Filomena Ceccarelli v Red Carpet Creations Pty Ltd T/A Red Pearl Couture

[2013] FWC 1869

[2013] FWC 1869

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Filomena Ceccarelli
v
Red Carpet Creations Pty Ltd T/A Red Pearl Couture
(U2012/16848)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 27 MARCH 2013

Application for Unfair Dismissal Remedy - Small Business Fair Dismissal Code - consideration of the merits of the application - harsh, unjust or unreasonable - remedy.

[1] On 17 December 2012 Ms Ceccarelli lodged an application pursuant to s.394 of the Fair Work Act 2009 (the FW Act) through which she sought relief with respect to the termination of her employment with Red Carpet Creations Pty Ltd T/A Red Pearl Couture (Red Pearl). The application was not resolved through the conciliation process and was referred to me for arbitration.

[2] Having consulted with the parties, this arbitration was conducted by way of a determinative conference, pursuant to s.398 of the FW Act convened on 21 March 2012. At this conference Ms Ceccarelli represented herself and Red Pearl was represented by its Director, Mr Tettis.

[3] Section 396 requires that the Commission be satisfied about a number of specified initial matters before the merits of the application can be considered. In this matter there is no dispute that the application was lodged within time. There is no dispute that Ms Ceccarelli was engaged as a regular casual employee under the Textile, Clothing, Footwear and Associated Industries Award 2010 (the Award). Ms Ceccarelli’s employment commenced on 2 August 2011. She was dismissed on 7 December 2012. I am satisfied that Ms Ceccarelli was a person protected from unfair dismissal. There is no suggestion that the termination of Ms Ceccarelli’s employment was a case of genuine redundancy.

[4] Red Pearl and Ms Ceccarelli agree that, at the time of the termination of Ms Ceccarelli’s employment, Red Pearl employed fewer than 15 employees and was a small business such that the Small Business Fair Dismissal Code (the Code) requires consideration. I have initially considered whether the termination of Ms Ceccarelli’s employment was consistent with that Code.

[5] Section 388 establishes the Code. This section states:

“388 The Small Business Fair Dismissal Code

(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.

(2) A person’s dismissal was consistent with the Small Business Fair Dismissal Code if:

(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and

(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.”

[6] Section 395 provides that, in effect, if Ms Ceccarelli’s dismissal was consistent with the Code she was not unfairly dismissed.

[7] The Code states:

“The Fair Dismissal Code provides a simple explanation of when a dismissal will be deemed to be fair by the Fair Work Commission. The Code applies to businesses that employ less than 15 employees.

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 beforehand. This warning can be given verbally or preferably in writing. It must be clear when giving the warning that the employee risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning. The employer must also give the employee a reasonable chance to fix the problem. Fixing the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Employers must be able to prove they followed the Code

A small business employer will be required to provide evidence that they followed the Fair Dismissal Code if the employee makes a claim for unfair dismissal to the Fair Work Commission. This includes 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.

Employee can have someone present at meetings

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.”

[8] At the conference on 21 March 2013 Ms Ceccarelli gave sworn evidence and provided a substantial amount of documentation in support of her position that remuneration and payments made to her were less than the relevant award and did not meet superannuation obligations. Ms Ceccarelli’s evidence was that she had not been warned about her behaviour or her timekeeping and had been dismissed after raising issues about wages and superannuation due to her.

[9] Ms Tettis is the Manager of Red Pearl. Red Pearl operates a retail bridal-wear clothing business. Ms Ceccarelli worked as a machinist on a regular casual basis. Whilst there may be a difference between the parties about her classification under the Award, there is no dispute that her duties included ensuring that the Red Pearl store was open for business by 9.00 am each day that she worked.

[10] Ms Tettis’ evidence was that there were some five occasions, from May to July 2012 when Ms Ceccarelli failed to attend work on time and open the store by 9.00 am. 1 Ms Tettis’ evidence was that she expressed concern to Ms Ceccarelli about this on various occasions.2 Whilst Ms Tettis referred to her discussions with Ms Ceccarelli as “warnings”, she conceded that they were better described as “comments” about her lateness. Ms Tettis’ evidence was that on 8 August 2012 Ms Ceccarelli had an altercation with another employee which she observed and, as a consequence, on 10 August 2012 she instructed Ms Ceccarelli that she was required to treat other employees with respect.3 Ms Tettis’ evidence was that she gave Ms Ceccarelli an instruction relative to her late arrival on 30 November 2012 and stressed the importance of opening the store on time.4 Whilst Ms Tettis characterised this as a warning, it does not appear that any consequences of repetition were specified to Ms Ceccarelli.

