Corey Langford v Transformer Services Pty Ltd

[2014] FWC 6599

[2014] FWC 6599

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Corey Langford
v
Transformer Services Pty Ltd
(U2014/9980)

Cara Langford
v
Transformer Services Pty Ltd
(U2014/9986)

COMMISSIONER HAMPTON ADELAIDE, 21 NOVEMBER 2014

Applications for relief from alleged unfair dismissal - related applications heard together - family business - whether small business as defined - not satisfied that business employed less than fifteen employees at the relevant time - accord and satisfaction - whether payment of entitlement to notice satisfied potential unfair dismissal claim - valid application not compromised - breakdown in personal and employment relationships - whether valid reason in each case - misconduct - whether dismissals harsh, unjust or unreasonable - dismissals found to be unfair - remedy - compensation awarded - applications granted.

1. Introduction and Case Outline

[1] Mr Corey Langford and Ms Cara Langford have each made an application to the Commission seeking a remedy for an alleged unfair dismissal. The applications have been made under s.394 of the Fair Work Act 2009. The applicants’ employer was Transformer Services Pty Ltd (Transformer).

[2] Transformer is a relatively small family owned business that provides maintenance and related services to the power industry. This predominately involves services in connection with substation transformers and related equipment.

[3] Transformer’s principal director is Mr Colin Johns and he manages and effectively controls the business.

[4] Cara Langford is the daughter of Colin Johns and Corey Langford is married to Cara.

[5] In late 2011 or early 2012, both Cara and Corey Langford were offered employment in the family business. Other family members were also employed within Transformer and by 2014, this included Ms Theresa Shaw, Colin Johns’ new partner, following a separation in late 2012 from his then wife, and the mother of Cara, Ms Bronwyn Johns. Ms Johns retained a financial interest in the business. In addition, Colin Johns’ brother, Stephen Johns, and the partner of Ms Shaw’s daughter were also employed by Transformer.

[6] On 22 May 2014, in the context of certain events and the breakdown in the personal relationships between Cara and Corey Langford (on the one hand) and Colin Johns and Ms Shaw (on the other), Colin Johns dismissed both of the applicants.

[7] Almost everything else in these matters is in dispute to some degree. Given the factual disputes, I was required under the Act to conduct a hearing or conference. 1 Having consulted with the parties I determined that a hearing would be appropriate. I also determined, by consent, that the two applications would be heard together.

[8] Ultimately permission was granted to all parties to be represented pursuant to s.596 of the Act. Amongst the considerations leading to that point, was the complexity of the matters given certain features of the applications and the number of witnesses. Further, the desirability of maintaining as much objectivity between the parties as possible, given the myriad of family relationships and evident tensions involved, was a factor in relation to the discretion to be exercised. 2

[9] Amongst the matters in dispute are two jurisdictional issues raised by Transformer. It is contended that there has been “accord and satisfaction” in relation to Corey Langford’s application. This is said to arise from the fact that following his dismissal, a payment representing two week’s notice was made by Transformer in the context of threatened legal action.

[10] In relation to both applications, Transformer also contends that it is a small business within the meaning of the Act 3 and that it has complied with Small Business Fair Dismissal Code established by s.388 of the Act (the small business code).

2. The accord and satisfaction contention

[11] There is no relevant factual dispute about this contention and it is therefore proper to deal with it before canvassing the evidence before the Commission.

[12] Corey Langford was dismissed summarily, that is without notice, on 22 May 2014.

[13] On 29 May 2014, Corey Langford sent an email to Colin Johns indicating in part that he had complied with the return of all equipment as required, had sought legal advice, and he was entitled to two weeks paid notice under the terms of the National Employment Standards. 4 The email then stated:

“This above condition will need to be met or I will seek further legal action.” 5

[14] On 30 May 2014, Colin Johns stated in a reply email:

“... I agree, however you have not returned all equipment supplied to you ....

When these are addressed I have no problem paying you out.”

[15] Transformer subsequently paid the two week’s “notice” sought.

[16] Mr Lazarevich, of counsel, for Transformer contended that this payment represents accord and satisfaction in relation to Corey Langford’s application and was a complete defence. That is, there was an offer by Corey Langford not to take legal action if the payment was made. The payment was made in response to the threat and this satisfied the matter.

[17] Mr Colgrave, of counsel, for Corey Langford contended that the payment could not represent accord and satisfaction with respect to any action arising from the dismissal and certainly not in relation to the unfair dismissal application.

[18] The concept of accord and satisfaction can apply in relation to unfair dismissal applications. 6 In order to operate, the Commission must be satisfied that a binding agreement was formed with the necessary elements in place to form such a contract.

[19] In the circumstances evident here, I am not satisfied that accord and satisfaction operates in relation to Corey Langford’s unfair dismissal application. The email threatens to take “further legal action” however the nature of any such action is not specified. Further, and in any event, the email does not indicate that there will be no further (legal) action taken in relation to the dismissal and it would be difficult to imply such an offer. Rather, it states an alleged existing entitlement and indicates that if the entitlement is not paid, “further legal action” may be sought.

[20] If anything, the only agreement would be around the payment of the two week’s notice and any satisfaction could only be related to legal action about that matter. Even then, the terms of the uncertain nature of the offer and acceptance fall short of what might be required to produce that result.

[21] Corey Langford’s application is properly before the Commission for determination.

3. The evidence before the Commission

[22] Both Cara and Corey Langford supplied witness statements and gave oral evidence in these matters.

