Iraku Lama v Konute Enterprises

[2016] FWC 1814

[2016] FWC 1814

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Iraku Lama
v
Konute Enterprises
(U2015/6111)

COMMISSIONER GREGORY MELBOURNE, 19 APRIL 2016

Application for relief from unfair dismissal.

Introduction

[1] Mr Iraku Lama was employed in a cafe owned by Konute Enterprises Pty Ltd (“Konute”) known as The Groove Lounge. He was originally located in the Melbourne CBD but then moved to another cafe owned by the business in Williamstown. During the time he was employed he worked in a variety of roles and over time took on more responsibility.

[2] However, Mr Lama was terminated from his employment on 21 June 2015, although there is no agreement about why he was dismissed. During the time he was employed there were issues raised on various occasions about whether he was receiving his correct pay and other entitlements. Mr Lama now claims his dismissal was “harsh, unjust and unreasonable.” This decision deals with that application.

[3] It is also noted that Konute originally raised a jurisdictional objection to the application, claiming Mr Lama resigned from his employment and therefore cannot have been unfairly dismissed. However, it subsequently advised it no longer intended to pursue this objection. 1

[4] Mr Matt Awad from M. Joseph & Associates was given permission to appear on behalf of Mr Lama per s.596(2)(a), as the matter involves a degree of complexity and his involvement would enable it to be dealt with more effectively. Mr Mohammed Ali, a director of Konute Enterprises appeared on its behalf.

The issue to be decided

[5] Mr Lama claims he has been unfairly dismissed because his dismissal was harsh, unjust or unreasonable. In determining an unfair dismissal application the Fair Work Act 2009 (Cth) (“the Act”) requires that the Commission must take into account the various factors set out in s.387. It states:

“In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC must take into account:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.” 2

[6] Therefore, was Mr Lama unfairly dismissed, taking into account the matters set out in s.387, on the basis that his dismissal was harsh, unjust or unreasonable?

The Evidence and Submissions

[7] Mr Lama provided a statement indicating he worked for Konute from 2 February 2013. He said he initially worked in the cafe waiting on tables but after a period of approximately six months he was given a role with more responsibility, and was required to train new staff, assist with rostering, and ensure staff were available to fill the rosters. He said he was also then required to get involved in purchasing for the business, particularly after Mr Ali’s licence was suspended and he was unable to drive. He said when he commenced his employment he was paid a flat rate of $17 for all hours worked, regardless of when those hours were rostered or how many hours were worked each week, and this was increased to $18 per hour from the beginning of 2015.

[8] Mr Lama also stated that no issues were raised about his work performance at any time during his employment, and he believed the business was generally happy with his work.

[9] His evidence also indicated that throughout the time he was employed he often raised issues about whether he was being paid his correct entitlements, and whether he could be provided with payslips and details of the taxation payments made on his behalf. He also said he asked for his salary to be paid into his bank account, rather than being paid to him in cash. He also stated that on the occasions when he was provided with a payslip it indicated he was being paid at an hourly rate of $30. He also provided a copy of a letter he received from a firm of accountants purporting to act on behalf of Konute, dated 8 May 2014, indicating his gross salary was $60,000 per annum, and he was “employed on a permanent full-time basis as the manager of the store.” 3

[10] Mr Lama continued to indicate that on 17 June he was involved in a discussion with Mr Ali, which was initiated when Mr Ali raised an issue about him not being at work on time on that day. He said he then raised again the issues in regard to the payslips he was wanting to obtain, and whether appropriate taxation payments were being made on his behalf. He said he also enquired about whether he was receiving his superannuation entitlements. He continued to indicate that the discussions subsequently became heated and he told Mr Ali he could no longer continue to work in this way. He said he then told Mr Ali he was resigning from his employment, and it was agreed that his last day at work would be 5 July.

