Govinda Prasad Dhungel v The Baking Company Australia Pty Ltd

[2012] FWA 4717

[2012] FWA 4717

FAIR WORK AUSTRALIA

DECISION

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

Govinda Prasad Dhungel
v
The Baking Company Australia Pty Ltd
(U2011/7392)

DEPUTY PRESIDENT SAMS SYDNEY, 7 JUNE 2012

Application for unfair dismissal remedy - jurisdiction - whether respondent a small business employer - onus on employer not discharged - whether applicant resigned - no resignation - jurisdictional objections dismissed - matter remitted for further proceedings.

BACKGROUND

[1] This matter has had a long and unfortunate history. My determination of the matter was made more difficult by what can only be described as an unsatisfactory and unreliable evidentiary case presented by the employer. Before coming to the evidence, I now provide a brief background to these proceedings.

[2] Mr Govinda Dhungel (‘the applicant’) was dismissed from his employment on 8 April 2011, having worked as a cleaner for the Baking Company Australia Pty Ltd (‘the respondent’) since 14 August 2010. The applicant filed an application for a remedy from unfair dismissal, pursuant to s 394 of the Fair Work Act 2009 (‘the Act’). He believes that he was dismissed because he had asked his employer for a pay rise (from $8.00 an hour) and because of his refusal to undertake tasks which would overload his duties. The applicant claimed that he was paid $8.00 an hour for a 60 hour week which was paid in cash at the end of each week. At this point, I note that the applicant was legally represented and his first language is Nepalese. A Nepalese interpreter was engaged to assist during the oral evidence of the applicant and his wife.

[3] As will be apparent from the above paragraph, the application was filed six days outside the statutory time limitation found in s 394(2) of the Act. On 15 July 2011, His Honour, Boulton J extended the time for the filing of his claim, pursuant to s 394(3) of the Act. However, on that day, the respondent raised a further jurisdictional objection claiming that it was a small business employer and that the applicant had not been employed for the requisite 12 month period to file an unfair dismissal claim. The parties requested that this issue be determined separately from, and prior to, any consideration of the merits of the claim.

[4] There is no disputing that the applicant had less than twelve months service with the respondent. However, as earlier mentioned, the first jurisdictional contest is whether the respondent was a small business employer (as defined) and therefore the applicant is prevented from bringing an unfair dismissal claim, pursuant to s 382 of the Act as to the minimum employment periods required before such claims may be made to Fair Work Australia (‘FWA’). Curiously, in the applicant’s statement, presumably prepared with the advice and assistance of his legal representative, Tsolakis Solicitors, the applicant said “There were about 13 other employees who worked for the respondent” (‘Exhibit 3’). The respondent claimed that at the time the applicant left the employ of the respondent, it employed nine employees.

[5] However, the respondent also contends that the applicant left his employment of his own accord after an argument with a supervisor about the performance of his work. I note the respondent has withheld two week’s pay which is due to the applicant because it was said he had refused to provide his tax file number and Employee Declaration Statement. The respondent had invited him to collect this amount ($960) at any time.

[6] On 2 September 2011, when the application came before me, Mr A Rogers of Counsel appeared for the applicant and Mr K Papanicolaou appeared for the respondent. Mr Rogers advised that arising from a company search undertaken by his instructing solicitors, it appeared the respondent company had been deregistered. This meant that there was no respondent to the application, as it had no legal existence. However, the respondent was still operating as a baking business. Mr Papanicolaou said his client had been taken completely by surprise when informed of this situation and discussions were occurring to rectify the legal status of the respondent. The matter was adjourned for a period of four weeks in order to clarify the respondent’s position and for the parties to file further submissions.

[7] On 5 October 2011, Mr Rogers now advised that the correct name of the respondent was the Baking Company Australia Pty Ltd - a company not deregistered, as previously believed. Leave was granted to amend the file and all of the relevant documents to identify the respondent’s correct name.

THE EVIDENCE

Was the respondent a small business employer?

Applicant’s evidence

[8] Despite the applicant’s first statement, wherein he said that the respondent had employed 13 other employees at the time of his dismissal, in a second statement he claimed that there were more than 15 employees, who he recognised by their faces and their first names. He named 12 in production, 6 in packing, 3 in delivery, Mr Munk (a Director) and another female employee in the office. He explained that in his first statement what he meant was that there were 13 employees on the shift he worked.