[11] Ms Tettis’ evidence was that from September 2011 to December 2012 Red Pearl was financially unable to make superannuation payments to staff but that, in early 2012 and again in July 2012, she advised employees of this, and that superannuation payments would be made in full as soon as Red Pearl was financially able to do so.

[12] Ms Tettis’ evidence was that on 5 December 2012 she spoke to another employee in the workroom adjacent to the shop and asked that employee to provide her superannuation details so that superannuation payments could be made. Ms Ceccarelli then complained that the payment of her wages was late and that she had not received superannuation payments. Ms Tettis alleged that Ms Ceccarelli was aggressive and made statements to the effect of “I’m sick of this shit”, “this is absolute crap” “I’m sure your husband gets paid on time” and “you always look after yourselves”. Ms Tettis’ evidence was that these statements were made in a raised voice, in the shop and in front of other employees. Ms Tettis asserts that Ms Ceccarelli said that she was underpaid, and that “she could not keep up with her personal bills and that this was my fault”. 5 Ms Tettis instructed Ms Ceccarelli to talk with her in private but Ms Ceccarelli refused and said “everyone should hear this”.6 Ms Tettis’ evidence was that at the end of that day she again tried to resolve these issues with Ms Ceccarelli and address her concerns about Ms Ceccarelli’s behaviour but that Ms Ceccarelli walked away from that discussion.

[13] Ms Tettis’ evidence was that on 6 December 2012 Ms Ceccarelli advised that she was sick and unable to work via an SMS message. On her return to work on 7 December 2012 Ms Tettis advised Ms Ceccarelli that her employment was terminated as a result of her failure to attend work on time, improve her behaviour to other staff and her conduct on 5 December 2012. Ms Tettis arranged for 30 hours pay as an ex gratia payment.

[14] Ms Tettis advised that on 9 December 2012 she received an e-mail from Ms Ceccarelli in which she expressed regret for her behaviour.

[15] Ms Tettis’ evidence was that Red Pearl had met all its obligations to pay wages under the Award and that since the termination of Ms Ceccarelli’s employment all superannuation payments had been made.

[16] Ms Ceccarelli’s evidence was that wages were not paid in accordance with the Award and that wages were not paid on a weekly basis as was required by the Award, that pay advices were late and did not enable a proper calculation of wage amounts due to her, and that superannuation payments were not made consistent with the Award obligation. 7 Ms Ceccarelli’s evidence was that she sought advice from the Fair Work Ombudsman in these respects in September 2011 but was reluctant to raise the issue with Ms Tettis. However, by mid 2012 she had engaged in a number of brief and unsatisfactory discussions with Ms Tettis.8 Ms Ceccarelli also disagrees that she was advised that superannuation payments would eventually be paid.

[17] Ms Ceccarelli disputes being given warnings about her behaviour. She acknowledges that she was late on occasion and that on 30 November 2012 Ms Tettis telephoned her about her lateness on that day. Ms Tettis complained about this and instructed her that she needed to advise Ms Tettis if she was to be late in the future. Ms Ceccarelli also disputes that she ever displayed bullying or harassing behaviour toward her employer or colleagues. 9

[18] With respect to the events of 5 December 2012, Ms Ceccarelli’s evidence was that she responded to Ms Tettis’ advice that superannuation payments were almost up-to-date and would be paid by Christmas by saying that no payments had been made into her superannuation account, that her pay was continuously being paid late and that this impacted on her ability to manage her finances. Ms Ceccarelli asserts that, that at the end of the day Ms Tettis raised the issue again which prompted her to refer to the financial impact that underpayments, late payments and the absence of superannuation payments had on her life. Ms Ceccarelli then engaged in a discussion with Ms Tettis about her capacity to work additional hours. Her evidence was that she became upset, and assumed that the conversation had ended so left the room. Ms Ceccarelli asserts that none of the comments she made on that day were aggressive or aggressively made.

[19] Ms Ceccarelli’s evidence is that she did not go to work on the 6 December 2012 as she was distressed. Ms Ceccarelli does not dispute Ms Tettis’ evidence about the termination of her employment on 7 December 2012 except that she understood she would be paid two weeks pay.

