Diana Tcaciuc v Amberwing Investments Pty Ltd T/A Essential Beauty Southland

[2013] FWC 8483

[2013] FWC 8483

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Diana Tcaciuc
v
Amberwing Investments Pty Ltd T/A Essential Beauty Southland
(U2013/7627)

COMMISSIONER LEE MELBOURNE, 30 OCTOBER 2013

Application for relief from unfair dismissal - remedy.

[1] On 6 September 2013, I issued a decision in transcript, in which I determined that the applicant in this matter, Ms Diana Tcaciuc (the Applicant) was a person protected from unfair dismissal and that her dismissal by Amberwing Investments Pty Ltd T/A Essential Beauty Southland (the Respondent), was harsh, unjust and unreasonable. This decision deals with a consideration of the remedy, if any, to apply.

[2] At the conclusion of my decision in transcript, I indicated to the parties that I would issue directions for the filing of materials as to remedy. Those directions were issued on 13 September 2013. Submissions were filed by both the Applicant and the Respondent. The directions advised that the matter would be listed for hearing on 15 October 2013. The Respondents’ representative, when filing their material in accordance with the directions, indicated that the Respondent would not be attending the hearing and had not instructed the representative to attend. The Respondent and their representative were informed by my associate that the matter would proceed to be heard on 15 October 2013 and may be determined in their absence. On the day of the hearing the Respondent, as foreshadowed, did not appear. The matter proceeded without the Respondent. The Applicant appeared and represented herself at the hearing.

[3] The relevant provisions of the Act pertaining to remedy are contained in section 390 of the Act:

“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.”

[4] It also necessary to consider the Objects of Part 3-2 of the Act especially section 381(c) of the Act which provides that an object of that Part of the Act is to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.

[5] The presumption in the legislation is that should a dismissal be found to be unfair, that reinstatement is the primary remedy and that compensation can only be considered if the Commission is satisfied that reinstatement is not appropriate.

[6] In this matter, the Applicant does not seek reinstatement. The Applicant has secured further employment as of 4 June 2013. At the hearing, the Applicant indicated that she felt that she could no longer work with the Respondent as she felt she had lost trust in them as a result of the circumstances surrounding her dismissal. The Respondent submitted that they agreed with the Applicant that reinstatement was not an option and further noted that she is engaged in full time employment with another employer. Having considered the submissions, I am satisfied that reinstatement in the circumstances of this case is not an appropriate remedy.

[7] Having determined that reinstatement is not appropriate I must consider what compensation, if any, is payable, in lieu of reinstatement.

[8] The Act provides for compensation as a remedy for unfair dismissal.

“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.

Note: subsection 392(5) indexed to $64,650 from 1 July 2013

(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.”

[9] In all of the circumstances, I consider that the award of some amount of compensation is appropriate in this matter.

[10] In determining the amount of compensation, I must have regard to “all the circumstances of the case” including each of the paragraphs in s.392(2) of the Act as set out above. No one matter is paramount but regard must still be had to each of them. 1

[11] The general approach to the calculation of compensation was well set out by the Full Bench in Tabro Meat Pty Ltd v Kevin Heffernan 2 and I will follow that approach in determining this matter.

Section 392(2)(c) - the remuneration that the person would have received or would have been likely to receive, if the person had not been dismissed.

[12] The Applicant’s annual earnings were $52,169.52 gross per annum with superannuation of 9%. Evidence of the remuneration earned by the Applicant was in a copy of a payslip dated March 2013, attached to exhibit T1 in proceedings. I will use this amount as the basis for calculating the amount of compensation to be awarded in this case.

[13] I have submissions from the Respondent as to how long it was expected the employment relationship would have continued were it not for the dismissal taking place., as follows;

“3. The Respondent submits that had procedural fairness and requirements of the Act were adhered to for the period leading up to the termination of Ms Tcaciuc’s employment, she would still have been dismissed. The Respondent maintains that even if the present tribunal has ruled that the dismissal was harsh, the growing animosity between the Respondent and Applicant had affected business efficacy. Undoubtedly, the Act is meant to balance the rights of employees with the need for employers to fairly and efficiently manage their workforce. As both parties do not seem to be able to work amicably, the Commission should be satisfied that a dismissal was imminent and should be accorded to the employer in order to advance its business. The Respondent was at all times acting in good faith and had only decided to terminate the Applicant’s employment upon the advice of the franchisor’s representative after noting that sales figures have fallen considerably.” 3 [Footnotes omitted]

[14] The Applicant submitted that she was expecting to stay with the employer a lot longer were it not for the dismissal,:

