Hui-Ming Wu v Paddy & Zees Pty Ltd
[2024] FWC 1284
•17 MAY 2024
| [2024] FWC 1284 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Hui-Ming Wu
v
Paddy & Zees Pty Ltd
(U2024/1089)
| COMMISSIONER CRAWFORD | SYDNEY, 17 MAY 2024 |
Application for relief from unfair dismissal – employer unilaterally decided to move employee from full-time employment to casual employment – repudiation – accepted by employee - dismissal not consistent with Small Business Fair Dismissal Code - dismissal unfair – compensation ordered
Background
Hu-Ming Wu (Ms Wu) commenced her latest period of employment at the Diver Café on 7 November 2022. The Diver Café is located at Coogee in New South Wales. Ms Wu was employed by Paddy & Zees Pty Ltd (Paddy & Zees). Ms Wu’s position was initially titled Front of House Supervisor. Ms Wu was promoted to the position of Café Manager/Barista during her employment.
Ms Wu last worked a shift for Paddy & Zees on 25 January 2024. Ms Wu and Patrick Dunphy (Owner/Director) had an argument after Ms Wu finished work on 25 January 2024. There are differing views about what happened over the next few days, but both parties appear to agree that the employment had ended by 28 January 2024.
On 2 February 2024, Ms Wu made an application to the Fair Work Commission (Commission) under s.394 of the Fair Work Act 2009 (Cth) (FW Act) for a remedy, alleging that she was unfairly dismissed from her employment with Paddy & Zees.
Paddy & Zees filed a Form F3 employer response on 12 February 2024. Paddy & Zees raised a jurisdictional objection to Ms Wu’s application on the basis that the dismissal was consistent with the Small Business Fair Dismissal Code (SBFDC). Paddy & Zees also suggested it was Ms Wu’s failure to contact Mr Dunphy after their argument on 25 January 2024 that caused the employment to end.
Ms Wu’s application was not resolved during conciliation. I issued directions for the filing of material and listed the application for determinative conference/hearing on 9 May 2024.
Ms Wu represented herself at the determinative conference/hearing on 9 May 2024. Paddy & Zees was represented by Mr Dunphy.
At the commencement of the proceeding on 9 May 2024, I indicated my provisional view was that the proceeding should be conducted as a determinative conference rather than a hearing given neither party was represented. The parties did not oppose my provisional view. The proceeding was conducted as a determinative conference.
Material relied upon
Both parties understandably filed various documents that contained a mixture of evidence and submissions. I considered the most convenient course of action was to mark all the filed material as exhibits. There was no objection to this approach from the parties.
Ms Wu
Ms Wu relied on the following material in support of her application:
· Ms Wu’s Form F2 unfair dismissal application dated 2 February 2024. I marked the application form Exhibit 1.
· An outline of argument on Paddy & Zees’ jurisdictional objections filed on 4 April 2024. I marked the outline Exhibit 2.
· An outline of argument on the merits filed on 4 April 2024. I marked the outline Exhibit 3.
· A response to Paddy & Zees’ Form F3 filed on 4 April 2024. I marked the response Exhibit 4.
· A document list with commentary from Ms Wu. I marked the list Exhibit 5.
· A letter of offer and contract of employment signed by Ms Wu on 8 November 2022. The contract is for employment “on a permanent full-time basis” in the position of Front of House Supervisor. I marked the offer letter and contract Exhibit 6.
· Various NAB bank statements for Ms Wu from July 2021 to 25 January 2024. I marked the statements Exhibit 7.
· Three of Ms Wu’s payslips from Paddy & Zees. The first payslip for the period of 17 April 2023 to 23 April 2023 refers to full-time employment at an annual salary rate of $65,000.00. The second payslip for the period of 1 May 2023 to 7 May 2023 refers to full-time employment at an annual salary rate of $68,000.00. The third payslip for the period of 15 January 2024 to 21 January 2024 refers to casual employment at a rate of $30.77. I marked the payslips Exhibit 8.
· Screenshots of WhatsApp messages between Ms Wu and Mr Dunphy from 25 January 2024 to 28 January 2024. I marked the screenshots Exhibit 9.
· Screenshots of WhatsApp messages between Ms Wu and Mr Dunphy about work issues at the Diver Café. I marked the screenshots Exhibit 10.