[9] Mr Rogers tendered documents arising from a notice to produce which was a schedule of 11 employees (not including the applicant or his wife) engaged between 1 July 2010 and 30 June 2011 and 25 time sheets for 5 of these employees and 2 others. Mr Papanicolaou advised that the respondent had no records of payments to subcontractors who had attended the respondent’s premises to pack and collect their own products.

[10] In cross examination, the applicant denied changing the number of employees he believed worked for the respondent, when he was told it was an issue being raised by the respondent. Despite only working on night shift, the applicant insisted there were over 24 employees working for the respondent. He agreed that he had not checked the records of the respondent. He just knew from the number of people he saw and who he knew worked for the respondent. He conceded that one or two employees may have left while he was there; that he had included Mr and Mrs Munk in his calculations and two or three others in delivery who may have been delivery subcontractor drivers. However, the applicant did not know their employment status. The applicant claimed he knew all of the employees on both shifts.

[11] Mrs Dhungel worked for the respondent for five months on night shift and left following her husband’s dismissal by the respondent. Mrs Dhungel said there were 20 employees working for the respondent, which included drivers, and Mr Munk. She did not include the packers and drivers from other companies. Mrs Dhungel accepted that she did not have access to the respondent’s books, but she was present when employees were working in the evening and arriving in the morning. Mrs Dhungel said that her husband’s original estimation of 13 employees may have been only those on his shift. She believed most of the employees she knew were still there today and she knew all of them personally.

Respondent’s evidence

[12] Mr Michael Munk is a director of the respondent. He claimed the respondent had 9 employees when the applicant left the respondent’s employment. However, in oral evidence, Mr Munk deposed that, at the relevant time, he employed 5 employees in production, 4 in packing, a secretary, himself and his wife (who is also a director of the respondent) - including 2 drivers who were subcontractors - a total of 13 employees.

[13] Mr Papanicolaou tendered a PAYG summary for 8 of the employees and 9 signed statements of appointment, all of which were dated or created on the same day - 21 July 2010. He also asked Mr Munk to identify a declaration, dated 6 December 2010, to the GIO for workers’ compensation purposes, which estimated wages for the year 1 July 2010 to 1 July 2011 as $140,000 for 10 baking/processing employees, 1 admin/accountant of $30,000 and 2 delivery drivers of $40,000.

[14] In cross examination, Mr Munk deposed that the number of employees did not change in 2011. Mr Munk explained that the unsatisfactory state of the records was because the mortgagee locked the respondent’s premises at 30 Cranbrook Street and he had difficulties in obtaining the records still held there. He was currently operating at other leased premises in Chipping Norton and had been for the last two or three weeks.

[15] It was Mr Munk’s understanding that the various documents required by the Australian Tax Office (‘ATO’) are not necessary until the employee’s probationary period has been completed. In a resumption of proceedings on 16 April 2012, Mr Munk identified a number of plain envelopes, given to both the applicant and his wife, in which their wages had been paid in cash.

[16] Mr Nathakumar Submarin has worked for the respondent for four years as a manager. He gave evidence, that over those four years, the respondent employed 10 to 12 employees, sometimes less. At the time of the applicant’s termination of employment, there were 6 to 7 roughly. The respondent did not employ subcontract drivers, who he described as vendors. They came in at night with their own packers. They packed their orders and then would leave. In cross examination, Mr Submarin said that he was not aware of the terms under which the contactors or vendors were engaged by the respondent. However, he said that these people do not take directions from managers of the respondent.

Was the applicant dismissed by the employer?

Applicant’s evidence

[17] The applicant said that when he commenced employment he was never given an employment contract or any other documentation setting out the details of his employment. Over the next eight months, he had frequently inquired as to his rate of pay and been promised increases.

[18] On 5 April 2011 the applicant made an inquiry with his supervisor, Mr Submarin about a pay increase. Mr Submarin did not answer. The next day Mr Submarin increased the number of jobs he had to do. The applicant said that in the week he was sacked, he complained about the increased workload. On 7 April, when Mr Submarin told him to clean every trolley, every day, he had replied that he could not do it. The next day Mr Submarin asked if he had cleaned every trolley. The applicant said he could not because he was required to clean 28 trolleys, instead of 18. Mr Submarin had replied ‘I will find someone else to take your place go, go.’ The applicant said he stayed and completed his shift. When Mr Submarin saw him later he asked him if he had finished his work. When the applicant said ‘nearly’ Mr Submarin again said ‘go, go’. The applicant asked when he would be given his pay and Mr Submarin said ‘when you normally get it’. The applicant claimed that he was never warned of any unsatisfactory performance.