[11] He then said that four days later on 21 June 2015 he started work at 8:30 a.m and was due to finish work at 5 however, another employee who was due to commence his shift at 5 p.m. advised that he would not be at work and Mr Lama said he “found my self-committed until 10:30 p.m” that evening. 4 He said Mr Ali then arrived at the cafe at around 4:30 p.m. and asked him to come upstairs because he wanted to speak to him in private. He said Mr Ali then accused him of accessing records to do with the business in an office at the cafe, without authority, and using his phone to photograph those records. He said Mr Ali then made various threats towards him if he continued to pursue the issues about his pay and entitlements, and used language indicating his employment was terminated with effect immediately.

[12] Mr Lama stated in cross-examination he only used the camera in his phone to take pictures of the roster sheets because he was required to understand the roster arrangements as part of his role in managing the staff who were rostered to work at the cafe.

[13] Konute provided a submission which confirmed Mr Lama was employed in 2013 on a full-time basis to carry out a range of duties, which included “making teas and coffees for clients, handling monies in and out of the office till, answering the telephone when required, ordering milk three times a week, the everyday management of the bar and contacting staff members periodically to enquire as to their availability.” 5

[14] The submission continued to indicate that from June 2014 Mr Lama would repeatedly arrive late for work and this developed into a regular pattern of behaviour, which impacted on other staff, particularly as Mr Lama was responsible for opening the cafe in the morning and setting up the business. It continued to indicate that Mr Ali met with Mr Lama on several occasions to express his dissatisfaction about this.

[15] It also submits that in August 2014 Mr Lama advised Mr Ali that he no longer wished to be employed on a full-time basis, and it was therefore agreed he would work as a casual employee at an hourly wage of $18.

[16] The submission continued to indicate that on 17 June 2015 Mr Lama arrived 20 minutes late for his shift. In a subsequent discussion with Mr Ali later that day Mr Lama told him he was leaving, and his last day at work would be 5 July 2015. The submission continues to indicate that Mr Ali was then told by other staff members that Mr Lama was seen entering the office at the cafe on 21 June, and was also seen taking pictures of various business documents.

[17] The submission continued to indicate that Mr Lama was unable to provide any explanation for taking the photographs, and he subsequently left the premises, and “Mr Ali considered the employment relationship terminated.” 6 It also stated that “…although it terminated the Applicant 21 June 2015, the termination was not harsh, unjust or unreasonable.”7 It also indicated that, “the Respondent also states that the Applicant was provided adequate compensation for the termination.”8

[18] Konute did not provide any further evidence or submissions in the proceedings and relies upon its written submission.

Consideration

[19] I now turn to consider whether Mr Lama’s dismissal was “harsh, unjust or unreasonable” taking into account the considerations in s.387 I must have regard to.

[20] I note, firstly, that an explanation about the conduct that might be encompassed within the phrase “harsh, unjust or unreasonable” was provided by the decision in Byrne & Frew v Australian Airlines Ltd 9 when McHugh and Gummow JJ stated as follows:

“…It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.” 10

[21] The decision of the Full Bench of Fair Work Australia in the matter of L.Sayer v Melsteel Pty Ltd 11 also provides guidance about the Commission’s role in regard to each of the considerations in s.387. It concluded:

“Where the applicant does present a case, in the ordinary course each of the criteria in s.387 which is capable of being relevant on the facts emerging at the hearing must be taken into account.” 12

[22] I now turn to deal with each of the considerations in s.387 having regard to these authorities.

(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);

[23] The submissions provided by Konute make reference to some issues to do with Mr Lama’s punctuality at work, although they do not appear to be matters that were indicated to be the reason for his termination. Its submissions also make reference to Mr Ali being informed by other staff members at the cafe that Mr Lama was seen entering the office at the cafe to take photographs of “the consolidated sheets which include private and confidential material such as the wages of other staff members and staff members’ signatures.” 13 However, no evidence was provided by these staff members, or by anyone else, in support of these submissions, and Mr Lama denies that this occurred. He states he only ever viewed the rosters, as he was required to do, in his role of ensuring staff were rostered and available to work.

