Francine Rolfe v Kids Choice ELS WA Pty Ltd T/A Kids Choice

[2015] FWC 8798

[2015] FWC 8798

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Francine Rolfe
v
Kids Choice ELS WA Pty Ltd T/A Kids Choice
(U2014/13803)

DEPUTY PRESIDENT KOVACIC MELBOURNE, 18 DECEMBER 2015

Application for relief from unfair dismissal - remedy.

[1] On 18 September 2015 the Fair Work Commission (the Commission) handed down its decision 1 which found that the termination of Mrs Francine Rolfe’s (the Applicant) employment by Kids Choice ELS WA Pty Ltd T/A Kids Choice (Kids Choice – the Respondent) on 31 October 2014 was harsh, unjust or unreasonable. The decision foreshadowed the Commission’s intention to convene a conference of the parties, including the new owner of the Kids Choice childcare centre in Cooma, to discuss the issue of remedy. This approach was adopted primarily as the sale of the Cooma child care centre appeared imminent.

[2] A conference was convened by the Commission on 6 October 2015 with Directions issued later that day requiring the parties to file submissions and any evidentiary material they intended to rely upon. The Directions also required Kids Choice to file with the Commission and serve on the Applicant any update on the sale of the centre together with any views of the potential purchaser regarding reinstatement of Mrs Rolfe. The matter was listed for hearing on 9 November 2015. However, that hearing date was vacated with the parties in agreement that the Commission should determine the issue of remedy based on the materials filed in accordance with the abovementioned Directions.

The Applicant’s submissions

[3] Mrs Rolfe submitted that in the event that the Cooma childcare centre was not sold that the appropriate remedy was reinstatement and that it was appropriate that an order to maintain continuity and restoration of lost pay be made by the Commission. In the alternative, Mrs Rolfe submitted that should the child care centre be sold and/or the purchaser not wish to offer continuing employment to her, then the appropriate remedy would be compensation pursuant to s.392 of the Act.

[4] As to reinstatement, Mrs Rolfe submitted that:

• she had received a medical certificate from her treating doctor which stated that she was fit to return to work from 27 March 2015;



• some of the staff related issues that existed at the time of her dismissal were no longer relevant as the persons concerned had left Kids Choice and/or the centre, including Ms Testa, Ms Reed and Ms Mylan;



• Kids Choice cannot properly establish the assertion that there has been a loss of confidence between it and Mrs Rolfe, adding that Ms Testa’s evidence in this regard cannot be given any weight as she is no longer employed by Kids Choice and cannot give any evidence as to the present state of affairs;



• there had been no prior misconduct by Mrs Rolfe and her termination was not as a result of unsatisfactory performance;



• as there had been no finding of misconduct by the Commission, s.392(3) is irrelevant in the calculation of any compensation amount;



• she had attempted to mitigate her loss but had found it difficult to find alternative employment in her area of expertise;



• nevertheless she commenced employment as an early childhood teacher with Guardian Community Early Learning Centres Pty Ltd in Canberra on 13 July 2015, though she had accepted a lower position than qualified for; and



• that an amount of compensation of $41,496.00 less applicable taxation plus superannuation be paid as lost pay, together with an order for continuity of service as at the deemed date of return to work 11 November 2014 but not including the period 13 July 2015 to the date of return this being the date on which the Mrs Rolfe accrued entitlements with her new employer.

[5] In the event that the centre is sold, Mrs Rolfe submitted that the Commission should order compensation in the amount of 26 weeks’ pay less appropriate taxation.

[6] Key aspects of Mrs Rolfe’s submissions in reply were that:

• there was no evidence to suggest Mrs Rolfe had displayed “unprofessional conduct” other than on 28 October 2014;



• with regard to the investigation into the parent complaint, the parent has left the centre and there is no evidence to suggest that the complaint is being pursued; and



• she rejected Kids Choice submission that any compensation should be confined to personal leave payments on the basis that Mrs Rolfe had lost a substantial amount of remuneration as a result of her dismissal.

[7] Mrs Rolfe also provided a witness statement in which she deposed that she:

• had been on anti-depressant medication for the past 15 years;



• has not wanted to pursue a workers compensation claim until her unfair dismissal application is finalised, but will do so if she is successful in this matter; and



• would not be seeking reinstatement had she lost trust and confidence in Kids Choice.

[8] Mrs Rolfe in her witness statement also disputed that she was embroiled in controversy with some parents, stating that there was one parent complaint during her period of employment as Centre Director and highlighting that the complainant’s children are no longer enrolled at the centre.