[19] One week later, when the applicant returned to collect his final pay, Mr Munk told him he was not going to pay him because he had not given him any notice when he left. The applicant said ‘Mr Kumar sacked me, I did not leave the job’. He left when Mr Munk refused to pay him his last two week’s pay.

[20] In oral evidence, the applicant denied that he did not have set hours in his job. He agreed that he was responsible for cleaning the floors, office, kitchen and toilet areas and all the baking trays and later, the lunch area. Mr Papanicolaou pressed the applicant to agree that this cleaning took no more than four hours. However, the applicant rejected this proposition.

[21] The applicant did not receive any letter of termination. He reiterated his statement evidence and said that Mr Submarin had said he had found another one . . . ‘you can go!’ He denied saying ‘if you don’t like it, sack me’. The applicant denied that he had lined up another job and commenced work immediately after 8 April 2011. He said he was given a trial of two or three days a week with another employer. The applicant said Mr Munk had never asked him for a tax declaration or tax file number. He was paid in cash $8 an hour nett. The applicant denied receiving any Centrelink payments. He recalled that when Mr Munk rang him and told him to collect his pay, he had not mentioned anything about filling in a form. The applicant agreed he had said ‘I can’t’ and hung up the phone.

Respondent’s evidence

[22] Mr Munk said that the applicant left his employment of his own accord. He said that since he had commenced employment, he had been ‘chasing’ the applicant for his Employee Declaration Statement for the ATO. On 9 April 2011 he told him that he would pay his outstanding pay when he completed the Employee Declaration Statement. He claimed the applicant then stormed off. Mr Munk said that when he phoned the applicant a couple of days later, the applicant said he did not want to talk to him and hung up. Mr Munk said the applicant’s wages were still in the respondent’s safe, waiting to be collected.

[23] Mr Submarin said that when he confronted the applicant on 8 April about the state of the sink area, the applicant had replied ‘If you don’t like it, sack me!’ He then said ‘If you don’t want to do your job properly, you can go’. He said this was not a dismissal, but an ultimatum that the applicant had a choice to comply with directions and undertake his duties properly or leave his employ. The applicant did not respond, collected his belongings and left the premises.

[24] In oral evidence, Mr Submarin said that when he came into work at 6.00 am on 8 April 2011 he noticed a smell around the sink area. He asked the applicant why he did not clean the area and that he had replied ‘I don’t want to. If you want to sack me, sack me’. Mr Submarin had replied ‘Well if you can’t do your job, then go’. It was Mr Submarin’s evidence that he never asked the applicant about cleaning the trolleys. In any event, he would never have had to clean all of them because some would be being used at all times. Mr Submarin denied ever being asked by the applicant about his pay and he denied telling the applicant he would ‘find someone to take his place’. He had said ‘. . . your choice, you go’ and he went. Mr Submarin deposed that the applicant was a bit lazy and would sometimes not attend for work.

FURTHER SUBMISSIONS

For the respondent

[25] Mr Papanicolaou said there was no dispute that the applicant was employed for less than 12 months. The issue is whether the respondent engaged 15 or more employees as at 8 April 2011. Mr Papanicolaou relied on the applicant’s own evidence that the respondent had 13 employees at the relevant time. There was also the respondent’s workers’ compensation declaration and Mr Munk’s and Mr Submarin’s evidence. The applicant and his wife only worked night shift and they had no access to the respondent’s records.

[26] Mr Papanicolaou put that a Jones v Dunkel inference arose in that the applicant could have called any number of the employees to verify his calculation. In addition, the evidence of the applicant was evasive, particularly about having obtained another job. Mr Munk’s evidence should be preferred. The onus rested with the applicant to establish that his claim was within jurisdiction.

For the applicant

[27] Mr Rogers rejected the onus of the applicant as to the test of the number of employees employed by the respondent for the purpose of s 383(b) of the Act. The applicant had clarified his first statement of ‘about 13 employees’ as those being the number on his shift. The applicant obviously had no access to the respondent’s records, and as it turned out, neither did the respondent.

