Desapriya Fernando v South Oakleigh Club Incorporated T/A South Oakleigh Club (SOC)

[2017] FWC 2453

[2017] FWC 2453

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Desapriya Fernando
v
South Oakleigh Club Incorporated T/A South Oakleigh Club (SOC)
(U2015/16669)

COMMISSIONER HARPER-GREENWELL MELBOURNE, 3 MAY 2017

Application for relief from unfair dismissal - remedy.

[1] I issued a decision 1 in which I found that Mr Fernando’s termination by the Respondent, South Oakleigh Club Incorporated T/A South Oakleigh Club (SOC) (SOC), was harsh, unjust or unreasonable. I was unable to come to a concluded view, based on the materials that were before me, on an appropriate remedy. I advised the parties that directions would be issued following my decision with respect to the filing of submissions addressing remedy.

[2] Directions were issued and the parties each filed written submissions addressing remedy. In the directions the parties were notified that I intended to determine the issue of remedy on the papers, however if either party sought a hearing they were to advise my chambers by the date set down. Neither party made a request to be heard.

Written Submissions of Mr Fernando

[3] Mr Fernando submitted that reinstatement was not appropriate in the circumstances due to the breakdown of employment relationship between the parties.

[4] Mr Fernando submitted that, but for his termination, he would have remained in his employment for a further 13 months. As a result, Mr Fernando submitted that he was seeking payment of $38,571.00, being $84,000 gross wages reduced by the amount earned by him between his termination and the anticipated date on which his employment would have ended.

[5] Mr Fernando submitted that the Commission should also take into account the additional financial hardship he has faced due to SOC’s refusal to supply him with a separation certificate and the long period of time that has elapsed between his termination and the result of this application.

Written Submissions of SOC

[6] SOC submitted that it concurred with Mr Fernando’s submission that reinstatement was not appropriate in the circumstances.

[7] SOC submitted that an order for compensation was not appropriate in the circumstances due to the following:

● The applicant was only employed for 11 months;

● The applicant was paid four weeks in lieu of notice and four and a half weeks of accumulated leave;

● The applicant obtained employment shortly after his termination and provided no evidence of his earnings post-termination; and

● SOC is a small not for profit enterprise with a very limited income and real issues about its viability.

[8] SOC further submitted that, if the Commission considered that compensation was an appropriate remedy, that the amount be nominal.

[9] They submitted that Mr Fernando was unlikely to have remained at SOC for more than four weeks and that compensation of one week’s pay was appropriate.

[10] SOC also submitted that Mr Fernando had not requested a separation certificate nor had he responded to their numerous requests that he provide his post termination pay documentation.

Submissions in Reply of Mr Fernando

[11] Mr Fernando submitted that although he had obtained employment post-termination, it was at a lesser rate of pay than he had received at SOC.

[12] Mr Fernando submitted that he had been unable to obtain Centrelink benefits due to SOC’s refusal to supply a separation certificate and that he had not disclosed his post termination pay documentation as he had not received any request to do so.

[13] Mr Fernando reiterated that SOC had recently sold land for 2.5 million dollars leaving them in a strong financial position.

Consideration

[14] The Fair Work Act 2009 (Cth) (the Act) provides the following with respect to remedy:

“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.”

[15] Mr Fernando does not seek reinstatement, submitting he has no desire to be re-employed by SOC. SOC strongly opposes reinstatement.

[16] In all of the circumstances I am satisfied there would be little prospect of re-establishing a productive and cooperative relationship, I do not consider reinstatement would be appropriate or practical. I find an order for compensation is appropriate.

[17] Section 392 of the Act sets out the criteria to which I must give regard in determining any amount of compensation I might order SOC to pay Mr Fernando. I will consider each of these in succession below.

[18] In determining the amount of compensation to be ordered, the Act provides:

“392 Remedy—compensation

Compensation

(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

Criteria for deciding amounts

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e)  the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the FWC considers relevant.

Misconduct reduces amount

(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

Shock, distress etc. disregarded

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

Compensation cap

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the dismissal.

(6) The amount is the total of the following amounts:

(a) the total amount of remuneration:

(i) received by the person; or
(ii) to which the person was entitled;
(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.”

The effect of the order on the viability of the employer’s enterprise

[19] SOC submit the dismissal of Mr Fernando was prompted by serious concerns about the viability of the business. During the unfair dismissal hearing SOC made submissions regarding the declining numbers of dining patrons and the financial impact this was having on SOC as a business. It was not in contention that this was a matter considered at the meetings of the Board.

[20] Mr Fernando submits SOC had recently sold off assets of substantial value.

[21] I have considered the submissions of the parties and I am satisfied on the evidence currently before me any amount of compensation I might order SOC to pay Mr Fernando would not threaten the viability of SOC’s enterprise.

Length of the person’s service with the employer

[22] Mr Fernando was employed by SOC for 11 months. He was an employee for a short period of time, therefore the length of Mr Fernando’s service with SOC does not necessarily support the making of an order for compensation of any significant quantum.

Remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed.

[23] Although Mr Fernando’s original submission was that he was not paid out his statutory entitlements or notice on termination, on the evidence presented by SOC during the hearing Mr Fernando conceded that these were paid to him.

[24] In my view, Mr Fernando would not have remained an employee of SOC for very long had he not been dismissed. I have come to this conclusion on the basis of the evidence in the proceedings.

[25] To me the evidence demonstrates that, due to the changes taking place at SOC at the direction of the Board at the time Mr Fernando was dismissed, his employment would not have sustained beyond a further 12 weeks.

[26] In my view, the situation between Mr Fernando and the Board would have escalated and had Mr O’Sullivan been given more time he would have likely formulated better substantiated reasons to dismiss Mr Fernando.

[27] Whilst I found Mr Fernando to have been harshly, unjustly or unreasonably dismissed it is not disputed that Mr Fernando had lost the confidence of the Board.

[28] Mr Fernando’s gross annual earnings at the time of his dismissal were $78,000; therefore his weekly earnings were $1500 gross per week.

[29] Mr Fernando from the time of his termination of his employment and up until the 12 week period for which I believe that he would have remained in employment amounts to $18,000.

[30] In reaching this conclusion I have given consideration to the likelihood of the employment relationship having been sustained over time. I could not reach a conclusion that Mr Fernando’s employment would have endured beyond the period I have determined.

The efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal

[31] Mr Fernando obtained employment immediately after his dismissal up until 7 April 2016. Mr Fernando was then unemployed for a period of a few weeks before again obtaining further employment. Up until the date of the hearing Mr Fernando had obtained work with at least three different employers with brief periods of unemployment.

[32] In my view Mr Fernando has made suitable efforts to mitigate the effects of unemployment, therefore I make no deduction for reasons of absence of attempts to mitigate the loss he has suffered.

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

[33] I have adopted the approach of the Full Bench of the AIRC in Ellawala v Australian Postal Corporation 2 as follows;

“Lost remuneration is usually calculated by estimating how long the employee would have remained in the relevant employment but for the termination of their employment. We refer to this period as the “anticipated period of employment”. This amount is then reduced by deducting monies earned since termination. Only monies earned during the period from termination until the end of the “anticipated period of employment” are deducted. An example may assist to illustrate the approach to be taken.

In a particular case the Commission estimates that if the applicant had not been terminated then he or she would have remained in employment for a further 12 months. The applicant has earned $3,000 a month for the 18 months since termination, that is $54,000. Only the money earned in the first 12 months after termination (that is $36,000) is deducted from the Commission’s estimate of the applicant’s lost remuneration. Monies earned after the end of the “anticipated period of employment”, 12 months after termination in this example, are not deducted. This is because the calculation is intended to put the applicant in the financial position he or she would have been in but for the termination of their employment.”

[34] Mr Fernando submits his earnings between 10 December 2015 and 7 April 2016 were a total of $23,284 gross. I have calculated Mr Fernando’s weekly earning during this period to be $1,369.65 gross.

[35] Mr Fernando’s remuneration since the time of the termination of his employment and up to the end of the 12 week period for which I believe that he would have remained in employment amounts to $16,435.76. Had Mr Fernando remained in his employment his total earnings for that period would have been $18,000.

[36] As a result I determine that the amount of compensation required to put Mr Fernando in the financial position he would have been in but for the termination of his employment is $1,564.24.

Any amount of income reasonably likely to be earned during the period between the making of the order and the actual compensation.

[37] At the time of his submission Mr Fernando submits he had total earnings of $45,429. I have considered this requirement in the context of the above. Only the money earned in the 12 weeks after the termination of employment ($16,435.76) is deducted from what I estimate to be Mr Fernando’s lost remuneration.

Any other matter that the FWC considers relevant.

[38] There are no other reasons relevant to my consideration.

[39] I do not consider there has been any misconduct which would require me to reduce the amount of compensation.
[40] I do not include any component by way of compensation for shock, distress or humiliation caused by the manner of the dismissal.

Conclusion

[41] There were no objections by the parties to making a decision on remedy based on the materials before me.

[42] For the reasons I have discussed above, SOC must pay to Mr Fernando the amount of $1,564.24 plus 9.5% superannuation, less appropriate taxation as required by law.

[43] I take into account that SOC is not likely to have budgeted for an order of compensation in these circumstances. I therefore deem it appropriate that the compensation be paid within 21 days from the date of the accompanying order 3 (as issued simultaneously with this decision).

COMMISSIONER

Final written submissions:

Applicant, 9 February 2017

Respondent, 3 February 2017

 1   Fernando v South Oakleigh Club Incorporated T/A South Oakleigh Club (SOC)[2016] FWC 8572

 2   Ellawala v Australian Postal Corporation (unreported, AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000) Print S5109

 3   PR592633

Printed by authority of the Commonwealth Government Printer

<Price code C, PR592632>