The Respondent’s submissions

[9] Kids Choice submitted that it would not be appropriate to reinstate Mrs Rolfe. In support of that view, Kids Choice submitted that:

• in circumstances where Mrs Rolfe’s fitness for duty was not in issue at the time when the evidence in this matter closed, it would be an erroneous exercise of the Commission’s jurisdiction/powers to order reinstatement unless there was compelling up-to-date evidence;



• it had lost trust and confidence in Mrs Rolfe’s ability to perform the role of Centre Director due to her unprofessional conduct on 28 October 2014 and her failure to professionally respond to allegations that may amount to a breach of her duty of care to children under her care and a breach of the relevant state legislation;



• Mrs Rolfe’s evidence is clearly that of a person who herself had lost trust and confidence in Kids Choice;



• Mrs Rolfe had spent the last few months of her employment with Kids Choice embroiled in considerable controversy with other members of the staff and some parents; and



• Mrs Rolfe has found employment in a childcare centre in southern Canberra.

[10] Kids Choice further submitted that any back payment ordered under s.391(3) of the Act should be confined to personal leave payments. More particularly, Kids Choice contended that any remuneration lost or likely to have been lost for the period of 28 October 2014 to 16 March 2015 is personal leave. Kids Choice also contended that any amount of compensation should take into account Mrs Rolfe’s relatively limited length of service (approximately one year and nine months), be limited to the amount of personal leave that Mrs Rolfe had accrued and be limited to an amount recognising the period of time that she would have remained in employment. On the last point, Kids Choice contended that Mrs Rolfe would have remained in employment for a limited time given that she failed to professionally participate in an investigation by the employer into allegations of a serious nature.

[11] Finally, Kids Choice contended that the prospective new owner will not re-employ Mrs Rolfe.

[12] In response to a question from the Commission, Kids Choice advised on 16 December 2015 that upon termination Mrs Rolfe had 55.81 hours of accrued personal leave that had not been used or paid out and that the sale of the centre had not settled.

The statutory framework

[13] Division 4 of Part 3-2 of the Act deals with remedies for unfair dismissal and is set out below.

“390 When the FWC may order remedy for unfair dismissal

(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:

(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and
(b) the person has been unfairly dismissed (see Division 3).

(2) The FWC may make the order only if the person has made an application under section 394.

(3) The FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and
(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.

Note: Division 5 deals with procedural matters such as applications for remedies.

391 Remedy—reinstatement etc.

Reinstatement

(1) An order for a person’s reinstatement must be an order that the person’s employer at the time of the dismissal reinstate the person by:

(a) reappointing the person to the position in which the person was employed immediately before the dismissal; or
(b) appointing the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

(1A) If:

(a) the position in which the person was employed immediately before the dismissal is no longer a position with the person’s employer at the time of the dismissal; and
(b) that position, or an equivalent position, is a position with an associated entity of the employer;
(c) the order under subsection (1) may be an order to the associated entity to:
(d) appoint the person to the position in which the person was employed immediately before the dismissal; or
(e) appoint the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

Order to maintain continuity

(2) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to maintain the following:

(a) the continuity of the person’s employment;
(b) the period of the person’s continuous service with the employer, or (if subsection (1A) applies) the associated entity.

Order to restore lost pay

(3) If the FWC makes an order under subsection (1) and considers it appropriate to do so, the FWC may also make any order that the FWC considers appropriate to cause the employer to pay to the person an amount for the remuneration lost, or likely to have been lost, by the person because of the dismissal.

(4) In determining an amount for the purposes of an order under subsection (3), the FWC must take into account:

(a) 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 reinstatement; and
(b) the amount of any remuneration reasonably likely to be so earned by the person during the period between the making of the order for reinstatement and the actual reinstatement.

392 Remedy—compensation

Compensation

(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

Criteria for deciding amounts

(2) In determining an amount for the purposes of an order under subsection (1), the FWC must take into account all the circumstances of the case including:

(a) the effect of the order on the viability of the employer’s enterprise; and
(b) the length of the person’s service with the employer; and
(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and
(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and
(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and
(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the FWC considers relevant.

Misconduct reduces amount

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

Shock, distress etc. disregarded

(4) The amount ordered by the FWC to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

Compensation cap

(5) The amount ordered by the FWC to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and
(b) half the amount of the high income threshold immediately before the dismissal.

Note: subsection 392(5) indexed to $66,500 from 1 July 2014

(6) The amount is the total of the following amounts:

(a) the total amount of remuneration:

(i) received by the person; or
(ii) to which the person was entitled;
(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.

393 Monetary orders may be in instalments

To avoid doubt, an order by the FWC under subsection 391(3) or 392(1) may permit the employer concerned to pay the amount required in instalments specified in the order.”

Consideration of the Issues

Should Mrs Rolfe be reinstated?

[14] Given s.390(3)(a) of the Act, the initial question which the Commission needs to determine is whether or not reinstatement is appropriate.