· Screenshots of WhatsApp messages between Ms Wu and Mr Dunphy on 1 March 2023, 1 January 2024, and 24 January 2024. I marked the screenshots Exhibit 11.
· A screenshot of a WhatsApp message from Mr Dunphy to Ms Wu on 2 January 2024. The message includes the following content: “I’m not going to be able to keep you on full time employment any longer as I need to make changes to the café… I’d like to keep you as casual only…” Also attached was a payslip for Ms Wu for the period of 1 January 2024 to 8 January 2024 which refers to Ms Wu as a casual employee. I marked these documents Exhibit 12.
· A screenshot of messages between Mr Dunphy and a potential employee on 29 December 2023. I marked the screenshot Exhibit 13.
· Reply material filed by Ms Wu on 2 May 2024. I marked the material Exhibit 14.
· Screenshots of sales reports for the Diver Café that Ms Wu tendered during the determinative conference. I marked the reports Exhibit 22.
Ms Wu answered several questions from me and was cross-examined on this evidence by Mr Dunphy during the determinative conference.
Ms Wu also made oral submissions at the end of the determinative conference.
Paddy & Zees
Paddy & Zees relied on the following evidence in support of its jurisdictional objections and in opposing Ms Wu’s application:
· Form F3 response dated 12 February 2024. The form had a completed copy of a Small Business Fair Dismissal Code checklist attached. I marked the documents Exhibit 15.
· A document containing a response to content in Ms Wu’s list of documents. I marked the response Exhibit 16.
· An outline of arguments in response to Ms Wu’s submissions. I marked the outline Exhibit 17.
· A document containing responses to material Ms Wu filed in response to the Form F3 employer response. I marked the document Exhibit 18.
· Sales graphic data for 25 January 2024. I marked this document Exhibit 19.
· A copy of emails Mr Dunphy sent to arrange a pest controller to attend the café in late 2023 and early 2024. I marked the emails Exhibit 20.
· An email from Mr Dunphy to the Commission attaching financial information for the café. I marked the email and attachments Exhibit 21.
· A copy of documents containing sales revenue data for the café from 2021 to 2024. I marked the documents Exhibit 23.
Mr Dunphy answered several questions from me and was cross-examined on his evidence by Ms Wu at the determinative conference.
Mr Dunphy made oral closing submissions at the end of the determinative conference.
Statutory provisions – initial matters
When can the Commission order a remedy for unfair dismissal?
Section 390 of the FW Act provides that the Commission may order a remedy if:
(a) Ms Wu was protected from unfair dismissal at the time of being dismissed; and
(b) Ms Wu has been unfairly dismissed.
Both limbs must be satisfied. I am therefore required to consider whether Ms Wu was protected from unfair dismissal at the time of being dismissed and, if I am satisfied that Ms Wu was so protected, whether Ms Wu has been unfairly dismissed.
When is a person protected from unfair dismissal?
Section 382 of the FW Act provides that a person is protected from unfair dismissal if, at the time of being dismissed:
(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.
When has a person been unfairly dismissed?
Section 385 of the FW Act provides that a person has been unfairly dismissed if the Commission is satisfied that:
(a) the person has been dismissed;
(b) the dismissal was harsh, unjust or unreasonable;
(c)the dismissal was not consistent with the SBFDC; and
(d) the dismissal was not a case of genuine redundancy.
Consideration – findings on the evidence
Although there is a significant amount of dispute about various events that occurred during Ms Wu’s employment with Paddy & Zees, I consider the key factual issues can be determined based on documentary evidence.