“Well I believe that I would've been able to stay for a lot longer. Again I had, you know, expressed the fact that I did not want to see that business fail which was, you know, shown in me trying to come up with different sales strategies. To be honest I don't think I would've stayed there for as long as I had stayed[sic] under the different ownership. But to be honest I think I would've stayed there for at least another six to 12 months, till I really got them on their feet and felt like they were well enough to be able to take over without having my knowledge there of that business.” 4

[15] The Applicant also pointed to inconsistency in the Respondent’s submission on the point where they claim that the parties could not work amicably but also claim that they had “only” decided to terminate the Applicant’s employment upon the advice of the franchisors representative. Also, she referred to the evidence in the case such as the photos of SMS messages between the Applicant and Ms Zhang of the Respondent business demonstrating the lack of animosity. From the applicants’ point of view, they had a great relationship together. 5

[16] Having considered the submissions on this point, I am not satisfied that that there is evidence of a “growing animosity” between the Applicant and the Respondent. Further, I note that the Respondent submits that they “only” terminated the Applicant on the advice of the franchisors representative. 6 This claim is at odds with the claimed reasons for the termination given during the hearing on the merits.

[17] I think it is reasonable to assume that, but for the dismissal, that in all of the circumstances the employment relationship would have continued for a further period of 12 months.

[18] Accordingly, I calculate the remuneration that the Applicant would have received or would have been likely to receive, if her employment had not been terminated, at $52,169.52 plus 9% superannuation.

Section 392(2)(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 section 392(2)(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

[19] The Applicant was unemployed from the date of her termination (16 March 2013) to 4 June 2013, a period of 80 days or 11.4 weeks. As already stated, the Applicant has secured further employment commencing 4 June 2013.

[20] The applicant submitted that her remuneration with her new employer is $1,996.39 per fortnight or $51,906.14 per year.

[21] In Ellawalla v Australian Postal Corporation 7, with respect to a precursor provision, the Full Bench stated that “[o]nly monies earned during the period from termination until the end of the anticipated period of employment are deducted”.

[22] The Applicant submitted on the day of the hearing that she was unsure how long the new employment will continue for as she had only been working there for four months. However, she submitted she was enjoying the role and had no plans to leave there any time soon. I think it is reasonable to assume that the Applicant will continue to earn from her recently secured position until the end of the anticipated period of employment.

[23] A deduction is therefore appropriate of $52,169.52 less $40,526.66 8, representing the monies earned by the Applicant during the period from termination until the end of the anticipated period of employment. This deduction results in an amount of compensation of $11,642.86, plus 9% superannuation.

Section 392(2)(g) - any other matter that FWA considers relevant

[24] The applicant referred to her period of unemployment and the need for her during that time to take up “hardship” on her personal loan, car loan and credit card. The Applicant submitted evidence in support of this submission. The evidence was in the form of letters from various financial institutions that demonstrated the Applicant was successful in suspending payments on loans for various periods or restructuring the payments. The Applicant claims that the changed arrangements will increase her liability to pay interest to the financial institutions through which the loans are arranged.

[25] The Respondent submits that it has no direct knowledge and control of the Applicants’ credit status and should not be responsible for the additional interest payable. Further, the Respondent believes the debts were owed during the period when the Applicant was employed.

[26] Having considered the submissions, I am not satisfied that this is a relevant consideration in determining compensation. While there may well be some financial cost to the Applicant as a result of securing the changes to the loan facilities, the extent of that loss has not been quantified and is difficult to quantify.

[27] In the circumstances, I am not satisfied that I should order any additional amount in compensation for losses associated with the Applicant’s loan liabilities.

[28] Ordinarily a deduction for contingencies is appropriate. 9 A deduction for contingencies is appropriate in this case. Contingencies only apply to the anticipated period of employment. While the percentage to be deducted for contingencies is a matter for judgement, I think that a deduction of 10% is appropriate in the circumstances of this matter.

[29] This results in a provisional amount of compensation of $11,642.86 - $1,164.29 = $10,478.57, plus 9% superannuation.

[30] There are no other matters that are relevant to the determination of compensation other than ss.392(2)(a),(b) and (d), 392(3) and 392(5) of the Act. I will turn to those factors now.

