David Cremona v Mimosa Homes Pty Ltd
[2022] FWC 618
| [2022] FWC 618 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
David Cremona
v
Mimosa Homes Pty Ltd
(U2021/9411)
| COMMISSIONER YILMAZ | MELBOURNE, 24 MARCH 2022 |
Application for an unfair dismissal remedy – compensation ordered
On 21 October 2021, Mr David Cremona made an application to the Fair Work Commission (Commission) under s.394 of the Fair Work Act 2009 (Cth) (the Act) for a remedy, alleging that he had been unfairly dismissed from his employment with Mimosa Homes Pty Ltd (Mimosa). Mimosa submit Mr Cremona was made redundant, while Mr Cremona submits his dismissal was unfair and seeks compensation.
When can the Commission order a remedy for unfair dismissal?
Section 390 of the Act provides that the Commission may order a remedy if:
(a) the Commission is satisfied that the Applicant was protected from unfair dismissal at the time of being dismissed; and
(b) the Applicant has been unfairly dismissed.
Both limbs must be satisfied. I am therefore required to consider whether the Applicant was protected from unfair dismissal at the time of being dismissed and, if I am satisfied that the Applicant was so protected, whether the Applicant has been unfairly dismissed.
In this matter the Respondent submits the Applicant was employed for 6 months and 16 days and during his employment, he had taken paid annual leave, paid personal leave and 7 days of unpaid leave. Mimosa submit that the pandemic restrictions required staff to be stood down and to take leave where appropriate. Mr Cremona took paid leave to cover his absence from work and only 7 days of the absence was unpaid. It is not contested that Mimosa is not a small employer and I am satisfied that the absences did not affect the period of continuous service required to meet the minimum employment period of 6 months pursuant to s.382 (a).
It is not disputed that Mr Cremona’s employment is covered by the Building and Construction General On-site Award 2020 (the Modern Award). The contract of employment tendered in evidence by Mimosa in the schedule provides that the relevant industrial instrument is the Building and Construction General On-site Award 2010. The current 2020 Modern Award supersedes the 2010 Award. In the short period of employment of just over 6 months employment, there was no evidence of any change to employment to affect award coverage.
When is a person protected from unfair dismissal?
Section 382 of the Act provides that a person is protected from unfair dismissal if, at the time of being dismissed:
(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and
(b) one or more of the following apply:
(i)a modern award covers the person;
(ii)an enterprise agreement applies to the person in relation to the employment;
(iii)the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.
When has a person been unfairly dismissed?
Section 385 of the Act provides that a person has been unfairly dismissed if the Commission 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.
Background
The uncontested factual background to the matter is as follows:
· Mr Cremona was first employed on 15 March 2021 in the role of Service and Warranty Manager;
· Mr Cremona was a full-time employee supervising the work of his team that performed warranty assessment and repair on occupied homes. This work did not include any on site construction work;
· Mr Cremona’s employment lasted a period of 6 months and 16 days and was interrupted by closures in the building industry due to the Covid-19 pandemic. These interruptions included his taking of his annual leave, personal leave and unpaid time off work. Mr Cremona had not returned to duties when he was called in and dismissed on 7 October 2021;
· Mimosa is not a small business and has HR resources;
· Mr Cremona met the salary threshold and was covered by a modern industry Award - the Building and Construction General On-site Award 2020; and
· Mr Cremona was dismissed at the employer’s initiative and filed his application within the statutory 21 day time limit.
I am satisfied that Mr Cremona’s application meets the requirements of s.382 and s.385 (a). Section 385 (c) is not relevant in these proceedings.
The hearing
There being contested facts involved, a hearing was scheduled for 15 March 2022.
Witnesses
Mr Cremona did not give evidence, but called his partner Tammy Conman to give evidence and sought orders for the following to attend:
· Mr Tas Carasavidis, Building Manager.
· Ms Betty Strakevski, ex HR Manager.
· Justin Huynh, ex Service and Warranty Inspector.
The following witnesses gave evidence on behalf of the Respondent:
· Mr Carasavidis, Building Manager.
Witness evidence was heard from Mr Tas Carasavidis and Ms Betty Strakevski. Ms Strakevski resigned from Mimosa, with her employment concluding in early January 2022 after her absence on annual leave. Mr Huynh objected to give evidence due to concerns about taking time off from his new position. Mr Cremona intended that Mr Huynh confirm a text message sent to him regarding an alleged offer of employment. Given the objection raised by Mr Huynh, the limited relevance of the evidence, together with the available witness evidence of Mr Carasavidis, I declined to direct Mr Huynh to attend.