[15] Kids Choice primary reason for opposing reinstatement was that it had lost trust and confidence in Mrs Rolfe. The issue of loss of trust and confidence in circumstances where an employee’s employment had been terminated was considered by the Industrial Relations Court in Perkins v Grace Worldwide (Aust) Pty Ltd (Perkins) 2. The Court found in Perkins that:

“Trust and confidence is a necessary ingredient in any employment relationship. That is why the law imports into employment contracts an implied promise by the employer not to damage the relationship or destroy the relationship of trust and confidence between the parties, without reasonable cause: see Burazin v Blacktown City Guardian Pty Ltd (unreported, Industrial Relations Court of Australia, Full Court, No. 606/96, 13 December 1996). The implication is not confined to employers, it extends to employees: see for example Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 at 81-82 and North v Television Corporation Ltd (1976) 11 ALR 599 at 609. So we accept that the question whether there has been a loss of trust and confidence is a relevant consideration in determining whether reinstatement is impracticable, provided that such loss of trust and confidence is soundly and rationally based.

At the same time, it must be recognised that, where an employer, or a senior officer of an employer, accuses an employee of wrongdoing justifying the summary termination of the employee’s employment, the accuser will often be reluctant to shift from the view that such wrongdoing has occurred, irrespective of the Court’s finding on that question in the resolution of an application under Div 3 of Pt VIA of the Act.

If the Court were to adopt a general attitude that such a reluctance destroyed the relationship of trust and confidence between the employer and employee, and so made reinstatement impracticable, an employee who was terminated after an accusation of wrongdoing but later succeeded in an application under the Division would be denied access to the primary remedy provided by the legislation. Compensation, which is subject to a statutory limit, would be the only available remedy. Consequently, it is important that the Court carefully scrutinise any claim by an employer that reinstatement is impracticable because of a loss of confidence in the employee.

Each case must be decided on its own merits.” 3 (Underling added)

[16] As previously noted, Kids Choice submitted that it had lost trust and confidence in Mrs Rolfe’s ability to perform the role of Centre Director. In particular, Kids Choice contended that such trust and confidence was a significant issue given that the position of Centre Director was the most senior position at the centre, particularly as the Respondent’s head office was in Queensland. A further consideration, Kids Choice contended, was the nature of the business together with public and community interest in ensuring the well-being of the centre. Beyond this, Kids Choice submitted that:

• it had been steadfast about loss of trust and confidence;



• Mrs Rolfe’s evidence in the primary proceedings in this matter, e.g. her evidence as to carrying of the Respondent’s emails in a folder in her bag, had accentuated the loss of trust and confidence;



• Mrs Rolfe’s submission that her reinstatement may see parents return the children to the centre caused it serious concern as to whether or not Mrs Rolfe intended to stir up factionalism amongst former and present parents; and



• it was concerned about the attitude of parents regarding the complaint made by Ms Saxby when it becomes public and if an enquiry ensues.

[17] Drawing on Perkins, I consider many of the reasons advanced by Kids Choice as to why reinstatement is not appropriate in this case not to be “soundly and rationally based.” Nevertheless, the argument that the Centre Director position is the most senior position at the centre is in my view a concern that is “soundly and rationally based.” However, the strength of that argument is diminished by the fact that Ms Testa, to whom Mrs Rolfe previously reported, is no longer employed by Kids Choice. Further, the concerns expressed by Kids Choice as to the impact of any enquiry into Ms Saxby’s complaint would, if relied upon as a reason not to reinstate Mrs Rolfe, effectively involve the Commission pre-empting the finding of any such enquiry.

[18] Taking into account all of the above considerations, on balance, I do not consider that Mrs Rolfe’s reinstatement is inappropriate. Whilst I accept that the relationship is likely to be bruised, I do not consider it to be beyond repair. As such, I find that Mrs Rolfe should be reinstated to her former position, i.e. Centre Director, from the first day that the centre is open for business in January 2016. This will enable Mrs Rolfe to provide notice of termination to her current employer and for Kids Choice to make the necessary arrangements regarding Mrs Rolfe’s return to work.

Order to maintain continuity

[19] The Act allows the Commission to make an order under s.391(2)(a) maintaining continuity of employment if it considers such an order to be appropriate. In deciding this issue I have taken into account my previous finding that Mrs Rolfe was unfairly dismissed. In my view, that finding cannot be ignored in determining matters under s.391(2)(a) of the Act.

[20] Mrs Rolfe sought an order for continuity of service as at the deemed date of return to work of 11 November 2014 (discussed further below) but not including the period 13 July 2015 to the date of any reinstatement (being the dates in which Mrs Rolfe accrued entitlements with her new employer). Mrs Rolfe also highlighted in her submissions that there had been no prior misconduct on her part. Kids Choice did not directly address this issue in its submissions.