[28] Mr Rogers noted that orders for production of the time and wages records were not provided and all that was produced were deficient records of people who worked on the production floor. Both the applicant and his wife were not on the list and one might ask how many others were not listed. It could only mean one of two things; the documents had been hidden or they do not exist. Either way, the onus on the respondent is not discharged. Moreover, Mr Rogers said that the Jones v Dunkel inference applies to the party which bears the onus of proof: see Ho v Powell [2001] 51 NSWLR 572.

[29] If the respondent claimed that some employees were contractors, it had failed to produce any evidence of such contracts. Mr Rogers put that it is not good enough simply to assert it had less than 15 employees. He added that it may be that the alleged contractors are not true contractors, as a matter of law, but employees. The onus is on the respondent to prove that they were. Mr Rogers noted that the respondent’s manager, Mr Submarin, did not know if contractors were engaged or even what a contractor was.

[30] Mr Rogers said that the applicant went to the trouble to name all the employees he claimed worked for the respondent. Yet, there was no attempt by the respondent to dispute these claims to establish the status of such persons. The number identified by the applicant exceeds 15 employees. Mr Rogers noted that the workers’ compensation declaration is only an estimate into the future (it is dated 6 December 2010 for the 12 month period to 1 July 2011) and not all such records accurately reflect the exposure of the employer in terms of the workers’ compensation premiums to be paid. Indeed, the applicant and his wife do not appear in any records.

[31] As to the dismissal, Mr Rogers put that even on the respondent’s own evidence, there was no rider to the words ‘go, go’.

[32] In reply, Mr Papanicolaou referred to the explanation for the unavailability of the records. The mortgagee, through the Sherriff’s Office, had locked the respondent out with the machinery, books and records inside. The property has now been auctioned and the machinery removed by the mortgagee.

[33] Mr Rogers noted that time and wages records are not the property of the mortgagee and if the property has gone to auction, it was all the more reason why the documents should have been available. In any event, the respondent had six months to retrieve the documents and failed to do so.

CONSIDERATION

Was the respondent a small business employer, as defined?

Statutory Provisions

[34] The definition of a small business employer is to be found at s 23 of the Act as follows:

“23 Meaning of small business employer

(1) A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.

(2) For the purpose of calculating the number of employees employed by the employer at a particular time:

(a) subject to paragraph (b), all employees employed by the employer at that time are to be counted; and

(b) a casual employee is not to be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis.

(3) For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.

(4) To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee’s employment, the employees that are to be counted include (subject to paragraph (2)(b)):

(a) the employee who is being dismissed or whose employment is being terminated; and

(b) any other employee of the employer who is also being dismissed or whose employment is also being terminated.”

[35] For the purposes of the Act’s unfair dismissal provisions, this section is to be read in conjunction with when a person is protected from unfair dismissal and with the definition of a minimum employment period at s 382 and s 383 respectively as follows:

“382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

383 Meaning of minimum employment period

The minimum employment period is:

(a) if the employer is not a small business employer—6 months ending at the earlier of the following times:

(i) the time when the person is given notice of the dismissal;

(ii) immediately before the dismissal; or

(b) if the employer is a small business employer—one year ending at that time.”

[36] Despite Mr Papanicolaou’s submission, the onus does not fall to the applicant to establish the number of employees employed by the respondent at the time of his termination of employment. The onus rests entirely with the respondent. So much so was made clear by the decision in Bruce Eva v Victorian Radio Network Pty Ltd[2008] AIRC 347 (17 April 2008). This is so because:

(a) the presumption is that a person is protected from unfair dismissal until an employer’s objection to FWA’s jurisdiction is upheld; and

(b) it is highly unlikely that information going to the number of employees employed at the time of dismissal would be precisely known by an applicant; and

(c) time and wages records are required to be kept by the employer according to the Act’s Regulations.

For completeness, I refer to what Eames, C said in Eva v Victorian Radio Network Pty Ltd (supra above) at para [28] - [35] as follows:

‘In matters such as this, the onus is on the Respondent to establish to the satisfaction of the Commission, that on the balance of probabilities, they employed 100 or fewer employees at the time of the Applicant’s termination.

It was put by Mr Rinaldi that mere assertion of employment numbers is not enough, and that sufficient evidence must be led, to convince the Commission that the jurisdictional objection is made out.