Submissions
On 7 October 2020, Mr Cremona was advised by Mr Carasavidis and Ms Strakevski that his role was redundant due to the impact of the industry wide Victorian Government COVID-19 industry closures, and that no other role was available for his redeployment. Mimosa submits that while the general closure of the building industry was lifted on 5 October 2021, the Victorian Government retained restrictions on performing any work in occupied homes.
Mr Cremona held the position of Service and Warranty Manager leading a team of up to 10 employees. In addition to Mr Cremona’s redundancy, 2 other employees, one in customer service and a service and warranty inspector were made redundant. All 3 roles were solely engaged in the delivery of warranty services for completed Mimosa homes that were occupied by the customer. Mimosa contend that the ongoing restrictions prevented any work in occupied homes.
Mimosa submit that due to the uncertain period that restrictions to work in occupied homes would last, together with the fact that the industry was closed down and staff stood down, it decided it best to make redundant those jobs that were no longer required, to give those employees affected the opportunity to find paid employment. Mimosa submit that the uncertainty was felt by staff that were stood down without pay or chose to take their leave to cover periods of absence and they knew the reason they could not be usefully engaged. Mimosa submit it had a valid reason and procedurally the dismissal was fair.
Mimosa did not raise a jurisdictional objection on the basis of genuine redundancy in their form F3 but does contend the reason for the dismissal is genuine redundancy.
Mr Cremona submits his redundancy was not genuine and it was unfair because he was not consulted, was not given notice, the process of the dismissal was unfair and a related position was advertised after his dismissal. He submits that Mimosa failed to provide evidence of Government restrictions on work that affected his employment, including their lack of evidence of compliance with s.117 of the Act and he contends that this failure by Mimosa, demonstrates that the dismissal was not genuine and nor fair.
Mr Cremona did not give evidence himself; instead he chose to rely on various website material, text messages and his cross examination of witnesses.
Was the dismissal a case of genuine redundancy?
Under s.389 of the Act, a person’s dismissal is a case of genuine redundancy if:
a) the 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.
Operational reasons
Mimosa submit that the Covid-19 pandemic affected the building industry with various restrictions and closures. It tendered in evidence a HIA Member Alert[1] about the closure that commenced from 11:59pm on 20 September 2021 for a 2 week period. The closure impacted approximately 30,000 small scale residential building projects under construction and renovation in the industry. On 1 October 2021, the Treasurer Mr Tim Pallas, MP announced the easing of the closure to commence from 11:59pm on 4 October 2021 with a Construction Sector Roadmap[2]. While the Victorian Government opened up construction, a range of restrictions remained in place including vaccination registers, authorised worker permits, workforce caps on construction sites and a testing regime for travel between metropolitan and regional Victoria. Restrictions on the building industry were progressively eased based on level of community double dose vaccination and compliance enforcement. On reaching 70% double dose, the Victorian Government eased restrictions early on 11:59 pm 21 October 2021, where building and non-essential maintenance work recommenced in occupied premises in metropolitan Melbourne.[3]
Mr Cremona had during his short period of employment already taken his annual leave, personal leave and taken time off work without pay due to the pandemic restrictions on the building and construction industry. There were no concerns about Mr Cremona’s conduct or performance, and Ms Strakevski and Mr Carasavidis gave witness evidence that he was a valued member of staff. Witness evidence supported the submission that while Mimosa did not wish to dismiss him, it decided it best for him to find paid employment rather than remain stood down without pay for a period that was unknown.
During cross examination of the witnesses Mr Cremona contended that his position was not genuinely made redundant and referred to adverts for a service and warranty inspector on 23 October 2021 and maintenance coordinator (undated), and further suggested his job was still being done.
Ms Strakevski gave evidence that a new HR Officer incorrectly posted an advert which was taken down as soon as it was noticed and that Mr Cremona’s job was not filled by either an existing or new employee. However, she did give evidence that an existing employee commenced performing the function of service and warranty supervisor with additional duties from mid to late January 2022. Ms Strakevski gave evidence that the duties performed by Mr Cremona was shared among the Building Manager and other employees engaged in construction site work following his departure and once restrictions eased.
Mr Cremona tendered no evidence, nor gave evidence himself that his job was performed by anyone else. In the absence of any evidence, I accept the evidence of Ms Strakevski who I found to be a credible witness. I observe that Mr Carasavidis, also corroborated the evidence that Mr Cremona’s job was not performed by anyone, the reasons being the Covid-19 pandemic restrictions on work in occupied premises. Mr Carasavidis also gave evidence that Mimosa had no alternative positions for which Mr Cremona was suitable. Mr Carasavidis gave evidence that a supervisor role was filled for on-site construction work which I note is not the role held by Mr Cremona. He stated that Mr Cremona was a manager (supervisor) and did not perform work on building sites. No evidence to dispute this evidence was advanced.
