Jarrod Letizia v AMG Shared Services Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (ACN 117 052 936)

[2012] FWA 10568

[2012] FWA 10568

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Jarrod Letizia
v
AMG Shared Services Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (ACN 117 052 936)
(U2012/11700)

and

John Ryan
v
AMG Shared Services Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (ACN 117 052 936)

(U2012/11966)

COMMISSIONER JONES MELBOURNE, 20 DECEMBER 2012

Background

[1] This decision follows an earlier decision determining against an application by the Administrators of Australian Music Group Holdings Pty Ltd (AMG) that the applications of Mr Ryan and Mr Letizia (the Applicants) be stayed indefinitely or until after 18 January 2013: 1 [2012] FWA 9609.

[2] Following the decision, directions were issued and a hearing listed to jointly determine the Applicants’ applications for a remedy in respect of their alleged unfair dismissals.

[3] It is relevant to note that in respect of each application the Respondent was identified in the Employer’s Response to Applications for Unfair Dismissal Remedy (Form F3) as AMG Shared Services Pty Ltd formally known as Allans Music Group Pty Ltd (AMG Shared Services).

[4] In the circumstances, pursuant to s.586 of the fair Work Act 2009 (the Act), I have amended the named respondent on the applications filed by the Applicants to reflect the legal entity identified in the Form 3.

[5] AMG Shared Services is in external administration and is one of 17 companies that formed part of the AMG. In this decision AMG Shared Services is identified as the Respondent.

[6] By correspondence dated 11 December 2012 the solicitors for the Administrators advised:

[W]e confirm that the Administrators will neither oppose, nor support or consent to, the orders being sought by the applicants in respect of their Claims. We also advise that the Administrators do not propose to appear at the hearing of the Claims, unless FWA requires an attendance on their behalf.

[7] At the hearing Mr Ryan was represented by Mr Pearce of counsel and gave sworn evidence.

[8] Mr Letizia failed to attend the hearing. Two attempts to contact him by my Chambers were unsuccessful. Mr Letizia also failed to comply with earlier directions issued to file and serve material for the purpose of the determination of the merits of his application. In the circumstances there is simply insufficient material on which I can determine Mr Letizia’s application for remedy for unfair dismissal. I am satisfied, therefore, that I should dismiss Mr Letizia’s application under s.587(1) of the Act. 2 An Order to this effect will be issued shortly.

[9] Mr Ryan was dismissed summarily for serious misconduct, being theft of the store’s stock. It is apparent from the Form 3 that the Respondent alleges it had in place a policy regarding employee access to store equipment called, ‘The Way We Do Things Around Here’. The Respondent submits that under that policy, removal from a store of any stock without proper authorisation or without correct registration in a permitted system will be considered theft. The relevant policy was not in evidence.

[10] The Respondent alleges the policy has been in place since 2008 and that Mr Ryan, was given a copy of the policy in April 2012 as part of a performance management issue.

[11] In effect the Respondent summarily dismissed Mr Ryan on the basis that the breach of its policy regarding access to store equipment constituted theft.

[12] At the relevant time Mr Ryan was Store Manager at one of the Respondent’s music stores in Sydney (the Clarence Street Store) and had been so since 21 March 2011. He had a long relationship with the Respondent, both as an employee and at some time in a partnership arrangement. Mr Ryan’s evidence is that he had had, at the time of his dismissal, a continuous period of employment from 4 January 2001.

[13] The stock Mr Ryan was alleged to have taken, in breach of the Respondent’s policies, is a snare drum. In brief, it appears Mr Ryan requested a Manager of another store to transfer the second hand snare drum to his store. The drum was transferred to Mr Ryan’s store, whilst he was on leave. Mr Ryan was not aware this had occurred until he undertook a stocktake of the store in or around the end of April 2012. The drum remained in the store until Saturday 2 June 2012, when Mr Ryan took it home to see how it performed. His evidence was that:

That is where the drum remained until Saturday June 2nd 2012 when I took the drum

to my home .... to ‘see how it performed’. (It has been common practise over the years to allow staff to take home new product to ‘get to know how it works’ for shop demonstration purposes or for ‘final evaluation’ before purchase. The next day I used the drum in a recording session at the home studio of Lyle Siqueira (Hi-Tech Dept Manager at the ABHM Parramatta store) the following day (sic), Sunday June 3rd 2012. 3

[14] The drum remained in the boot of Mr Ryan’s car until the end of June 2012. He explained he mainly used public transport to travel to work. Mr Ryan stated he intended to purchase the drum before the next stocktake in July 2012 and to complete the purchase by offsetting the amount against his own money he had used to pay for various store expenditure when the petty cash money had been stolen.

