Erik Wirtz v The Trustee for the Posadowski Family Trust T/A Ready Kit Cabinets Pty Ltd
[2014] FWC 7606
•27 OCTOBER 2014
| [2014] FWC 7606 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Erik Wirtz
v
The Trustee for the Posadowski Family Trust T/A Ready Kit Cabinets Pty Ltd
(U2014/5694)
DEPUTY PRESIDENT KOVACIC | MELBOURNE, 27 OCTOBER 2014 |
Application for relief from unfair dismissal - jurisdiction - small business - genuine redundancy - harsh, unjust or unreasonable - compensation.
[1] On 18 March 2014 Mr Eric Wirtz (the Applicant) filed an application under s.394 of the Fair Work Act 2009 (the Act) alleging that the termination of his employment by The Trustee for the Posadowski Family Trust T/A Ready Kit Cabinets Pty Ltd (the Respondent) on 12 March 2014 was harsh, unjust or unreasonable.
[2] The Applicant represented himself and gave evidence on his own behalf. Mr Posadowski appeared for the Respondent and gave evidence together with Mr Glenn Ould, the Factory Manager for the Respondent.
[3] I have found that Mr Wirtz’s termination was not a genuine redundancy and that it was harsh, unjust and unreasonable. As to remedy, for the reasons outlined below I do not consider reinstatement appropriate and propose an amount of compensation of $5076.94 less applicable tax, which is equivalent to four weeks’ salary. However, given the Respondent’s financial circumstances, before settling an order I propose to convene a conference of the parties to discuss what, if any, effect the proposed compensation would have on the viability of the Respondent’s business.
Background
[4] Mr Wirtz commenced his employment with the Respondent on 10 January 2013 as a Computer Numerical Control (CNC) Operator, though he did also perform sales work at different times during his employment with the Respondent. It was not disputed that the Applicant was protected from unfair dismissal at the time his employment was terminated on 12 March 2014.
[5] The Respondent has been under financial pressure for some time and on 29 October 2013 was placed into administration. The Respondent commenced operating under a Deed of Company Arrangement (DOCA) in mid-December 2013. These financial pressures were evidenced by, among other things, employees regularly being paid their wages late and superannuation contributions and taxation instalments being in arrears.
[6] On 11 March 2014, Mr Wirtz contacted Mr Posadowski to advise that he would not be coming into work as he had to care for his nine month old daughter who was unwell. While Mr Posadowski accepted this, during the hearing he admitted that he was annoyed with Mr Wirtz’s absence on carer’s leave.
[7] On 12 March 2014 when Mr Wirtz arrived for work Mr Posadowski immediately spoke with him and advised that he would have to let him go. Mr Wirtz submits that Mr Posadowski advised him that he was closing the business due to monetary problems, ill health and lack of energy and that he asked him to leave immediately. He further submits that Mr Posadowski undertook to provide him with a letter of termination and separation certificate, neither of which he submits have been provided to date.
[8] Mr Posadowski disputes that he told Mr Wirtz that he was closing the business and cites genuine redundancy as the reason for Mr Wirtz’s termination. Mr Posadowski does, however, acknowledge that while redundancy was the reason for Mr Wirtz’s termination, the termination was the culmination of a number of things that had happened over the year. The other factors identified by Mr Posadowski included what he described as Mr Wirtz’s “entitlement mentality”, his alleged undertaking of activities related to his personal business during work hours and his non-compliance with the Respondent’s no mobile phone at work policy. Mr Posadowski also alluded to Mr Wirtz’s poor sales figures and continuing errors as further factors in the termination.
[9] No other employees were made redundant with Mr Wirtz.
The submissions of the Applicant
[10] Mr Wirtz submitted that the reasons cited by Mr Posadowski for his termination, i.e. financial issues, ill health and lack of energy, were false. The real reason for his dismissal he contended was that he had taken carer’s leave on 11 March 2014. Mr Wirtz also disputed Mr Posadowski’s claim that his termination was a genuine redundancy. In doing so, Mr Wirtz questioned, among other things, why Mr Posadowski had not referred to genuine redundancy until May 2014, had not dismissed casual and/or probationary staff rather than him, and had not discussed with him alternative approaches such as working part-time or taking a pay cut. To support his contention that his dismissal was not a genuine redundancy, Mr Wirtz pointed to a job advertisement placed by the Respondent which appeared in the press on 22 March 2014 seeking a full-time cabinetmaker. Mr Wirtz also contended that the position of CNC programmer had not changed 1.
