Ivana Collice Lim v The Aeonic Group Pty Ltd

[2020] FWC 4692

[2020] FWC 4692

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Ivana Collice Lim
v
The Aeonic Group Pty Ltd
(U2020/7143)

COMMISSIONER HARPER-GREENWELL MELBOURNE, 29 SEPTEMBER 2020

Application for an unfair dismissal remedy.

[1] On 22 May 2020, Ms Ivana Lim (the Applicant) made an application to the Fair Work Commission (Commission) pursuant to s.394 of the Fair Work Act 2009 (Cth) (the Act) for a remedy in respect of her dismissal by Secret Sneaker Pty Ltd T/A Secret Sneaker Store. During the hearing on 27 August 2020 the Respondent confirmed the correct name of the Respondent Employer was The Aeonic Group Pty Ltd. Pursuant to s.586(a) of the Act Ms Lim’s application is amended to correct the name of the Respondent to The Aeonic Group Pty Ltd (the Employer, Secret Sneaker).

[2] Ms Lim was employed as a Sales Associate by Secret Sneaker from 22 February 2019 until her employment was terminated on 4 May 2020.

[3] Secret Sneaker is a company that sells consignment inventory. Ms Lim entered into an arrangement (the Master Consignment Agreement) where she provided merchandise that she owned on consignment to Secret Sneaker who then advertised and displayed those goods for sale on her behalf. Secret Sneaker retain 20% of the profit from the sale of those goods and the remaining amount is then paid to Ms Lim.

[4] Secret Sneaker submits Ms Lim was terminated for reasons of misconduct. Specifically, they submit that there was no proof Ms Lim owned some of the goods she had put up for consignment breaching store policies. They further submit Ms Lim breached store policies by allowing a non-staff consignor to use her consignment account.

[5] Ms Lim denies the allegation and submits that the termination of her employment was harsh, unjust and unreasonable. She seeks compensation not reinstatement.

[6] The matter was heard in Melbourne on 27 August 2020 by video via Microsoft Teams. Ms Lim represented herself and Mr Chee Mun Low, Director represented Secret Sneaker and gave evidence on its behalf. Mr James Li, Store Manager also gave evidence on behalf of Secret Sneaker.

Preliminary Matter

[7] Ms Lim’s application was made within the time prescribed in s.394(2) of the Act. Secret Sneaker is not a small-business employer within the meaning of the Act therefore the Small Business Fair Dismissal Code does not apply. The dismissal was not a case of genuine redundancy.

[8] During her employment with Secret Sneaker, Ms Lim was covered by the General Retail Industry Award 2010 and her annual earnings were below the high-income threshold. Ms Lim had completed a period of employment with the company that was at least the minimum employment period. Ms Lim was a person protected from unfair dismissal.

The evidence

[9] Ms Lim was dismissed for inappropriate access to and use of company benefits and failure to comply with Secret Sneaker company policies during the COVID-19 lockdown period. 1

[10] Ms Lim states that she has been a consignor since 2017 and was one of the Chadstone store’s top three consignors for over a year. 2 Ms Lim reported directly to Mr James Li, Manager of Secret Sneaker in Chadstone. Ms Lim submits that she had not breached store policy or the Master Consignment Agreement because the shoes in question belonged to her.3

[11] On 24 April 2020, Ms Lim entered into negotiations to purchase, in bulk, shoes known as Nike Air Jordan 1 Court Purple from a former employee of Secret Sneaker. 4 The former employee did not appear or give evidence on Ms Lim’s behalf in these proceedings, I have henceforth referred to him as Mr T. Ms Lim says there was a lot of back and forth negotiations between herself and Mr T regarding the number of shoes and sizes that she would purchase. Ms Lim’s evidence is that on 1 May 2020 she entered into an arrangement with Mr T where she agreed that in exchange for receiving stock of a higher monetary value, she would assist Mr T by clearing stock that was of a lesser value.5

[12] On 30 April 2020, Ms Lim confirmed with Mr T her intention to buy the bae (smaller) sizes (US4.5-6.5). Ms Lim says she initially wanted to purchase ten bae pairs however due to fund constraints she agreed to purchase five pairs. Ms Lim says she entered into the purchase agreement with Mr T because she saw an opportunity to be the first consignor at the Chadstone store to sell those specific shoes. 6