I agree with that submission.

Mr Rinaldi drew the Commission’s attention to three previous decisions of the Commission, which I agree, are helpful in determining this matter.

While the decision of Deputy President Hamilton in Kieselbach v Amity Group P/L, 9 October 2006 [PR973864] (“Kieselbach”) dealt with a termination for alleged operational reasons, paragraph 41 of His Honours decision is relevant in this matter, in my view.

His Honour stated:

“If it is in fact the case that a simple statement is sufficient, then as a matter of practicality the ability of an employee to challenge that statement may in many cases be extremely limited. The effective onus would be on the employee, once the statement was made, to disprove the assertion by producing evidence that this explanation was not genuine. An employee may not know what those reasons are beyond what he or she was told, there may be financial and time limits on the employee’s ability to conduct investigation and searches of records, and so on. The employer, however, has ready access to that evidence, if it exists, and has nevertheless chosen not to produce it. Nor does the language of the subsection lend support to an interpretation that the onus of proof shifts to the employee in this manner simply because an assertion is made by the employer, nor can it readily be argued that an evidentiary onus shifts simply because an assertion is made.”

In this case the Respondent has all the information related to the number they employ, and has to demonstrate beyond the balance of probabilities, that Mr Rinaldi’s assertion, that they employ in the order of 114 employees is incorrect. The onus is on the Respondent to prove its case.

In the decision of Commissioner Smith’s, Baldacchino & ors v Triangle Cables (Aust) P/L, 23 May 2006 [PR972581], in his findings and conclusions, the following statement was made:

“[21] … it was appropriate for the employer to bring material to the attention of the Commission which would demonstrate the factual basis upon which the notice of motion was made.”

[37] That issue having been resolved, I am regretfully bound to say that the evidence of the respondent in this matter was hopelessly deficient and that which was provided, was unsatisfactory and unreliable. I am unable to determine whether this was through deliberate intent, inadvertence or incompetence. Although it is telling that the wages paid to the applicant and his wife, and no doubt to others, were in cash, in a plain envelope with no pay advice provided to the employees. This, of itself, was in breach of Div 4, Part 3-6 of the Fair Work Regulations.

[38] That said, for the following reasons, I do not accept that the time and wages records of the respondent were unavailable because the mortgagee of the property had ‘locked the gates’. Firstly, those records do not belong to the mortgagee. Secondly, they are records required to be kept, maintained and produced by the employer, by law. Thirdly, the respondent had been on notice since 2 September 2011 that these records were required to be produced. There seems to have been little effort made to do so.

[39] Mr Papanicolaou relied on the following documents to support the respondent’s submissions:

(a) a WorkCover Declaration, dated 6 December 2010;

(b) the list of 11 employees from 1 July 2010 to 1 July 2011 and the wages paid to them;

(c) 25 time sheets for 5 of the employees in (b) above and two other employees;

(d) 9 signed statements of appointment which were either all signed or created on the same day - 21 July 2010; and

(e) the PAYG summaries for 8 employees.

[40] In my view, none of these documents are consistent with each other and thereby are not particularly helpful in establishing the true number of employees at the relevant time. I arrive at this conclusion for the following reasons:

● Firstly, the WorkCover declaration cites 10 production workers, 2 drivers and an office employee - a total of 13;

● Secondly, the schedule of 11 employees and their wages do not include the applicant and his wife and the office worker - a total of 14 - nor is it possible to distinguish from this list any drivers be they contractors or otherwise;

● Thirdly, time sheets were only provided for 5 of the listed employees (plus 2 others), excluding the applicant and his wife - totalling 7; and,

● Fourthly, the respondent only produced 9 signed statements of appointment and 8 PAYG summaries.

[41] Unfortunately, I have some doubts as to the authenticity of at least 3 sets of these documents. The purported timesheets and PAYG summaries are incomplete and unsigned; they appear to have been hastily and carelessly prepared. Moreover, it seems very strange to me, that 9 of the signed or created statements of appointments are all dated the same day (21 July 2010). In my opinion, it seems highly likely that a number of documents were hastily created for the express purposes of these proceedings. Even so, the production of some documents begs the question, that if these documents were able to be retrieved from the locked premises, why could not all of the documents, particularly a properly kept time and wages record?

