Doris Maree Pettitt v MicroAnalytix Pty Ltd

[2015] FWC 6595

[2015] FWC 6595

FAIR WORK COMMISSION

DECISION

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

Doris Maree Pettitt
v
MicroAnalytix Pty Ltd
(U2014/16754)

COMMISSIONER CAMBRIDGE SYDNEY, 25 SEPTEMBER 2015

Unfair dismissal - conflict regarding alteration to daily hours of work - extended absence due to illness - no clear warning about ramifications of extended absence - mistaken reliance upon three month absence prescription contained in Regulation 3.01(5) - procedural deficiencies - unfortunate absence of clear communication between parties - harsh, unjust and unreasonable dismissal - inability of applicant to perform inherent requirements of the job - compensation Ordered.

[1] This matter involves an application for unfair dismissal remedy made pursuant to section 394 of the Fair Work Act 2009 (the Act). The application was lodged at Sydney on 30 December 2014. The application was made by Doris Maree Pettitt (the applicant) and the respondent employer is MicroAnalytix Pty Ltd (the employer).

[2] The application indicated that the date that the applicant’s dismissal took effect was 15 December 2014. Consequently, the application was made within the 21 day time limit prescribed by subsection 394 (2) of the Act.

[3] Unfortunately, the matter appeared to have escaped any scheduled conciliation and it has proceeded to arbitration in a Hearing conducted in Sydney on 21 April, 27 May and 16 July 2015.

[4] At the Hearing the applicant was represented by her brother, Mr P Bondin, who called the applicant as the only witness who provided evidence in support of the claim. The employer was represented by Mr M Croft, the father of the employer’s Managing Director. Mr M Croft called his son, and one other witness who gave evidence on behalf of the employer.

Factual Background

[5] The applicant commenced work for the employer on 20 August 2007. The applicant was employed in a position referred to as a Customer Service Officer. Relevantly, the work of the applicant involved various customer service functions including telephone handling of customer inquiries and securing sales together with various other office-based clerical and administrative sales related functions.

[6] The employer conducts a business which supplies laboratory products throughout Australia, New Zealand and the Asia Pacific region. The employer has office and warehouse premises in both Australia and New Zealand. The employer is a small business which employs in total, less than 15 people throughout its Australian and New Zealand operations.

[7] The applicant and her family unfortunately suffer from poor health involving a variety of medical problems. During the period of her employment the applicant utilised personal leave and other forms of leave as a result of her own ill-health and requirements to care for other family members who were similarly inflicted with poor health. In 2008 the employer advised the applicant of concerns regarding what it considered to be an excessive amount of personal and other leave which the applicant had taken. At this time, 2008, the applicant and the employer came to a mutual accommodation which recognised the particular needs of the applicant that arose from both her own ill-health and that of her family.

[8] As part of the employer’s accommodation for the health needs of the applicant including her carer’s responsibilities, in 2009 it agreed to the applicant’s request to vary her daily working hours from 9 am to 5pm to 8am to 4pm. Following these rearrangements to the applicant’s daily working hours the applicant observed something of a flexible daily working arrangement which in particular involved her departure from work at or before 4pm on days other than Fridays. The early departure arrangement was connected with the applicant’s carer’s responsibility for her grandson.

[9] In July 2014 the employer sought to have the applicant return to daily working hours of between 9am to 5pm. The alteration to the applicant’s daily hours of work was proposed by the employer because of certain changed commercial and business operational requirements. The applicant and her then immediate supervisor engaged in an exchange of emails about the proposed alteration to the applicant’s daily work hours. These communications were unsuccessful in achieving any agreed position and the email exchange culminated with the applicant advising the employer inter alia, that “We are unlikely to come to an agreement on the matter…” and, “I intend to maintain my current working hours.” 1

[10] The difficulties associated with the proposed change to the applicant’s daily hours of work reached a crescendo on Thursday, 31 July 2014 when, whilst at work, the applicant became emotionally distraught. The applicant had become distressed as a result of the employer’s scrutiny of her flexible daily working arrangements and its insistence that her daily work hours return to 9am to 5pm. The applicant experienced a severe emotional event and she advised the employer’s Managing Director that she could not stay at work anymore and she immediately walked out of the workplace.

