Jan Knecht v Renaissance Parquet

[2011] FWA 1079

[2011] FWA 1079

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Jan Knecht
v
Renaissance Parquet
(U2010/13937)

COMMISSIONER BISSETT MELBOURNE, 21 FEBRUARY 2011

Application for unfair dismissal remedy - Small Business Fair Dismissal Code.

[1] This decision concerns an application by Mr Jan Knecht (the Applicant) under section 394 of the Fair Work Act 2009 (the Act) alleging that the termination of his employment by Renaissance Parquet (the Respondent) was harsh, unjust or unreasonable.

[2] The Applicant’s employment was terminated on 5 November 2010. The application was subject to conciliation where it was not settled. It was subsequently referred for arbitration.

[3] The matter was heard on 19 January 2011. The Applicant was represented by Ms Henry while the Respondent was represented by Mr Unger. Mr Knecht was a witness on his own behalf and Mr Unger and Ms Brown were witnesses for the Respondent.

Background

[4] The Applicant was employed by the Respondent on 27 July 2009 as a carpenter on an average of 35 hours per week. As a part of his employment contract the Applicant was provided with tools and given access to the factory to undertake personal projects after working hours or at times that did not impede the business. It was accepted at the time the Applicant was employed that he also ran his own business.

[5] On 10 May 2010 Ms Brown commenced working for the Respondent as a Bookkeeper/Administrator. Ms Brown immediately commenced a reconciliation of wages paid to employees against their time records.

[6] On 20 August Mr Unger (of the Respondent) met with the Applicant and raised issues associated with his work practices and performance. A further meeting was held between Mr Unger and the Applicant on 24 August 2010. What was discussed at each of these meetings and whether anything was put in writing is in dispute.

[7] On 14 October 2010 the Applicant submitted his resignation specifying a final working day of 19 November 2010 (that is, provided five weeks notice).

[8] On 5 November 2010 the Applicant sent a text message to the Respondent to advise he was not well and would not be attending work that day.

[9] A notice of termination of employment was sent to the Applicant by email at approximately 3.56pm that day. The Applicant subsequently provided a medical certificate to the Respondent. A further email was sent to the Applicant at approximately 6.04pm detailing the reasons for the termination of his employment.

[10] The Applicant claims that he was never given any formal warnings or written notice that he was ‘not performing or that there were issues with his work or time management’ 1 and that he has been unfairly dismissed.

[11] I note in passing that there are a number of outstanding matters relating to the final payment due to the Applicant upon the termination of his employment. The Respondent is in contact with the Fair Work Ombudsman as to the calculation of final payments and the treatment of alleged overpayments, and the relevant superannuation fund as to outstanding superannuation payments. The determination of these matters is not within my powers and I do not intend to make any findings with respect to them. I would however encourage the Respondent to resolve these issues as a matter of urgency.

Legislative framework

[12] The Act provides

385 What is an unfair dismissal

A person has been unfairly dismissed if FWA is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

(d) the dismissal was not a case of genuine redundancy.

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388...

388 The Small Business Fair Dismissal Code

(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.

(2) A person’s dismissal was consistent with the Small Business Fair Dismissal Code if:

(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and

(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.

[13] There is no dispute that the Applicant has been dismissed. He claims that dismissal was harsh, unjust or unreasonable. The dismissal is not a case of genuine redundancy.

[14] The Respondent says the company is a small business. This was not disputed. The Respondent claims that the dismissal was consistent with the Small Business Fair Dismissal Code (the Code).

[15] By virtue of s.385 of the Act it is apparent that if the dismissal is consistent with the Code the Applicant has not been unfairly dismissed. It is appropriate therefore to determine this matter as a threshold issue.

The Small Business Fair Dismissal Code

[16] The Code is in the following terms:

Summary Dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal.

Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other Dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response.

Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Procedural Matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.

[17] The Applicant’s employment was terminated without notice.

Conduct sufficiently serious to justify immediate dismissal

[18] It appears, based on the submissions and the materials filed, that the Applicant was summarily dismissed (that is without notice) for fraud in that he incorrectly filled in his timesheets and hence claimed wages for time he had not worked.

[19] There were also a range of other matters associated with the Applicant’s ‘attitude’ and performance of his duties that clearly were part of the matrix of issues considered by the Respondent in determining to terminate the employment.

[20] The Code relevantly provides that it is fair to dismiss an employee without notice when the employer believes on reasonable grounds that the conduct of the employee is sufficient to justify the dismissal. The requisite test as to whether summary dismissal is in accordance with the Code is not if the conduct occurred but whether the employer believes on reasonable grounds that the conduct occurred. This requires a consideration of the belief of the employer. Such a consideration should not in my view be cursory but requires an examination of the facts and circumstances that led the employer to that view.