Ms Strakevski also gave evidence that on 7 October 2021, Mr Cremona was invited to a meeting with herself and Mr Carasavidis. She gave evidence that Mr Cremona was informed of the purpose of the meeting. Further she gave evidence that he did not express any need for a support person. She then explained that Mr Cremona was invited to identify any suggestions or alternatives. She gave evidence that from the conversation, that Mr Cremona had expected the discussion, that he did not express any need for further time nor the need to consider options. She gave evidence that she left Messrs Cremona and Carasavidis to exchange contacts and discuss potential alternative employment in the building industry, while she went to her office to prepare a letter of termination. Mr Cremona submits that Ms Strakevski did not leave the room to prepare the letter, although he had no evidence to dispute her witness evidence. Mr Carasavidis was not asked the question while giving evidence whether Ms Strakevski left the room to prepare a letter. In the absence of any evidence in dispute, I accept the evidence of Ms Strakevski.
The letter of termination prepared by Ms Strakevski to Mr Cremona does mention that the outcome of the consultation process is the decision to make his position redundant. It also states that there are no alternative positions for redeployment. It confirms the last day of employment being 7 October 2021 and that he would be paid 2 weeks in lieu of notice.[4]
I am satisfied on the evidence that there were operational reasons for the decision to make Mr Cremona’s position redundant. I am also satisfied that no alternative positions were available.
I am also satisfied that the position is no longer required to be performed by anyone for operational reasons and I am satisfied that s.389 (1)(a) of the Act has been met. However, notwithstanding the valid operational reason and reasonable grounds for no alternative positions for redeployment, s.389 (b) requires consideration of the consultation provisions in an enterprise agreement or modern award. Mimosa was subject to the terms of clause 37 of the Building and Construction General On-Site Award 2020 (the Award).
Obligations to consult
Clause 37 of the Award provides as follows:
“37. Consultation about major workplace change
37.1If an employer makes a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must:
(a) give notice of the changes to all employees who may be affected by them and their representatives (if any); and
(b) discuss with affected employees and their representatives (if any):
(i)the introduction of the changes; and
(ii)their likely effect on employees; and
(iii)measures to avoid or reduce the adverse effects of the changes on employees; and
(c) commence discussions as soon as practicable after a definite decision has been made.
37.2 For the purposes of the discussion under clause 37.1(b), the employer must give in writing to the affected employees and their representatives (if any) all relevant information about the changes including:
(a) their nature; and
(b) their expected effect on employees; and
(c) any other matters likely to affect employees.
37.3 Clause 37.2 does not require an employer to disclose any confidential information if its disclosure would be contrary to the employer’s interests.
37.4 The employer must promptly consider any matters raised by the employees or their representatives about the changes in the course of the discussion under clause 37.1(b).
37.5 In clause 37 significant effects, on employees, includes any of the following:
(a) termination of employment; or
(b) major changes in the composition, operation or size of the employer’s workforce or in the skills required; or
(c) loss of, or reduction in, job or promotion opportunities; or
(d) loss of, or reduction in, job tenure; or
(e) alteration of hours of work; or
(f) the need for employees to be retrained or transferred to other work or locations; or
(g) job restructuring.
37.6 Where this award makes provision for alteration of any of the matters defined at clause 37.5, such alteration is taken not to have significant effect.”
The Award requires the employer to notify employees who may be affected by a definite decision that is likely to have significant effect by the proposed changes. This clause anticipates that the employer will consult with employees likely to be affected prior to the implementation of the decision and the information is to be provided in writing. The purpose of consultation prior to the termination of employment is that the employer’s decision may be influenced through consultation. Significant effects in consultation clauses include a termination of employment.
Ms Strakevski gave evidence that the notification requirements were met during the meeting of 7 October 2021 at 1:00pm. As there is no evidence to dispute her evidence, I do accept that there were discussions as detailed by Ms Strakevski. However, the Award clause does require the provision of information in writing consistent with clause 37.2. In my view Mimosa had failed to comply with the technical requirements of the Award and consequently s.389(b) of the Act.
I am satisfied that Mr Cremona’s employment was terminated due to reasons of redundancy, however, failure to comply with the technical requirements of the Award clause means that the genuine redundancy provisions in the Act do not exclude Mr Cremona from protection under the unfair dismissal provisions. I now consider the relevant provisions of s.387 of the Act.