[21] In all the circumstances, I consider that an order maintaining Mrs Rolfe’s continuity of service is appropriate. That order, will provide for continuity from the date of Mrs Rolfe’s dismissal until 12 July 2015, the day before she commenced employment in Canberra. Further, Mrs Rolfe’s continuity of employment should be maintained upon her reinstatement in January 2016.

Order to restore lost pay

[22] Sections 391(3) and (4) of the Act provide that, if an order for reinstatement is made, the Commission may also make any order that it considers appropriate to restore lost pay for the amount of remuneration lost by the person because of the dismissal. In doing so, the Commission must take into account any remuneration earned by the person during the period between their dismissal and the making of the order for reinstatement and the amount of any remuneration reasonably likely to be earned by the person during the period between the making of the order for reinstatement and the actual reinstatement.

[23] As previously mentioned, Mrs Rolfe submitted that an amount of compensation of $41,496.00 less applicable taxation plus superannuation should be paid as lost pay. As to the basis for calculating this amount, Mrs Rolfe submitted that were it not for her receiving the dismissal letter from Kids Choice of 31 October 2014, she would have returned to work shortly thereafter. On that basis, Mrs Rolfe submitted that she could have returned to work within two weeks of the meeting of 28 October 2014, i.e. 11 November 2014. Mrs Rolfe termed this date the “deemed date of return to work.” Accordingly, the above amount reflects what Mrs Rolfe calculates she would have earned for the period 11 November 2014 to 12 July 2015 based on a gross fortnightly pay of $2371.20. Mrs Rolfe also submitted that she has been earning $1225.50 per week from 13 July 2015 with her new employer and that this is likely to continue until the making of any order for compensation.

[24] Kids Choice submitted that any back payment ordered under s.391(3) of the Act should be confined to personal leave payments and also submitted that any amount of compensation should be limited for a number of other reasons (see paragraph [10] above).

[25] Based on the material before the Commission, it is clear that Mrs Rolfe was not declared fit to resume her pre-injury duties by her treating medical practitioner until 27 March 2015. Against that background, there is no basis to support Mrs Rolfe’s “deemed date of return to work” of 11 November 2014. Indeed, it is contrary to the medical evidence before the Commission. As previously noted, Kids Choice advised the Commission on 16 December 2015 that at the time of her dismissal Mrs Rolfe had 55.81 hours of accrued personal leave. This supports a finding that for the period from her dismissal, i.e. 31 October 2014, until she was fit to return to work on 27 March 2015, Mrs Rolfe would have used that personal leave and then presumably taken unpaid personal leave. It is also possible that Mrs Rolfe may have also utilised other paid leave such as annual leave during this period. In this regard, I note that Mrs Rolfe’s accrued annual leave was paid out on termination. As such, it is not a relevant consideration in calculating the amount of lost pay. Based on an hourly rate of pay of $31.20 4, the 55.81 hours of accrued personal leave paid at this hourly rate is valued at $1741.27.

[26] Beyond this, there is also the period from 27 March until 12 July 2015 where Mrs Rolfe was fit for work. This period equates to seven fortnightly pay periods and five days for the period 30 March to 5 April 2015 (as Mrs Rolfe was only declared fit for work by her doctor on 27 March 2015 I consider it unlikely that she would have returned to work on that day). Based on Mrs Rolfe’s fortnightly salary, Mrs Rolfe would have earned $17,784.00 during this period.

[27] As Mrs Rolfe’s weekly pay with her new employer exceeds what she would have earned had she remained employed by Kids Choice, no further adjustment is necessary to reflect the period from 13 July 2014 until the date of reinstatement.

[28] Together the amounts calculated above total $19,595.27. I do not consider that this amount needs to be adjusted to reflect Mrs Rolfe’s behaviour in this case. While I consider Mrs Rolfe’s behaviour in walking out of the meeting of 28 October 2014 to be inappropriate for a senior manager, it is clear that the events in this matter have had a toll on Mrs Rolfe’s well-being and that Mrs Rolfe was unfit for work for an extended period during which she had no income.

[29] Accordingly, an order to restore lost pay of an amount of $19,595.27 plus superannuation will be issued.

Conclusion

[30] In summary, I order that Kids Choice:

(i) reinstate Mrs Rolfe to her former position, i.e. Centre Director, from the first day that the centre is open for business in January 2016;

(ii) maintain the continuity of Mrs Rolfe’s employment from the date of her dismissal until 12 July 2015, with that continuity of employment to also be maintained upon her reinstatement in January 2016; and

(iii) pay Mrs Rolfe an amount of $19,595.27 plus superannuation.

An order to that effect will be issued with this decision.

 1   [2015] FWC 6458

 2 (1997) 72 IR 186

 3   Ibid at 191

 4   $2371.20 divided by 76 hours per fortnight

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