[15] Before he could complete the purchase, the July stocktake occurred and shortly thereafter, the NSW State Manager, Ms Woudstra attended his store enquiring about “percussion items” on the stocktake list. Mr Ryan told Ms Woudstra that he had taken the snare drum home and would finalise the paperwork for the purchase as soon as the stocktake transfers were over. The events which then happened are described in Mr Ryan’s evidence as:

31. Ann-Marie said, “John, John, John, what are we going to do with you?” “OK”, I said, “no problem let me sort it out now. I’ll pay for it now”. She replied, “We can’t do this John, I’ll need to escalate this, I’m going to have to suspend you”. I said, “You are joking, aren’t you?” We walked from the shop floor to the back-office, where we were then away from other staff, and she then asked me for my keys and said something about me having unauthorised stock which is theft to which I replied, “How can I have pinched anything when everyone knew that I had it.??..What just because I didn’t get round to doing the paperwork”.

32. I also said to her, “I identified to Ben Reah and Dave Roberts on the morning of the stock-take that we needed to count the drum in the stock-take in the boot of my car. I also told Paul from ‘Revere Capital’ yesterday where the drum was when he asked me about it. There has been no concealment; everyone knew what was going on”.

33. She told me to leave the building, that I was suspended on full pay and they would be in contact with him. Later that day I received an email asking me to attend a ‘Formal Hearing” the next day, July 19th 2012, at 2.30.pm. 4

[16] At the meeting on 19 July 2012, Mr Ryan was represented by his solicitor. In attendance was Ms Woudstra and a HR person attending by telephone conference. Amongst other things, Mr Ryan stated at the meeting that as store manager he had self authorised numerous transactions some to the value of thousands of dollars, without approaching higher level management.

[17] At the conclusion of the meeting, the Respondent informed Mr Ryan he was summarily dismissed. This was confirmed by letter dated 19 June 2012 from the Respondent.

Was Ryan’s dismissal unfair?

Was there a valid reason: S.387(a)

[18] I am not satisfied there was a valid reason for Mr Ryan’s dismissal. An email sent by Ms Woudstra to Mr Ryan and other managers on 28 February 2012 regarding “stock being taken from stores without correct paperwork assigned to it by staff”, set out a proposed communiqué to all staff as follows:

Hi All,

A reminder that stock must never leave a store or warehouse without the relevant authorisation from the manager responsible for that stock, (Store Manager/State Manager) and the correct paperwork. Any stock that is removed without authorisation and/or correct paperwork will be considered as theft.

If you have any queries please ask your Store Manager or myself.

[19] It is reasonable to infer, having regard to the evidence, from this email that:

(a) First, there was lack of clarity as to the Respondent’s policy on the loaning of equipment to staff; and

(b) Second, the authorisation for the loan was to be provided by the Store Manager or State Manager.

[20] Mr Ryan was a Store Manager. I agree with the submission that he was permitted within the scope of his position to authorise the loan of the snare drum.

[21] I am not satisfied that the snare drum was removed without the authorisation required under the relevant policy. I am satisfied that Mr Ryan did not complete the relevant paperwork as alleged by the Respondent, however, I am satisfied this conduct did not justify Mr Ryan’s termination. 5

[22] I note that the reason given for Mr Ryan’s dismissal at Point 2 of Form 3 was “serious misconduct - theft”. However, it is apparent that the Respondent’s policy deems a breach of its policy regarding loans of stock to staff as theft. Having regard to the evidence I am satisfied that Mr Ryan had no intention, at the relevant time, to permanently deprive the Respondent of the snare drum. I find therefore, Mr Ryan’s conduct did not constitute theft as alleged by the Respondent. 6

[23] Consequently, I find that there was no valid reason for Mr Ryan’s dismissal.

Notification of the reason - s.387(b)

[24] As I have found there was no valid reason for Mr Ryan’s dismissal, Mr Ryan was not notified of the reason.

Opportunity to respond - s.387(c)

[25] The reference to ‘any reason’ refers to a valid reason. 7 Consequently, I am not satisfied Mr Ryan was given an opportunity to respond.

Unreasonable refusal by the employer to allow a support person - s.387(d)

[26] The Respondent did not unreasonably refuse to allow Mr Ryan to have a support person.

Warnings regarding unsatisfactory performance - s.387(e)

[27] As this dismissal related to conduct only, this factor is not relevant.

Impact of the size of the Respondent on procedures followed - s.387(f)

[28] There is no evidence regarding the size of the Respondent. I am satisfied that this was not a relevant factor in these circumstances.