[21] In 2009 the Respondent terminated the employment of its then bookkeeper. There had been a number of problems with irregularities in the accounting system. Following the termination of employment the Respondent engaged the services of an accountant and independent bookkeepers to try and put things in order.

[22] In May 2010 the Respondent employed Ms Rebecca Brown as administration manager/bookkeeper. On her appointment Ms Brown set about ‘rectifying serious issues with [the Respondent’s] accounting records for 2009/2010 year, more specifically focusing on payroll errors’ as the ‘[b]ookkeeper employed prior to [Ms Brown] had severely distorted pay records which had resulted in countless over/under payments, and unreliable payroll balances.’ 2 Agreement was reached with relevant current employees who had been overpaid to recover the overpayment and an underpayment to an employee was rectified.3

[23] The Applicant had been overpaid. This was a result of an overstatement by the Applicant of the hours worked by him which had not been picked up by the previous bookkeeper. 4 Part of the reconciliation undertaken by Ms Brown of the Applicant’s timesheets included a period where the Applicant worked at the Salter construction site. This was a commercial project where employees were deemed to have commenced work 10 minutes after they parked their car at the relevant car park (this apparently was practice for the entire site). The Applicant was reimbursed the cost of parking so was required to submit his parking tickets. It was on the basis of these tickets that the Respondent could determine the actual start and finish times of the Applicant and compare these to the timesheets submitted.5

[24] The Applicant denies that misrepresentation of his timesheets was raised with him or does not recall it being raised 6 and says that he first became aware that his timekeeping was an issue on 5 November 2010 when his employment was terminated.7

[25] The Applicant submits that he could not always clock in and out because he was not based at the factory where the time clock was situated. 8

[26] Mr Unger gave evidence for the Respondent that he had raised issues with respect to timekeeping (along with other matters) in meetings with the Applicant on 20 August 2010 and 24 August 2010. Mr Unger’s evidence is that at each of these meetings a number of issues were discussed with the Applicant and a letter setting out the matters discussed was provided to the Applicant. 9 The letter provided to the Applicant on 24 August 2010 contained a specific formal warning with respect to the accuracy of his timesheets. Whilst the Applicant agrees that each of the meetings took place he denies his timekeeping was discussed or that he was given anything in writing.

[27] Ms Brown’s evidence is that she generated each of the letters of 20 August 2010 and 24 August 2010 10 and made two copies of each. These were placed on the boardroom table, where Mr Unger met with the Applicant. When she received the Applicant’s personal file following the meeting of 24 August there was only one copy of the letter relevant to that meeting on the file.11 She could not recall if the same was true after the meeting of 20 August 2010. She believes that Mr Unger had given a copy of each of the letters to the Applicant.

[28] During the meeting on 24 August 2010 between Mr Unger and the Applicant Ms Brown was seated about 3 metres away at her desk, 12 albeit with her back to the meeting13 (there was an open doorway between the meeting and herself). She took it upon herself to jot down notes of the meeting (as she heard it)14 and believes from what she heard that the Applicant was given each letter15 although she never saw this occur.

[29] I have heard the evidence of both Mr Unger and the Applicant. I found the Applicant to be vague or non committal in some of his responses and prone to altering his evidence when pressed. Mr Unger on the other hand gave his evidence in a clear and forthright manner. I find Mr Unger a more credible witness and prefer his evidence to that of the Applicant.

[30] On the basis of the evidence I find that the Applicant was given each of the letters of 20 August 2010 and 24 August 2010 and that the accuracy of timesheets had been raised with the Applicant in each of the meetings. The letter of 20 August clearly raised issues associated with timesheets and the letter of 24 August contained a formal warning with respect to timesheets and a formal warning with respect to other performance related issues.

[31] It is inexplicable that this did not occur. If I were to accept the evidence of the Applicant that matters associated with his timekeeping had never been raised with him I would have to accept that the Respondent had confected an elaborate hoax, in conjunction with his bookkeeper, of letters written, conversations had and reconciliations of timesheets all for the purpose of terminating the employment of the Applicant two weeks prior to the date he was to finish his employment anyway.

[32] I am satisfied that the Applicant was aware that he was required to improve his timekeeping with respect to his start and finish times and meal breaks and that this had been raised with him by the Respondent. Whilst the Applicant repeatedly denies that issues with his timesheets or record keeping was ever raised with him I prefer the evidence of Mr Unger that he did, over a period of time, raise these issues with the Applicant and of Ms Brown that she did, on at least one occasion, seek clarification from the Applicant of the times recorded by him.