The documentary evidence filed by both parties confirms:
Ms Wu commenced full-time employment as a Front of House Supervisor at the Diver Café on 7 December 2022. The terms of the full-time employment are recorded in a contract signed by Ms Wu on 8 November 2022.[1] There was no dispute that Ms Wu was subsequently appointed to the position of Café Manager/Barista when another employee left in around May 2023.[2]
(ii)On 2 January 2024, Mr Dunphy sent a WhatsApp message to Ms Wu which stated: “I’m not going to be able to keep you on full time employment any longer as I need to make changes to the café. I’ll be making changes to others as well not just yourself. I’d like to keep you as a casual only…” The change was confirmed on Ms Wu’s payslip for the period of 1 to 7 January 2024 which records that Ms Wu is a casual employee.[3]
There is insufficient evidence to establish that Ms Wu agreed to convert to casual employment on around 2 January 2024. To the contrary, the severe deterioration in the relationship between Ms Wu and Mr Dunphy from early January 2024 strongly indicates Ms Wu did not agree to convert to casual employment. Ms Wu provided evidence that she did not agree to the change.[4]
(iv)Ms Wu continued performing the same duties and receiving the same weekly pay after Mr Dunphy changed her employment status to casual on around 2 January 2024.[5]
Ms Wu last performed work at the café on Thursday, 25 January 2024. Mr Dunphy called Ms Wu at the end of her shift and an argument occurred. Mr Dunphy indicated to Ms Wu he intended to reduce her rate of pay and raised various issues with Ms Wu’s performance and conduct. At the end of the call, Mr Dunphy told Ms Wu to take the rest of the week off.[6]
(vi)It was not clear whether Ms Wu’s employment would continue after the phone call on 25 January 2024. Mr Dunphy gave evidence he was waiting to hear from Ms Wu about her intentions. Ms Wu’s evidence was that she heard from another employee on Saturday, 27 January 2024 that Mr Dunphy had stated Ms Wu’s employment was “finished”. On Sunday, 28 January 2024, the following messages were exchanged between Ms Wu and Mr Dunphy (sic):
Ms Wu: “I can see you already paid all my annual leave, thanks”.
Mr Dunphy: “No worries. Let me know when you can drop the key back and pick up what you need ro.”
Ms Wu: “I thought there were ‘to think about it’ but wow. And sure I will let you know.”[7]
Consideration – initial matters
Was Ms Wu dismissed?
A Full Bench of the Commission stated the following in City of Sydney RSL & Community Club Limited v Mrs Roxana Balgowan[8] (City of Sydney) concerning the legal test to determine whether there has been a repudiation of a contract of employment by an employer:
“The question whether there has been a repudiation of the contract of employment is determined objectively, it is unnecessary to show a subjective intention to repudiate[9] and is a question of fact not law.[10] Relevantly, for present purposes, repudiation may exist where an employer reduces the wages of an employee without the employee’s consent[11] or where there is a serious non-consensual intrusion on the nature of the employee’s status and responsibilities in a way which is not permitted by the contract.[12] Similarly, if an employer seeks to bring about a change in the employee’s duties or place of work which is not within the scope of the express or implied terms of the contract of employment, the conduct may evince an intention to no longer be bound by those terms. Therefore, in these circumstances if an employee does not agree to the change, which if agreed would amount to a variation of the contract, the employee may claim to have been constructively dismissed.
Conduct of an employer which repudiates the contract of employment does not by that act alone bring the contract of employment to an end. A repudiation of the contract by the employer gives the employee who is not in breach the option to decide whether to continue, that is to affirm the contract, or to treat the contract as at an end by accepting the repudiation.”[13]
I consider there was clearly a “serious non-consensual intrusion on the nature of the employee’s status and responsibilities in a way which is not permitted by the contract” when Ms Wu was converted to casual employment on around 2 January 2024. Unsurprisingly, the full-time employment contract did not allow for Ms Wu to be unilaterally converted to casual employment.
I find that Paddy & Zees repudiated Ms Wu’s full-time employment contract when it unilaterally decided to convert her from full-time employment to casual employment on around 2 January 2024.
As identified by the Full Bench above in City of Sydney, Paddy & Zees’ conduct in repudiating the contract did not bring the contract to an end. Although the parties were understandably not aware of this, I find Ms Wu continued performing duties under the full-time employment contract until her last shift on 25 January 2024. As identified above, Ms Wu performed the same duties and received the same income during this period. The situation here is somewhat similar to the circumstances considered by the High Court in Visscher v Giudice.[14] In that case, Mr Visscher’s appointment to a Chief Officer position was purportedly rescinded by the employer, but Mr Visscher continued performing the role in what was described as an acting capacity with the payment of an allowance to top his earnings up from a lower substantive position to the Chief Officer rate of pay. The High Court found Mr Visscher’s employment contract for the Chief Officer position could continue operating after the employer’s purported rescission of the contract, in circumstances whereby Mr Visscher did not accept the rescission and continued performing the same duties.[15]
After increasing animosity between Ms Wu and Mr Dunphy caused by the repudiatory conduct on 2 January 2024, I find Ms Wu accepted the repudiation on 28 January 2024 and treated the contract as at an end. In this case, Ms Wu’s acceptance ended both the employment relationship and the full-time employment contract. I find the acceptance is established based on Ms Wu’s conduct in not notifying Mr Dunphy that she would continue working for the café after the argument on 25 January 2024 and based on the WhatsApp messages exchanged between Ms Wu and Mr Dunphy on 28 January 2024.