[13] On 2 May 2020, Ms Lim agreed to purchase 24 pairs of Nike Air Jordan 1 Court Purples (Court Purples) and one pair of Nike x Fear of God Air 1 Triple Black, which came to a total sum of $8900. Ms Lim took possession of 23 pairs of the Court Purples and Mr T was still to provide the remaining pair of Court Purple and Fear of Gods. The yet to be delivered shoes came to a total value of $1040.00. Ms Lim could not pay the full amount owed to Mr T because of financial constraints. It is not in contention that at the time the products were consigned Ms Lim still owed an outstanding amount of $2000. 7

[14] Mr Low’s evidence is that on 5 April 2020, due to the COVID-19 lockdown, they closed the Chadstone store however the business continued to operate online. Secret Sneaker employees would attend the Chadstone store premises to pack and ship online orders. Mr Low says he arranged weekly meetings with his employees and during those meetings he specified that only employees could consign goods for sale. Mr Low’s evidence is that this decision was to ensure that only staff entered the store so as to ensure the safety of its employees and minimise social contact. Ms Lim was present at the meeting and acknowledged the summary notes of the meeting in a Facebook post that she “liked”. 8 Ms Lim does not dispute that this occurred.

[15] Mr Low presented evidence that staff were provided with instructions by way of social media forums that non-staff members were prohibited from consigning stock for safety reasons. The evidence suggests that Ms Lim viewed and acknowledged receipt of the instructions provided by Mr Low. 9 Ms Lim did not dispute that she had read the posts on social media.

[16] Mr Low gave evidence that management had on previous occasions become concerned about Ms Lim’s conduct. He alleges that Ms Lim had been accused of marking other employees’ consigned stock as her own in order to sell like products that she had also consigned. Although Mr Low did not raise this with Ms Lim, his evidence is that it caused enough of a concern that thereafter Ms Lim’s activities were monitored. 10

[17] On 2 May 2020, it was brought to his attention by Mr Li that Ms Lim had made a bulk purchase of stock for consignment and he had reason to believe that Ms Lim did not own the consigned stock outright. Of greater concern was that the stock belonged to an ex-employee whose employment had ended on less than favourable terms. Mr Low requested that Mr Li conduct an investigation into the matter and that he instruct Ms Lim to provide proof of purchase for the consigned stock. 11

[18] Mr Li checked the security footage and found that, during the lockdown period on the day that Ms Lim was rostered to work by herself, she had entered the Chadstone store with Mr T and the stock that had been consigned to Ms Lim’s account. 12 Ms Lim does not dispute that this occurred. Mr Low submits Ms Lim’s conduct constituted a breach of her employer’s reasonable directions.

[19] Although Ms Lim submits she was not informed of the reasons she was being investigated, the evidence suggests otherwise. On 4 May 2020, Mr Li informed Ms Lim that her activities were being investigated and she was required to provide proof of purchase for her consigned stock. 13 Ms Lim regarded Mr Li as a friend and provided information to him that she did not expect would be passed onto Mr Low. One could say that Ms Lim was naïve in her assessment of Mr Li’s priorities and role as a Manager however, on the evidence before me, I have no reason to believe that Mr Li misled Ms Lim about the reasons her activities were being investigated.

[20] Through an exchange of text messages, Ms Lim informed Mr Li that the “majority of the shoes” were hers and that the bae sizes 8.5 and 9 were Mr T’s and that she had agreed to help him out because she didn’t think it would matter. 14 During the hearing, Ms Lim gave evidence in contradiction of the text messages she sent to Mr Li. During the hearing, Ms Lim was more concerned with how Mr Low had come into possession of the text messages and that she had sent the correspondence to her Manager who she regarded as a friend not realising he would pass this information onto Mr Low.

[21] Ms Lim took issue with Secret Sneaker asking her to provide evidence that she owned the shoes because she had no knowledge of any other staff member being asked to provide evidence of a similar kind. Ms Lim believes her bulk buying of products was unfairly scrutinised by Secret Sneaker and submits bulk buying of shoes is common practice among staff consignors. 15

[22] Ms Lim wrote to Mr Low raising those concerns, however she complied with the request for proof of ownership and sent Mr Low copies of bank transfer receipts totalling $6900. Ms Lim gave evidence that she could not pay Mr T the full amount due at the time of receiving the goods, her evidence is that at the time Mr Li made the request for proof of purchase she still owed Mr T $2000. 16