[24] Mr Lama’s evidence also indicates that issues to do with his pay and entitlements were raised by him on numerous occasions during the time that he was employed, and a further argument about these matters in June last year led to Mr Ali making various threats to Mr Lama, and then terminating his employment.

[25] In summary, based on the limited evidence provided in these proceedings I am unable to conclude that a valid reason existed, related to Mr Lama’s capacity or conduct, to justify his dismissal.

(b) whether the person was notified of that reason;

[26] This consideration is of limited relevance given the conclusion that the Commission has come to about “valid reason.”

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person;

[27] Again, this consideration is of limited relevance. The submissions provided by Konute state that Mr Lama simply shrugged his shoulders and did not reply when asked about whether he had been taking photographs of confidential material in the office at the cafe. Mr Lama denies this behaviour occurred, and states he was dismissed following an argument about his pay and entitlements.

(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;

[28] There is no evidence Mr Lama was provided with the opportunity to have a support person present in the discussions on either 17 or 21 June, which led to his termination, however, there is also no evidence of any unreasonable refusal to allow him to have a support person at either of those discussions.

(e) if the dismissal related to unsatisfactory performance by the person – whether the person had been warned about that unsatisfactory performance before the dismissal;

[29] This consideration does not appear to be of any particular relevance in this matter.

(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;

[30] The submissions provided by Konute indicate the business has only eight employees and it quite clearly does not have specialist staff to deal with matters related to issues about work performance or conduct at work, or the arrangements associated with the employment of staff. This situation almost certainly contributed to the procedures and the processes followed in terminating Mr Lama’s employment.

(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;

[31] A similar conclusion applies in regard to this consideration as indicated in the paragraph above.

(h) any other matters that the FWC considers relevant.

[32] I am not aware of any further issues that need to be considered in this context.

Conclusion

[33] In dealing with the various matters in s.387 that I must take account of I note, firstly, that previous authorities have established that the existence or not of a “valid reason” is invariably an important issue in any unfair dismissal application, and is often determinative. For example, in the often cited decision of Parmalat Food Products Pty Ltd v Kasian Wililo 14 a Full Bench of the Commission made the following statement about the importance of “valid reason.”

“The existence of a valid reason is a very important consideration in any unfair dismissal case. The absence of a valid reason will almost invariably render the termination unfair. The finding of a valid reason is a very important consideration in establishing the fairness of a termination.” 15

[34] It is also clear that the reason must be objectively valid. It is not sufficient that the employer believes it had a valid reason for termination. This was emphasised in the Full Bench decision handed down by this Tribunal’s predecessor in the matter of Rode v Burwood Mitsubishi 16at paragraph 19 where the Full Bench held:

“....the reason for termination must be defensible or justifiable on an objective analysis of the relevant facts. It is not sufficient for an employer to simply show that he or she acted in the belief that the termination was for a valid reason.” 17

[35] As the decision in Selvachandran v Peterson Plastics Pty Ltd 18 also makes clear the reason should also be “sound, defensible and well founded” and should not be “capricious, fanciful, spiteful or prejudiced.”

[36] As indicated, it is unclear about what precisely led to the decision by Konute to terminate Mr Lama’s employment. However, I have already concluded that the evidence does not establish the existence of a “valid reason,” and I am not satisfied that an objective analysis of the evidence and submissions relied upon in these proceedings provides justification for Mr Lama’s dismissal from his employment.

[37] In conclusion, having considered each of the matters in s.387 that the Commission is required to take into account I am satisfied in all the circumstances that Mr Lama’s dismissal was at least “unjust” and “unreasonable.” In coming to this decision I have had particular regard to the conclusions arrived at in respect of s.387(a), in particular.

[38] Having come to this conclusion I am now required to consider what is an appropriate remedy in the context of the provisions contained in ss.390 and 392 of the Act.