In Ms Tamicka Louise Dover-Ray v Real Insurance Pty Ltd, a Full Bench found that an employee’s actions in filing an unfair dismissal application constituted acceptance of an employer’s repudiation.[16] However, in this case, I am satisfied that Ms Wu had already accepted the repudiation on 28 January 2024, and this occurred prior to the filing of her unfair dismissal application on 2 February 2024. If I am wrong about that point, I consider the Full Bench decision could have been relied upon to find that the repudiation was accepted when Ms Wu filed her unfair dismissal application.
It is well established that an employee’s acceptance of a repudiation of the contract by their employer constitutes a termination at the employer’s initiative and falls within the definition of a “dismissal” in s.386(1)(a) of the FW Act.
I am therefore satisfied that Ms Wu has been dismissed within the meaning of s.385 of the FW Act.
Other initial matters
Under s.396 of the FW Act, the Commission is obliged to decide the following matters before considering the merits of the application:
(a)whether the application was made within the period required in subsection 394(2);
(b) whether the person was protected from unfair dismissal;
(c)whether the dismissal was consistent with the SBFDC; and
(d) whether the dismissal was a case of genuine redundancy.
Given my finding that Ms Wu’s dismissal took effect on 28 January 2024 when she accepted Paddy & Zees’ repudiation of her employment contract, I find that Ms Wu’s application was filed within the relevant 21-day period.
Ms Wu had completed the minimum employment period of 12 months when she was dismissed on 28 January 2024. Ms Wu’s employment with Paddy & Zees was covered by the Hospitality Industry (General) Award 2020 and her earnings were well below the high-income threshold. I find Ms Wu was a person protected from unfair dismissal.
Paddy & Zees has not argued Ms Wu’s dismissal was a case of genuine redundancy. I do not consider this finding would be open based on the actions taken by Paddy & Zees to end the employment. However, as I suggested to Mr Dunphy during the determinative conference, a process to implement a redundancy based on operational changes within the business may have been a better option for him to explore.
Paddy & Zees’ Form F3 response states it had three employees when Ms Wu was dismissed. This position was not contested by Ms Wu. I accept this evidence and find Paddy & Zees was a “small business” within the meaning of s.23 of the FW Act.
Paddy & Zees has argued Ms Wu’s dismissal was consistent with the SBFDC. I must determine this issue before considering the merits of the application.
Was Ms Wu’s dismissal consistent with the Small Business Fair Dismissal Code?
It appears unlikely a dismissal that has arisen from an employee’s acceptance of a repudiation of the contract by the employer could be consistent with the SBFDC.
For completeness, I find Paddy & Zees did not have a valid reason to dismiss Ms Wu based on her conduct or capacity and that Ms Wu’s dismissal was not consistent with the SBFDC. The reason given by Mr Dunphy for the repudiatory conduct was the café’s financial position. That reason had nothing to do with Ms Wu’s conduct or capacity.
Having considered each of the initial matters and found Ms Wu’s dismissal was not consistent with the SBFDC, I am required to consider the merits of Ms Wu’s application.
Statutory provisions - harsh, unjust or unreasonable
Section 387 of the FW Act provides that, in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission 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.
I am required to consider each of these factors, to the extent they are relevant to the factual circumstances before me.[17]
I set out my consideration of each below.
Consideration – harsh, unjust or unreasonable
Was there a valid reason for the dismissal related to Ms Wu’s capacity or conduct?
In order to be a valid reason, the reason for the dismissal should be “sound, defensible or well founded”[18] and should not be “capricious, fanciful, spiteful or prejudiced.”[19] However, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer.[20]
Where a dismissal relates to an employee’s conduct, the Commission must be satisfied that the conduct occurred and justified termination.[21] The question of whether the alleged conduct took place and what it involved is to be determined by the Commission on the basis of the evidence in the proceedings before it. The test is not whether the employer believed, on reasonable grounds after sufficient enquiry, that the employee was guilty of the conduct which resulted in termination.[22]
On 28 January 2024, Ms Wu accepted Paddy & Zees’ repudiation of her full-time employment contract on 2 January 2024. The reason that Paddy & Zees committed the repudiatory conduct was its financial position. That was not a valid reason based on Ms Wu’s conduct or capacity.