[23] Transformer relied upon the witness statements and oral evidence of the following:

● Colin Johns - Director;
● Mr Michael Wallace - General Skilled Worker with Transformer and the partner of Ms Shaw’s daughter;
● Ms Theresa Shaw - Project Manager with Transformer and the partner of Colin Johns;
● Mr Dwayne Hunter - General Skilled Worker with Transformer and the brother of Ms Johns;
● Mr Stephen Johns - General Skilled Worker with Transformer and brother of Colin Johns;
● Mr Stephen Beauchamp - Casual worker with Transformer; and
● Mr Phillip McGee - General Skilled Worker with Transformer.

[24] In addition, Ms Marie Scarfo, an Accountant with Freer Parker, gave evidence in relation to the preparation of taxation returns for Colin Johns. I accept her evidence.

[25] Many of the witnesses are related and it was evident to me that the breakdown in certain family relationships, and the dynamics and alignments created as a result, have impacted upon their evidence to a degree. I have also noted that some of the evidence was in my view subject to embellishment, not in the sense of an attempt to mislead the Commission, but more in the nature of filling in some gaps in the context of an incomplete recall of the events.

[26] Subject to those important caveats, I generally found the evidence of Cara Langford and Colin Johns to be genuine and reliable.

[27] I have reservations about the evidence of Corey Langford and I consider that he attempted to down play the extent and nature of his negative conduct towards Ms Shaw and his negative comments to others about Colin Johns and how he ran the business.

[28] I also have reservations about the evidence of Ms Shaw, particularly in terms of the degree of her active involvement in the business at times. I do not accept her evidence about those matters and note that it is contradicted, in part, by other witnesses called by the respondent.

[29] In relation to the other evidence before the Commission, I accept that each of these witnesses did not attempt to mislead the Commission and for the most part gave frank evidence. I do however find that at least in terms of the degree to which they were prepared to indicate that others, including potentially themselves, may have made negative comments about Colin Johns during conversations involving Corey Langford, they were reluctant to do so. This does not lead me to generally discount their evidence on the nature of comments made by Cara and Corey Langford given the consistency and relative detail of that evidence.

[30] I have resolved the factual conflicts having regard to the above observations and the probability and consistency of the evidence.

4. Was Transformer a small business employer at the relevant time?

[31] This issue arises by virtue of s.385 of the Act, which provides as follows:

“385 What is an unfair dismissal

(1) 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.”

[32] Further, s.396 of the Act provides that issue raised by s.385(1)(c) is to be determined before any consideration of the merits.

[33] The small business code will be relevant only if Transformer was a small business within the meaning of the Act.

[34] The Act provides as follows:

“23 Meaning of small business employer

(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.

(2) For the purpose of calculating the number of employees employed by the employer at a particular time:

(a) subject to paragraph (b), all employees employed by the employer at that time are to be counted; and

(b) a casual employee is not to be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis.

(3) For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.

(4) To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee’s employment, the employees that are to be counted include (subject to paragraph (2)(b)):

(a) the employee who is being dismissed or whose employment is being terminated; and

(b) any other employee of the employer who is also being dismissed or whose employment is also being terminated.”

[35] There are no associated entities in this matter.

[36] Section 388 of the Act provides 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.”

[37] Accordingly, I need to determine whether, immediately before the dismissal of the applicants, Transformer employed fewer than 15 employees having regard to the qualifications of s.23(2) of the Act. Further, both applicants are to be included for present purposes given the operation of s.23(4).

[38] On either case as presented, there were at least 14 relevant employees at the relevant time. This includes Ms Johns who was drawing income from the employer and Transformer elected 7 not to lead evidence that would enable her to be excluded for present purposes. The dispute is whether Colin Johns and/or Ms Shaw were employees. It is not in contention that each was an employee of Transformer at some stage.

[39] Transformer contends that neither Colin Johns nor Ms Shaw were employees at the relevant time. In the case of Colin Johns, he had drawn wages and was treated as an employee for certain periods, but not during 2014. In the case of Ms Shaw, the employer contends that after a dispute with Corey Langford, she did not work for the company and only attended as a visitor or performed the odd administrative/marketing function as a volunteer. Transformer also suggests that Ms Shaw resumed employment only after the dismissals leading to this matter.

[40] The applicants contend that both were employees at the relevant time.

[41] I find that Colin Johns was not an employee of Transformer at the relevant time. There is sufficient material to explain how and why his employment status changes from time to time and to confirm that he has not drawn, and was not being paid wages as an employee, during the relevant period.

[42] In the case of Ms Shaw, I have serious reservations about the extent to which she was actively engaged in the business at the relevant time. In particular, although she attempted to down play both the time spent at the business and her role, it is evident that she was conducting business for Transformer and even conducted interviews, on her own, which led to the employment of staff. In these circumstances and given the lack of clarity about when wages were paid to Ms Shaw, I am not satisfied that she should be excluded from the “head count” of employees for present purposes. 8

[43] Accordingly, I am not satisfied that Transformer was a small business at the relevant time and the small business code is not relevant.

5. The events directly leading to the dismissal of Cara and Corey Langford

[44] In July 2011, Cara Langford approached Colin Johns seeking employment for Corey Langford to assist the family. He commenced working as a general skilled worker and in early 2012, Corey was appointed to the role of foreman/site manager.

[45] In mid 2012, Cara Langford approached Colin Johns seeking employment for herself in the Transformer business. Cara was ultimately offered a position and was employed as a Project Manager. This involved a reduction in earnings for Cara Langford, who moved from her job with a major bank based in Tasmania.

[46] Cara Langford’s role as an Office/Project Manager was largely office-based but also involved arranging and physically carrying out work at various substations. In due course, Cara expressed a preference to undertake a wholly office-based position and Mr Wallace was employed to take over the field work. This involved Cara Langford and Mr Wallace travelling to various regional locations.

