Dana Emery v Cutlers the Law Firm

[2015] FWC 52

[2015] FWC 52

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s 394 - Application for unfair dismissal remedy

Dana Emery
v
Cutlers The Law Firm
(U2014/11288)

DEPUTY PRESIDENT SAMS SYDNEY, 14 JANUARY 2015

Application for relief from unfair dismissal - whether dismissal a case of genuine redundancy - whether compliance with Small Business Fair Dismissal Code - complaints of applicant’s performance - procedural fairness - no warning of poor performance or possible dismissal - dismissed while on sick leave - no consultation - dismissal not a case of genuine redundancy - non-compliance with the Code - applicant’s dismissal harsh and unreasonable - reinstatement inappropriate - compensation ordered.

[1] Ms Dana Emery (the ‘applicant’) had two periods of part time employment as a Legal Receptionist/Secretary with Cutlers The Law Firm (the ‘respondent’) at The Entrance, New South Wales. The first period commenced on 12 September 2012 and ended on 24 May 2013, when the applicant resigned in order to take up full time employment with another law firm, Aubrey Brown Partners (ABP). However, after only three weeks of employment with ABP, the applicant approached Mr Stephen Cutler (Principal of the respondent), to seek reemployment by her former employer. Mr Cutler agreed and she recommenced employment with the respondent on 24 June 2013.

[2] However, on 21 July 2014, the applicant’s employment was terminated while she was on sick leave, when Mr Cutler phoned her and informed her that the ‘firm had taken a different direction.’ The result was to replace two part-time positions with one junior legal secretary position.

[3] On 29 July 2014, the applicant filed an application pursuant to s 394 of the Fair Work Act 2009 (the ‘Act’) seeking compensation for her alleged unfair dismissal by Mr Cutler. The respondent has challenged the applicant’s claim on the basis that her dismissal was a case of genuine redundancy and that the dismissal was consistent with the Small Business Fair Dismissal Code (the ‘Code’). There is no dispute that Mr Cutler’s law firm is a small business (as defined) in that he employs five employees.

[4] While the matter was the subject of an unsuccessful phone conciliation on 27 August 2014, I asked the parties at the commencement of the jurisdictional hearing on 10 December 2014, if there was any prospect of the matter being settled in a further conciliation. However, as there was no prospect of any settlement, the application proceeded to hearing on that day. Both parties were unrepresented and had provided written statements. The applicant did not require Mr Cutler for cross examination. Neither party cited any authorities to support their respective positions.

THE EVIDENCE

Mr Cutler

[5] Mr Cutler described the applicant’s employment history in less than flattering terms. He was critical of her typing mistakes, given her 30 years of legal office experience. Mr Cutler was also of the view that the applicant was not suited to full time employment having regard for her inability to cope with her full time job at ABP.

[6] Mr Cutler was absent from the office for a month over May and June 2014. During this time, the applicant was required to work a full week or additional days under the supervision of another solicitor, Ms Jennifer Parkin. Mr Cutler attached to his statement an unsigned commentary from Ms Parkin of the applicant’s work during this period, which identified a number of criticisms of her. Given that Ms Parkin was unavailable for cross examination, I do not intend to give much weight to her comments. However, it is apparent that Mr Cutler did not regard the applicant’s work as satisfactory and considering that the other employee, who job shared with her was contemplating retirement, he decided to change the firm’s structure by employing one junior person full time to cover both positions.

[7] Mr Cutler did not consider the applicant suitable for the full time position because he believed she had demonstrated an incapacity to handle a five day working week. Mr Cutler advertised for a junior receptionist on 9 and 11 July 2014 and filled the position on 21 July 2014. The applicant was sick on Friday 11 July, Thursday 17 July and Friday 18 July. She had told him that she would be seeing her doctor on the following Tuesday and would notify him when she was able to return to work. Mr Cutler said that this sequence of sick leave constituted an absence of two weeks, with the possibility of a third week.

[8] Mr Cutler said he advised the applicant of his restructuring decision when he phoned her on 21 July 2014, as he could not reach her on Friday 18 July. He gave her written notice that day and paid her two additional weeks pay.