[20] Ms Ceccarelli agrees that she sent an e-mail to Ms Tettis on 9 December 2012 in the hope that this would provide an opportunity for re-employment.

[21] Ms D’Angelo is another employee of Red Pearl. I was provided with a witness statement to the effect that Ms D’Angelo was aware that superannuation payments were not being made during the period September 2012 to December 2012 as a result of advice provided to her by Ms Tettis. Ms D’Angelo’s evidence is that on 5 December 2012 she witnessed the heated exchange between Ms Ceccarelli and Ms Tettis and regarded Ms Ceccarelli’s behaviour as loud and aggressive. She also felt embarrassed in observing this behaviour and uncomfortable in the workplace. 10 I invited Red Pearl to call Ms D’Angelo as a witness but Mr Tettis explained that, in order to keep the business open, Ms D’Angelo’s presence was required at the shop. I have accepted this explanation and have not adopted any adverse conclusions arising from a failure to call Ms D’Angelo to confirm her statement.

Findings

[22] I have concluded that a significant contributing factor in this matter related to Ms Ceccarelli’s concerns about payment of entitlements due to her. Ms Ceccarelli was, and is perfectly entitled to hold these concerns and to take action to recover monies which she believes are due to her. The FW Act and other legislation relative to superannuation establishes employee rights and enforceable employer obligations. Nothing in this decision deals with underpayment claims which are the domain of other jurisdictions. Any concern over employment entitlements however, does not give rise to a basis for inappropriate behaviour. However, a failure on the part of an employer to comply with the obligation to make minimum remuneration payments such as superannuation payments is understandably likely to create the potential for employee frustration and distrust. I have considered this application in this context.

[23] A Small Business Fair Dismissal Code Checklist has been developed to help small business employers to comply with the Code. There is no suggestion that this checklist has been completed in this matter. I have consequently considered the provisions of the Code itself.

[24] I have concluded that the termination of Ms Ceccarelli’s employment occurred on a summary basis. Ms Ceccarelli was employed as a casual employee. I am satisfied that on 7 December 2012, Ms Tettis made it clear to Ms Ceccarelli that her employment was terminated as of that time. 11 I have noted that Ms Ceccarelli was paid an amount which equated to 30 hours work but have concluded that this reflected an ex gratia payment.

[25] There were three forms of misconduct which formed the basis for the termination of Ms Ceccarelli’s employment. Firstly, her continued failure to ensure that she attended work on time. In this respect, I am not satisfied that this conduct was sufficiently serious to justify immediate dismissal on 7 December 2012. I am not satisfied that the discussions which Ms Tettis had with Ms Ceccarelli about her timekeeping made it clear that termination of employment would follow from further lateness. Even more importantly, the last occasion that Ms Ceccarelli was late was 30 November 2012 such that I do not consider instant dismissal on 7 December 2012 over a matter unrelated to timekeeping could be sustained on the basis of earlier timekeeping concerns.

[26] Secondly, Ms Ceccarelli’s failure to improve her behaviour to other staff was stated as a basis for the termination of her employment. Ms Ceccarelli was warned about her behaviour in this respect in August 2012. In the absence of evidence about repetition of such behaviour, or indeed any form of warning that repetition of that behaviour could result in termination of employment, this could not form a basis for the termination of her employment on 7 December 2012.

[27] Thirdly, Ms Ceccarelli’s behaviour on 5 December 2012 towards Ms Tettis was regarded by Red Pearl as misconduct which warranted the termination of her employment. Having considered all of the evidence before me I have concluded that this behaviour can be briefly summarised. Ms Ceccarelli was aggressive toward Ms Tettis in the workroom adjacent to the store itself and in front of at least one other employee. This behaviour followed a discussion between Ms Tettis and another employee over superannuation arrangements. The manner in which Ms Ceccarelli made these allegations was inappropriate and, when she was later given an opportunity to discuss her concerns privately with Ms Tettis, she did not do so. I have concluded that Ms Ceccarelli was frustrated by the protracted non-payment of superannuation amounts. While Ms Ceccarelli’s concerns about the alleged late payment of wages or an alleged underpayment did not justify a personal attack on Ms Tettis on 5 December 2012, I do not consider that this behaviour can be properly described as serious misconduct such that, pursuant to the Code, Red Pearl had reasonable grounds upon which to justify the decision to instantly dismiss Ms Ceccarelli. It was behaviour which would clearly warrant some form of disciplinary action such that, if it was repeated, it may have led to termination of employment. Had it not been for the unpaid superannuation obligations, I may have reached a different conclusion.