Section 392(2)(a) - the effect of the order on the viability of the employer’s enterprise

[31] The Respondent submitted that the business is of a small size with less than 10 employees; that the franchise was the worst performer in Victoria with a 15% to 20% decrease in sales comparing with the same period in the previous year. Further, it was submitted that the Respondent had to employ a new manager to manage the business and “the double payout would undoubtedly affect the business”. 10

[32] The Applicant in response, on the day of the hearing, submitted that the evidence of the Respondent during the merits hearing was that the situation of the business was that it had now improved to being ranked number 2 in Victoria. During the hearing, Ms Zhang for the Respondent stated;

“...currently we're still number 2, yes. So we saw a very positive turn to...the business and currently is on the track and show a very positive trend.” 11

[33] I note that while there was evidence provided by the Respondent that there was a decline in sales activity, there is no evidence relating to the profitability or viability of the enterprise. While sales are declining, this may be from a high point such that the viability of the Respondent is not at issue. Alternately, it may be taking the Respondent to a position where its viability is threatened. However, there is no evidence from the respondent that would allow me to draw that conclusion. In fact, the evidence from the Respondent is that the store is currently performing well.

[34] The employer must “present evidence and/or argument as to the financial situation” of the business and “the likely effect that an order for compensation” will have on the viability of the business. 12 A mere submission that difficulties for the business will occur is not sufficient.13

[35] Having considered the evidence, I am not satisfied the award for compensation will affect the viability of the Respondent. The fact that the business is a small business does not of itself lead to a conclusion that it is not viable. There is no evidence that there is a risk to the viability of the store. In the circumstances, I do not think that a further deduction in the compensation is appropriate in the circumstances. Further, I am not satisfied that any award for compensation should be made by instalments.

Section 392(2)(b) - the length of the persons service with the employer

[36] The Applicant was employed by the Respondent for over five years. I have already determined in my decision on the merits that the period of employment was from 17 January 2008 to 16 March 2013. 14 The submission of the Respondent that the period of employment was for less than 6 months due to the sale of the business is simply incorrect. The Applicant’s service was continuous throughout the period. The length of service being in excess of five years is a reasonable one and I do not think there is a basis for reducing the amount of compensation awarded based on the Applicant’s length of service.

Section 392(2)(d) - the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal

[37] The Respondent submitted that the Applicant’s skills in the beauty industry are highly transferable and the period of unemployment of 11 weeks since the termination suggests that the Applicant had not made sufficient effort to mitigate the losses. On the day of the hearing, the Applicant submitted that she had made considerable efforts to obtain further employment. She tendered a number of “screen shots” of applications to “Seek.com” The evidence shows that the Applicant made over 30 applications for employment during the period of unemployment. She gave evidence that she took action within a number of days of being dismissed to seek further employment. Her mitigation efforts are considerable. I am satisfied they are sufficient to exclude any deduction from the quantum of $10,478.57, plus 9% superannuation.

Misconduct (s.392(3))

[38] I have found that the Applicant was not dismissed for a valid reason and that no misconduct was in evidence. There is no basis to make a further deduction for misconduct.

Compensation Cap (s.392(5))

[39] As the amount of $10,478.57 plus 9% superannuation is less than the legislative compensation cap no further deduction for that reason is required.

Conclusion and order as to remedy

[40] I find that reinstatement is not an appropriate remedy in this case.

[41] I find that compensation is appropriate.

[42] I am satisfied that an order for payment of compensation by the Respondent of

$10,478.57 gross plus 9% superannuation less tax as required by law, to the Applicant in lieu of reinstatement is appropriate in all the circumstances of the case. It accords a fair go all round to both the Respondent and the Applicant.

[43] The compensation payment, less any required deduction in taxation, is to be made within 14 days of this decision. An order [PR543891] will be issued concurrently with this decision.

COMMISSIONER

Appearances:

D Tcaciuc appeared on her own behalf

Hearing details:

2013.

Melbourne:

October 15

 1   Tempo Services Limited v Klooger and Others, PR953337, [22]

 2   [2011] FWAFB 1080

 3   Outline of Submissions of the Respondent, filed 8 October 2013, [3]

 4   PN1319

 5   PN1412

 6   Outline of Submissions of the Respondent, filed 8 October 2013, [3]

 7   Print S5109

 8   Calculated as follows: 1 year (anticipated employment period) x $51,906.14 (currently secured annual wage) minus (11.4 weeks (unemployed period) x $998.20 (current secured weekly wage)) = $40,526.66

 9   See Slifka v JW Sanders Pty Limited (1995) 67 IR 316 at 328

 10   Outline of Submissions of the Respondent, filed 8 October 2013, [2(a)]

 11   PN468

 12   D.A. Moore v Highpace Pty Ltd, (unreported, AIRCFB, Boulton J, Watson SDP , Whelan C, 18 May 1998), Print Q0871

 13   K.Beams v BDRP Falconer Pty Ltd (unreported, AIRC, Hamilton DO, 28 March 2002), PR916075, [49]

 14   PN1109, PN1111

Printed by authority of the Commonwealth Government Printer

<Price code C, PR543886>