[33] There is substantial evidence for the Respondent of efforts to ensure that the Applicant’s timesheets were properly completed. Where there were deficiencies in his timesheets the Applicant was advised of these and given the opportunity to rectify the errors. In circumstances where the Applicant failed to rectify errors or omissions the Respondent sought information from other sources, including the Applicant’s co-workers, as to the start and finish and/or break times of the Applicant. 16

[34] Ms Brown gave uncontested evidence that whilst processing payrolls for the period ending 2 November 2010 she became aware that the Applicant ‘claimed he had not taken meal breaks when it was undeniable that he had’. 17 She raised this with Mr Unger.

[35] Mr Unger’s evidence is that he asked that Applicant to meet with him at the end of the day on 4 November 2010 when they both returned to the factory from a job in country Victoria. The Applicant did not attend the meeting but went home. The Applicant denies that he was asked to attend such a meeting. Again I prefer the evidence of Mr Unger on this matter, that the Applicant was asked to attend such a meeting.

[36] The Applicant agreed that by this point in time there were issues of trust between himself and his employer. 18

[37] The following day the Applicant sent a text to the Respondent advising that he was ill and would not be at work that day.

[38] Mr Unger, suspecting that the Applicant was not unwell and was in fact conducting his personal business at home, arranged for the Applicant to be contacted by an investigator posing as a potential client of the Applicant. Mr Unger claims his suspicions were aroused because another of his employees advised him that the Applicant had some private work ‘and he needed to complete it for a job or he needed to supply for that weekend’. 19 A representative of the Respondent then attended the Applicant’s premises, took a photo of the Applicant, advised that the Applicant’s employment was being terminated and requested that the keys to the factory be returned.

[39] The Applicant’s employment was terminated by email later that day. The reasons given in the email for the termination were falsifying timesheets and failure to attend work while conducting private business.

[40] There is no question that falsifying timesheets to gain payment for time not worked may be justification for summary dismissal. It is a matter of theft and goes to matters of trust and confidence. Given the history of the matter and advice from Ms Brown, the Respondent had reasonable grounds to believe such conduct was occurring.

[41] The Applicant gave evidence that he believed his employment was terminated because he took a day off sick on 5 November 2011. 20 I find that this was not the reason for the termination of his employment.

Procedural matters

[42] At the meetings held to discuss the Applicant’s performance he did not have another person with him. However, the Code requires that ‘the employee can have another person present’. There is nothing to suggest that the Applicant sought and was denied the opportunity to have another person present.

[43] The Respondent has produced evidence of warnings given to the Applicant 21 and the completed Code Checklist.22 Whilst the completed Code Checklist may at first be confusing it does indicate that the Applicant was dismissed for fraud (inaccurate timesheets) and for unsatisfactory performance. The checklist is signed and dated 4 November 2011. Whilst not definitive, it does reinforce the evidence of the Respondent that the decision to terminate the Applicant’s employment occurred on 4 November 2010 and was not made in response to the Applicant notifying he was on sick leave on 5 November 2010.

Consideration

[44] The Respondent in this matter is a small business. Its work is generally in the domestic sector. However, having been involved in a commercial project, it has become more aware of its obligations with respect to its employees and the rights of employees. The Respondent has sought information on the correct processes where dismissal may be an issue. It is to be applauded for its efforts in talking to those it considers more knowledgeable in this area. Whilst acknowledging the efforts of the Respondent I did make it clear during the hearing of the matter that just because it had gone to such efforts did not necessarily mean it had complied with the Code or that the dismissal was fair. These things could only be decided on evidence put before me.

[45] In all of the circumstances and based on the evidence I find that the Respondent had reasonable grounds to believe that the Applicant was defrauding the company by falsifying timesheets.

[46] On the basis of that evidence I find that the Respondent did comply with the Small Business Fair Dismissal Code.

[47] Having found so I find that the Applicant was not unfairly dismissed.

[48] The application is dismissed. An order to this effect will be issued.

COMMISSIONER

Appearances:

A. Henry for the Applicant.

H. Unger for the Respondent.

Hearing details:

2011.

Melbourne:

19 January.

 1   Transcript PN1106.

 2   Exhibit R2, paragraph 3.

 3   Transcript PN913-7.

 4   Transcript PN917-8.

 5   Exhibit R1.

 6   See, for example, Transcript PN37, 161, 192, 312, 396.

 7   Transcript PN40.

 8   Exhibit A1.

 9   Exhibits R4 and R5.

 10   Transcript PN536 & 539; Exhibit R2, paragraphs 6 & 7.

 11   Transcript PN540.

 12   Transcript PN683.

 13   Transcript PN808.

 14   Transcript PN685.

 15   Transcript PN686.

 16   See Transcript PN724, 819, 982.

 17   Exhibit R2, paragraph 8.

 18   Transcript PN325.

 19   Transcript PN941.

 20   Transcript PN357.

 21   Exhibit R5.

 22   Exhibit R10.

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