[47] During 2012 and early 2013, there were discussions between Colin Johns and the Langfords about the Langfords ultimately purchasing the business when Colin Johns retires. There is no evidence of a concluded agreement on that matter.

[48] In September 2013, Ms Shaw commenced working within the Transformer business, generally undertaking field work. Colin Johns and Ms Shaw had formed a relationship and initially, Ms Shaw and Cara and Corey Langford were on good terms and mixed socially and at family functions.

[49] In November 2013, there was a heated discussion between Colin Johns and Corey Langford. This included Corey indicating that Colin was a “c**t” and that he was not respected in the business. It is also evident to me that Corey was attempting to have some further influence over the management of the company and Colin Johns did not appreciate the “advice”. I also find that Colin Johns informed Corey Langford during that discussion that he was not to be spoken to in that manner. Although Colin Johns indicated that he had dismissed Corey at that time, it is more likely that there was a heated mutual exchange that left the relationship unclear.

[50] The day after the November 2013 exchange, Corey Langford apologised to Colin Johns who accepted the apology and indicted that Corey was not to get personal again.

[51] By the early part of 2014, tensions had developed in the family relationships as evident at the workplace. This occurred for a number of reasons including the fact that Cara Langford considered that Ms Shaw was coming between her and her father and was also far too involved in the business. This had a particular edge as Cara perceived that Ms Shaw was increasingly having a role in the office and administration work which Cara was intending to undertake full-time.

[52] On or about 27 March 2014, an incident occurred between Corey Langford and Ms Shaw. Work was to be undertaken at a new SA Power Networks substation at Regency Park that was not yet connected to the power network. Colin Johns however considered that they should treat the substation as if it was live for induction and safety purposes, as a prudent measure given the work health and safety (WHS) audits undertaken by the client. This also included having all of the attending employees sign Job Safety Assessment (JSA) forms. It is evident that Corey Langford considered the requirement for full inductions to be unnecessary in the circumstances and that the JSA’s were not correct for the job. Corey Langford expressed his displeasure about those requirements to others at the time.

[53] On site at Regency Park, Ms Shaw approached Corey Langford and requested that an induction be conducted. Corey refused to provide the induction, advised Ms Shaw that he considered the JSA’s to be “fu**ed”. Ms Shaw responded that Corey should take the issue up with Colin Johns and Corey made some demeaning and abusive comments about Colin Johns including referring to him as a c**t. This upset Ms Shaw and she was eventually inducted by Stephen Johns who was also on site.

[54] Ms Shaw reported the incident to Colin Johns and advised that she did not wish to perform further work for the business. I note that this led to Ms Shaw not being involved in the site-based work however she took up a role in promoting the business and undertaking various administrative functions from time to time. Further, even when not performing work, Ms Shaw attended the office of Transformer during the work day, sometimes for long periods.

[55] On the day after the March incident at the Regency Park site, Colin Johns informed both Cara and Corey Langford that Corey had to apologise to Ms Shaw. I note that at the time this was seen by Colin Johns as an issue about the conduct of Corey towards Ms Shaw, rather than as some form of misconduct against him or the company. Corey Langford indicated to the effect that he could not be forced to apologise as he had done nothing wrong. After the meeting, Corey Langford left a voice message on Ms Shaw’s phone suggesting that he couldn’t recall calling Colin Johns a c**t and concluding with words to the effect of, “Colin said I had to apologise, so I apologise if I caused any offence”.

[56] Ms Shaw did not consider that this was genuine apology and the following day she came into the office where Cara and Corey Langford and Colin Johns were present. I add that prior to Ms Shaw’s attendance, Colin Johns had already advised Corey Langford that whatever he had done had made things worse. Upon entering the office, Ms Shaw, in effect, sought an apology from Corey for calling Colin a “c**t” and Corey stated that did not recall calling Colin a c**t and stated that he had already apologised. Ms Shaw stated that if Corey was not going to apologise then “You’re not going to yell at me again”. Ms Shaw also stated that Corey was not to call Colin a c**t again and he responded to the effect that she could not tell him what to do. Ms Shaw then told Corey to “f*** off then” and both Corey and Cara left the office.

[57] After the Regency Park incident and the disputed “apology”, relationships between Corey and Cara Langford and Ms Shaw effectively ended. Further, relationships between the Langfords and Colin Johns also became more problematic. This included having reduced communications with each other, including at the workplace, and Corey and Cara Langford generally not coming into the office when Ms Shaw was present.

[58] I note that a WHS audit was apparently conducted by a client on the Regency Park worksite on 28 March 2014. The audit was very positive and Colin Johns informed all relevant employees of the results and thanked them for their efforts.

[59] On or around 8 May 2014, there was a discussion between the Langfords and Colin Johns. During that meeting, Cara indicated that Ms Shaw was not welcome in the business and that Colin Johns should get rid of her. Colin Johns downplayed the degree to which Ms Shaw was engaged in the business, as he had done on previous occasions, but advised that if relationships did not improve, they may need to go their “separate ways”.

[60] In mid May 2014, there was a disagreement about some family events that Ms Shaw was attending. This ended with Colin Johns indicating that because the Langfords would not speak or recognise Ms Shaw, it would “not be a good idea” if they attended. Cara Langford requested that they should all “try to get along for a couple of hours”, but this was rejected by Colin Johns. It is evident that this event created a further rift in the personal and working relationships involved.

[61] Also in mid May 2014, Cara Langford commenced applying for alternative employment given the problems between the family members in the workplace. Cara informed Colin Johns that she had done so. This occurred in the context of continuing concerns held by Cara Langford about the extent of involvement of Ms Shaw in the business.