Was the termination unfair?
Section 387 of the Act requires me to consider the following matters:
“387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA 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 FWA considers relevant.”
Was there a valid reason? (s.387(a))
The termination was due to redundancy due to the restrictions on the building and construction industry. The restrictions prevented work in occupied premises and Mr Cremona’s work relied on the capacity to perform warranty work on completed and occupied homes. Mimosa determined that it best to let affected employees go, rather than have them remain stood down without pay, not knowing when the restrictions would be lifted and when it could usefully engage Mr Cremona. Mimosa did not fill Mr Cremona’s job and even though an employee currently performs the role of supervisor, the role includes duties unrestricted to occupied homes.[5] Mr Carasavidis gave evidence that at the time the Applicant was made redundant, Mimosa filled a supervisor role in the on-site construction area of the business. Mr Carasavidis stated that while the performance of warranty work had been affected by Covid-19 restrictions, the construction area of the business remained in operation at the time the Applicant was made redundant. Ms Strakevski corroborated Mr Carasavidis’ evidence that restrictions prevented the performance of the business’ warranty work. Ms Strakevski gave evidence that at the time of the Applicant’s redundancy, Mimosa advertised positions in areas of the business unaffected by the restrictions, however the Applicant was unsuitable for the advertised roles.
Notification and opportunity to respond (ss.387(b) and (c))
The matters in Section 387(b) and (c) of the Act deal with whether there was procedural fairness in respect of a reason for dismissal related to the Applicant’s capacity or conduct. Mr Cremona’s dismissal was not due to performance or conduct.
Nevertheless, I observe that he was not notified of the decision to implement redundancies until the day he was invited to a meeting on 7 October 2021. The evidence of Ms Strakevski was that the discussion provided Mr Cremona the opportunity to advise whether he had alternative suggestions or comments requiring consideration regarding a decision to make the position redundant. She gave evidence that the discussion did not identify any alternative positions, nor that Mr Cremona required further time to consider the situation. In the absence of any evidence to the contrary I accept this evidence, however the Award provision does require matters to be put in writing. Further, despite the evidence that Mr Cremona appeared to understand the decision and the ultimate outcome of the discussion, I do consider that Mr Cremona should have been afforded a consultation process more than the 15 minutes of discussion. Unless industrial instruments provide a detailed and lengthy process, a few days to a week is a reasonable timeframe for genuine consultation in circumstances such as in this matter.
However, ss. 387 (b) and (c) relate to procedural fairness in respect to capacity or conduct and therefore due to the reason for the dismissal I consider this matter neutral with respect to whether the dismissal is harsh, unjust or unreasonable.
Support person (s.387(d))
Mimosa did not advise Mr Cremona of the purpose of the meeting, other than to say it was a HR matter. Ms Strakevski gave evidence that an opportunity was made for Mr Cremona to express his preference to have a support person and he did not request to have a support person. It is not required that Mimosa offer the opportunity, rather, it is required that Mimosa do not deny the opportunity for a support person. In this case, Mr Cremona was not aware of the purpose of the meeting but was aware that it was a meeting with HR and his immediate manager. Having considered the evidence of Ms Strakevski I consider this a matter not in Mr Cremona’s favour with respect to whether the dismissal was harsh, unjust or unreasonable.
Unsatisfactory performance (s.387(e))
The dismissal did not relate to unsatisfactory performance, so this matter is not relevant to my consideration. I regard this a neutral matter in terms of whether the dismissal was harsh, unjust or unreasonable.
Size of the enterprise and human resource management (s.387(f) and (g))
Mimosa is not a small business, and the dismissal was managed by human resources. Ms Strakevski gave evidence of the decision and process, and while there was a technical breach of the Award clause, the breach of process is unlikely to have affected the outcome of redundancy. For this reason, I consider this matter a neutral consideration.
Other matters (s.387(h))
Mr Cremona made a conscious decision not to give evidence. During the programming, Mr Cremona was encouraged to tender a witness statement while discussions were had regarding process and his obligation to advance his case. He made it clear that he would not be giving evidence. It appears that the strategy adopted was to make submissions and expect the Respondent to prove that the dismissal was not harsh, unjust or unreasonable. This approach is mistaken as there is no reverse onus of proof. During proceedings, Mr Cremona made statements that the Respondent provided no evidence and he was reminded that he was required to tender evidence. I also observe that rather than tendering or referring to accepted authorities, bar one decision, he relied on various website extracts containing commentary from sources unknown. I do not accept this material as reliable evidence in support of his application.
