Jaime Duckworth v My Shared Services Pty Ltd

[2020] FWC 6626

[2020] FWC 6626

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Jaime Duckworth
v
My Shared Services Pty Ltd
(U2020/5528)

DEPUTY PRESIDENT GOSTENCNIK MELBOURNE, 10 DECEMBER 2020

Application for an unfair dismissal remedy – remedy appropriate – reinstatement inappropriate – compensation ordered.

[1] In Jaime Duckworth v My Shared Services Pty Ltd 1 I concluded that the Applicant’s dismissal by the Respondent was harsh, and therefore unfair.2 This decision deals with the remedy (if any) that should be ordered consequent on my earlier conclusion. In this decision, for convenience, I will continue to use the abbreviations adopted in my earlier decision.

[2] Section 390 of the Act sets out the circumstances in which I may make an order for reinstatement or compensation:

“390 When the FWC may order remedy for unfair dismissal

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

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

(b) the person has been unfairly dismissed (see Division 3).

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

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

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.

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

[3] That the Applicant was protected from unfair dismissal when she was dismissed and that she was unfairly dismissed was determined in my earlier decision. 3 Section 390(1) of the Act is therefore satisfied. It is uncontroversial that the Applicant has made an application under s.394. Section 390(2) is also satisfied. The Applicant does not seek reinstatement.4 In the circumstances and for the purposes of s.390(3)(a) I am satisfied that an order for reinstatement of the Applicant is inappropriate. I turn then to consider whether an order for payment of compensation is appropriate in all the circumstances of the case, and if so, what that amount should be.

[4] In its submissions on remedy, the Respondent did not expressly contend that no order of compensation should be made. 5 In concluding that the dismissal of the Applicant was unfair, I observed:

“The right to be consulted about a decision to reduce staffing numbers which may impact the ongoing employment of an employee is a substantive right and not merely perfunctory. The Applicant should have been consulted about the proposed redundancy and the consequent employment termination before her employment ended. That the Respondent failed to so do meant that the Applicant was deprived the opportunity of discussing with her employer options to mitigate or ameliorate effects of redundancy on her. Consequently, mitigating options such as reduced working hours or leave without pay were not discussed or considered.” 6

[5] The Respondent contended that its business is currently under review by the directors to determine its ability to continue trading. 7 It said that any order of compensation would severely impact on its ability to maintain its trading status considering the current conditions presented by COVID-19 restrictions.8 No detail by way of financial statements or statements of evidence were provided to support this submission despite directions I made allowing the Respondent to file and serve any documentary material on which it intends to rely in relation to the issue of remedy. The submission filed by the Respondent also did not provide any detail of the circumstances which might support the contention made. The bare contention is therefore given little weight. Given my earlier finding, and in the absence of any material to the contrary, I consider that in the circumstances of this case an order for compensation is appropriate. I consider the quantum of any compensation order that I might make below.

[6] Section 392 of the Act sets out the circumstances that must be taken into account in determining an amount of compensation, the effect of any findings of misconduct on that compensation amount and the upper limit of compensation that may be ordered as follows:

“392 Remedy—compensation

Compensation

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

Criteria for deciding amounts

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

(a) the effect of the order on the viability of the employer’s enterprise; and

(b) the length of the person’s service with the employer; and

(c) the remuneration that the person would have received, or would have been likely to receive, if the person had not been dismissed; and

(d) the efforts of the person (if any) to mitigate the loss suffered by the person because of the dismissal; and

(e) the amount of any remuneration earned by the person from employment or other work during the period between the dismissal and the making of the order for compensation; and

(f) the amount of any income reasonably likely to be so earned by the person during the period between the making of the order for compensation and the actual compensation; and

(g) any other matter that the FWC considers relevant.

Misconduct reduces amount

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

Shock, distress etc. disregarded

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

Compensation cap

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

(a) the amount worked out under subsection (6); and

(b) half the amount of the high income threshold immediately before the dismissal.

(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.”

[7] The method for calculating compensation under s.392 of the Act was consider by a Full Bench of the Commission in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge. 9 In that decision the Full Bench set out a suggested order in which the criteria and other factors might be applied, taking into account authority under the Workplace Relations Act 1996 in Sprigg v Paul’s Licensed Festival Supermarket10and Ellawala v Australian Postal Corporation.11 I have adopted the methodology in Bowden in determining the amount of a payment of compensation observing that Bowden and the formulation in Sprigg serve as a guide rather than any decision rule.

