DL v BKC
[2010] FWA 5659
•28 JULY 2010
[2010] FWA 5659 |
|
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
DL
v
BKC
(U2010/6270)
COMMISSIONER BISSETT | MELBOURNE, 28 JULY 2010 |
Application for unfair dismissal remedy.
[1] This is an application under s.394 of the Fair Work Act 2009 (the Act) for a remedy from unfair dismissal.
[2] The application was lodged in February 2010. It was not resolved in conciliation.
[3] The matter was dealt with by way of conference before me on 8 July 2010. As the matter was dealt with by conference any identifying information, including the name of each party’s representative, has been suppressed.
[4] The applicant in this matter has a hearing impairment. Permission was given in the hearing for his representative to repeat to him questions asked of him. The respondent had no objection to this course.
Background
[5] DL (the applicant) had been employed by BKC (the respondent) since July 2008 as a painter. Whether or not he was a trainee is not agreed although there is no training contract. 1 DL is therefore not an employee to whom a training arrangement applies. DL had been employed by the company under a previous administration when the company was known by a different name. At some stage prior to July 2008 he voluntarily left employment with this or the previous company for a period of 3 months when he worked elsewhere.
[6] DL had been undertaking training at a Registered Training Organisation in a qualification relevant to his work with BKC. There is no agreement as to whether or not this training was required to be undertaken by DL although the cost of the training had been met, for a period of time, by BKC and its predecessor prior to DL leaving the company in 2009. 2
[7] DL’s employment was terminated, by letter on 11 February 2010, effective from 12 February 2010. The letter of termination claimed that there was no suitable work available for his position.
The evidence
[8] DL gave evidence on his own behalf. His evidence is:
- That he was employed by the respondent as a painter.
- That he was employed under an employment agreement 3 that specified he was a trainee.
- That he had not been given any warnings with respect to his work performance. 4
- He was terminated without notice and for no reason. 5
- Following his termination by the company the work he did for the company continued to be performed. 6
- At the time of termination he was not offered any other work at BKC even though he was capable of undertaking that work. 7
- He had not been consistently late for work 8 nor had he received any written warnings from BKC with respect to his attendance at work or any other performance issues.9
[9] BKC called no witnesses.
Submissions
[10] Mr I, appearing for DL, submitted that there was no reason for the termination of DL’s employment. Whilst the letter of termination stated that there was no work available, work of the kind undertaken by DL had continued past his employment. 10 Further, Mr I stated that even if there was no work in the paint area DL was capable of undertaking general labouring work in other parts of the company.
[11] Mr I stated that there was no basis on which Fair Work Australia could accept the warning letters 11 BKC claimed they had given to DL. There was nothing in the letters to authenticate that they had in fact been sent and no evidence to suggest that DL had received them. Mr I submitted that the letters may well be a fabrication.12
[12] Mr I also submitted that at the time of his termination DL, accompanied by Mr I, had approached management over the payment of DL’s entitlements on termination (specifically payment in lieu of notice) and that the respondent had attempted to bargain over the amount to be paid to DL. 13
[13] Mr B, appearing for BKC, advised that DL had been terminated because there was no further work available for his position. 14 In response to questions from the Bench Mr B agreed that DL had not been paid any redundancy entitlements and that he, Mr B, was not responsible for such issues but rather he ‘assumed’ the accountant was.15 Mr H, the Production Manager who had signed DL’s termination letter (and two of the three performance warnings) who perhaps could have answered some of the questions posed was not at the hearing because he had ‘a few commitments at work’ and was ‘not a very good people person’.16
[14] Mr B submitted that DL had received a number of verbal warnings (although no details could be provided) and ‘3 or 4 written warnings’ that went to his attendance, 17 that he was not a trainee and that the copy of the employment agreement produced by DL18 was not the valid contract as it was not signed. Mr B however was not able to produce any other employment agreement that had been signed or otherwise by DL and BKC.
[15] Mr B could provide very few specific details of DL’s employment including his commencement date.
[16] Mr B submitted that, four to six weeks following DL’s termination, DL’s work area was dismantled and the work outsourced. 19
[17] Mr B advised that at the time of the termination of DL’s employment the company employed in excess of 15 employees, although now there were only about 14 employees. 20
Findings
[18] The only sworn evidence in this matter is that of DL.