[62] In the immediate lead up to the dismissals, there were further communication difficulties within the workplace. These were largely due to the decline in the relationships, and to some degree, the fact that Colin Johns was interstate. Mr Johns also became aware of allegations that Cara had been making comments about him and the business to an external contractor. I add that it is likely that Cara Langford had spoken to the external contractor about family matters and in particular about Stephen Johns working in the business.

[63] On Thursday 22 May 2014, Cara Langford walked passed Colin Johns in the office without directly acknowledging him. Cara also did not come into the office at the end of the day after completing on-site work. Colin Johns had intended to speak to Cara Langford about the overall work situation at that time. He was due to be interstate from the following morning. Around 6.00pm, Colin Johns sent an email to Cara Langford in the following terms:

“Hi Cara, as you are well aware the strain and tension between us is overwhelming and has been for some time, and it has started to affect my health again. So I have made the decision that it is time for us to move apart.

I do not accept the fact that like today, again you will not talk too (sic) or let me know what is going on in my own company, I have said before and will not say anymore that I will not be ignored by anyone I employ.

Your termination date will be Tuesday night the 3rd of June 2014. You are not required to attend work again after tonight if you choose not to do so. Your normal weekly entitlements will remain until your termination date.

This will give you paid leave to search for other employment.

You must return all keys and equipment that are the property of Transformer Services prior to this date including your substation keys.

As I am going to NSW until Tuesday I am not available for any meetings, however if you wish to discuss this matter I will be available Tuesday morning in my office.

I wish you all the best for the future and in any endeavour you enter.”

[64] Colin Johns had unsuccessfully tried to contact Cara Langford during the day but did not leave any messages on her mobile phone. The email to Cara Langford was read by Bronwyn Johns who alerted Cara to its contents and she then rang Colin Johns from her car. Corey Langford was also in the car and it is unlikely that Colin Johns was initially aware of that fact.

[65] During a series of discussions from the car, Cara Langford asked Colin Johns, “how can you sack your own daughter” and Mr Johns referred to the alleged negative comments about the company being made to the external contractor. Cara indicated that she could not be sacked because she did not like Ms Shaw and Colin Johns denied that this was the reason.

[66] At one point, Colin Johns indicated that they could speak further on the following Tuesday when he returned from interstate and that he needed to take back control of his business. Cara Langford questioned why other employees had not been sacked and Colin Johns responded that they had been warned and that all employees, no matter who they were, had to perform or they “won’t be there”. At some point Cara Langford made reference to the suggestion that she was being used an as example.

[67] Colin Johns also made reference to Corey Langford and indicated that he would need to improve his performance and would no longer be able to play the “Cara card.” At this point, Corey, who had been listening, said “You’re a fu**head” and may have made further similar comments. Colin Johns then stated “you can finish now” in reference to Corey and also indicated that the company car had to be returned to the depot by 8.00am on the following morning, or “I will report it as stolen.”

[68] I note that it was Colin John’s evidence that, at least at the point and despite the earlier conduct of Corey Langford, it was not his intention to dismiss Corey in the absence of the comments made during the phone conversation.

[69] Cara Langford was paid out the two week’s notice referred to in the termination email on the basis that Colin Johns informed her that it would not be appropriate to attend work during the notice period.

[70] Corey Langford was subsequently paid two weeks in lieu of notice in circumstances outlined earlier in this decision.

6. Other matters now relied upon by the parties

[71] During the course of the evidence and the hearing, various other matters of potential relevance to these matters were relied upon by the parties. To some extent, these involved an attempt to bolster their respective positions however where relevant I have had regard to the following findings.

[72] When the Langford’s both moved to Adelaide to work with Transformer, they were offered accommodation in a house used by some of its employees. In due course this included Stephen Johns and other men. I accept that he was uncomfortable for Cara, particularly as the only female, and that both Cara and Corey were keen to move out. The main source of the tensions was however between Corey Langford and Stephen Johns and arose in part about criticism that Corey would make about Colin Johns and the company, when both Stephen and Corey were at the house.

[73] In due course, Colin Johns provided a loan of $50,000 to the Langfords to assist with relocating.

[74] In early 2014, Colin Johns arranged for Corey Langford to attend some management training. Although this may have been in the context of reservations held by Mr Johns about Corey’s performance, this was not expressly communicated to Corey. Rather, Corey Langford understood that the training was in preparation for the fact that that the Langfords would one day take over (purchase) the business.

[75] During the training course, Corey Langford discussed situations arising at the business as might be expected. Upon his return, Corey Langford did advise Colin Johns that the Transformer business had been discussed and that criticism may have been made about aspects of its operations. Corey Langford also came back with some ideas to improve staff morale.

[76] A number of alleged performance and conduct concerns were raised by Colin Johns regarding both Cara and Corey Langford. The most serious of these referred to Corey.

[77] With the exception of the events described elsewhere in this decision, I am not satisfied that there is any basis for the concerns about Cara’s work.

[78] In terms of Corey Langford, I do accept that his conduct towards Ms Shaw was not appropriate and that at times, he did not always speak to others in a constructive manner in terms of comments about Colin Johns or the company. This included comments about what he may do when he took control of the company. In terms of the work performance matters, some issues did arise on some jobs where Corey Langford had worked. However, there was a tendency in the evidence of Colin Johns to overstate those concerns and place responsibility upon Corey even if he was not directly involved. Whilst having to take some responsibility as the Site Manager, some of this criticism of his work performance was not properly founded nor supported by evidence.

7. Were the dismissals of Cara Langford and Corey Langford unfair?

7.1 The statutory context

[79] The Act relevantly provides as follows:

“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.”