[28] Accordingly, I am not satisfied that Ms Ceccarelli’s summary dismissal was consistent with the Code.

[29] I have considered the extent to which the Code provides for dismissals other than summary dismissal. In this case I am satisfied that Red Pearl specified the reasons why she was being dismissed but I am not satisfied that the lateness and conduct toward other staff could be regarded as valid reasons in that there is no evidence which establishes this type of behaviour on the part of Ms Ceccarelli immediately before the dismissal. Ms Ceccarelli’s behaviour on 5 December 2012 could have represented a valid reason for the termination of her employment if she had been previously warned about such behaviour. I am not satisfied that this was the case.

[30] In cases other than summary dismissal the Code requires that an employee be warned verbally or preferably in writing about their behaviour. I am not satisfied that warnings of this nature were given to Ms Ceccarelli. Further, I am not satisfied that Ms Ceccarelli was given an opportunity to respond to Ms Tettis’ concerns.

[31] Consequently, I am not satisfied that Red Pearl has complied with the Small Business Fair Dismissal Code with respect to the termination of Ms Ceccarelli’s employment. Given this finding I do not believe that it necessarily follows that the termination of Ms Ceccarelli’s employment was unfair, but rather, that I consider the factors set out in s.387 of the FW Act.

[32] This section states:

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the 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 the FWC considers relevant.”

[33] I have considered these factors.

Valid Reason

[34] Notwithstanding various legislative changes since that time, I have adopted the position set out by Northrop J in Selvechandron v Petersen Plastics Pty Ltd, 12 in the following terms:

“In its context in s.170DE(1), the adjective “valid” should be given the meaning of sound, defensible or well founded. A reason which is capricious, fanciful, spiteful or prejudiced could never be a valid reason for the purposes of s.170DE(1). At the same time the reasons must be valid in the context of the employee’s capacity or conduct or based upon the operational requirements of the employer’s business. Further, in considering whether a reason is valid, it must be remembered that the requirement applies in the practical sphere of the relationship between an employer and an employee where each has rights and privileges and duties and obligations conferred and imposed on them. The provisions must “be applied in a practical, commonsense way to ensure that the employer and employee are treated fairly.”

[35] I am not satisfied that there was a valid reason for the termination of Ms Ceccarelli’s employment. Her periodic lateness and her behaviour toward another employee could have represented a valid reason if they recurred after she had been given appropriate warnings. Her behaviour on 5 December 2013 was not of a nature that required the employment relationship to be terminated and was, in my view, an understandable response to the non-payment of superannuation monies. Had Ms Ceccarelli’s behaviour been shown to be physically aggressive or sustained in the face of clear warnings, it may well have represented a valid reason for employment termination, but this is not the case here.

[36] In reaching this conclusion I have had regard to the fact that the discussion occurred in the general work area and was adjacent to the store. However, Ms Tettis initiated the discussion with another employee and it is clear from the evidence that employee issues have, on occasion in the past, been discussed in that general work area. Again, if warnings or instructions to employees about their conduct in that work area had been given, I may have arrived at a different conclusion.

Notification of the reason

[37] Notwithstanding concerns about the validity of those reasons, I am satisfied that Ms Tettis advised Ms Ceccarelli of the reasons for the termination of her employment.

Opportunity to respond

[38] I am not satisfied that Ms Ceccarelli was given an opportunity to respond to the proposition that her employment would be terminated. Ms Tettis made that termination of employment decision, probably in concert with Mr Tettis and proceeded to put it into effect without giving Ms Ceccarelli an opportunity to respond to it.

Unreasonable refusal to allow a support person.

[39] Because of the manner of the termination of Ms Ceccarelli’s employment, there was no practical opportunity for her to seek a support person. This means that my conclusions about this factor must be severely qualified such that, whilst there was no unreasonable refusal, there was no realistic opportunity for the making of a request for a support person.

Warnings about unsatisfactory performance.

[40] Ms Ceccarelli’s periodic lateness would have provided a basis for warnings about this behaviour. Those warnings should have specified what was expected of her and what would have happened if Ms Ceccarelli repeated her late attendance for work. I am not satisfied that warnings of this nature were given as distinct from observations or comments about her periodic late arrival for work.