I do not consider Mr Cremona’s approach to have been naïve but rather a measured strategy considering that he had initially been legally represented and had obviously spent time researching the Commission’s website and various other websites.
Mimosa’s letter of termination makes reference to the payment of 2 weeks’ notice paid in lieu.[6] The contract of employment contains a minimum period of notice consistent with the National Employment Standards of 1 week for less than 1 year of continuous service. Having the opportunity to assess the 2 payslips tendered in evidence by Mimosa, the payment of 2 weeks in lieu of notice from the date of dismissal is not provided for, rather the payslip covering the pay period ending on 11 October 2021 refers to a payment of 54.28571 hours of ordinary time. This is more than the 1 week of minimum notice required but less than 2 weeks of notice as stated in the letter of termination of employment. The other payslip tendered in evidence relates to the pay period of 24 September to 7 October 2021 and includes 22.8 ordinary hours and 22.8 hours of annual leave.
Conclusion regarding harsh, unjust or unreasonable
Taking into account the matters referred to above, I am satisfied that the process of termination of Mr Cremona’s employment by Mimosa was deficient as it failed to comply with the technical Award requirement in a redundancy process. However, the outcome being a dismissal was unlikely to be different given the circumstances of the industry restrictions on working in occupied homes to which Mr Cremona’s work was intrinsically linked. In the absence of any evidence from Mr Cremona, I accept the evidence of Ms Strakevski and Mr Caradavidis that there was a valid reason for the dismissal and the process of dismissal was as detailed by Ms Stakevski.
Remedy
Mr Cremona is not seeking reinstatement but 26 weeks of compensation, despite having been out of work no more than 4 weeks after his dismissal. Mr Cremona did not provide any evidence of remuneration earned or lost income.
Reinstatement of Mr Cremona is not practicable, not because he has found alternative employment in a like position elsewhere, but because of the breakdown in the relationship since Mr Cremona filed his application. Mr Caradavidis described the loss of respect in the relationship due to the manner in which Mr Cremona behaved and Ms Stakevski challenged Mr Cremona’s disrespectful approach during her cross examination. Mr Cremona’s approach indicates that the relationship is not retrievable and while not a small business, if Mr Cremona was reinstated he would be required to work closely with the Mimosa representatives directly affected during the proceedings. In the circumstances, I consider that an order for compensation would be appropriate.
In considering compensation I am required by Section 392(2) of the Act to consider the following:
“(2) In determining an amount for the purposes of an order under subsection (1), FWA 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 FWA considers relevant.”
No submissions were put forward by Mimosa regarding the impact of any order on the viability of the enterprise. I have taken into account the size of the enterprise.
Mr Cremona’s period of employment is not significant. He submits that the position would have taken him into retirement. No evidence was tendered to support this. I do consider the submission mere speculation and do not give it any weight.
Had Mimosa complied with the technical aspects concerning consultation, the process would not have been more than a week of further employment.
Mr Cremona provided no evidence of income, remuneration received or efforts made to mitigate his loss. He did admit to being out of work for no more than 4 weeks. This period is not significant. However, Mimosa’s evidence of the payslips does confirm payment of 54.28571 hours paid, 16.28571 hours short of the 76 hours (or 2 week’s notice) it submits that it paid to Mr Cremona.
I make no deduction for misconduct as this consideration is not relevant and I make no deduction for failure to provide further mitigating evidence.
I have calculated a compensation figure of $989.09 gross, which represents the balance of the 1 week of notice that should have been paid as stated in the letter of termination, and this reflects the 1 week at most, to cover the consultation period had Mimosa complied with the Award clause.
Orders[7] will be issued concurrently with this decision requiring the payment of this compensation less appropriate taxation within 7 days.
COMMISSIONER
Appearances:
D. Cremona, Applicant.
P. Holt, Respondent.
Hearing details:
2022
Melbourne (By Microsoft Teams):
15 March
[1] HIA Member Alert, Closure of all building sites in metropolitan Melbourne from midnight tonight, 20 September 2021.
[2] Mr Tim Pallas MP, Media Release, Covidsafe Reopening for Victorian Construction, dated 1 October 2021.
[3] Victorian Building Authority, Construction Sector Guidance at 22 October 2021. See
[4] Letter of termination of employment 7 October 2021, attachment to Mr Cremona’s outline of submissions and form F3.
[5] Witness evidence of Ms Strakevski.
[6] See letter of termination of employment. Payslips for Mr Cremona tendered with the form F3.
[7] PR739623.
Printed by authority of the Commonwealth Government Printer
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