I find there was not a valid reason for Ms Wu’s dismissal.
Was Ms Wu notified of the reason for dismissal?
Proper consideration of s.387(b) requires a finding to be made as to whether Ms Wu “was notified of that reason”. Contextually, the reference to “that reason” is the valid reason found to exist under s.387(a).[23]
Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made to terminate their employment,[24] and in explicit[25] and plain and clear terms.[26]
As I am not satisfied that there was a valid reason for dismissal, this factor is not relevant to the present circumstances.[27]
Was Ms Wu given an opportunity to respond to any valid reason related to her capacity or conduct?
An employee protected from unfair dismissal should be provided with an opportunity to respond to any reason for their dismissal relating to their conduct or capacity. An opportunity to respond is to be provided before a decision is taken to terminate the employee’s employment.[28]
The opportunity to respond does not require formality and this factor is to be applied in a common-sense way to ensure the employee is treated fairly.[29] Where the employee is aware of the precise nature of the employer’s concern about his or her conduct or performance and has a full opportunity to respond to this concern, this is enough to satisfy the requirements.[30]
As I have not found that there was a valid reason for dismissal, this factor is not relevant to the present circumstances.[31]
Did Paddy & Zees unreasonably refuse to allow Ms Wu to have a support person present to assist at discussions relating to the dismissal?
Mr Dunphy communicated Paddy & Zees’ decision to repudiate Ms Wu’s full-time contract on 2 January 2024 via a WhatsApp message. There is no evidence of a discussion with Ms Wu and hence no opportunity for Ms Wu to have a support person present at a discussion. I consider this factor weighs in favour of a finding of unfair dismissal.
Was Ms Wu warned about unsatisfactory performance before the dismissal?
As the dismissal arose from repudiatory conduct by Paddy & Zees caused by its financial position, this factor is not relevant to the present circumstances.
To what degree would the size of Paddy & Zees’ enterprise be likely to impact on the procedures followed in effecting the dismissal?
I accept Paddy & Zees is a very small business and that this had an impact on the procedures followed in effecting the dismissal. Mr Dunphy presented as a genuine person who was trying to keep his café afloat. I consider Mr Dunphy mistakenly thought it was lawful to make Ms Wu a casual employee and did not realise this would have the legal effect of repudiating her full-time contract.
To what degree would the absence of dedicated human resource management specialists or expertise in Paddy & Zees’ enterprise be likely to impact on the procedures followed in effecting the dismissal?
I find that a lack of dedicated human resource management specialists contributed to a significant degree to the defects in the decision-making and procedures followed by Paddy & Zees in effecting the dismissal.
What other matters are relevant?
Section 387(h) requires the Commission to take into account any other matters that the Commission considers relevant.
I find the financial state of the Diver Café is a relevant factor and I accept that was the reason Paddy & Zees repudiated Ms Wu’s employment contract.
Neither party argued there were any other relevant factors.
Conclusion - harsh, unjust or unreasonable
I have made findings in relation to each matter specified in s.387. I must consider and give due weight to each as a fundamental element in determining whether the termination was harsh, unjust or unreasonable.[32]
Having considered each of the matters specified in s.387 of the FW Act, I am satisfied that the dismissal of Ms Wu was unjust and unreasonable primarily because there was no valid reason for dismissal related to Ms Wu’s conduct or capacity.
I also consider Paddy & Zees’ conduct in notifying Ms Wu that she was being converted to casual employment on 2 January 2024 via a WhatsApp message was not reasonable. This weighs in favour of a finding of unfair dismissal.
I am therefore satisfied that Ms Wu was unfairly dismissed within the meaning of s.385 of the FW Act.
Remedy
Being satisfied that Ms Wu:
· made an application for an order granting a remedy under s.394;
· was a person protected from unfair dismissal; and
· was unfairly dismissed within the meaning of s.385 of the FW Act,
I may, subject to the FW Act, order Ms Wu’s reinstatement, or the payment of compensation to Ms Wu.
Under s.390(3) of the FW Act, I must not order the payment of compensation to Ms Wu unless:
(a) I am satisfied that reinstatement of Ms Wu is inappropriate; and
(b)I consider an order for payment of compensation is appropriate in all the circumstances of the case.
Is reinstatement of Ms Wu inappropriate?