[41] I consider that Ms Ceccarelli’s conduct on 5 December 2012 warranted a warning but I am not satisfied that any warnings about this type of behaviour had previously been given to her.

Size of the employer’s enterprise - procedures followed in effecting the dismissal

[42] Red Pearl is a very small employer and I have taken this into account in reaching a conclusion about whether the termination of Ms Ceccarelli’s employment was harsh, unjust or unreasonable.

Absence of dedicated human resource management specialists or expertise

[43] I am satisfied that Red Pearl had no ready access to human resource management expertise and that the termination of employment decision was made by the business owners with very limited knowledge in this area.

Any other matters considered relevant

[44] I do not consider any other matters to be relevant to this situation.

Conclusion - harsh, unjust or unreasonable.

[45] I have concluded that the termination of Ms Ceccarelli’s employment was harsh in that it was disproportionate to her misconduct on 5 December 2012. I have concluded that it was unreasonable in that the process followed to effect that termination of employment failed to give Ms Ceccarelli any real opportunity to express her position or explain her conduct. Accordingly, I consider that Ms Ceccarelli was harshly or unreasonably dismissed such that for the purposes of s.385, Ms Ceccarelli was unfairly dismissed. In these circumstances, s.390 provides that the Commission may order a remedy.

[46] The primary remedy to be considered is reinstatement. In this situation neither Ms Ceccarelli nor Red Pearl consider that reinstatement is a viable option and I am satisfied that it would not be appropriate.

[47] Section 392 relevantly 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), the FWC must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer’s enterprise; and

(b) the length of the person’s service with the employer; and

(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and

(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and

(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and

(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the FWC considers relevant.

Misconduct reduces amount

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

[48] I consider that an amount of compensation in lieu of reinstatement is appropriate. I have considered all the circumstances of this matter and particularly the criteria set out in s.392(2).

[49] The evidence of Ms Tettis and the behaviour of Red Pearl in not making employee superannuation payments for some time, indicates that any substantial award of compensation could affect the viability of the enterprise. Notwithstanding that, there is no evidence that the amount I am contemplating will affect that viability.

[50] Ms Ceccarelli was employed for a period of some 16 months. I do not consider that to be a particularly long period of employment which supports a substantial compensation payment.

[51] Had Ms Ceccarelli not been dismissed I have concluded that her employment would have been unlikely to have lasted more than another four weeks. In reaching this conclusion, I have had regard to the frequency with which she was late and Ms Tettis’ various concerns about her. Had Ms Ceccarelli not been dismissed on 7 December 2012 I would have expected her to have received a final warning which would ultimately have given rise to the termination of employment situation.

[52] Ms Ceccarelli’s evidence went to the steps she has taken to obtain suitable alternative employment and I am satisfied that those steps are properly characterised as reasonable and responsible.

[53] Apart from the 30 hours pay provided to Ms Ceccarelli shortly after the termination of her employment, there is no evidence which indicates that Ms Ceccarelli has received any income since the termination of her employment. I have deducted this 30 hour payment from the amount being contemplated. Further, I have concluded that it is unlikely, on the evidence before me, that Ms Ceccarelli will earn further income before the date of my Order in this matter.

[54] I have noted that Ms Ceccarelli was a casual employee and that the possibility existed for a change to her working hours to suit the requirements of Red Pearl.

[55] I have taken Ms Ceccarelli’s misconduct into account in assessing the amount of compensation.

[56] I have applied the approach set out in Sprigg v Pauls Licensed Festival Supermarkets 13 to the circumstances of this case and consider that an amount an amount of three weeks pay at 30 hours per week represents an appropriate amount of compensation in lieu of reinstatement. An Order [PR535181] to this effect will be issued.

SENIOR DEPUTY PRESIDENT

Appearances:

F Ceccarelli on her own behalf.

D Tettis for the Respondent.

Hearing details:

2013.

Adelaide:

March 21.

 1   Exhibit R1, para 7

 2   Ibid, para 8

 3   Ibid, para 10

 4   Ibid, para 11

 5   Ibid, para 14

 6   Ibid, para 14

 7   Exhibit C1

 8   Ibid, page 2

 9   Ibid, page 4

 10   Exhibit R2, para 4 and 5

 11   Exhibit R1, para 18

 12 (1995) 62 IR 371 at 373

 13   AIRC, Print R0235, (24 December 1998).

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<Price code C, PR535180>