[80] It is clear that s.387 of the Act contemplates that an overall assessment as to the nature of the dismissal must be made by the Commission. In so doing, the Act sets out a number of considerations that must, where relevant, be weighed up in totality.

[81] It is convenient therefore to use the various provisions of s.387, with reference to the relevant circumstances, to outline my consideration of the matter. There are different circumstances that apply to Cara and Corey Langford respectively, and as a result I will separately apply the statutory considerations to each of the applicants.

7.2 Was the dismissal of Cara Langford unfair?

Section 387(a) – whether there was a valid reason for the dismissal related to Cara Langford’s capacity or conduct (including its effect on the safety and welfare of other employees)

[82] Valid in this context is generally considered to be whether there was a sound, defensible or well founded reason for the dismissal. Further, in considering whether a reason is valid, the requirement should be applied in the practical sphere of the relationship between an employer and an employee where each has rights, privileges, duties and obligations conferred and imposed on them. That is, the provisions must be applied in a practical, commonsense way to ensure that the employer and employee are each treated fairly. 9

[83] Transformer contends that there was an irretrievable breakdown in the relationships and that the work environment had became disharmonious to the point that Cara Langford’s employment could not continue. Cara Langford contends that there was no valid reason for her dismissal.

[84] The breakdown of the relationships itself, is not directly related to Cara Langford’s capacity or conduct.

[85] To some degree, the behaviour of Cara Langford in not continuing to deal with Colin Johns in the same constructive manner, and in putting constraints around her attendance in the office when Ms Shaw was present, is conduct capable of being considered in this context. This arose from the breakdown of the relationships more generally but this does not mean that the conduct becomes irrelevant to that extent.

[86] I would accept that Colin Johns contributed to these breakdowns by not being up front with Cara Langford about the degree to which Ms Shaw was actively engaged in the business. I would also accept that the conduct of Corey Langford in his dealings with Ms Shaw and Colin Johns, had a significant impact upon Cara’s relationships with them, and consequentially, upon her conduct.

[87] In my view, by mid May 2014, the decline in the working relationships between Cara Langford and Colin Johns (and Ms Shaw) had reached the point where the administration of the business was being impacted. The reduction in communications and the tensions in the workplace were serious matters.

[88] As a result, there were some objective and sound reasons for Cara’s dismissal related to conduct.

Section 387(b) – whether Cara Langford was notified of the reasons for dismissal

[89] It has been held that the notification relates to the valid reason contemplated by s.387(a) of the Act 10 and that it must be done prior to the dismissal.11

[90] Cara Langford was notified of the reason, at least in general terms, as part of the email that constituted the dismissal. This was not done prior to that point in any meaningful sense.

Section 387(c) – whether Cara Langford was given an opportunity to respond to any reason related to her capacity or conduct

[91] There was a discussion some weeks prior to the dismissal during which the joint frustrations of Colin Johns and Cara Langford were aired. This involved Colin indicating that things had to improve.

[92] This does not constitute an opportunity to respond to those concerns as contemplated by s.387(c) of the Act.

Section 387(d) – any unreasonable refusal by the respondent to allow Cara Langford a support person

[93] There was no discussion about the potential dismissal before it was determined. However, this means that there was no context in which Cara Langford sought to have a support person. As a result, this consideration is not engaged.

Section 387(e) – if the dismissal is related to unsatisfactory performance by Cara Langford – whether she has been warned about that unsatisfactory performance before the dismissal.

[94] This consideration relates to performance. Some of the conduct considered in relation to Cara Langford relates indirectly to the performance of her role.

[95] Warnings for this purpose must identify the relevant aspect of the employee’s performance which is of concern to the employer. 12 Further, a mere exhortation to improve is not sufficient and the warning must make it clear that the employee’s employment is at risk unless performance improves.13

[96] The discussion between the parties referenced under the s.387(c) consideration does not represent a warning within the contemplation of s.387(e) of the Act.

Section 387(f) – the degree to which the size of the respondent’s enterprise would be likely to impact on the procedures followed in effecting the dismissal.

Section 387(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.

[97] Transformer is a relatively small employer and does not have dedicated human resource management specialists. It is also a family owned business and the dismissals involved family members. The size and nature of the business have in my view impacted upon the procedures followed in effecting the dismissal.

[98] As a result, the assessment of any procedural fairness issues must be made having genuine regard to these considerations.

Section 387(h) - other matters considered to be relevant

[99] To the extent that the breakdown in working relationships within the business does not relate to Cara Langford’s conduct, it remains a relevant consideration. The breakdown and the various reasons contributing to that point must also be considered.

[100] Cara Langford was employed within the business for about three years and her decision to join the business did not involve being head-hunted or lured to join Transformer.

[101] With one exception, the consequences of the dismissal are those that would normally be expected and there are no particular extenuating circumstances. Cara Langford’s dismissal took place at the same time as Corey Langford’s dismissal. There are serious personal consequences of the dismissal in terms of family relationships, and although these are very unfortunate, I do not consider that they are relevant in the present context.

[102] The manner of the dismissal is in my view a relevant consideration. Although the breakdown in the relationships had led to communication problems and Cara Langford not being responsive at times, Colin Johns did not leave a message for Cara Langford seeking to meet with her about the likely dismissal. This contributed to the procedural unfairness outlined earlier and to receive the dismissal advice via email in all of the circumstances evident here, was also unreasonable.

Conclusion in relation to Cara Langford

[103] On balance, I consider that the dismissal of Cara Langford was unjust and unreasonable. Even allowing for the size and nature of the business and the practical circumstances of the parties, the absence of any of the reasonable procedural steps raised by s.387 and some of the other considerations set out in this decision have led to unfairness.