[23] Ms Lim says she could not provide evidence of her discussions with Mr T because they finalised the agreement on 1 May 2020 during a phone call. Ms Lim says that Mr Low would not accept a screen shot of her call history as proof of purchase. 17

[24] Ms Lim’s evidence is that at the time of the inquiry into her buying activity, Mr T had not yet completed the order. Ms Lim was still waiting to receive one pair of Court Purples US12 and one pair of Nike x Fear of God. 18

[25] Ms Lim’s evidence is that the purchase agreement had not been completely fulfilled at the time of consignment however she believes that because she knew Mr T very well and he knew where she lived and worked, there was a level of trust between them and he could rely on her to make payment in full once the shoes had been sold. Ms Lim received two pairs of shoes from their arrangement on 8 June 2020, over a month after entering into the agreement. Ms Lim says Mr T waited for her to fulfil her part of the arrangement being payment for the shoes she had placed on consignment as she had waited for him to fulfil her order. 19

[26] Ms Lim was notified of an investigation into her consignment activities on 4 May 2020. Shortly after, Ms Lim sent Mr Low a copy of a transfer receipt for the final payment of $2000 made to Mr T. Ms Lim’s evidence was that she had received money from a shoe she had sold on the StockX app and reward funds from her Cashrewards account, and that she had been waiting for that money to be transferred to her bank account from her Paypal account. 20

[27] Ms Lim submits that since she had paid 77% of the total purchase price this should have been accepted by Secret Sneaker as evidence of ownership. 21

[28] Ms Lim disputes that she has breached the Consignment Agreement and submits that it does not explicitly state that she must own the shoes. 22 However, during the hearing Ms Lim acknowledged that in section 3 under “Ownership Representations” it states that she must have a “legal right to offer and sell the Goods” and that she had read and understood the Consignment Agreement. Ms Lim believes that as the shoes had been provided to her for sale, she had the right to list them for consignment.23

[29] Ms Lim submits that the dismissal was harsh and that she should have received a warning and not have been dismissed. 24

The legislation and the relevant considerations

[30] Section 396 of the Act requires that the following matters be decided before the merits of the application may be considered:

“396 Initial matters to be considered before merits

The FWC must decide the following matters relating to an application for an order under Division 4 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 Small Business Fair Dismissal Code (the Code);

(d) whether the dismissal was a case of genuine redundancy.”

Consideration

Harsh, Unjust Unreasonable

[31] Section 387 of the Act sets out the criteria for considering whether a dismissal was harsh, unjust or unreasonable:

“387 Criteria for considering harshness etc.

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

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

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

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

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

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

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

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

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

[32] The type of conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained by the High Court of Australia in Byrne v Australian Airlines Ltd.²⁵ McHugh and Gummow JJ explained 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.”26

[33] I will now consider each of the matters set out in s.387 of the Act.

Was there a valid reason for the dismissal- s.387(a)

[34] The employer must have a valid reason for the dismissal of the employee, although it need not be the reason given to the employee at the time of the dismissal. 27 The reason for the dismissal should be “sound, defensible and well founded”28 and should not be “capricious, fanciful, spiteful or prejudiced.”29

[35] 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. 30 The question the Commission must address is whether there was a valid reason for the dismissal related to the employee’s capacity or conduct (including its effect on the safety and welfare of other employees).³¹

[36] In cases relating to alleged conduct, the Commission must make a finding, on the evidence provided, whether, on the balance of probabilities, the conduct occurred.³² It is not enough for an employer to establish that it had a reasonable belief that the termination was for a valid reason. 33

[37] The Consignment Agreement at clause 3 provides that an employee must be “the valid and lawful owner of all goods” and that “none of the goods will be subject to any lien, encumbrance, security interest or adverse claim” and that the consigner is to “have the full legal right to offer and sell the goods”.

[38] It is not in dispute that Ms Lim was familiar with the Consignment Agreement and that she had received the notification from Mr Low that employees were not to consign products that did not belong to them.

[39] Ms Lim sent a series of text messages to Mr Li in which she clearly states that she did not own all of the shoes she had placed on consignment. She states in those text messages that she had agreed to help Mr T because she “didn’t think it would matter lol”. Ms Lim sent Mr Li the information trusting that Mr Li would not pass the information onto Mr Low. Ms Lim also gave evidence that she was unable to pay for the products she had acquired from Mr T in full due to financial constraints.

[40] Mr Li sent text messages to Ms Lim suggesting she tell Mr Low the truth about the consigned goods however Ms Lim responded saying that she will “look bad for lying lol”.