[11] In the days, weeks and months which followed after the applicant walked out of the workplace on 31 July a series of unfortunate communications between the Parties contributed to a further deterioration in the employment relationship. The applicant provided the employer with certificates of sickness which covered her absence from work. The employer invited the applicant to discuss her absence and the anticipated return to work. The applicant communicated to the employer via her brother and her counsellor who suggested that the Parties might benefit from some independent mediation. Unfortunately no mediation occurred and on 15 December 2014, the employer decided to dismiss the applicant reliant upon apparent advice that because the absence of the applicant had exceeded three months such dismissal complied with Regulation 3.01 (5) of the Fair Work Regulations 2009.

[12] The employer sent the applicant a letter dated December 15, 2014 which advised of her dismissal due to her absence from work for a period in excess of three months. The letter of dismissal was not received by the applicant until 21 December 2014. The letter of dismissal indicated that the applicant would be paid outstanding entitlements including five weeks pay in lieu of notice.

[13] After the dismissal, the applicant experienced an exacerbation of her health issues which restricted her capacity to seek other employment for a period of time. The applicant had medical certificates which covered her absence from work until 15 January 2015. However, even after that period of incapacity, the applicant has not been able to secure any alternative employment and she has not been capable of returning to work with the employer at any time. 2

The Case for the Applicant

[14] Mr Bondin who appeared for the applicant submitted that the dismissal of his sister was unfair. Mr Bondin submitted that the applicant had not been dismissed because of misconduct or poor work performance but rather for being absent from work for more than three months. Mr Bondin said that the employer did not have regard for the applicant’s situation at the time which involved her own health problems and also those of her husband and her daughter.

[15] Mr Bondin further submitted that the employer had persisted with wanting the applicant to work 9am to 5pm even though she had not been working those hours for five years. According to the submissions made by Mr Bondin, the employer had not taken the applicant’s personal situation into consideration when it was insisting upon the change to the applicant’s working hours. Mr Bondin was also critical of the employer’s refusal to participate in the mediation which had been suggested by the applicant’s counsellor.

[16] The submissions of Mr Bondin also raised issue with the employer not following the Small Business Fair Dismissal Code. In particular, Mr Bondin submitted that the applicant had not been warned that she was at risk of being dismissed nor was she given an opportunity to discuss the matter prior to her dismissal.

[17] Mr Bondin also submitted that the applicant was 60 years of age and she had been trying unsuccessfully to obtain alternative employment but that realistically she would probably never find another full-time job again.

The Case for the Employer

[18] The employer was represented by Mr M Croft who submitted that the dismissal of the applicant was not unfair.

[19] Mr Croft commenced his submissions by stating that the employer was a small business for the purposes of the Act as it employed a total of nine employees in Australia and four in New Zealand. Consequently, Mr Croft submitted that the dismissal of the applicant was subject to the Small Business Fair Dismissal Code.

[20] Mr Croft made further submissions which broadly recounted the history of the applicant’s employment. Mr Croft stressed that in August 2008 the applicant had been the subject of a warning regarding her excessive leave. Further, Mr Croft submitted that the employer had endeavoured to accommodate the particular personal needs of the applicant relating to her own health problems and those of her family. In this regard the employer had agreed to an alteration to the applicant’s daily hours of work in an endeavour to assist the applicant with her family support needs and medical conditions. However, in July 2014 when the employer sought to have the applicant agree to alter her flexible work arrangements to assist the business needs of the employer she was resistant to any change.

[21] Mr Croft submitted that the applicant had refused to contemplate the employer’s request to alter her daily working hours and she simply walked out of the workplace stating “I cannot be here any more”. It was further submitted by Mr Croft that the employer had sent numerous communications to the applicant endeavouring to arrange for discussions regarding her absence from work. Although the employer had been provided with medical certificates, Mr Croft said that the employer was entitled to discuss the matter with the applicant in order to understand the reason for her extended absence and the likelihood of her return to work.