Remuneration that the Applicant would have been received: s.392(2)(c)

[8] A consideration of this circumstance requires an assessment to be made about the likely period of employment that would have ensued had the Applicant not been unfairly dismissed. An assessment of the likely period of employment is not to be conducted in a vacuum but rather against the backdrop of the circumstances of the dismissal and the reasons for concluding that the dismissal was unfair. The dismissal of the Applicant was effected on redundancy grounds, albeit that the failure to consult as required by the applicable modern award meant the redundancy dismissal was not a case of genuine redundancy within the meaning of s.389 of the Act. Nevertheless, the Respondent’s business, like many others, had been adversely affected by the COVID-19 pandemic. 12 The Respondent’s evidence was that the business suffered a rapid decline in novated lease enquires.13 In the four weeks preceding the Applicant’s dismissal, novated lease enquires are said to have declined by 50%.14 The Applicant conceded the business of the Respondent has suffered a reduction in turnover.15 The Respondent (probably unlawfully) directed the Applicant and a number of other employees to take annual leave because of a reduced work requirement. Ultimately some employees of the Respondent, including the Applicant, were dismissed on redundancy grounds in response to the deteriorating economic conditions and their impact on the Respondent’s business. This included streamlining of the Customer Support Consultant functions and the introduction of operational efficiencies. Taken together, these circumstances resulted in the job of the Applicant becoming redundant and dismissal followed.

[9] The point here is that the Respondent was taking steps responsive to the economic circumstance visited upon the Respondent’s business because of government restrictions on movement and activity aimed at curbing the spread of the COVID-19 virus. All of this supported the conclusion I reached that the Applicant’s dismissal was for reasons of redundancy. As I have already noted, the Applicant was not the only employee of the Respondent whose employment came to an end in or around that time for reasons of redundancy.

[10] What the Respondent had failed to do, and that which led me to conclude the Applicant’s dismissal was unfair, was to consult as required by the Clerks Award.

[11] The Applicant contends that following proper consultation, the Applicant would have commenced a period of unpaid leave instead of dismissal. I agree that this was possible, however there is no indication that the Respondent would or would have likely agreed. That it would likely not have agreed is supported by economic circumstances it faced at the time, the need to act reasonably quickly to address its cost base (of which labour costs accounted for 70% of its expenditure) 16 given those circumstances and the fact that other employees were also affected by redundancy and dismissal. In addition the Respondent was undertaking the job streamlining and operational efficiency exercise noted earlier. The likelihood of these circumstances leading to a decision to carry the Applicant and perhaps also several other employees on unpaid leave is remote. In any event, the Respondent was under no obligation to have consented to unpaid leave. Such an endeavour would only have had a short-term impact on its cost base in an environment where the longer-term economic impact of the restrictions responsive to the COVID-19 virus were unknown.

[12] The Applicant also says that she “strongly believe if [she] remained employed and on unpaid leave for April, [she] could have resumed working at full capacity from May and remained employed into the foreseeable future as [her] performance was not the issue. Therefore, [she] seek[s] compensation for the 18 weeks [she] could have successfully been working full time for the [Respondent]”. 17 No one has suggested the Applicant was anything other than a good and effectively performing employee. But dismissal for redundancy reasons happens because of decisions to restructure or because of adverse prevailing economic circumstances. Invariably both effective performers and underperforming employees are affected. Redundancy dismissals brought about by rapidly changing adverse economic circumstances, as in the present case, tend not to discriminate. They affect good and poor performing employees. The Respondent was ultimately under no obligation to grant unpaid leave nor was it under any obligation to delay its decision to dismiss until it knew whether it would be eligible for a JobKeeper subsidy. Even then, eligibility does not mean that an employer must keep all its staffing cost base. The Applicant’s reliance on the fact that there was some improvement in the business of the Respondent in May 202018 ignores the fact that at the time that consultation would have occurred in early April, this could not have been known. It also ignores the fact that the Respondent was restructuring in response to economic conditions. It cannot be criticised for wanting to streamline its operations and effect operational efficiencies for the long term. Moreover, though it became eligible for JobKeeper a short time after dismissal of the Applicant, as already noted the Respondent was not obliged to keep all of its staff or prohibited from effecting redundancies to achieve efficiencies and a reduced cost base.