[19] BKC relied on their oral submissions. Much of that material was contested by the applicant. BKC failed to call any witnesses - including the production manager who signed the termination letter and two of the three written warnings - even though he was available (he was at work). Whilst no submissions were made as to the inference I could or should draw from this failure to call the witness it clearly leaves me in a position of having to make findings with respect to a number of matters where I do not have the benefit of any sworn evidence from the respondent.
[20] The respondent claimed that the employment agreement provided by DL 21 is not the true employment agreement and that DL was not a trainee. However, they did not produce any other employment agreement that they say is the true employment agreement. I have no reason not to believe that the employment agreement provided by DL is the employment agreement he was given when he commenced the existing period of employment with BKC. I so find that it is the employment agreement. I find, based on the employment agreement, that DL commenced on or about 22 July 2008.
[21] BKC claimed that DL received three written warnings and produced copies of those. 22 DL, under oath, denied that he had ever received the written warnings. It was also submitted for the applicant that the warning letters may well be fabrications.
[22] Each of these letters is headed ‘Official Warning’ followed by a date. The dates are: ‘27/08/2009’ (the first warning), ‘05/09/2009’ (the second warning) and ‘16/09/2009’ (the third warning). The first and second warnings are signed by Mr H, the Production Manager. Under this signature is a phone number and fax number and an email address for ‘gregory@...’ Gregory is not the Production Manager’s first or last name. 23 The third warning is signed by the Sales Manager. Under his name are the same phone and fax numbers and email address (‘gregory@...’) as the first and second warnings. The email address contains the same name as that of the Sales Manager. The phone number and fax number under the signature of each of the warnings are not the same phone number or fax number on the letterhead.
[23] A visual scan of each of the ‘warnings’ indicates that they are all formatted exactly the same to the extent that the spacing between the letterhead and subject line of each warning is exactly the same and the letterhead in each case is that of the previous company. The level of similarity in the layout, tone and style of each of the warning letters raises questions about their authenticity. The authenticity of the warning letters was not affirmed through a witness of BKC nor was either of the authors of the warnings called as a witness.
[24] I should also observe that, while the representative of BKC could quickly find these warning letters, he was unable to produce any other information relevant to DL’s employment including the alleged ‘real’ employment agreement or information in relation to the actual dates of DL’s employment.
[25] There is no evidence to indicate that DL had received the warnings. I therefore find that, on the basis of the evidence given, these warning letters were not given to DL by the respondent. I further find that the authenticity of these letters is in doubt. No reliance can be put on these letters. I shall not take these warnings into account in making my decision.
[26] I find that DL was not employed subject to a training arrangement. Whilst his employment agreement states that he was a trainee – and he certainly was undertaking training – he did not have a training contract or a training agreement such that he was on a training arrangement as defined by the Act.
[27] At the time of the termination of DL’s employment BKC employed in excess of 15 employees. I find that BKC, at the time of the dismissal of DL, was not a small business. No evidence to the contrary was provided and Mr B supported this in his submissions.
[28] The letter of termination of employment given to DL suggests that DL was terminated because of the lack of suitable work. There was no evidence given on behalf of BKC as to the status of the company or any downturn in business. In any case DL was not given any redundancy payment that would have been due to him had this been a genuine redundancy case.
[29] A person has not been unfairly dismissed if the dismissal was a case of genuine redundancy.
Section 389 of the Act states:
389 Meaning of genuine redundancy
(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.
[30] In Tasmania Development & Resources v Martin, 24 the Full Court of the Federal Court found that:
The term ‘‘operational requirements’’ is not defined in the relevant legislation or Convention. The requirements are expressed to be those of the employer and in that sense the term is taken broadly to refer to the employer’s enterprise and undertaking and how it is to function, for reasons which are thought desirable. In Nettlefold v Kym Smoker Pty Ltd (1996) 69 IR 370, Lee J referred to the term (at 373):
‘‘The Act does not define the term ‘operational requirements’. Obviously it is a broad term that permits consideration of many matters including past and present performance of the undertaking, the state of the market in which it operates, steps that may be taken to improve the efficiency of the undertaking by installing new processes, equipment or skills, or by arranging for labour to be used more productively, and the application of good management to the undertaking. In general terms it may be said that a termination of employment will be shown to be based on the operational requirements of an undertaking if the action of the employer is necessary to advance the undertaking and is consistent with management of the undertaking that meets the employer’s obligations to employees.’’