[11] As to remedy, Mr Wirtz submitted that he considered reinstatement untenable on the basis that all trust and respect between he and Mr Posadowski had dissolved. In those circumstances Mr Wirtz sought payment of outstanding amounts owed to him. He identified these amounts as being payment for:
- the three days before the administrators took control of the business in late October 2013 - calculated as $774.30 plus interest;
- 11 and 12 March 2014 - calculated as $461.54; and
- a week’s notice in lieu which remained outstanding - calculated as $1153.85.
[12] In addition, Mr Wirtz sought compensation of 14 week’s pay based on one week’s pay for each month of service with the Respondent. This amounts to $16,153.90, based on Mr Wirtz’s weekly salary of $1153.85.
The Applicant’s evidence
[13] Under cross examination Mr Wirtz reiterated many of the points made in his submissions. Beyond that, key aspects of his evidence were that he believed that Mr Posadowski had changed the reasons for the termination since his dismissal, adding that he had still not received written reasons for his termination despite numerous email requests for a termination letter and separation certificate. Further, Mr Wirtz stated that he considered Mr Posadowski had dismissed him out of frustration and anger and had subsequently tried to come up with reasons to justify his actions.
[14] Mr Wirtz also stated that he had received no formal warnings while employed by the Respondent, though he did acknowledge that some errors had been brought to his attention. However, Mr Wirtz described the errors brought to his attention as minor, adding that he always took the utmost care with his work.
[15] In response to questions from Mr Posadowski, Mr Wirtz stated that he never undertook work for his own business during working hours and that he had no idea of the value of sales for those periods he was working at the Respondent’s showroom or that jobs were going out with errors.
[16] Mr Wirtz also acknowledged under cross examination that wages were paid late every week.
The submissions of the Respondent
[17] The Respondent submitted that Mr Wirtz’s termination was the result “of a lot of frustration and anger that it was impossible for me to keep paying Erik for non-performance. As I had said to Erik that morning I do not know where I was going to get the money to pay the wages for the week.” 2 The Respondent also submitted that “The 11thof March was the straw that broke my bank [sic back]as constant complaints from customers that their jobs are wrong or colours selected incorrect ... The decision to terminate his employment was purely and solely on the basis that I could not run my business as it had been run for the last 12 months prior to the day.”3 The Respondent also alluded to Mr Wirtz taking carer’s leave on 11 March 2014, contending that he understood and stating that “Erik’s decision was a very detrimental choice to look after his daughter because he was entitled to carers leave ... I found those words very insulting and hard to comprehend knowing I was losing my house and everything I had worked for all those years.”4
[18] The Respondent stressed that Mr Wirtz’s termination was a genuine redundancy and that Mr Posadowski now does both the computer work (i.e. CNC work) and sales and that the business now only employs six employees as opposed to the fifteen it previously employed. The Respondent further submitted that it could not afford paying someone who is non-productive and that he found Mr Wirtz’s “entitlement mentality” insulting, particularly in circumstances where he had lost his house and the bank had taken over a unit owned by the Respondent and had foreclosed on the Respondent’s overdraft facility.
The Respondent’s evidence
[19] Mr Posadowski did not provide a witness statement. Under cross examination Mr Posadowski set out in broad terms the Respondent’s financial circumstances in recent years and Mr Wirtz’s role while employed by the Respondent. His evidence reiterated many of the points made in the Respondent’s submissions. Key aspects of Mr Posadowski’s evidence were that:
- the business had lost over $200,000 in the past 12-13 months;
- the business had been running at a severe loss for over three years;
- the reason for Mr Wirtz’s dismissal was that he had “no money”, adding that on the day of the dismissal he indicated to Mr Wirtz that he could not afford to pay him and that were things to continue as they were he would be better off closing the business;
- he had advertised for a cabinetmaker on 22 March 2014 because at that time the business had in excess of 15-20 jobs in the factory which could not be delivered without a cabinetmaker;
- following the DOCA taking effect he had spoken to all employees about the importance of them taking responsibility for their work;
- there were errors in Mr Wirtz’s work and Mr Wirtz failed to respond to problems raised by clients regarding their purchase. To reinforce the point, Mr Posadowski cited the example of the Barwon Prison job which he contended took two days instead of 10 minutes to complete as a result of errors which Mr Wirtz should have picked up prior to production and another of Mr Wirtz’s jobs where as a result of errors the cost of make good totalled $4,800;
- while one in ten of his jobs would have faults, about two-thirds of Mr Wirtz’s jobs had faults;
- Mr Wirtz’s sales results were markedly lower than his;
- no written warnings had been given to Mr Wirtz regarding his performance, though he had sat down with Mr Wirtz and discussed what needed to improve; and
- he believed that Mr Wirtz was undertaking activities related to his own business during work hours, citing the presence of software relating to Mr Wirtz’s business on the Respondent’s computer system and Mr Wirtz’s non-compliance with the Respondent’s no mobile phone at work policy as the basis for that belief.