Ms Wu does not seek reinstatement on the basis that the employment relationship has been irreparably damaged. I agree with this position.
Is an order for payment of compensation appropriate in all the circumstances of the case?
Having found that reinstatement is inappropriate, it does not automatically follow that a payment for compensation is appropriate. As noted by the Full Bench, “[t]he question whether to order a remedy in a case where a dismissal has been found to be unfair remains a discretionary one…”[33]
Where an applicant has suffered financial loss as a result of the dismissal, this may be a relevant consideration in the exercise of this discretion.[34]
Ms Wu has suffered financial loss in circumstances where I have found there was not a valid reason for dismissal. In all the circumstances, I consider that an order for payment of compensation is appropriate.
Statutory provisions - compensation
Section 392(2) of the FW Act requires all of the circumstances of the case to be taken into account when determining an amount to be paid as compensation to Ms Wu in lieu of reinstatement including:
(a) the effect of the order on the viability of Paddy & Zees’ enterprise;
(b) the length of Ms Wu’s service;
(c)the remuneration that Ms Wu would have received, or would have been likely to receive, if Ms Wu had not been dismissed;
(d)the efforts of Ms Wu (if any) to mitigate the loss suffered by Ms Wu because of the dismissal;
(e)the amount of any remuneration earned by Ms Wu from employment or other work during the period between the dismissal and the making of the order for compensation;
(f)the amount of any income reasonably likely to be so earned by Ms Wu during the period between the making of the order for compensation and the actual compensation; and
(g) any other matter that the Commission considers relevant.
I consider all the circumstances of the case below.
Consideration – compensation
Effect of the order on the viability of Paddy & Zees’ enterprise
I consider Paddy & Zees provided sufficient financial evidence to establish any sort of compensation order has the potential to impact on its viability. I consider this weighs in favour of a lower compensation order.
Length of Ms Wu’s service
Ms Wu only employed by Paddy & Zees for around 14 months. I consider this to be a neutral factor.
Remuneration that Ms Wu would have received, or would have been likely to receive, if Ms Wu had not been dismissed
As stated by a majority of the Full Court of the Federal Court, “[i]n determining the remuneration that the employee would have received, or would have been likely to receive… [the Commission must] address itself to the question whether, if the actual termination had not occurred, the employment would have been likely to continue, or would have been terminated at some time by another means. It is necessary for the Commission to make a finding of fact as to the likelihood of a further termination, in order to be able to assess the amount of remuneration the employee would have received, or would have been likely to receive, if there had not been the actual termination.”[35]
Given the financial state of Paddy & Zees and Mr Dunphy’s concerns about being able to afford to keep paying Ms Wu in accordance with her full-time employment contract, I consider it is likely Mr Dunphy would have made Ms Wu’s employment redundant in the near future to reduce his labour costs and that Mr Dunphy would have attempted to implement organisational changes to reduce the overall number of hours being worked by employees at the café.
I find that the employment would have been likely to continue for a further two months, until 28 March 2024. This is the “anticipated period of employment”.[36]
Based on Ms Wu’s annual salary of $68,000, I calculate the remuneration Ms Wu would have been likely to receive working for Paddy & Zees from 28 January 2024 to 28 March 2024 to be $11,333.33 gross plus superannuation of $1,246.67.
Efforts of Ms Wu to mitigate the loss suffered by Ms Wu because of the dismissal
Ms Wu must provide evidence that she has taken reasonable steps to minimise the impact of the dismissal.[37] What is reasonable depends on the circumstances of the case.[38]
Ms Wu promptly succeeded in finding other work after her dismissal. I do not consider any deduction should be made for failure to mitigate loss.
Amount of remuneration earned by Ms Wu from employment or other work during the period between the dismissal and the making of the order for compensation
Given the anticipated period of employment ended on 28 March 2024, I will only calculate Ms Wu’s earnings to that date.
Ms Wu provided evidence that she earned $4,544.75 NET from her dismissal on 28 January 2024 to around 25 March 2024. Ms Wu was not able to provide her gross earnings during this period. I will estimate that Ms Wu would have paid tax of around 20% on these earnings. I calculate Ms Wu’s gross remuneration during the anticipated period of employment to be $5,453.70 plus superannuation of $599.91.
Amount of income reasonably likely to be so earned by Ms Wu during the period between the making of the order for compensation and the actual compensation
Given the anticipated period of employment ended on 28 March 2024, I do not consider this factor is relevant.
