for the 26 week period immediately prior to the dismissal was $45,000.
[80] The amount of compensation I will order does not exceed the compensation cap.
Conclusion
[81] The Commission, as presently constituted, is satisfied that the Applicant was protected from unfair dismissal, that the dismissal was unfair and a remedy of $5,769.23 (payable within 21 days) is appropriate.
[82] Order [PR719912] to this effect will be issued with this Decision.
COMMISSIONER
Appearances:
Mr C Ledden for himself.
Mr D Mathew, Managing Director, for the Respondent.
Hearing details:
21 January 2020, Sydney.
21 April 2020, via teleconference.
Printed by authority of the Commonwealth Government Printer
<PR719911>
1 Transcript, 21 January 2020, PN233.
2 Transcript, 21 January 2020, PN202.
3 Transcript, 21 January 2020, PN223.
4 Transcript, 21 January 2020, PN245.
5 Noting how the Respondent’s pay cycle operated, it seems likely that the Applicant was short-changed 1 days’ notice.
6 Transcript, 21 January 2020, PN96 – 130.
7 Transcript, 21 January 2020, PN144 – 157.
8 Transcript, 21 April 2020, PN115.
9 Transcript, 21 January 2020, PN241.
10 [2020] FWC 2671.
11 Ulan Coal Mines v Honeysett (2010) 199 IR 363, 370 [26].
12 Technical and Further Education Commission (t/a TAFE NSW) v Pykett (2014) 240 IR 130, [36].
13 Ulan Coal Mines v Honeysett (2010) 199 IR 363 [28].
14 Sayer v Melsteel[2011] FWAFB 7498.
15 UES (Int’l) Pty Ltd v Harvey (2012) 215 IR 263.
16 Construction, Forestry, Mining and Energy Union v Fair Work Commission[2017] FWCFB 4141.
17 [2013] FWCFB 431.
18 (1998) 88 IR 21.
19 Print S5109.
20 [2020] FWC 2671.
21 “Any other matter that the FWC considers relevant”.
22 Re Loty and Holloway v Australian Workers’ Union [1971] AR (NSW) 95.
23 McQuire v Western Morning News [1903] 2 K.B. 100 at 109 per Collins MR.
24 Biviano v Suji Kim Collection PR915963 at [34].
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