[22] Mr Croft said that despite the repeated attempts by the employer to clarify the circumstances of the applicant’s absence and to have her return to work, there was no clear communication about the circumstances surrounding what became the protracted absence of the applicant from work. In these circumstances Mr Croft said that the employer completed the Small Business Fair Dismissal Checklist and believed that the absence of the applicant from work for a period of longer than three months provided proper basis for dismissal as the applicant had abandoned her employment.

[23] Mr Croft further submitted that the employer had valid reason to dismiss the applicant on the basis that she had been absent from work for over four months. Mr Croft said that the employer had given the applicant warning that she was at risk of having her employment terminated. In any event, Mr Croft submitted that even if the employer had not complied with the Small Business Fair Dismissal Code, it did not automatically follow that the dismissal was unfair. Mr Croft then made submissions which referred to the provisions of s. 387 the Act.

[24] Mr Croft reiterated his assertion that the employer had valid reason to dismiss the applicant because she had not been at work and had not responded to requests from the employer to discuss the issues surrounding her extended absence. Further, Mr Croft submitted that the applicant was notified of the termination of employment in the letter from the employer dated 15 December 2014. Mr Croft acknowledged that the applicant had not been given an opportunity to respond but that the circumstances did not permit such an opportunity because the applicant had not been prepared to discuss the matter with the employer. Mr Croft also made submissions which stressed that the employer was a small business and did not have dedicated human resource specialists.

[25] In summary, Mr Croft submitted that the Commission should dismiss the applicant’s unfair dismissal claim. Mr Croft asserted that the dismissal of the applicant was not harsh, unjust or unreasonable. However, Mr Croft noted that as the applicant was not seeking reinstatement and if the Commission was to find that the dismissal was unfair, it should not impose any financial pressure on the employer particularly because the applicant had been paid five weeks in lieu of notice.

Consideration

[26] Section 385 of the Act stipulates that the Commission must be satisfied that four cumulative elements are met in order to establish an unfair dismissal. These elements are:

(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.

[27] In this instance there was no dispute that the applicant had been dismissed and that the dismissal was not a case of genuine redundancy. Consequently, only the elements contained in subsections (b) and (c) of s. 385 of the Act have had relevance.

Small Business Fair Dismissal Code

[28] The employer is a small business and therefore the provisions of subsection 385 (c) of the Act require consideration. Specifically, it is necessary to determine whether the dismissal of the applicant was or was not consistent with the Small Business Fair Dismissal Code (referred to as “the Code”). Logically a determination of any application of the Code should precede any more general contemplation of whether the dismissal was harsh, unjust or unreasonable.

[29] The Code is in the following terms:

“Small Business Fair Dismissal Code

Summary Dismissal
It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

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

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

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

Procedural Matters
In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.”

[30] In this case the applicant was dismissed for reason of her extended absence from work due to illness and she was paid an amount equivalent to five weeks remuneration in lieu of notice. Consequently, the dismissal of the applicant was not a summary dismissal and that part of the Code relating to “Other Dismissal” is relevant.

[31] In order to comply with the Code, in cases of “Other Dismissal” a small business employer must give an employee a reason why he or she is at risk of being dismissed. Further, the Code requires that an employee must be warned that he or she is at risk of being dismissed. In this instance the applicant was not given a reason why she was at risk of being dismissed nor was she warned that she was at risk of being dismissed because of her extended absence from work due to illness. Therefore the dismissal of the applicant was not consistent with the Code and further consideration must logically be made in respect of subsection 385 (b) of the Act, specifically whether the dismissal of the applicant was harsh, unjust or unreasonable.

[32] Section 387 of the Act contains criteria that the Commission must take into account in any determination of whether a dismissal is harsh, unjust or unreasonable. These criteria are:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.