[104] As a result, the dismissal of Cara Langford was unfair within the meaning of the Act.

7.3 Was the dismissal of Corey Langford unfair?

[105] The discussion of the nature of each of these considerations set out above also applies in the case of Corey Langford and the following should be read in that context.

Section 387(a) – whether there was a valid reason for the dismissal related to Corey Langford’s capacity or conduct (including its effect on the safety and welfare of other employees)

[106] Transformer contends that Corey Langford’s conduct in calling his boss a “f**khead” was serious misconduct and represents a valid reason for dismissal. It also relies upon the breakdown in the working relationships in that regard. Amongst other matters, the employer further relies upon the 28 March 2014 incident involving Ms Shaw and the general conduct of Corey Langford in undermining Colin Johns.

[107] Corey Langford contends that up until the comments made in the course of the conversation about Cara’s dismissal, Colin Langford had no intention to dismiss him. He further contends that the comments made at that time must be considered in the context of a husband having heard the discussion about his wife’s dismissal by his father in law.

[108] The authorities emphasise that this assessment is to be made in the context of the practical realities of the workplace. In this case, this includes the relationships between the parties and the context in which the conduct took place.

[109] I must also assess the existence of a valid reason based upon the conduct as I have found it to be rather than the view of the employer at the time. 14

[110] In many, if not most cases, referring to the employer in the manner that Corey Langford did during the relevant discussion, would represent serious misconduct and a valid reason in its own right.

[111] In this case, I must consider that this took place in extenuating circumstances including the dismissal of Cara Langford and involved Corey Langford listening in and speaking to his father in law in that context. In my view, the conduct remains misconduct however these other circumstances must also be weighed into the statutory consideration.

[112] I have found that some of the performance and related concerns raised by Transformer in relation to Corey Langford have been overstated. I do however accept that Corey Langford’s conduct in relation to Ms Shaw, in late March 2014, and following that event in relation to his attitude and conduct towards Colin Johns and his tendency to undermine Colin Johns with others in the business more generally was destructive and are important considerations.

[113] I have dealt with the import of the broader relationship breakdowns, and Corey Langford’s role in that, earlier in this decision.

[114] I consider that there was a valid reason for Corey Langford’s dismissal related to his conduct.

Section 387(b) – whether Corey Langford was notified of the reasons for dismissal

[115] Corey Langford was not notified of the reasons for dismissal as contemplated by s.387(b) of the Act.

Section 387(c) – whether Corey Langford was given an opportunity to respond to any reason related to his capacity or conduct

[116] The dismissal occurred as an immediate response to the comments made by Corey Langford on 22 May 2014.

[117] There was no opportunity to respond to the reasons as contemplated by s.387(c) of the Act.

Section 387(d) – any unreasonable refusal by the respondent to allow Corey Langford a support person

[118] There was no discussion about the potential dismissal before it was determined. However, this means that there was no context in which Corey Langford sought to have a support person. As a result, this consideration is not engaged.

Section 387(e) – if the dismissal is related to unsatisfactory performance by Corey Langford – whether he has been warned about that unsatisfactory performance before the dismissal.

[119] There were some discussions about Corey Langford’s conduct and in particular how he spoke to Colin Johns. This occurred most directly in November 2013.

[120] These discussions did involve an indication that Corey was not to personally abuse Colin Johns again. This was a warning of sorts and should have been understood by Corey Langford to that extent. The discussions did not however extend to an explicit warning that if this occurred again, his employment would be in jeopardy.

Section 387(f) – the degree to which the size of the respondent’s enterprise would be likely to impact on the procedures followed in effecting the dismissal.

Section 387(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.

[121] I have dealt with this above and these considerations are equally applicable here.

[122] In the case of Corey Langford, the informal nature of the warnings was influenced by these considerations and this must genuinely be taken into account in assessing the overall fairness of the dismissal.

Section 387(h) - other matters considered to be relevant

[123] To the extent that the breakdown in working relationships within the business does not relate to Corey Langford’s conduct, it remains a relevant consideration. The breakdown and the various reasons contributing to that point must also be considered.

[124] Corey Langford was employed within the business for about three years and his decision to join the business did not involve being head-hunted or lured to join Transformer.

[125] With one exception, the consequences of the dismissal are those that would normally be expected and there are no particular extenuating circumstances. Corey Langford’s dismissal took place at the same time as Cara Langford’s dismissal. There are serious personal consequences of the dismissal in terms of family relationships, and although these are very unfortunate, I do not consider that they are relevant in the present context.

[126] The dismissal occurred in the heat of the moment and represented a knee-jerk response in a mutually tense and distressing situation.

Conclusion in relation to Corey Langford

[127] The existence of a valid reason for dismissal is an important but not determinative consideration. Equally, the absence of elements of procedural fairness also falls into the same category. 15 This is reinforced by the considerations in s.387(f) and (g).

[128] It is the overall circumstances that must be considered having regard to the relevant statutory considerations.

[129] On balance, and not without some hesitation, having regard to all of the statutory considerations, I consider that the dismissal of Corey Langford was unreasonable at that point.

8. Remedy

8.1 Cara Langford

[130] Cara Langford seeks compensation as a remedy in this matter.

[131] Division 4 of Part 3-2 of the Act relevantly provides as follows:

“Division 4—Remedies for unfair dismissal

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 FWC may make the order only if the person has made an application under section 394.

(3) the FWC 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.

...

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. 16

(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.

393 Monetary orders may be in instalments

To avoid doubt, an order by the FWC under subsection 391(3) or 392(1) may permit the employer concerned to pay the amount required in instalments specified in the order.”

[132] The prerequisites of ss.390(1) and (2) have been met in the case of Cara Langford.