[39] Section 390 provides that the Commission may order reinstatement or the payment of compensation to a person if it is satisfied the person has been unfairly dismissed. However, a payment of compensation is not to be ordered unless the Commission is satisfied that reinstatement of the person is inappropriate.

[40] Despite the limited evidence and submissions provided in these proceedings I am satisfied that reinstatement is not an appropriate remedy in this matter. The proceedings have clearly demonstrated that there is little or no possibility of a normal working relationship being established between the principal in the business, Mr Ali, and Mr Lama in what is a relatively small business with employees working in close proximity. In addition, Mr Lama had already indicated prior to his termination that he believed he could no longer work in the business, and was intending to resign. An agreement had also been reached about when his last day at work would be. Therefore, I now turn to consider whether it is appropriate to make an order for payment of compensation.

[41] Section 392 of the Act states:

“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.

(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.” 19

[42] Neither party made submissions or provided evidence going to the particular issue of compensation. However, in coming to a decision in regard to what, if any, compensation should be ordered I have had regard to each of the matters contained in s.392, and the evidence I consider relevant in this context. I have also had regard to the approach adopted by the Full Bench in the decision of Sprigg v Paul’s Licensed Festival Supermarkets. 20

[43] It is noted, firstly, that Mr Lama was employed for almost two and a half years, which is not an insignificant period of time.

[44] However, the evidence also indicates that one consideration, in particular, is of relevance to the determination of this matter. Mr Lama was terminated on 21 June 2015, however, his evidence indicates he had already informed the business he was intending to resign because he felt unable to continue working, given the various issues he was dealing with. It was then agreed his last day at work would be 5 July.

[45] Therefore, in taking into account s.392(2)(c) “the remuneration the person would have received, or would have been likely to receive, if the person had not been dismissed” I am satisfied that Mr Lama can only have expected at the time of his termination to be employed for that remaining period of 14 days from 21 June until 5 July.

[46] The submissions provided in the proceedings by Konute suggest that at the time Mr Lama was terminated he was employed on a casual basis at a Level 3 classification under the relevant Restaurant Industry Award 2010 21. When the casual loading is included this would entitle him to an hourly rate of at least $23.90 for ordinary time hours worked, or $907.25 for an ordinary time week of 38 hours, although it is understood he often worked more hours than this in a week, and worked in the evenings and at weekends as well.

[47] Therefore, having had regard to all the circumstances of this matter, and the considerations in s.392 I am required to take into account, I am satisfied it is appropriate to make an Order for compensation in the sum of $1,814.50, which is intended to represent an amount equivalent to two weeks of ordinary time earnings for a casual employee. This amount is to be paid within 14 days of the date of this Decision. An Order to this effect will be issued in conjunction with this Decision.

COMMISSIONER

Appearances:

Mr Matt Awad from M. Joseph & Associates appeared on behalf of Mr Lama

Mr Mohammed Ali, a Director of Konute Enterprises appeared on its behalf.

Hearing details:

2016.

Melbourne:

18 February.

 1   Email from Chiodo Madafferi Solicitors to the chambers of Commissioner Gregory, dated 28 January 2016

 2   Fair Work Act 2009 (Cth) at s.387

 3   Exhibit L1 at attached IL-2

 4   Ibid at para 12

 5   Submissions of the Respondent dated 10 February 2016 at para 4

 6   Ibid at para 28

 7   Ibid at para 31

 8   Ibid at para 32

 9 (1995) 185 CLR 410

 10   Ibid at 465

 11   [2011] FWAFB 7498

 12   Ibid at para 20

 13   Above n.v at para 24

 14   [2011] FWAFB 1166

 15   Ibid at [24]

 16  Print R4471, 11 May 1999

 17   Ibid at [19]

 18 (1995) 62 IR 371 at 373

 19   Fair Work Act 2009 (Cth) at s.392

 20 (1998) 88 IR 21

 21   MA000119

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