It may be accepted that an employer is entitled to considerable latitude in determining the needs of its undertaking and how it should perform. There is nothing in cl 12.3 which restricts the nature of the strategy or change that is said to amount to operational requirements of TDR. What is, however, required by the provision is that there be a factual basis for a conclusion that there were requirements arising from the way in which the undertaking operated which, in turn, necessitated the termination of the employment the subject of the contract. It is difficult then to consider that it would ever be sufficient for an employer merely to rely upon the abolition of the position or cessation of the employment as the operational undertaking itself, since it should be able to say what requirements of finance or efficiency dictated the need for the termination. To say that the position of employment the subject of the contract is no longer required, is simply to state the conclusion.
[31] In this matter BKC have relied on the statement in the letter of termination that there was no longer work available for the position. They have provided no evidence of changes to the operational requirements of the business, beyond statements in submission, such that I could conclude at least that the requirements of s.389(1)(a) had been met.
[32] Such evidence need not necessarily be lengthy or overly complex, particularly with respect to this employer, who appears to operate a smaller sized business. But to provide no evidence of the changed circumstances of the business is not enough to enable Fair Work Australia to make any finding with respect to the operational requirements of the business and hence consider whether the dismissal was a genuine redundancy.
[33] If it was accepted that a dismissal was a case of a genuine redundancy on the mere assertion of the employer the capacity of the employee to show otherwise would be very difficult. The employee does not have access to the information held by a company as to its financial and operational status 25 - no matter how large or small the company may be.
[34] That BKC is a relatively small company (with about 17 employees at the time of the termination) does not absolve it of the necessity of demonstrating changes in the company’s operational requirements such that the termination was a genuine redundancy. BKC chose not to do so.
[35] I cannot find that DL’s termination was a genuine redundancy such that s.389 of the Act applies. This finding is further supported by the fact (not disputed by the respondent) that BKC did not make, or attempt to make, a redundancy payment to DL.
[36] On the basis of these findings I must now determine if DL’s termination was harsh, unjust or unreasonable.
Statutory requirements
[37] The statutory requirements for determining whether a dismissal is unfair are clear. Section 385 of the Act states:
385 What is an unfair dismissal
A person has been unfairly dismissed if FWA 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.
Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.
[38] The Small Business Fair Dismissal Code is not relevant in this matter. BKC was not, at the time of the dismissal, a small business.
[39] As I have already found above, there was no evidence from BKC that this was a genuine redundancy.
[40] In determining if the dismissal was harsh, unjust or unreasonable, section 387 of the Act states:
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.
[41] I now turn to consider each of these matters in turn.
A valid reason
[42] There is no evidence that there was a valid reason for the termination of DL based on conduct or capacity. For a reason to be valid it must be ‘sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason.’ 26 There is no evidence that the reason for termination in this matter was sound, defensible or well founded. In this respect I have already rejected that the termination was a matter of genuine redundancy. I find that there was not a valid reason for the termination based on the capacity or conduct of DL.
Whether the person was notified
[43] If the termination was related to the capacity or conduct of DL I find that DL was not provided with any warnings in relation to his capacity or performance.
[44] DL was advised that he was terminated because there was a lack of suitable work. I have no basis on which to conclude that this was in fact the case. In this respect BKC declined the opportunity to present any evidence to support such a conclusion.
An opportunity to respond
[45] DL was given no opportunity to respond to the matters raised in the letter of termination. The letter was delivered to him on 11 February 2010 advising that from the following day he would not be required to report to work.
Support person
[46] There is no evidence of any meeting occurring between DL and BKC such that DL would have needed the assistance of a support person. DL was given no opportunity by the company to discuss the matter.
Warning of unsatisfactory performance
[47] As outlined above I find that DL received no warnings from the company with respect to his performance.
The size of the employer’s undertaking
[48] The employer clearly is a smaller business, although not a small business as defined in the relevant Act. 27 They currently have about 14 employees, although at the time of BK’s dismissal they had about 17. I accept that they are unlikely to have detailed procedures for dealing with a termination of employment and I accept that they most likely do not have any dedicated human resource management or expertise (although no evidence was given to me on this I think it a reasonable assumption to make based on the nature and history of the business). This lack of procedure and human resource expertise however is no excuse for the total absence of fairness in the approach taken in terminating DL’s employment.