[42] In addition, I find it very unlikely that 10 production workers were paid $140,000 per annum, in total, equating to an average annual wage of only $14,000. This conclusion emphasises the ‘rubbery’ nature of a document which is no more than a prediction of the possible number of employees.

[43] Unsurprisingly, Mr Papanicolaou relied on the evidence of Mr Munk and Mr Submarin. Mr Submarin’s evidence was confused and unhelpful. I do not accept it. Obviously there is a conflict of evidence between Mr Munk and the applicant. Considering the unsatisfactory state of the respondent’s other evidence and the applicant’s more plausible naming of 20 employees, I am disinclined to accept Mr Munk’s evidence.

[44] As Mr Rogers correctly noted:

(a) It was open to the respondent to test the evidence of the applicant in order to identify the status of the employees he had named. It failed or declined to do so;

(b) If the respondent asserted the inclusion of contractors in the applicant’s list, then it would have been a simple exercise to produce some evidence of a contractual arrangement with such persons. It failed or declined to do so;

(c) The respondent’s failure to bring any evidence to refute or call into question the applicant’s assertion, squarely raises a Jones v Dunkel inference. I would draw such an inference: see Jones v Dunkel [1959] 101 CLR 298.

[45] In my view, the best and uncontested evidence of the number of employees employed by the respondent, at the time of the applicant’s termination of employment, is that of the applicant himself. In this regard, the applicant’s evidence was corroborated by that of his wife; although her evidence does not tip the balance of probabilities either way. I am satisfied that the respondent engaged more than 15 employees at the time of the applicant’s termination of employment. Accordingly, the respondent’s first jurisdictional objection is dismissed.

Was the applicant dismissed at the initiative of the employer?

[46] It is axiomatic that if there was no termination of employment at the respondent’s initiative, then the applicant is not a person protected from unfair dismissal. This prerequisite is to be found at s 386(1)(a) of the Act and is expressed as follows:

“386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative;

. . .

[47] It is to be observed that in this case the applicant vigorously maintains that he did not resign and that it was Mr Submarin’s direction to ‘go’ which was the action of the employer which constituted his dismissal at the employer’s initiative. This is commonly referred to as a ‘constructive dismissal’.

[48] In deciding this jurisdictional question, I have relied on a helpful summary of the law in respect to constructive dismissal found in Barkla v G4S Custodial Services Pty Ltd[2011] FWAFB 3769. There the Full Bench said at para 24:

[24] It is then necessary to consider whether any action of the employer amounted to termination of employment. It should be noted in this case that Mr Barkla did not resign from his employment. Rather he alleges that the employer’s conduct amounted to dismissal. There is considerable law on whether a resignation is forced by conduct of the employer or that the employer’s conduct amounts to a constructive dismissal either at common law or within the statutory definitions. In our view this law is helpful in the present context because it articulates the nature of employer conduct which will bring an employment contract to an end. This is what Mr Barkla has argued in this case. In O’Meara v Stanley Works Pty Ltd a Full Bench of the Australian Industrial Relations Commission discussed the relevant case law and outlined the legal considerations in the following terms:

“Termination at the initiative of the employer

[19] The circumstances in which a resignation, while apparently a termination of employment by the employee, nevertheless constitutes a termination at the initiative of the employer, have been considered in a number of cases. A prominent authority is the decision of a Full Court of the Federal Court of Australia in Mohazab v Dick Smith Electronics Pty Ltd  (Mohazab). In that case, the employer made a threat that unless the employee resigned the employer would ask the police to charge the employee with an offence. The analysis of the concept of termination at the initiative of the employer by the Court in that case has not always been quoted in full. It is desirable that we do so in this case. After referring to dictionary definitions of the term “initiative” and the convention giving rise to the statutory provisions, the Full Court said:

“These definitions reflect the ordinary meaning of the word ‘initiative’. Viewed as a whole, the Convention is plainly intended to protect workers from termination by the employer unless there is a valid reason for termination. It addresses the termination of the employment relationship by the employer. It accords with the purpose of the Convention to treat the expression ‘termination at the initiative of the employer’ as a reference to a termination that is brought about by an employer and which is not agreed to by the employee. Consistent with the ordinary meaning of the expression in the Convention, a termination of employment at the initiative of the employer may be treated as a termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship. We proceed on the basis that the termination of the employment relationship is what is comprehended by the expression ‘termination of employment’: Siagian v Sanel (1994) 1 IRCR 1 at 19; 54 IR 185 at 201. In many, if not most, situations the act of the employer that terminates the employment relationship is not only the act that puts in train the process leading to its termination but is, in substance, the entire process. An example would be a situation where the employer decided to dismiss an employee and did so orally or in writing with immediate effect. Other situations may be more complex as exemplified by the circumstances considered by Moore J in Grout v Gunnedah Shire Council (1994) 1 IRCR 143; 57 IR 243 where an employee had given written notice purporting to terminate the employment relationship. The notice was not reasonable but was accepted by the employer which later refused to allow the employee to withdraw the notice. A question arose as to whether that was a termination of the employment at the initiative of the employer and his Honour held it was. His Honour said at 160-161; 259:

‘I have already said that Div 3 concerns termination at the initiative of the employer. The respondent submits that “initiate” means “to begin, commence, enter upon; to introduce, set going, or initiate”: see Shorter Oxford English Dictionary. In this matter, it is submitted, it was the applicant and not the respondent that initiated the termination by writing the letter of 18 May. This, in my opinion, gives the expression “termination” in the Act, read in conjunction with Art 3 of the Convention which speaks of “termination … at the initiative of the employer”, a narrow meaning that was not intended. A principal purpose, if not the sole purpose, of Div 3 is to provide an employee with a right to seek a remedy in circumstances where the employee did not voluntarily leave the employment. An employee may do some act which is the first in a chain of events that leads to termination. An example would be an employee who engaged in misconduct at work which ultimately led to the employer dismissing the employee. However, that situation and the present are not situations where the termination was at the initiative of the employee. In both instances the step or steps that effectively terminated the employment or purported to do so were taken by the employer.’

In these proceedings it is unnecessary and undesirable to endeavour to formulate an exhaustive description of what is termination at the initiative of the employer but plainly an important feature is that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship. This issue was addressed by Wilcox CJ in APESMA v David Graphics Pty Ltd (unreported, Industrial Relations Court of Australia, 12 July 1995, Wilcox CJ). His Honour, at p 3, referred to the situation of an employee who resigned because ‘he felt he had no other option’. His Honour described those circumstances as:

‘… a termination of employment at the instance [of] the employer rather than of the employee.’

And at p 5:

‘I agree with the proposition that termination may involve more than one action. But I think it is necessary to ask oneself what was the critical action, or what were the critical actions, that constituted a termination of the employment.’”

[20] Moore J, one of the members of the Full Court in Mohazab, addressed the question further in Rheinberger v Huxley Marketing Pty Limited  (Rheinberger). His Honour said, after referring to extracts from Mohazab:

“However it is plain from these passages that it is not sufficient to demonstrate that the employee did not voluntarily leave his or her employment to establish that there had been a termination of the employment at the initiative of the employer. Such a termination must result from some action on the part of the employer intended to bring the employment to an end and perhaps action which would, on any reasonable view, probably have that effect. I leave open the question of whether a termination of employment at the initiative of the employer requires the employer to intend by its action that the employment will conclude. I am prepared to assume, for present purposes, that there can be a termination at the initiative of the employer if the cessation of the employment relationship is the probable result of the employer's conduct.”

[21] In this Commission the concepts have been addressed on numerous occasions and by a number of Full Benches. In Pawel v Advanced Precast Pty Ltd  (Pawel) a Full Bench said:

“[13] It is plain that the Full Court in Mohazab considered that an important feature in the question of whether termination is at the initiative of the employer is whether the act of an employer results directly or consequentially in the termination of the employment and that the employment relationship is not voluntarily left by the employee. However, it is to be noted that the Full Court described it as an important feature. It plainly cannot be the only feature. An example will serve to illustrate this point. Suppose an employee wants a pay rise and makes such a request of his or her employer. If the employer declines and the employee, feeling dissatisfied resigns, can the resignation be said to be a termination at the initiative of the employer? We do not think it can and yet it can be said that the act of the employer i.e. refusing the pay rise, has at least consequentially resulted in the termination of the employment. This situation may be contrasted with the position where an employee is told to resign or he or she will be terminated. We think that all of the circumstances and not only the act of the employer must be examined. These in our view, will include the circumstances giving rise to the termination, the seriousness of the issues involved and the respective conduct of the employer and the employee. In the instant case the uncontested factual findings are that the applicant had for almost the whole of his employment performed welding duties; that there was no objective threat to his health and safety involved in the requirement that he undertake welding duties so long as it was not on a continuous basis and that the welding he was required to do was not continuous.”