The applicant

[9] In her statement, the applicant said she had taken full time employment with ABP in June 2013 because her daughter was due to be married in November 2014 and she had wanted to assist with the wedding costs. However, she was not happy working at the new employer and asked Mr Cutler if he would reengage her (which he did). She was now to work five days per fortnight.

[10] The applicant said that until May 2014 she had always found Mr Cutler to be a reasonable, just and fair employer. While not overly friendly, he was respectful and pleasant. However in May 2014, his attitude changed and he became ‘hostile and intimidating’. He would scream at her in front of others and find fault with everything she did. When she approached him about his change in behaviour, he simply said that she irritated him.

[11] The applicant claimed that Mr Cutler’s constant intimidation led to her visiting her GP as she was suffering from elevated blood pressure. The doctor recommended that she take sick leave, which she did on 17 and 18 July 2014. She emailed Mr Cutler to advise she had another appointment with her doctor on 22 July and she would advise him when she would be returning to work.

[12] The applicant said she had noticed job applications in response to an advertisement for a full time junior prior to going on sick leave. She believed it was to fill a legal secretary’s position which had been made redundant in early 2014. The applicant agreed that Mr Cutler had called her on 18 July and left a message. He had called again on 21 July to advise her of his restructure plans.

[13] The applicant believed her dismissal was ‘unfair’ and ‘not a genuine redundancy’ because:

‘a. Mr Cutler refilled the same position with a new employee.

b. He did not advise me that he was restructuring and did not give me the opportunity to apply for the position.

c. He advertised and hired a new employee to fill my position prior to terminating my employment.

d. He terminated my employment whilst I was on sick leave.

e. He terminated my employment over the phone and not in person.

f. His wife, Julie Cutler, who I job shared my position with, is still working at Cutlers the Law Firm and has not retired.

g. His treatment of me was harsh and unjust.

h. He has breached s 389 of the Fair Work Act.’

[14] The applicant provided a very favourable reference from her previous employer of 18 years, Solicitor, Mr Peter Kernan.

[15] In cross examination, the applicant disagreed with much of what was complained about in Ms Parkin’s document. The applicant could not recall or disputed other criticisms made by Mr Cutler in respect to mistakes in typed documents, such as wrongly naming a real estate agent, incorrect instructions to clients, poor punctuation and her failure to check faxes. She said that the examples given by Mr Cutler had never been raised with her. When he did raise issues with her, he would just shout at her. The applicant denied she had sought a day off because she was ‘working so hard’.

[16] The applicant gave a number of reasons for leaving ABP. She claimed that the job was not as described in the interview as to who she would be working for. The office had no real structure and was chaotic. She denied being stressed by working five days a week; rather, she was stressed by the work environment. It just did not suit her. She added that this job was not temporary and she had intended it to be permanent. She rejected the suggestion that she had a sensitive nature. On the contrary, she was very easy going and non-confrontational.

[17] The applicant deposed that she had not applied for the advertised full time position because she thought it was an extra person to replace someone who had been made redundant in January 2014. She claimed that she had no idea that Mr Cutler was looking to restructure the firm or that his wife was intending to retire. The applicant insisted she would have definitely considered any offer to work full time. However, she had no idea that she was going to be dismissed.

[18] The applicant was asked about her 18 years employment with Peter Kernan. For 10 years she had worked three days per week and when her daughter was older, she had worked four days. Mr Kernan had provided supervision and would speak to her three or four times a day. He would review all of the work she had prepared. Occasionally, she might see clients to have them sign documents. When Mr Kernan merged his firm with Watts McCray, she remained there for some ten months. However, she had preferred working for a small firm and for Mr Kernan, in particular. After 18 years, she had decided she needed a change. Her decision was not related to her being subject to greater accountability and target setting at the new merged firm.

SUBMISSIONS

For the respondent

[19] Mr Cutler submitted that his firm had undergone a restructure reducing three part time positions to one full time and one part time. Mr Cutler acknowledged he could have handled the situation ‘a bit better’, but the applicant had had an opportunity to see the advertisement, apply for the position and sit down with him to discuss it. Had she done so, he would have considered her for the position. However, as there was a general deterioration in the quality of her work, it was unlikely she would have been employed full time. He cited her part time employment history as demonstrating she was incapable of working five days a week.