[49] Whilst I do recognise and take into account the fact that this employer is small and does not have access to procedures and expertise, their total disregard for their legislative obligations is not acceptable. It is reasonable to expect that any employer has at least a basic knowledge of their rights and obligations as an employer and those of their employees.
Any other matters considered relevant
[50] It is a relevant consideration in this matter that, on seeking from BKC payment in lieu of notice, it appears that the representative of BKC sought to bargain about what that payment should be. It is also relevant that, if this were in fact a genuine redundancy, BKC made no attempt to make any redundancy payment to DL.
Consideration
[51] In all of the circumstances of this matter I find that the termination of employment of DL was harsh, it was unjust and it was unreasonable. The lack of due process afforded to DL, the lack of any substantive evidence to the contrary from BKC in addition to those matters cited above lead inevitably to this conclusion.
Remedy
[52] Having determined that the dismissal of DL was harsh, unjust or unreasonable I must now determine an appropriate remedy.
[53] The Act presumes that reinstatement should be the remedy afforded to an employee who has had their employment terminated in contravention of the provisions of the Act. This must be my first consideration.
[54] In this matter the employee does not seek reinstatement and I do not consider reinstatement an appropriate remedy. BKC is a small business, their capacity to absorb an additional person into the organisation is, I expect, limited (though again no submissions were made on this).
[55] Section 392 of the Act states:
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), 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.
Misconduct reduces amount
(3) If FWA is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, FWA 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 FWA 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 FWA 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.
[56] In determining an amount for compensation I have had regard to the criteria established in the Act. There is no need to reduce the amount of compensation due to misconduct. There is no component of compensation for shock or distress. I do not propose compensation that exceeds the statutory maximum.
[57] In terms of the criteria for deciding the amount I have had no evidence that any compensation amount would affect the viability of the company.
[58] DL had worked for the company since July 2008. The company sought to deny that the employment agreement specifying a date of July 2008 was the real employment agreement but gave no evidence of another contract. There was no evidence that the document tendered by the applicant was anything other than a true copy of his employment agreement. Had he continued in employment there is no reason to believe that he would not have continued in employment with BKC for many years to come. The company operates in an industry that has shown growth and resilience over the past few years.
[59] The applicant has, since his termination, completed his qualification in the occupation he was working in for the employer. The applicant met the cost of that training. I take this as a positive step by the applicant to assist in his capacity to gain ongoing employment. I am not aware of any remuneration earned by the applicant since his termination. I do not consider earnings between the issuing of the order and the payment of compensation relevant.
[60] I have taken into account the scant regard the employer appears to have had to ensuring the applicant was paid all of his entitlements on termination of his employment. That the employer chose to participate in a very superficial manner in this matter has meant no additional assistance has been provided by the respondent to me in determining compensation.
[61] Taking into account all of the above matters I consider that the respondent, BKC, should pay to the applicant, DL, an amount equivalent to six weeks’ salary at the rate of pay DL was entitled to at the time of his termination. An order to this effect will be issued forthwith. Such payment is to be made within 10 working days of the issuance of the said order.
COMMISSIONER
Appearances:
Mr I for the applicant
Mr B for the respondent
Hearing details:
Melbourne
2010
8 July
1 Transcript, PN85-6.
2 PN126.
3 Exhibit L1.
4 PN108.
5 PN32.
6 PN33-4.
7 PN34-5.
8 PN62-3.
9 PN108-9, 251-64.
10 PN12.
11 Exhibit B1.
12 PN270.
13 PN271.
14 It should be noted that BKC made no jurisdictional objection to the matter being dealt with by Fair Work Australia on the grounds that the termination was a genuine redundancy.
15 PN215.
16 PN226.
17 Exhibit B1.
18 Exhibit L1.
19 PN164.
20 PN175-183.
21 Exhibit L1.
22 Exhibit B1.
23 Contact details provided for BKC on Fair Work Australia’s file in relation to this matter suggest that at least senior or management employees have their own email addresses in the form ‘firstname@....’
24 (2000) 97 IR 66, at [25]- [26], 5 April 2000, Lee, Cooper, Kiefel JJ.
25 Kieselbach v Amity Group Pty Ltd, PR973864, 9 October 2006 at [41].
26 Selvachandran v Peteron Plastics Pty Ltd,(1995) 62 IR 371 at 373, 7 July 1995.
27 Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) sch 12A.
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