Other relevant matters
Neither party submitted that there were any other relevant matters.
Compensation – how is the amount to be calculated?
As noted by the Full Bench, “[t]he well-established approach to the assessment of compensation under s.392 of the FW Act… is to apply the “Sprigg formula” derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul’s Licensed Festival Supermarket (Sprigg).[39] This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages[40].”[41]
The approach in Sprigg is as follows:
Step 1: Estimate the remuneration the employee would have received, or have been likely to have received, if the employer had not terminated the employment (remuneration lost).
Step 2: Deduct monies earned since termination. Workers’ compensation payments are deducted but not social security payments. The failure to mitigate loss may lead to a reduction in the amount of compensation ordered.
Step 3: Discount the remaining amount for contingencies.
Step 4: Calculate the impact of taxation to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.
Step 1
I have estimated that Ms Wu would have remained employed by Paddy & Zees until 28 March 2024.
The remuneration Ms Wu would have received, or would have been likely to have received, from her dismissal on 28 January 2024 until 28 March 2024 is $11,333.33 plus superannuation of $1,246.67.
Step 2
Only monies earned since termination for the anticipated period of employment are to be deducted.[42]
Ms Wu earned around $5,453.70 plus superannuation of $599.91 between 28 January 2024 to 28 March 2024.
For the reasons outlined above, I have not applied a deduction because Ms Wu has taken steps to mitigate her loss.
A figure of $5,879.63 plus superannuation of $646.76 is left after the deduction for remuneration earned.
Step 3
I now need to consider the impact of contingencies on the amounts likely to be earned by Ms Wu for the remainder of the anticipated period of employment.[43]
I know Ms Wu’s earnings during the anticipated period of employment. I therefore do not need to make a deduction for contingencies.
Step 4
I have considered the impact of taxation but have elected to settle a gross amount of $5,879.63 plus superannuation of $646.76 and leave taxation for determination.
Compensation – is the amount to be reduced on account of misconduct?
If I am satisfied that misconduct of Ms Wu contributed to the employer’s decision to dismiss, I am obliged by s.392(3) of the FW Act to reduce the amount I would otherwise order by an appropriate amount on account of the misconduct.
Ms Wu was not dismissed for misconduct and no deduction for misconduct is appropriate.
Compensation – how does the compensation cap apply?
Section 392(5) of the FW Act provides that the amount of compensation ordered by the Commission must not exceed the lesser of:
(a) the amount worked out under s.392(6); and
(b)half the amount of the high income threshold immediately before the dismissal.
Section 392(6) of the FW Act provides:
(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…
Given Ms Wu’s annual salary of $68,000.00 a compensation cap of $34,000.00 plus superannuation applies in accordance with s.392(6) of the FW Act.
Conclusion – compensation
Having applied the formula in Sprigg, I am nevertheless required to ensure that “the level of compensation is an amount that is considered appropriate having regard to all the circumstances of the case.”[44]
The application of the Sprigg formula has resulted in an outcome where Ms Wu would be awarded compensation of $5,879.63 plus superannuation of $646.76.
I am satisfied that the amount of compensation that I have determined above takes into account all the circumstances of the case as required by s.392(2) of the FW Act.
Compensation order
Given my findings above, I will make an order that Paddy & Zees must pay Ms Wu $5,879.63 less taxation as required by law, plus superannuation of $646.76 to be paid into Ms Wu’s nominated fund, with both payments to be made within 28 days of the date of this decision.
COMMISSIONER
Appearances:
Ms Wu representing herself.
Mr Dunphy on behalf of Paddy & Zees.
Determinative conference details:
9 May.
Sydney.
2024.
[1] Exhibit 6.
[2] Ms Wu and Mr Dunphy’s oral evidence and the payslip for the period of 1 May 2023 to 7 May 2023 which refers to the salary rate of $68,000 – Exhibit 8.
[3] Exhibit 12.
[4] Exhibit 1 and Ms Wu’s oral evidence.
[5] Exhibit 8.
[6] Ms Wu and Mr Dunphy’s oral evidence.
[7] Exhibit 9.
[8] [2018] FWCFB 5 at [18] and [19].