[20] In his witness statement Mr Ould set out problems which had been brought to his attention on 11 March 2014 relating to three jobs which Mr Wirtz was working on while employed by the Respondent 5. Under cross examination Mr Ould confirmed that he had performed work for Mr Wirtz out of hours but disputed that he had discussed these jobs with Mr Wirtz during working hours or that he carries a mobile phone with him while at work. On the issue of errors, Mr Ould indicated that Mr Posadowski’s jobs were generally pretty good, though he had picked up some issues before manufacture, whereas with Mr Wirtz’s work he could recall about five or six jobs with errors out of 20 to 30 jobs. Mr Ould also stated that Mr Posadowski was ultimately responsible for all errors made by staff and that the business had never had a good year in the period he had worked for the Respondent.
[21] While a witness statement by Mrs Posadowski was submitted in accordance with the Commission’s directions in this matter, Mrs Posadowski did not give evidence as she was ill. Her witness statement was therefore not tendered as evidence and accordingly it has not been taken into consideration in determining this matter.
The statutory framework
[22] The Commission exercises its discretion in relation to an application for an unfair dismissal remedy pursuant to Part 3-2 of the Act. In this case there is no contest that the Applicant is a person who is protected from unfair dismissal pursuant to s.382 of the Act. In the context of this matter, the relevant provisions of the Act are ss. 385, 387 and 389 which read as follows:
“385 What is an unfair dismissal
A person has been unfairly dismissed if FWC 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.
387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWC 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 FWC considers relevant.
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.”
[23] There is no dispute that Mr Wirtz was dismissed, so s.385(a) of the Act is satisfied. Mr Wirtz contends that his termination was harsh, unjust or unreasonable, so s.385(b) is relevant. While the Respondent currently employs six staff, Mr Posadowski’s evidence was that the business had employed fifteen staff at the time of Mr Wirtz’s dismissal. Further, the Respondent did not contend that it was a small business employer for the purpose of the Act. Accordingly, s.385(c) is not relevant. The Respondent contends that the termination is a case of genuine redundancy, so s.385(d) applies. Therefore, in determining whether Mr Wirtz was unfairly dismissed, I must consider whether the dismissal was harsh, unjust or unreasonable as per s.385(b) and whether the termination was a case of genuine redundancy as per s.385(d).
Was the termination a genuine redundancy?
[24] Section 389 deals with the meaning of genuine redundancy. I will deal with each of the factors set out in s.389 separately.
The employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the enterprise [s.389(1)(a)]
[25] The picture that emerges from the evidence in this matter is one of a business which is and has been under financial pressure for some time. This is evidenced by the Respondent being placed into administration in the second half of 2013, Mr Posadowski’s evidence that the business had lost over $200,000 in the past 12-13 months and had been running at a severe loss for over three years and the evidence indicating that the business consistently struggled to pay wages on time.
[26] The financial dimension in Mr Wirtz’s termination is clearly expressed in an email from Mr Posadowski to Mr Wirtz on 14 April 2014 where he states:
“You were dismissed purely because of the financial hardship that was put upon my wife and I.” 6
[27] Mr Wirtz pointed out in his closing submissions that the losses had started before he was employed by the Respondent, adding that it appeared Mr Posadowski was trying to pin the blame for the Respondent’s continuing losses on him. While that latter view is understandable, it is not a conclusion that I draw from Mr Posadowski’s evidence and submissions.