387 (a) - Valid Reason for the Dismissal Related to Capacity or Conduct

[33] It has been unfortunate that this matter has progressed through to Hearing and a requirement for determination. The evidence was broadly uncontested notwithstanding that at times it was presented with a lack of clarity. Importantly, the evidence has clearly established that the reason for the dismissal of the applicant was her extended absence from work due to illness. Further, the deteriorating health of the applicant has meant that she is incapable of returning to work with the employer at any time.

[34] Consequently, the circumstances have established that the applicant is incapable of performing the inherent requirements of the job and such incapacity, once properly established, would ordinarily provide valid reason for the termination of employment. Unfortunately however, in this instance, the employer erroneously construed that a Regulation (Regulation 3.01 (5)) relating to a General Protection established by s. 352 of the Act, created valid reason for dismissal once the applicant’s absence from work had extended beyond a three month period.

[35] It is indeed unfortunate that the employer misconstrued the operation of the Regulation made in respect of the General Protection provided by s.352 of the Act. In the absence of that mistake the employer may have properly established valid reason for the dismissal of the applicant because of her incapacity to return to work with the employer. However, the employer’s hasty and erroneous reliance upon the three month time prescription in Regulation 3.01 (5) has meant that there was not a valid reason for the dismissal related to capacity or conduct of the applicant.

387 (b) - Notification of Reason for Dismissal

[36] The employer provided written notification of the reason for the applicant's dismissal by way of the letter of dismissal dated December 15, 2014. The applicant did not receive the letter of dismissal until 21 December. Therefore, although there was written notification of the reason for dismissal, that notification was not appropriately provided until several days after the date of effect of dismissal. Consequently, the notification of the reason for dismissal was severely deficient because it provided advice of the dismissal several days after the date that the dismissal took effect. This meant that the notification of the reason for dismissal advised that, in effect, the dismissal applied retrospectively.

387 (c) - Opportunity to Respond to any Reason Related to Capacity or Conduct

[37] The employer did not provide any opportunity for the applicant to respond to the prospect that her extended absence from work might result in dismissal. Importantly, the applicant was denied an opportunity to advance any prospects, short or long term, which might provide basis to return to work. In particular, the suggestion of independent mediation was not properly pursued and such mediation may have resulted in an amicable arrangement for the finalisation of the applicant’s employment on the basis of her incapacity and including agreed terms.

387 (d) - Unreasonable Refusal to Allow a Support Person to Assist

[38] As a further reflection of the adoption of a highly erroneous procedure, the employer simply sent a letter of dismissal to the applicant which ensured that there was no opportunity for any discussion between the Parties which may have included the presence of a support person to assist the applicant.

387 (e) - Warning about Unsatisfactory Performance

[39] This factor is not directly relevant to the circumstances in this instance. However, before any dismissal of an employee for reason of extended absence from work due to illness it would be a matter of fundamental fairness to provide a warning about possible dismissal because of such extended absence.

387 (f) - Size of Enterprise Likely to Impact on Procedures

[40] I have been cognisant that the employer’s operation is a small business. The employer’s business operation may benefit from a review of its employee management practices.

387 (g) - Absence of Management Specialists or Expertise Likely to Impact on Procedures

[41] It appeared that the employer did not have dedicated employee relations management specialists and regard has been made for the consequential impact that the absence of such personnel would have in respect to the erroneous procedures that were adopted by the employer.

387 (h) - Other Relevant Matters

[42] It is appropriate to acknowledge that for some period of time, particularly following the discovery of the extent of the applicant's illness and that of her family, the employer had acted quite benevolently and it endeavoured to accommodate the carer’s responsibilities and other needs of the applicant. It is unfortunate that largely because of poor communication, the generally harmonious relationship between the Parties deteriorated rapidly when the employer legitimately endeavoured to return the applicant’s work hours to those that were more suited to its business needs.

[43] It is perhaps unfortunate that because it had attempted to assist the applicant during previous periods of health related difficulties, the employer may have felt it unnecessary to follow a careful and measured approach when dealing with the extended absence of the applicant. Further, it appeared that perhaps as a result of what it believed to be its previous assistance to the applicant, coupled with the erroneous reliance upon Regulation 3.01 (5), the employer felt that it could dispense with any fundamentally reasonable arrangements in respect to the manner in which the dismissal of the applicant was implemented.