[133] Section 390 makes it clear that compensation is only to be awarded as a remedy where the Commission is satisfied that reinstatement is inappropriate and that compensation is appropriate in all the circumstances. In this case, Cara Langford does not seek reinstatement and given all of the prevailing circumstances I accept that reinstatement would not be appropriate.

[134] As a result, I need to consider whether compensation is appropriate and if so, to what extent.

[135] Section 392(2) of the Act requires me to take into account all of the circumstances of the case including the factors that are listed in paras (a) to (g). Without detracting from the overall assessment required by the Act, 17 it is convenient to discuss the identified considerations under the various matters raised by each of the provisions.

The effect of the order on the viability of Transformer

[136] Nothing has been put to the Commission on this issue.

The length of Cara Langford’s service with Transformer

[137] Cara Langford was employed for a period of under two years. This does not require any particular variation to the compensation figure otherwise appropriate in this case.

The remuneration Cara Langford would have received, or would have been likely to receive, if she had not been dismissed

[138] This involves in part a consideration of the likely duration of Cara Langford’s employment in the absence of what I have found to be an unfair dismissal.

[139] In the circumstances evident here, it is reasonable to assume that the relationship would not have continued over the longer term. Both parties had recognised the difficulties arising given the breakdown of personal and working relationships.

[140] In my view, the employment should be projected for present purposes for a period of no more than 8 weeks from the date of the dismissal.

[141] Cara Langford earned approximately $1,600 per week (gross) with Transformer. 18

[142] The remuneration likely to have been received if not dismissed was therefore $12,800.

The efforts of Cara Langford to mitigate the loss suffered by her because of the dismissal

[143] Cara Langford was seeking employment at the time of her dismissal. This led to employment in July 2014 and no deduction in relation to any lack of mitigation is warranted.

The amount of any remuneration earned by Cara Langford from employment or other work during the period between the dismissal and the making of the order for compensation

The amount of any income reasonably likely to be so earned by Cara Langford during the period between the making of the order for compensation and the actual compensation

[144] Cara Langford was paid two weeks in lieu of notice. This amounts to $2,800 19 and this payment is to be taken into account.

[145] Cara Langford commenced casual employment on 7 July 2014. Her rate of pay is $1,059 20 per week (gross). That employment is ongoing but remains casual.

[146] The amount of that income earned during the period of projected employment, a period of two weeks, is to be taken into account. This amounts to $2,118.

[147] Given the closed nature of the compensation period, the income earned after that date is not relevant for present purposes.

Any other matter that the FWC considers relevant and the remaining statutory parameters

[148] I have taken into account the projected nature of the anticipated loss of remuneration (s.392(2)(c)) and there is no alternative income outside of the projected period of employment (s.392(2)(e)). In that light, I do not need to make a further allowance for contingencies in this matter. 21

[149] There is no demonstrated misconduct that would need to be taken into account as provided by s.392(3) of the Act.

[150] In accordance with s.392(4) of the Act, I make no allowance for any shock, distress or humiliation that may have been caused by the dismissal.

[151] The amount of compensation that I have determined is far less than the maximum prescribed by s.392(5) of the Act as applied in this matter. 22 The compensation amount confirmed below is also appropriate having regard to all of the circumstances of this matter.23

[152] Taxation will be payable on any amount awarded and would have been payable on the lost earnings. I have also used gross income for the alternative income and I presume that tax has been paid on those amounts. The impact of taxation does not therefore require any further adjustment to the amount of compensation.

[153] Although there is some indication that additional benefits were provided, such as access to a company vehicle, in terms of private use this was provided to Corey Langford and in any event has not been quantified. I make no further allowance on that count.

Conclusions on remedy for Cara Langford

[154] It is appropriate that compensation be paid to Cara Langford.

[155] Having regard to the statutory considerations and following the process outlined above, I assess the appropriate compensation to be as follows:

● Projected earnings $12,800
● Less two weeks notice paid ($ 2,800)
● Less alternative earnings in the relevant period ($ 2,118)

● Total Compensation $7,882 (gross)

8.2 Corey Langford

[156] The following should be read in conjunction with the observations made about the considerations of the Act as outlined above.

[157] The prerequisites of ss.390(1) and (2) have also been met in the case of Corey Langford.

[158] Corey Langford does not seek reinstatement and given all of the prevailing circumstances I accept that reinstatement would not be appropriate.

[159] As a result, I need to consider whether compensation is appropriate and if so, to what extent.

The effect of the order on the viability of Transformer

[160] Nothing has been put to the Commission on this issue.

The length of Corey Langford’s service with Transformer

[161] Corey Langford was employed for a period of under three years. This does not require any particular variation to the compensation figure otherwise appropriate in this case.

The remuneration Corey Langford would have received, or would have been likely to receive, if he had not been dismissed

[162] This involves in part a consideration of the likely duration of Corey Langford’s employment in the absence of what I have found to be an unfair dismissal.

[163] In the circumstances evident here, it is reasonable to assume that the relationship would not have continued for very long. Both parties had recognised the difficulties arising given the breakdown of personal and working relationships. In the case of Corey Langford there were also additional relevant conduct and attitude issues bearing upon the relationships and this would in my view have impacted upon the likely duration of the employment.

[164] In my view, the employment should be projected for present purposes for a period of no more than five weeks from the date of the dismissal.

[165] Corey Langford earned approximately $1,929 per week (gross) with Transformer. 24

[166] The remuneration likely to have been received if not dismissed was therefore $9,645.

The efforts of Corey Langford to mitigate the loss suffered by him because of the dismissal

[167] There is some evidence to support the notion that Corey Langford sought employment immediately after his dismissal. This led to employment in August 2014 and no deduction in relation to any lack of mitigation is warranted.