[28] The evidence in this matter also indicates that there were a number of other factors which were relevant considerations in Mr Posadowski’s decision to terminate Mr Wirtz’s employment. They include what Mr Posadowski saw as Mr Wirtz’s “entitlement mentality”, the errors in Mr Wirtz’s work and the costs incurred by the Respondent in rectifying those errors, Mr Wirtz’s lower sales figures and Mr Posadowski’s concerns regarding Mr Wirtz conducting his own business during work hours.
[29] While Mr Wirtz contended that the CNC work performed by the Respondent had not changed, Mr Posadowski’s submission was that he now performed the CNC work in addition to sales work.
[30] The Explanatory Memorandum to the Fair Work Bill 2008 (the Bill) in discussing the meaning of genuine redundancy states:
- a machine is now available to do the job performed by the employee;
- the employer's business is experiencing a downturn and therefore the employer only needs three people to do a particular task or duty instead of five; or
- the employer is restructuring their business to improve efficiency and the tasks done by a particular employee are distributed between several other employees and therefore the person's job no longer exists.” [Underlining added]
“1548. The following are possible examples of a change in the operational requirements of an enterprise:
[31] In other words, the above extract indicates that simply because the work continues to be performed does not of itself mean that a job is not redundant.
[32] In this case, the material before me supports a finding that Mr Posadowski assumed the key components of Mr Wirtz’s duties with any residual aspects reallocated to other employees.
[33] Drawing on all of these factors, I find that Mr Wirtz’s termination was as a result of the Respondent no longer requiring his job to be performed by anyone because of changes in the operational requirements of the enterprise.
The employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy [s.389(1)(b)]
[34] The Respondent’s offer of employment to Mr Wirtz 7 in early 2013 cited the Joinery and Building Trades Award 2010 (the Award) as underpinning the contract of employment. The Award’s consultation clause is as follows:
“8. Consultation
8.1 Consultation regarding major workplace change
(a) Employer to notify
(i) Where an employer has made a definite decision to introduce major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must notify the employees who may be affected by the proposed changes and their representatives, if any.
(ii) Significant effects include termination of employment; major changes in the composition, operation or size of the employer’s workforce or in the skills required; the elimination or diminution of job opportunities, promotion opportunities or job tenure; the alteration of hours of work; the need for retraining or transfer of employees to other work or locations; and the restructuring of jobs. Provided that where this award makes provision for alteration of any of these matters an alteration is deemed not to have significant effect.
(b) Employer to discuss change
(i) The employer must discuss with the employees affected and their representatives, if any, the introduction of the changes referred to in clause 8.1(a), the effects the changes are likely to have on employees and measures to avert or mitigate the adverse effects of such changes on employees and must give prompt consideration to matters raised by the employees and/or their representatives in relation to the changes.
(ii) The discussions must commence as early as practicable after a definite decision has been made by the employer to make the changes referred to in clause 8.1(a).
(iii) For the purposes of such discussion, the employer must provide in writing to the employees concerned and their representatives, if any, all relevant information about the changes including the nature of the changes proposed, the expected effects of the changes on employees and any other matters likely to affect employees provided that no employer is required to disclose confidential information the disclosure of which would be contrary to the employer’s interests.
8.2 Consultation about changes to rosters or hours of work
(a) Where an employer proposes to change an employee’s regular roster or ordinary hours of work, the employer must consult with the employee or employees affected and their representatives, if any, about the proposed change.
(b) The employer must:
(i) provide to the employee or employees affected and their representatives, if any, information about the proposed change (for example, information about the nature of the change to the employee’s regular roster or ordinary hours of work and when that change is proposed to commence);
(ii) invite the employee or employees affected and their representatives, if any, to give their views about the impact of the proposed change (including any impact in relation to their family or caring responsibilities); and
(iii) give consideration to any views about the impact of the proposed change that are given by the employee or employees concerned and/or their representatives.
(c) The requirement to consult under this clause does not apply where an employee has irregular, sporadic or unpredictable working hours.
(d) These provisions are to be read in conjunction with other award provisions concerning the scheduling of work and notice requirements.” [Underlining added]
[35] It is worth noting that the copy of the offer of employment submitted by Mr Posadowski was unsigned. Further, the offer provides that:
“Either party may terminate this agreement. Notice of termination must be in writing.