Conclusion

[44] The applicant was dismissed because of an extended absence from the workplace due to illness. Evidence presented during the Hearing has established that the applicant is incapable of returning to work with the employer. Although ordinarily, such incapacity would likely provide a valid reason for dismissal, in this instance the incapacity was not properly established but prematurely constructed by virtue of an erroneous reliance upon Regulation 3.01 (5) of the Fair Work Regulations 2009.

[45] Therefore the dismissal of the applicant was not for valid reason relating to the applicant’s capacity or conduct.

[46] The procedures that the employer adopted in dealing with the employment issues which arose regarding the extended absence of the applicant were, regrettably, severely deficient. The particular manner in which the employer implemented the dismissal of the applicant was unreasonable and unnecessarily harsh.

[47] In summary, the dismissal of the applicant was not for valid reason relating to the capacity or conduct of the applicant. The dismissal arose following an entirely unreasonable and unjust process which did not properly warn the applicant about the prospect of dismissal because of her extended absence from the workplace due to illness. Further, the manner in which the dismissal was implemented was plainly unreasonable. Consequently, the dismissal of the applicant has been found to have been harsh, unjust and unreasonable.

Remedy

[48] The applicant has not sought reinstatement as remedy for her unfair dismissal. Instead she has sought remedy in the form of payment of an amount of monetary compensation.

[49] I have decided that compensation would be an appropriate remedy for the applicant’s unfair dismissal and I turn to the factors which involve the quantification of any amount of compensation.

[50] Section 392 of the Act prescribes certain matters that deal with compensation as a remedy for unfair dismissal. I have approached the question of compensation having regard for the guidelines that were established in the Full Bench Decision in Sprigg v Paul’s Licensed Festival Supermarket 3 and as commented upon in the subsequent Full Bench Decision in Smith and Ors v Moore Paragon Australia Ltd 4.

[51] Firstly, I confirm that an Order of payment of compensation to the applicant will be made against the employer in lieu of reinstatement of the applicant.

[52] Secondly, in determining the amount of compensation that I Order I have taken into account all of the circumstances of the matter including the factors set out in paragraphs (a) to (g) of subsection 392 (2) of the Act.

[53] There was some limited evidence that an Order of compensation would impact on the viability of the employer’s enterprise.

[54] The applicant had over seven years of service. If the applicant was capable of performing work for the employer she would have been likely to have received remuneration of approximately $935.00 per week. However, there was some significant prospect that the employment of the applicant may not have involved any return to actual performance of work with the employer. Consequently, the established incapacity of the applicant is a factor which must be carefully considered in respect to remedy by way of any compensation.

[55] Immediately following the dismissal, the applicant did not make efforts to mitigate the loss suffered because of the dismissal. This particular failure to mitigate her loss was in large part because of the exacerbation of her mental condition which arose at the time that she walked out of the workplace. The applicant has not secured any further alternative employment.

[56] Thirdly, in this instance there was no established misconduct of the applicant which contributed to the employer's decision to dismiss.

[57] Fourthly, I confirm that any amount Ordered does not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt caused to the applicant by the manner of the dismissal.

[58] There are no other relevant matters in this instance.

[59] Consequently for the reasons outlined above, I have decided that an amount approximating with four weeks remuneration should be Ordered as compensation to the applicant. That amount is $3,740.00. Accordingly, separate Orders [PR572248] providing for remedy in these terms will be issued.

COMMISSIONER

Appearances:

Mr P Bondin for the applicant.

Mr M Croft for the respondent.

Hearing details:

2015.

Sydney:

April, 21.

May, 27.

July, 16.

 1   Exhibit 1 - Document 18.

 2   Transcript @ PN1094.

 3 Sprigg v Paul’s Licensed Festival Supermarket, (Munro J, Duncan DP and Jones C), (1998) 88IR 21.

 4   Smith and Ors v Moore Paragon Australia Ltd, (Lawler VP, Kaufman SDP and Mansfield C), (2004) PR942856.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR572245>