[9] See for example Whittaker v Unisys Australia Pty Ltd (2010) 192 IR 311 at [32] – [41] and Fishlock v The Campaign Palace Pty Ltd (2013) 234 IR 1 at [126]
[10] See Woods v W M Car Services (Peterborough) Ltd [1982] ICR 693 at 698,699-700, 701-702
[11] See for example Rigby v Feredo Ltd [1988] ICR 29 and Brockton Holdings No V Pty Ltd v Kara Kar Holding Pty Ltd (1994) 57 IR 288
[12] See for example Whittaker v Unisys Australia Pty Ltd (2010) 192 IR 311 at [41] – [46], [68] and Fishlock v The Campaign Palace Pty Ltd (2013) 234 IR 1 at [126].
[13] See Automatic Fire Sprinklers v Watson (1946) 72 CLR 435 at 450 – 453, 461 – 463, 465 – 467; Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 47 – 428; Visscher v Giudice (2009) 239 CLR 361 at [53] – [55]
[14] Visscher v Giudice (2009) 239 CLR 361.
[15] Ibid at [56] to [59].
[16] [2010] FWAFB 2670 at [26].
[17] Sayer v Melsteel Pty Ltd[2011] FWAFB 7498, [14]; Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002), [69].
[18] Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371, 373.
[19] Ibid.
[20] Walton v Mermaid Dry Cleaners Pty Ltd(1996) 142 ALR 681, 685.
[21] Edwards v Justice Giudice [1999] FCA 1836, [7].
[22] King v Freshmore (Vic) Pty Ltd Print S4213 (AIRCFB, Ross VP, Williams SDP, Hingley C, 17 March 2000), [23]-[24].
[23] Bartlett v Ingleburn Bus Services Pty Ltd [2020] FWCFB 6429, [19]; Reseigh v Stegbar Pty Ltd [2020] FWCFB 533, [55].
[24] Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151.
[25] Previsic v Australian Quarantine Inspection Services Print Q3730 (AIRC, Holmes C, 6 October 1998).
[26] Ibid.
[27] Chubb Security Australia Pty Ltd v Thomas Print S2679 (AIRCFB, McIntyre VP, Marsh SDP, Larkin C, 2 February 2000), [41]; Read v Cordon Square Child Care Centre [2013] FWCFB 762, [46]-[49].
[28] Crozier v Palazzo Corporation Pty Ltd t/a Noble Park Storage and Transport Print S5897 (AIRCFB, Ross VP, Acton SDP, Cribb C, 11 May 2000), [75].
[29] RMIT v Asher (2010) 194 IR 1, 14-15.
[30] Gibson v Bosmac Pty Ltd (1995) 60 IR 1, 7.
[31] Chubb Security Australia Pty Ltd v Thomas Print S2679 (AIRCFB, McIntyre VP, Marsh SDP, Larkin C, 2 February 2000), [41]; Read v Cordon Square Child Care Centre [2013] FWCFB 762, [46]-[49].
[32] ALH Group Pty Ltd t/a The Royal Exchange Hotel v Mulhall (2002) 117 IR 357, [51]. See also Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002), [92]; Edwards v Justice Giudice [1999] FCA 1836, [6]–[7].
[33] Nguyen v Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australia Chapter[2014] FWCFB 7198, [9].
[34] Vennix v Mayfield Childcare Ltd [2020] FWCFB 550, [20]; Jeffrey v IBM Australia Ltd [2015] FWCFB 4171, [5]-[7].
[35] He v Lewin [2004] FCAFC 161, [58].
[36] Ellawala v Australian Postal Corporation Print S5109 (AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000), [34].
[37] Biviano v Suji Kim Collection PR915963 (AIRCFB, Ross VP, O’Callaghan SDP, Foggo C, 28 March 2002), [34] citing Lockwood Security Products Pty Ltd v Sulocki and Ors PR908053 (AIRCFB, Giudice J, Lacy SDP, Blair C, 23 August 2001), [45].
[38] Biviano v Suji Kim Collection PR915963 (AIRCFB, Ross VP, O’Callaghan SDP, Foggo C, 28 March 2002), [34] citing Payzu Ltd v Saunders [1919] 2 KB 581.
[39] (1998) 88 IR 21.
[40] [2013] FWCFB 431.
[41] Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries[2016] FWCFB 7206, [16].
[42] Ibid.
[43] Enhance Systems Pty Ltd v Cox PR910779 (AIRCFB, Williams SDP, Acton SDP, Gay C, 31 October 2001), [39].
[44] Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries[2016] FWCFB 7206, [17].
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