Termination of employment is by one hour’s notice or by payment or forfeiture, as the case may be, of remainder of the day’s wages or one hour’s pay, whichever amount is greater.” 8
[36] The period of notice provided for in the offer of employment is clearly inconsistent with the period of notice provided for in the National Employment Standards (NES) in the Act. Accordingly the latter prevails. Further, Mr Posadowski’s evidence was that he gave Mr Wirtz two weeks’ notice (which is consistent with the NES) and did not require Mr Wirtz to work out the notice period. As previously noted, Mr Wirtz submitted that payment for one week of the notice period remained outstanding.
[37] It is clear that Mr Posadowski had an obligation under the Award to notify Mr Wirtz and his representative, if any, of the proposed change(s) once a definite decision had been made and to discuss the proposed change(s), its effect on Mr Wirtz and measures to mitigate the effect of the change(s) with Mr Wirtz and/or his representative as soon as practicable after the decision was made and to give consideration to matters raised in those discussions regarding the change(s). Such consultation would have provided an opportunity for Mr Wirtz to propose some of the measures referred to in his submissions (see paragraph [10] above).
[38] The evidence in this case is that no such consultation occurred. It was not disputed that Mr Wirtz upon arriving at work on 12 March 2014 was informed by Mr Posadowski that his employment was to be terminated and that he was to leave the workplace immediately.
[39] It follows that Mr Wirtz’s termination was therefore not a genuine redundancy as defined in the Act as the Respondent had not complied with its Award obligation to consult about the redundancy.
Would it have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise or the enterprise of an associated entity of the employer? [s.389(2)]
[40] No evidence was led on the issue of possible redeployment. While Mr Wirtz did raise the issue of the job advertisement for a cabinetmaker placed by the Respondent in the press on 22 March 2014, he did not contend that he could have been redeployed to that vacancy. Rather, he alluded to that advertisement as casting doubt on the genuineness of his redundancy. He did submit, however, that casual and/or probationary staff could have been dismissed instead of him.
[41] As noted by the Full Bench in Technical and Further Education Commission T/A TAFE NSW v L. Pykett (TAFE NSW) 9:
“[40] The Commissioner ... failed to make a finding that there was a job, a position or other work to which Ms Pykett could have been redeployed. Such a finding is a necessary step in reaching a conclusion that it would have been reasonable in all the circumstances for Ms Pykett to be redeployed within the appellant’s enterprise.”
[42] Given the financial circumstances of the Respondent, it is unlikely that there was a job, a position or other work to which Mr Wirtz could have been redeployed. However, in the absence of any evidence on this issue, I am unable to form a definitive view as to whether or not this was the case. Following the approach in TAFE NSW, I am therefore unable to conclude that it would have been reasonable in all the circumstances for Mr Wirtz to be redeployed within the Respondent’s enterprise.
Was the dismissal harsh, unjust or unreasonable?
[43] In considering whether a dismissal was harsh, unjust or unreasonable, the Act requires the Commission to have regard to the criteria set out in s.387. I will address each of those criteria separately.
(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)
[44] I have previously found that Mr Wirtz’s termination was as a result of the Respondent no longer requiring his job to be performed by anyone because of changes in the operational requirements of the enterprise. However, as noted at paragraph [8] above, Mr Posadowski acknowledged that Mr Wirtz’s termination was the culmination of a number of things that had happened over the year. The other factors identified by Mr Posadowski included what he described as Mr Wirtz’s “entitlement mentality”, his alleged undertaking of activities related to his personal business during work hours and his non-compliance with the Respondent’s no mobile phone at work policy. Mr Posadowski also alluded to Mr Wirtz’s poor sales figures and continuing errors as relevant considerations in the termination. These factors do in part go to Mr Wirtz’s conduct.
[45] While some of these other factors cited by Mr Posadowski may in particular circumstances either individually or collectively constitute a valid reason for dismissal, some, e.g. Mr Wirtz’s so called “entitlement mentality”, would clearly not. However, Mr Posadowski maintained throughout the proceedings that Mr Wirtz’s dismissal was a genuine redundancy. Accordingly, the factors cited by Mr Posadowski, to the extent that they relate to Mr Wirtz’s conduct, do not constitute a valid reason for his dismissal, particularly in circumstances where several of the factors have not been raised with Mr Wirtz (as outlined below).