[20] Mr Cutler put that the applicant’s work was not ‘rocket science; basically a glorified receptionist’. His business was not particularly busy, but he had to do something about the situation. In any event, the applicant only ever wanted to work full time to earn more money to help pay for her daughter’s wedding.

[21] Mr Cutler agreed he had not documented any warnings given to the applicant, but there had certainly been verbal warnings about her performance. In a small firm, he adopted a practical approach. It was not necessary to issue a formal written warning, unless it was ‘something really drastic’.

[22] Mr Cutler argued that although the applicant was dismissed while she was on sick leave, he said the situation was ‘a bit tricky’. He had tried to talk to her on the Friday and found it ‘strange’ that she did not answer the phone if she was sick. He eventually spoke to her on the following Monday.

For the applicant

[23] The applicant submitted that her dismissal was not a case of genuine redundancy because:

(a) the position that she was performing is still in existence and is being performed by a new employee;

(b) Mr Cutler had not consulted with her regarding the redundancy and had not given her any prior notice of his intention to restructure the firm;

(c) she was not given any opportunity to apply for the full time position;

(d) Mr Cutler had not made any attempt to redeploy her within the firm, although he had employed a new part-time legal secretary two months prior to making her redundant;

(e) Mr Cutler had advertised and filled the position in which she was working before terminating her and making her redundant; and

(f) Mr Cutler had terminated her employment, over the phone, while she was on sick leave.

[24] The applicant believed Mr Cutler’s decision was a commercial one; employing one full time employee is more cost-effective than two part time employees. She noted that Mrs Cutler is still working at the firm six months after she was dismissed.

[25] The applicant observed that her performance had never been raised with her during her employment and she had received no written warnings. On the contrary, he had said in his final letter: ‘Dear Dana, Many thanks for your work, much appreciated’. The applicant secured a four day a week retail position in a lower paid position one month after her dismissal.

[26] In reply, Mr Cutler noted that the applicant had only had a two week loss of income as he had paid her two weeks in lieu of notice.

CONSIDERATION

[27] S 396 of the Act requires the Commission to determine a number of preliminary jurisdictional matters before considering the merits of an unfair dismissal application. These are:

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

(b) whether the person was protected from unfair dismissal (s 382);

(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code (ss 396(c), 388);

(d) whether the dismissal was a case of genuine redundancy (ss 396(d), 389)

[28] A number of preliminary findings can be made in this matter. These are:

1. The applicant’s s 394 application was filed within the statutory 21 day time period (s 394(2));

2. The applicant is a national system employee and the respondent is a national system employer (s 386);

3. The applicant’s part time employment was governed by the Legal Services Award 2010 [MA000116] (the ‘Award’) and she was paid $28.08 per hour (s 382(b)).

4. The applicant was dismissed by Mr Cutler on 21 July 2014 (s 385(a));

5. The applicant had more than one year’s employment with a small business (ss 382(a), 383(b)).

[29] Thus, the two remaining jurisdictional questions are:

(a) whether the applicant’s dismissal was consistent with the Code (s 385(c)); and

(b) whether the dismissal was a case of genuine redundancy (s 385(d)).

It is to those questions that I now turn.

[30] It seems obvious enough that Mr Cutler did not inform the applicant of his restructuring proposal or consult with her about any alternative options to his proposal. While I accept that in a very small office, these options may well have been non-existent, there still remained an obligation on Mr Cutler to at least give warning of what his intentions were and give the applicant an opportunity to consider her position and discuss alternatives with him.

[31] It is clear from the applicant’s pay advices that she was employed under the terms of the Legal Services Award 2010 [MA000116]. That Award imposes specific obligations on an employer when a decision is made to make an employee/s redundant. The relevant provisions are found at cl 8.1 of the Award as follows:

‘8.1 Consultation regarding major workplace change

(a) Employer to notify

(i) Where an employer has made a definite decision to introduce major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must notify the employees who may be affected by the proposed changes and their representatives, if any.

(ii) Significant effects include termination of employment; major changes in the composition, operation or size of the employer’s workforce or in the skills required; the elimination or diminution of job opportunities, promotion opportunities or job tenure; the alteration of hours of work; the need for retraining or transfer of employees to other work or locations; and the restructuring of jobs. Provided that where this award makes provision for alteration of any of these matters an alteration is deemed not to have significant effect.