[41] The evidence supports a finding that Ms Lim did not own all of the products she consigned. Ms Lim has breached the Consignment Agreement.

[42] The evidence also supports a finding that Ms Lim failed to comply with the lawful direction of her employer by entering the store during the Covid-19 lockdown with a non-staff member, being Mr T.

[43] On the basis of the above, I am satisfied that there was a valid reason for the dismissal of Ms Lim.

Notification of the valid reason –s.387(b) and an opportunity to respond –s.387(c)

[44] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made 34, and in explicit35 and plain and clear terms.36 In Crozier v Palazzo Corporation Pty Ltd a Full Bench of the Australian Industrial Relations Commission dealing with a similar provision of the Workplace Relations Act 1996 stated the following:

“As a matter of logic procedural fairness would require that an employee be notified of a valid reason for the termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. Much like shutting the stable door after the horse has bolted.” 37

[45] 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. This criterion is to be applied in a common sense way to ensure the employee is treated fairly and should not be burdened with formality. 38

[46] Mr Low sent correspondence to Mr Li informing him that he must “show respect” to Ms Lim and inform her of the reasons she was being terminated. Mr Low also provided a brief for Mr Li to follow. The brief provided that Ms Lim was being terminated because she was unable to provide proof that she owned the products that she had placed on consignment.

[47] Mr Li sent correspondence to Ms Lim on 11 May 2020 informing her that she had been dismissed because she was unable to provide evidence that she owned the merchandise she had placed on consignment and she had failed to comply with the store policy during the Covid-19 lockdown period.

[48] Although Ms Lim was notified that she was under investigation for breaching the Consignment Agreement, she was not informed of the outcome of the investigation until she received notification that she was being dismissed. Ms Lim was provided with the opportunity to respond to the allegations as part of the investigation. She was also provided the opportunity to submit any mitigating circumstances for consideration prior to the decision to terminate her employment, although it was not made clear to Ms Lim that Mr Low and Mr Li were considering termination as an outcome of the investigation.

Unreasonable refusal of a support person – s.387(d)

[49] In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account any unreasonable refusal by the employer to allow the person to have a support person present to assist in any discussions relating to dismissal.³⁹ With respect to this consideration, the Explanatory Memorandum states:

“This factor will only be a relevant consideration when an employee asks to have a support person present in a discussion relating to dismissal and the employer unreasonably refuses. It does not impose a positive obligation on employers to offer an employee the opportunity to have a support person present when they are considering dismissing them.”40

[50] There is no suggestion that Ms Lim was refused a support person. Ms Lim did not at any time request that a support person be present during the investigation. There is no positive obligation under s.387(d) on the employer to offer an employee the opportunity to have a support person.

Warnings regarding unsatisfactory performance – s.387(e)

[51] In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, if the dismissal related to unsatisfactory performance by the person, the Commission must take into account whether the person had been warned about that unsatisfactory performance before the dismissal.⁴¹ Unsatisfactory performance is more likely to relate to the employee’s capacity to do the job, than their conduct.⁴² The Commission must take into account whether there was a period of time between an employee being warned about unsatisfactory performance, and a subsequent dismissal. This period of time gives the employee the opportunity to understand their employment is at risk and to try and improve their performance.⁴³

[52] This is a matter of misconduct and not unsatisfactory performance. This is a neutral consideration.

Impact of the size of the Respondent on procedures followed and absence of dedicated human resources management specialist/expertise on procedures followed – s.387(f)-(g)

[53] In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal.⁴⁴ Further, in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account 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.⁴⁵

[54] The conduct of Mr Li during the investigation into the allegations against Ms Lim was not open nor was it transparent. Mr Li deliberately withheld from Ms Lim that he was the person that had alerted Mr Low about the consignment activities of Ms Lim. He further failed to inform Ms Lim that he was providing the information she had provided to him, in the trust that the information would not be shared with anyone else, to Mr Low.

[55] Mr Li is not experienced in Human Resource Management, and due to his inexperience, he found himself in a position of conflict between his role as a Manager and his friendship with Ms Lim. Mr Low also has limited experience in Human Resource Management. Mr Low was guiding Mr Li through the investigation and termination process however, due to their inexperience, they failed to provide Ms Lim the opportunity of an open and transparent investigation resulting in both the investigation and dismissal being procedurally deficient.