(b) Whether the person was notified of that reason
[46] There is no evidence to suggest that Mr Wirtz was notified of these other factors prior to his dismissal. While Mr Wirtz acknowledged that Mr Posadowski had raised with him the issue of errors, this appears to have occurred sometime prior to his dismissal. In addition, Mr Posadowski’s undisputed evidence supports a finding that he did remind Mr Wirtz of the Respondent’s no mobile phone at work policy. Beyond that, however, it does not appear that Mr Posadowski’s concerns regarding what he described as Mr Wirtz’s “entitlement mentality”, Mr Wirtz undertaking activities related to his personal business during working hours or his sales figures were ever raised with Mr Wirtz. This suggests a lack of procedural fairness in the dismissal process.
[47] This is therefore a relevant consideration.
(c) Whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person
[48] It follows from the above that Mr Wirtz was not provided with an opportunity to respond to the other factors identified by Mr Posadowski. Again, this is a relevant consideration.
(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
[49] No invitation was extended by Mr Posadowski to Mr Wirtz to have a support person sit in on their discussion on 12 March 2014. Further, Mr Wirtz did not submit that he would have sought the attendance of a support person in circumstances where he had known the purpose of the meeting. As such, I consider this criterion to be a neutral consideration.
(e) If the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal
[50] While Mr Posadowski asserts that Mr Wirtz’s termination was a genuine redundancy, he also acknowledged that the termination was the culmination of a number of things that had happened over the year. More specifically, the Respondent’s submission “that it was impossible for me to keep paying Erik for non-performance” 10 and Mr Posadowski’s evidence which referred to the errors in Mr Wirtz’s work and poor sales figures support a view that performance was a consideration in the dismissal.
[51] It was not disputed that Mr Posadowski had discussed the issue of errors with Mr Wirtz; however Mr Wirtz described the errors raised with him as fairly minor. Also relevant is Mr Posadowski’s evidence that he had not given Mr Wirtz any written warnings regarding his performance.
[52] This supports a finding that Mr Wirtz’s termination was in part related to what Mr Posadowski considered to be his unsatisfactory performance and while the issue of errors had been discussed with Mr Wirtz he had not been warned about that unsatisfactory performance before his dismissal.
(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
[53] The Respondent is a small business with no human resources staff. At the hearing Mr Posadowski demonstrated a limited grasp of his obligations under the Act and Award. I consider that the Respondent’s size would therefore have impacted on the procedures followed in effecting Mr Wirtz’s dismissal.
(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
[54] For the reasons outlined above, I consider that the Respondent’s size would have impacted on the procedures followed in effecting Mr Wirtz’s dismissal.
(h) Any other matters that FWC considers relevant
[55] The material in this case suggests that Mr Wirtz’s decision to take carer’s leave on 11 March 2014 was the catalyst that led to his dismissal on 12 March 2014. The Respondent’s submissions that “The 11thof March was the straw that broke my bank [sic back]as constant complaints from customers that their jobs are wrong or colours selected incorrect ... The decision to terminate his employment was purely and solely on the basis that I could not run my business as it had been run for the last 12 months prior to the day.” 11 The Respondent also alluded to Mr Wirtz taking carer’s leave on 11 March 2014, contending that he understood and stating that “Erik’s decision was a very detrimental choice to look after his daughter because he was entitled to carers leave ... I found those words very insulting and hard to comprehend knowing I was losing my house and everything I had worked for all those years.”12 While Mr Posadowski’s reaction is perhaps understandable in the circumstances, it is also unreasonable given that the illness of Mr Wirtz’s nine month old daughter is not disputed. It may also contravene the Act’s general protections provisions.
[56] A further factor identified by Mr Posadowski as a consideration in his decision to dismiss Mr Wirtz was his view that Mr Wirtz was undertaking activities related to his own business during work time. While there was some circumstantial material to support that view, no evidence was lead that Mr Posadowski ever discussed his concerns with Mr Wirtz, other than reiterating the Respondent’s no mobile phone at work policy.
[57] I have previously found at paragraph [39] that the Applicant’s termination was not a genuine redundancy as defined in the Act based on the Respondent’s failure to consult in accordance with its obligations under the Award. Further, as previously noted, I am unable to conclude that it would have been reasonable in all the circumstances for Mr Wirtz to be redeployed within the Respondent’s enterprise.