The amount of any remuneration earned by Corey Langford from employment or other work during the period between the dismissal and the making of the order for compensation

The amount of any income reasonably likely to be so earned by Corey Langford during the period between the making of the order for compensation and the actual compensation

[168] Corey Langford was paid two weeks in lieu of notice. This amounts to $2,800 25 and this payment is to be taken into account.

[169] Corey Langford commenced new employment on 25 August 2014. His average rate of pay is $1,065 per week (gross).

[170] Corey Langford did not earn income during the period of projected employment and no reduction is appropriate on that count.

[171] Given the closed nature of the compensation period, the income earned after that date is not relevant for present purposes.

Any other matter that the FWC considers relevant and the remaining statutory parameters

[172] I have taken into account the projected nature of the anticipated loss of remuneration (s.392(2)(c)) and there is no alternative income outside of the projected period of employment (s.392(2)(e)). In that light, I do not need to make a further allowance for contingencies in this matter.

[173] There is relevant misconduct that would need to be taken into account as provided by s.392(3) of the Act. That is, I am satisfied that there is relevant misconduct that contributed to the employer’s decision to dismiss Corey Langford. I am also satisfied that it is appropriate to reduce the compensation amount on account of that misconduct. The discount for misconduct should be made having regard to the short compensation period over which I have assessed the compensation. Even accounting for that context, a discount of 40 percent is appropriate given the particular circumstances of this case.

[174] In accordance with s.392(4) of the Act, I make no allowance for any shock, distress or humiliation that may have been caused by the dismissal.

[175] The amount of compensation that I have determined is far less than the maximum prescribed by s.392(5) of the Act as applied in this matter. The compensation amount confirmed below is also appropriate having regard to all of the circumstances of this matter. 26

[176] Taxation will be payable on any amount awarded and would have been payable on the lost earnings. The impact of taxation does not therefore require any further adjustment to the amount of compensation.

[177] Although there is some indication that additional benefits were provided, such as access to a company vehicle, this has not been quantified. I make no further allowance on that count.

Conclusions on remedy for Corey Langford

[178] It is appropriate that compensation be paid to Corey Langford.

[179] Having regard to the statutory considerations and following the process outlined above, I assess the appropriate compensation to be as follows:

● Projected earnings $9,645
● Less two weeks notice paid ($2,800)
● Provisional amount $6,848
● Less misconduct discount (40%) ($2,738)

● Total Compensation $4,110 (gross)

9. Conclusions and orders

[180] I have found that both Cara and Corey Langford were unfairly dismissed within the meaning of the Act.

[181] I have found that reinstatement is not an appropriate remedy in either case.

[182] I have found that an amount of compensation is appropriate and the level of compensation has been set in each case having regard to the statutory considerations.

[183] Orders 27 to reflect the above are being issued in conjunction with this decision.

Appearances:

I Colgrave, of counsel, with permission for Cara Langford and Corey Langford.

A Lazarevich, of counsel, with C Rae, both with permission for Transformer Services Pty Ltd.

Hearing details:

2014

Adelaide

September 18, 19.

 1   S.397 of the Act.

 2   Reasons for the permission decision were issued directly to the parties in the lead up to the hearing of these matters.

 3   S.23 of the Act.

 4   S.117 of the Act.

 5   Exhibit R6.

 6   See Australia Postal Corporation v Gorman [2011] FCA 975.

 7   Transcript PN42.

 8   It was not contended that Ms Shaw (or the other employees) were casual employees who should be excluded for the purposes of the assessment of the size of the employer.

 9   Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 as cited in Potter v WorkCover Corporation, (2004) 133 IR 458 per Ross VP, Williams SDP, Foggo C and endorsed by the Full Bench in Industrial Automation Group Pty Ltd T/A Industrial Automation [2010] FWAFB 8868, 2 December 2010 per Kaufman SDP, Richards SDP and Hampton C at par [36].

 10   Chubb Security Australia Pty Ltd v Thomas, 2 February 2000, Print S2679 at [41].

 11   Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at [73].

 12   Fastidia Pty Ltd v Goodwin, Print S9280.

 13   Ibid.

 14   King v Freshmore (Vic) Pty Ltd, Print S4213 at [24].

 15   See the discussion of this aspect in De Silva v ExxonMobil Chemical Australia Pty Ltd PR910623 at [76].

 16   Note: the subsection 392(5) amount was indexed to $129,300 from 1 July 2013 - as was relevant given the timing of this application.

 17   Smith and Others v Moore Paragon Australia Ltd (2004) 130 IR 446

 18   This is based upon calculations provided by the applicants at the outset of proceedings.

 19   Ibid.

 20   Ibid.

 21   See the discussion of contingencies in Bowden v Ottrey Hones Cobram and Districts Retirement Villages Inc. T/A Ottrey Lodge[2013] FWCFB 431, 4 February 2013 per Acton SDP, Smith DP and Ryan C at par [52]; Ellawala v Australian Postal Corporation AIRC Print S5109, 17 April 2000 per Ross VP, Williams SDP and Gay C and in Enhance Systems Pty Ltd v James Cox AIRC Print PR910779, 31 October 2001 per Williams SDP, Acton SDP and Gay C.

 22   The maximum compensation limit in this case would be $64,650.

 23   Smith and Others v Moore Paragon Australia Ltd (2004) 130 IR 446 at par [32].

 24   This is based upon calculations provided by the applicants at the outset of proceedings.

 25   Ibid.

 26   Smith and Others v Moore Paragon Australia Ltd (2004) 130 IR 446 at par [32].

 27   PR557942, PR557943.

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