[13] The Respondent cannot be criticised for the economic circumstances it faced or the fact that it had to act and did act quickly. Its failing was in the lack of proper consultation consistent with the Clerks Award.

[14] In my assessment taking these matters into account, the Applicant would have continued in employment for a further week during which consultation, which did not occur in accordance with the Clerks Award, should have occurred. I consider given the circumstances described above, that employment of the Applicant would have ended thereafter on redundancy grounds. Therefore, the remuneration that the Applicant would have received if she had not been dismissed is one week’s pay or $1,057.69 plus 9.5% superannuation contribution.

Remuneration earned by the Applicant: s.392(2)(e)

[15] The Applicant obtained alternative employment in October 2020. 19 She did not earn any income until that time. In the circumstances I do not propose any deduction on account of income earned.

Income likely to be earned: s.392(2)(f)

[16] Given my assessment about the likely remuneration that the Applicant would have received if she had not been dismissed, and the consequence of that conclusion on the assessment of compensation, I do not propose to make any deduction on account of this assessment.

Other matters: s.392(2)(g)

[17] No party suggested other matters that might be relevant to the assessment of compensation. Given the amount of compensation assessed, a deduction for exigencies is not appropriate.

Viability: s.392(2)(a)

[18] As earlier noted, although the Respondent made vague reference to its financial position and that an order of compensation might impact its viability, it failed to provide detail by way of financial statements or statements of evidence or to elaborate in its written submission. In the circumstances I am not persuaded that the order I propose be made will adversely affect the viability of the Respondent’s business

Length of service: s.392(2)(b)

[19] At the time of her dismissal the Applicant had completed less than 12 months of service with the Respondent. This is not a significant period of employment however it is not a material factor weighing against the order I propose to make nor does it suggest the amount I propose to order is excessive.

Mitigating efforts: s.392(2)(d)

[20] I accept the Applicant was diligent in seeking alternative employment following her dismissal and that obtaining alternative employment in the period since her dismissal was difficult. 20 I do not propose any deduction on account of any failure to mitigate.

Misconduct: s.392(3)

[21] No deduction is warranted given the reason for dismissal was redundancy and not misconduct.

Calculation of total compensation

[22] At the time of the dismissal the Applicant earned $1,057.69 per week plus superannuation.

Applying the Compensation cap: s.392(5)

[23] The compensation amount is below the statutory cap.

Payment by instalments: s.393

[24] No suggestion was made that the compensation amount should be paid by instalment and I do not propose to so order.

Conclusion on compensation

[25] I consider the application of the Sprigg formula does not, in this case, yield an amount that is clearly excessive or clearly inadequate. Accordingly, there is no basis for me to reassess the assumptions made in reaching the compensation amount of $1,057.69 plus 9.5% superannuation.

[26] For the reasons I have given, it is appropriate that I order compensation in the sum of $1,057.69 plus 9.5% superannuation. The order I make will require payment within 14 days of the date of the order. The order is published contemporaneously with this decision in PR725288.

DEPUTY PRESIDENT

Written submissions:

Applicant, 14 November and 6 and 9 December 2020
Respondent, 2 December 2020

Printed by authority of the Commonwealth Government Printer

<PR725287>

 1   [2020] FWC 4865

 2   Ibid at [41], [43]

 3   Ibid at [10]-[14], [41], [43]

 4   Applicant’s submission on remedy

 5   Respondent’s submissions 2 December 2020

 6   [2020] FWC 4865 at [41]

 7   Respondent’s submissions 2 December 2020

 8   Ibid

 9   [2013] FWCFB 431

 10 (1998) 88 IR 21

 11   Print S5109

 12   Respondent’s outline of argument: objections at 4(b) and Transcript of proceedings (24 August 2020) at PN138-PN144

 13   Form F3 at 3.2(6)

 14   Letter from Ms Ellen Powell, Chief Operations Officer, dated 12 June 2020

 15   Transcript of proceedings (24 August 2020) at PN137-PN144

 16   Exhibit 5

 17   Applicant’s submission on remedy

 18   Applicant’s reply submissions on Remedy

 19   Ibid

 20   Ibid