[56] Although the lack of Human Resource expertise affected the dismissal process, I again make the observation that Ms Lim was afforded the opportunity to provide Mr Low with the truth for his consideration prior to his decision to dismiss her and she chose not to do so. I also note Mr Low instructed Mr Li on several occasions to ensure Ms Lim was dismissed in a respectful manner however this did not take into consideration procedural fairness.

Other relevant matters – s.387(h)

[57] Ms Lim was effectively stood down whilst the investigation was conducted into her activities. Ms Lim did not receive any further shifts whilst she had been stood down. Ms Lim remained employed until the time she was notified of her dismissal. Although her dismissal took effect the same day she received notification, Mr Low backdated her dismissal to take effect on the last date she had worked at Secret Sneaker.

[58] Ms Lim submits she was ready and available to work during the stand down period and correctly asserts that her dismissal did not take effect until she received formal notification that she had been dismissed. Ms Lim believes she is entitled to be paid for that period.

[59] However, the Commission does not have jurisdiction to deal with matters of unpaid wages of this type. Claims for unpaid wages must be pursued separately through the courts.

Findings

[60] Taking into consideration the size of the employer and the lack of Human Resources expertise combined with Ms Lim being provided with the opportunity to tell Mr Low the truth about the ownership of the consigned merchandise, I do not consider the procedural deficiencies in this matter to be sufficiently detrimental to the circumstances to warrant a finding that the dismissal was unfair.

[61] Taking into account all of the circumstances and the considerations in s.387, I consider that the dismissal of Ms Lim was not harsh, unjust or unreasonable and that accordingly her dismissal was not unfair.

[62] The application for an unfair dismissal remedy is dismissed. An order 46 to that effect will accompany this decision.

COMMISSIONER

Appearances:

I. Lim on her own behalf.
C. Low from the Respondent.

Hearing details:

2020.
Melbourne (by video link via Microsoft Teams):
August 27.

Printed by authority of the Commonwealth Government Printer

<PR722431>

 1   Exhibit A1, p5, Exhibit A2 at [4] and Exhibit R1, p9.

 2   Exhibit A1, p4.

 3 Exhibit A2 at [6].

 4 Ibid at [8].

 5   Ibid.

 6   Ibid and Exhibit A1, p4.

 7   Exhibit A1, p4 and Exhibit A2 at [8] – [10].

 8   Exhibit R1, p10 and Exhibit R2, p.5.

 9   Documents 1-4 of Respondent documents list filed 29 July 2020.

 10   Exhibit R1, p10 and Exhibit R2, p6.

 11   Exhibit R1, p10.

 12   Ibid.

 13   Ibid.

 14   Text message screenshots between Mr Li and Ms Lim, contained in Applicant documents list filed 17 July 2020 and Respondent documents list filed 29 July 2020.

 15 Exhibit A1, p4 and Exhibit A2 at [7].

 16   Exhibit A1, p4 and Exhibit A2 at [6] and [10].

 17 Exhibit A2 at [8].

 18 Ibid at [9].

 19   Ibid.

 20 Ibid at [11].

 21   Ibid.

 22 Ibid at [18].

 23   Ibid.

 24 Ibid at [19].

25 (1995) 185 CLR 410.

26 Ibid at 465.

 27   Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 373, 377-8.

 28   Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 at 373.

 29   Ibid.

 30   Walton v Mermaid Dry Cleaners Pty Ltd(1996) 142 ALR 681 at 685.

31 Ibid.

32 King v Freshmore (Vic) Pty Ltd (unreported, AIRCFB, Ross VP, Williams SDP, Hingley C, 17 March 2000) Print S4213 at [24].

 33   Ibid.

 34   Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41].

 35   Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at [151].

 36   Previsic v Australian Quarantine Inspection Services Print Q3730.

 37   Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at [73]

 38   RMIT v Asher (2010) 194 IR 1 at 14-15.

39 Fair Work Act 2009 (Cth) s.387(d).

40 Explanatory Memorandum, Fair Work Bill 2009 (Cth) [1542].

41 Fair Work Act (Cth) s.387(e).

42 Annetta v Ansett Australia Ltd (2000) 98 IR 233, 237.

43 Johnston v Woodpile Investments Pty Ltd T/A Hog’s Breath Café – Mindarie[2012] FWA 2 at [58].

44 Fair Work Act (Cth) s.387(f).

45 Fair Work Act (Cth) s.387(g).

 46   PR723171