(b) Employer to discuss change

(i) The employer must discuss with the employees affected and their representatives, if any, the introduction of the changes referred to in clause 8.1(a), the effects the changes are likely to have on employees and measures to avert or mitigate the adverse effects of such changes on employees and must give prompt consideration to matters raised by the employees and/or their representatives in relation to the changes.

(ii) The discussions must commence as early as practicable after a definite decision has been made by the employer to make the changes referred to in clause 8.1(a).

(iii) For the purposes of such discussion, the employer must provide in writing to the employees concerned and their representatives, if any, all relevant information about the changes including the nature of the changes proposed, the expected effects of the changes on employees and any other matters likely to affect employees provided that no employer is required to disclose confidential information the disclosure of which would be contrary to the employer’s interests.’

[32] S 389 of the Act defines the meaning of genuine redundancy as:

‘(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.’

[33] It is patently obvious that Mr Cutler did not comply with the notification and consultation provisions of the Modern Award. This would, of itself, ground a finding that the applicant’s dismissal was not a case of genuine redundancy, as defined by s 389(1)(b) of the Act.

[34] It is also curious why Mr Cutler acted with such haste when he was fully aware that the applicant was on sick leave. While he suggested an adverse inference should be drawn against her for not answering her mobile on Friday 18 July 2014, there was no evidence that the applicant was not genuinely unwell or that the doctor’s certificate was false or misleading. To ask the Commission to draw such an adverse inference in these circumstances was improper.

[35] Mr Cutler defended his timing by arguing that he did not know when she would be returning to work. The applicant had told him that she would be visiting her GP on the following Tuesday and would then let him know when she would be returning to work. Not content with waiting for her answer, he ‘trumped’ her by informing her the day before of his restructuring intentions. There was no reasonable basis for failing to wait at least one more day or until such time as Mr Cutler could meet with her personally.

[36] The applicant claimed that while she may not have accepted the junior full time position, the fact was she was given no opportunity to consider it. Moreover, I found Mr Cutler’s submission that she should have applied for the position when she saw the advertisements, to be disingenuous. Firstly, the applicant was an existing employee. Secondly, the applicant believed, on reasonable grounds, that Mr Cutler was replacing a legal secretary who had been made redundant in January 2014. The onus was on Mr Cutler to consult with her, not for her to assume what he was up to.

[37] I accept that the applicant knew nothing of Mr Cutler’s restructuring proposal until he told her over the phone on 21 July 2014. As a matter of common decency, one should not expect to learn of the advertisement of your job, through applications made by your likely replacement. This was a cruel and callous way to behave. It ill behoved a person of Mr Cutler’s legal experience and standing. In my view, Mr Cutler had no intention of considering the applicant for the new full time role, even if she had applied for it. His evidence and submissions to the contrary are not accepted.

[38] While I am unable to make findings that Mr Cutler had bullied or intimidated the applicant, I am satisfied that he was ill disposed towards her and that his criticisms of her work and performance were exaggerated and unjustified. Indeed, his criticisms sit rather oddly with what he said in the applicant’s letter of termination (‘Many thanks for your work, much appreciated.’). Moreover, there was no evidence that Mr Cutler had properly warned the applicant that her job was in jeopardy, if she failed to improve. This failure was inconsistent with the Code which states:

‘In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee's conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee's response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer's job expectations.’

[39] In my opinion, Mr Cutler was intent on dismissing the applicant. The restructuring proposal was a sham or illusion to achieve this objective. His ex post facto criticisms of her work and his vague assumption that she was not capable of working a five day week, were simply poor attempts to cloak her dismissal with threadbare justification.

[40] While compliance with the Small Business Fair Dismissal Code exempts an employer from facing an unfair dismissal application, it should not be lost sight of that the Code itself imports considerations of procedural fairness, similar to what is required by s 387 of the Act. That section is 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.’