[58] In Maswan v Escada Textilvertrieb T/A ESCADA (Escada) 13 Vice President Watson found the failure to consult did not render the dismissal unfair.14 More particularly, Watson VP stated:
“[39] In my view a decision to dismiss on account of redundancy will only be harsh, unjust or unreasonable if the rationale for the decision is seriously undermined or if there is a serious error in procedure such that renders the termination unfair in the circumstances ... The failure to consult is not a trivial matter. But as it is clear that consultation was highly unlikely to have negated the operational reasons for the dismissal or lead to any other substantive change, I do not believe that the failure to consult prior to the date of termination rendered the dismissal unfair. Given the evidence in relation to the operational need to restructure, I am of the view that it is likely that Mr Maswan would have been dismissed in any event, even if timely consultation had occurred.”
[59] The circumstances in this matter are very similar to those in Escada in that ESCADA was also a small business that had been experiencing financial difficulties 15.
[60] The issue of consultation was also considered by a Full Bench of Fair Work Australia in UES (Int’l) Pty Ltd v Leevan Harvey (UES) 16. In its decision the Full Bench said:
“[48] UES, however, failed to consult with Mr Harvey as required by the “consultation regarding major workplace change” clause in the modern award that applied to his employment. In the circumstances the failure to so consult was unreasonable. We regard such a failure to consult as also a matter relevant to our consideration as to whether Mr Harvey’s dismissal was harsh, unjust or unreasonable. Further, it is a matter telling for a conclusion that Mr Harvey’s dismissal was harsh, unjust or unreasonable.
Conclusion regarding harsh, unjust or unreasonable
[49] Taking into account the matters referred to above, we are satisfied Mr Harvey’s dismissal by UES was harsh, unjust or unreasonable. A failure to consult does not necessarily mean a dismissal was harsh, unjust or unreasonable. However, in this case we consider the failure to consult was unreasonable and is sufficient to lead us to conclude Mr Harvey’s dismissal was harsh, unjust or unreasonable, notwithstanding the valid reasons for his dismissal and the due weight we have given to those valid reasons.”
[61] Two questions flow from these authorities - the first is whether or not consultation would have resulted in a different outcome and the second is whether the failure to consult was unreasonable. On the first question, while consultation would have afforded Mr Wirtz the opportunity to put forward a number of alternatives, at the end of the day, I doubt that it would have averted his dismissal given the financial pressure the Respondent was under. At best I consider that it may have delayed his dismissal by a few days. Consultation, however, is likely to have seen the dismissal found to be a genuine redundancy for the purposes of the Act. With regard to the second question, I consider the failure to consult to be unreasonable, particularly in light of the other factors cited by Mr Posadowski as relevant considerations in his decision to dismiss Mr Wirtz.
[62] While based on the material before me I accept that financial reasons were the primary factor in the decision to terminate Mr Wirtz, I cannot overlook the other factors cited by Mr Posadowski as being relevant considerations in his decision to terminate Mr Wirtz. Chief among those, is the fact that Mr Wirtz taking carer’s leave was, to use the Respondent’s words, “the straw that broke my bank [sic back]” 17. In addition, the absence of consultation and the general lack of procedural fairness afforded Mr Wirtz are particularly relevant considerations in determining whether or not the dismissal was harsh, unjust and unreasonable. These considerations are not outweighed by acknowledging that the Respondent’s size did impact on the procedures followed in effecting Mr Wirtz’s dismissal.
[63] Taking into account all of these factors and having considered all of the relevant statutory provisions, I find that Mr Wirtz’s termination was harsh, unjust and unreasonable.
Remedy
[64] As noted at paragraphs [11] and [12] above, Mr Wirtz considered that reinstatement was not appropriate on the basis that all trust and respect between he and Mr Posadowski had dissolved. Accordingly, he sought the payment of all outstanding employee entitlements and compensation equivalent to 14 weeks’ pay.
[65] Section 318 of the Act sets out the object of Part 3-2 of the Act, providing at ss.318(1)(c) that an object of Part 3-2 is “to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement.”
[66]
Given that Mr Wirtz’s former responsibilities have largely been assumed by Mr Posadowski, the Respondent’s financial circumstances and the reasons cited by Mr Wirtz, I do not consider reinstatement appropriate in this case.
[67] Section 390 of the Act deals with when the Commission may order a remedy for unfair dismissal and provides at ss.390(3):
“(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.”
[68] The criteria relevant to the deciding of the amount of compensation are set out in s.392(2) of the Act.