[22] In the Full Bench decision of ABB Engineering Construction Pty Ltd v Doumit  (ABB Engineering) it was said:

“Often it will only be a narrow line that distinguishes conduct that leaves an employee no real choice but to resign employment, from conduct that cannot be held to cause a resultant resignation to be a termination at the initiative of the employer. But narrow though it be, it is important that that line be closely drawn and rigorously observed. Otherwise, the remedy against unfair termination of employment at the initiative of the employer may be too readily invoked in circumstances where it is the discretion of a resigning employee, rather than that of the employer, that gives rise to the termination. The remedies provided in the Act are directed to the provision of remedies against unlawful termination of employment. Where it is the immediate action of the employee that causes the employment relationship to cease, it is necessary to ensure that the employer’s conduct, said to have been the principal contributing factor in the resultant termination of employment, is weighed objectively. The employer’s conduct may be shown to be a sufficiently operative factor in the resignation for it to be tantamount to a reason for dismissal. In such circumstances, a resignation may fairly readily be conceived to be a termination at the initiative of the employer. The validity of any associated reason for the termination by resignation is tested. Where the conduct of the employer is ambiguous, and the bearing it has on the decision to resign is based largely on the perceptions and subjective response of the employee made unilaterally, considerable caution should be exercised in treating the resignation as other than voluntary.”

[23] In our view the full statement of reasons in Mohazab which we have set out together with the further explanation by Moore J in Rheinberger and the decisions of Full Benches of this Commission in Pawel and ABB Engineering require that there to be some action on the part of the employer which is either intended to bring the employment to an end or has the probable result of bringing the employment relationship to an end. It is not simply a question of whether “the act of the employer [resulted] directly or consequentially in the termination of the employment.”  Decisions which adopt the shorter formulation of the reasons for decision should be treated with some caution as they may not give full weight to the decision in Mohazab. In determining whether a termination was at the initiative of the employer an objective analysis of the employer’s conduct is required to determine whether it was of such a nature that resignation was the probable result or that the appellant had no effective or real choice but to resign.” (References omitted)

[49] Obviously, there is no letter of resignation or a conversation alleged by the respondent in which the applicant expressly said that he was resigning. The highest the respondent’s evidence got was that the applicant had said ‘if you don’t like it, sack me!’ Even if those words were said, Mr Submarin appeared to accept this invitation. He said he replied ‘if you don’t want to do your job properly, you can go’.

[50] In my opinion, the second jurisdictional objection can be swiftly disposed of by reliance on the respondent’s own evidence. There can be no reason to doubt that the words used in the conversation, on either version of it, fit neatly with the concept of sending the applicant away or dismissing him. The ordinary bystander would be under no illusion as to what Mr Submarin intended. I am fortified to this conclusion by the fact that there was no attempt by the respondent to clarify the applicant’s position, immediately thereafter or in the next few days. Indeed, the respondent seemingly acquiesced to the applicant removing himself and his belongings from the site. I do not accept Mr Papanicolaou’s questioning of the applicant to the effect that, he had not been dismissed because he received no letter to that effect. This submission is misconceived. The test is not whether the respondent had given the applicant a letter of termination, although that obviously would be determinative of the issue; rather, the test is whether the exchange between the applicant and Mr Submarin constituted a termination of employment at the respondent’s initiative. I am satisfied that it was.

[51] Accordingly, the second jurisdictional objection of the respondent is rejected and dismissed.

[52] In the light of the abovementioned findings, the application filed by Mr Govinda Dhungel in Matter U2011/7392 is properly before Fair Work Australia. I propose to remit the matter to FWA’s Unfair Dismissal Unit for further processing in accordance with the Tribunal’s usual protocols.

DEPUTY PRESIDENT

Appearances:

For the applicant: Mr A Rogers of Counsel, with Mr V Tsolakis, Solicitor.

For the respondent: Mr K Papanicolaou, Solicitor.

Hearing details:

2011
SYDNEY
September 2

2012
SYDNEY
April 16

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