[41] It will be seen that subsections (b) - (e) of s 387 of the Act above might be broadly characterised as issues relevant to whether a dismissed employee was afforded procedural fairness or, put another way, natural justice. A dismissal may still be held to be unfair if the employee was not afforded procedural fairness or natural justice. This has been a long held industrial principle adopted and applied by this Commission, its predecessors, other Courts, industrial tribunals and the High Court.

[42] In Wadey v Y.M.C.A. Canberra [1996] IRCA 568 (‘Wadey’), Moore J made clear that an employer cannot merely pay ‘lip service’ to the requirement to give an employee an opportunity to respond to allegations concerning the employee’s conduct. His Honour said:

‘In my opinion the obligation imposed on an employer by that section has, for present purposes, two relevant aspects. The first is that the employee must be made aware of allegations concerning the employee's conduct so as to be able to respond to them. The second is that the employee must be given an opportunity to defend himself or herself. The second aspect, the opportunity to defend, implies an opportunity that might result in the employer deciding not to terminate the employment if the defence is of substance. An employer may simply go through the motions of giving the employee an opportunity to deal with allegations concerning conduct when, in substance, a firm decision to terminate had already been made which would be adhered to irrespective of anything the employee might say in his or her defence. That, in my opinion, does not constitute an opportunity to defend.’

[43] That said, procedural fairness steps should be applied in a commonsense and practical manner. In Gibson v BosmacPty Ltd (1995) 60 IR 1 (‘Gibson’), Wilcox CJ said at 7:

‘Ordinarily, before being dismissed for reasons related to conduct or performance, an employee must be made aware of the particular matters that are putting his or her job at risk and given an adequate opportunity of defence. However, I also pointed out that the section does not require any particular formality. It is intended to be applied in a practical, commonsense way so as to ensure that the affected employee is treated fairly. Where the employee is aware of the precise nature of the employer's concern about his or her conduct or performance and has a full opportunity to respond to this concern, this is enough to satisfy the requirements of the section.’

[44] In accordance with these and other authorities, there is little doubt the applicant was treated unfairly in respect to the circumstances of her dismissal. I am satisfied that the applicant’s dismissal was not a case of genuine redundancy. I am fortified to this conclusion by the applicant’s submission that six months after her dismissal, Mr Cutler’s wife had not retired, which was the very pretext for his decision to supposedly quickly restructure the firm. Mr Cutler did not dispute the applicant’s claim. In any event, the applicant’s dismissal was inconsistent with the Code. It follows that I find the applicant’s dismissal to be ‘harsh and unreasonable’ and therefore unfair. See: Byrne & Frew v Australian Airlines Ltd (1995) 185 CLR 410.

REMEDY

[45] The applicant does not seek reinstatement or re-employment. Given all the circumstances, I judge reinstatement in this case to be inappropriate (s 390(3)).

[46] S 392 of the Act sets out the matters the Commission must take into account when assessing compensation for unfair dismissal. These are:

‘(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.’

[47] I do not consider the modest order I propose to make will impact on the viability of the employer’s enterprise (s 392(a)). The applicant had relatively short service with the respondent (s 392(b)). This is a neutral factor. I consider that the applicant would not have continued employment with the respondent beyond a further six to eight weeks (s 392(c)). The applicant obtained alternative employment approximately one month after her dismissal (s 392(d)), although at a much lower salary. Ss 392(e) and (f) are not relevant to this matter.

[48] The applicant received two weeks pay in lieu of notice as required by the National Employment Standards (s 117(3)). It was not redundancy pay or a gratuity. I would not discount the amount of compensation by this figure. There was no misconduct of the applicant (s 392(3)). The compensation order contains no component for shock, distress or humiliation (s 392(4)).

[49] Accordingly, I propose to order an amount of six weeks’ pay as compensation for the applicant’s dismissal on 21 July 2014. As this amount is below the compensation cap (ss 392(5), (6)), an amount of $3,159 is to be paid by the respondent to the applicant within 14 days of today. This calculation is derived from the information outlined in the Employment Separation Certificate. I consider that such a result satisfies the ‘fair go all round’ principle in s 381(2) of the Act.

[50] Orders to this effect will be published contemporaneously with this decision.

DEPUTY PRESIDENT

Appearances:

Applicant in person.

Mr S Cutler for the respondent.

Hearing details:

2014:

Sydney

10 December.

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