Remuneration that would have been received (s.392(2)(c))
[69] At paragraph [61] above I observed that while consultation would have afforded Mr Wirtz the opportunity to put forward a number of alternatives, at the end of the day, I doubt that it would have averted his dismissal given the financial pressure the Respondent was under. I further observed that consultation may have delayed Mr Wirtz’s dismissal by a few days and is likely to have seen the dismissal found to be a genuine redundancy for the purposes of the Act.
[70] Given the size of the Respondent, I consider that the consultation period is likely to have taken three days. This would have provided a reasonable opportunity for the provision, consideration and discussion of relevant information regarding the proposed change, for Mr Wirtz to consider whether he wished to be represented, for Mr Wirtz to put forward measures to avert or mitigate the impact of the proposed change and for Mr Posadowski to consider and respond to those proposals. On the basis that consultation would not have averted the dismissal, I consider that Mr Wirtz would have been entitled to four weeks redundancy pay under the Award.
[71] Accordingly, I consider that had Mr Wirtz not been terminated when he was, a reasonable expectation was that he would have been likely to receive another three days’ remuneration plus four weeks’ redundancy pay. This equates to an amount of $5076.94 less applicable tax.
Remuneration earned (s.392(2)(e))
[72] Mr Wirtz’s evidence was that he had earned an average of $300-$350 per week since his termination. Given the basis on which the proposed compensation has been calculated (i.e. primarily as equivalent to redundancy pay), I consider that no deduction on this ground is warranted.
Income reasonably likely to be earned (s.392(2)(f))
[73] For the same reason as above, I consider that no deduction on this ground is warranted.
Other matters (s.392(2)(g))
[74] There are no other matters that I consider relevant to take into account in the determination of an amount of compensation in lieu of reinstatement for the Applicant, apart from those in ss.392(2)(a), (b) and (d), s.392(3) and s.392(5) of the Act to which I now turn.
Viability (s.392(2)(a))
[75] Given the financial circumstances of the company, it is not clear whether the proposed compensation would affect the viability of the Respondent’s enterprise. I therefore propose to convene a conference of the parties to discuss this issue prior to finalising an order. This approach is also consistent with s.120 of the Act which provides scope for Commission on application by the employer to vary the amount of redundancy pay for other employment or incapacity to pay.
Length of service (s.392(2)(b))
[76] Given the basis on which the proposed amount of compensation has been calculated, I do not consider that Mr Wirtz’s relatively short period of service provides a basis for reducing the proposed amount of compensation.
Mitigation efforts (s.392(2)(d))
[77] Mr Wirtz’s evidence was that he has been looking for work since his termination without success and that he has earned income via his business. Given the basis on which the compensation has been calculated, I consider that no deduction on this ground is warranted.
Misconduct (s.392(3))
[78] Misconduct was not a factor in Mr Wirtz’s termination. As a result, there is no basis to reduce the proposed compensation amount on account of misconduct.
Compensation cap (s.392(5))
[79] The proposed amount of compensation of $5076.94 less applicable tax is less than the compensation cap for Mr Wirtz as per s.392(5) of the Act.
Conclusion
[80] For the reasons outlined above, I consider Mr Wirtz’s termination was not a genuine redundancy and that it was harsh, unjust and unreasonable. As to remedy, I do not consider reinstatement appropriate and propose an amount of compensation of $5076.94 less applicable tax, which is equivalent to four weeks’ pay. However, prior to settling an order for compensation, I propose to convene a conference of the parties to discuss whether the proposed compensation would affect the viability of the Respondent’s enterprise.
[81]Beyond this, I would encourage the Respondent to pay Mr Wirtz his outstanding entitlements as soon as possible. Should this not occur, it can be discussed at the abovementioned conference.
DEPUTY PRESIDENT
Appearances:
E. Wirtz on his own behalf.
M. Posadowski for the Respondent.
Hearing details:
2014.
Melbourne:
August 7.
1 Exhibit W1
2 Respondent’s Outline of Submissions at page 3
3 Ibid
4 Ibid at page 4
5 Exhibit P1
6 Exhibit W1 at Attachment 14
7 Respondent’s Outline of Submissions at Submission 3
8 Ibid
9 [2014] FWCFB 714
10 Respondent’s Outline of Submissions at page 3
11 Ibid
12 Ibid at page 4
13 [2011] FWA 4239
14 [2011] FWA 4239 at paragraph [42]
15 Ibid at paragraph [5]
16 (2012) 215 IR 263
17 Respondent’s Outline of Submissions at page 3
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