Absence of dedicated human resources management specialist/expertise on procedures followed - s.387(g)

[29] It is apparent that there were dedicated human resource management personnel.

Other relevant matters - s.387(h)

[30] Mr Ryan had a long period of continuous employment with the Respondent. In these circumstances, the dismissal was harsh.

Conclusion

[31] I am satisfied that Mr Ryan was unfairly dismissed.

Remedy

[32] S.390 of the Act provides:

390 When FWA may order remedy for unfair dismissal

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

(a) FWA 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) FWA may make the order only if the person has made an application under section 394.

[33] I am satisfied Mr Ryan was a person protected from unfair dismissal at the time he was dismissed and I have found that he was unfairly dismissed.

[34] Mr Ryan seeks reinstatement together with remuneration he has lost because of the dismissal.

[35] I am satisfied that in this case, reinstatement is the appropriate remedy. The mere fact that a company is in external administration does not constitute a reason for finding reinstatement is inappropriate.

[36] S.391 of the Act provides:

391 Remedy—reinstatement etc.

Reinstatement

(1) An order for a person’s reinstatement must be an order that the person’s employer at the time of the dismissal reinstate the person by:

(a) reappointing the person to the position in which the person was employed immediately before the dismissal; or

(b) appointing the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

(1A) If:

(a) the position in which the person was employed immediately before the dismissal is no longer a position with the person’s employer at the time of the dismissal; and

(b) that position, or an equivalent position, is a position with an associated entity of the employer;

the order under subsection (1) may be an order to the associated entity to:

(c) appoint the person to the position in which the person was employed immediately before the dismissal; or

(d) appoint the person to another position on terms and conditions no less favourable than those on which the person was employed immediately before the dismissal.

Order to maintain continuity

(2) If FWA makes an order under subsection (1) and considers it appropriate to do so, FWA may also make any order that FWA considers appropriate to maintain the following:

(a) the continuity of the person’s employment;

(b) the period of the person’s continuous service with the employer, or (if subsection (1A) applies) the associated entity.

Order to restore lost pay

(3) If FWA makes an order under subsection (1) and considers it appropriate to do so, FWA may also make any order that FWA considers appropriate to cause the employer to pay to the person an amount for the remuneration lost, or likely to have been lost, by the person because of the dismissal.

(4) In determining an amount for the purposes of an order under subsection (3), FWA must take into account:

(a) 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 reinstatement; and

(b) the amount of any remuneration reasonably likely to be so earned by the person during the period between the making of the order for reinstatement and the actual reinstatement.

[37] Mr Ryan gave evidence that on 26 July 2012 an email was sent by the Respondent advising staff that the Clarence Street Store was to be considered part of the Pitt Street store and that the Respondent was looking for a new Department and Store Manager. Mr Ryan stated, that in his view, there would be little difference in duties performed under this newly created position and his former position. Mr Pearce submitted that this evidence suggests that the Respondent restructured shortly after Mr Ryan’s dismissal which nevertheless created a similar position to Mr Ryan’s former position.

[38] The evidence suggests that there may have been a restructure which impacted on Mr Ryan’s former position. However, I am not able to make any firm findings on this point.

[39] I note the Respondent is part of a large group of companies operating in the music industry. 8

[40] Given my finding that there was no valid reason for Mr Ryan’s dismissal, I am satisfied that I should make an order that Mr Ryan be reinstated in his former position or another position no less favourable than his former position within the Respondent’s business. An Order will be issued today.

[41] I am further satisfied that I should make an Order maintaining the continuity of Mr Ryan’s employment.

[42] Mr Ryan’s salary as Store Manager was $85,000 per annum. 9 Mr Ryan’s evidence was that he was unemployed from 19 July 2012 until 9 October 2012 during which he applied for many sales positions in the music retail stores. He stated that from 10 October 2012 to 21 November 2012 he was employed as a Tour Manager earning $1,650.00 gross. On 22 November 2012, he commenced employment as a salesman with “Big Music” at Crows Nest, Sydney on an annual salary of $50,000 per annum.

[43] I have approached the task of calculating the salary Mr Ryan would have earned from 20 July 2012 to 19 December 2012 by first estimating the number of weeks in that period, being 21.75 weeks.

[44] As Mr Ryan’s gross weekly salary was $1630.00, the remuneration he would have earned was $35,452.50. During this period Mr Ryan earned $1,650 as a Tour Manager and $3,711.54 from his employment as salesman, totalling $5,361.54.

[45] The remuneration lost by Mr Ryan because of his dismissal in the period 20 July 2012 to 19 December 2012 was, therefore, $30,090.96.

[46] I am satisfied that it is appropriate that Mr Ryan be awarded a gross amount of $30,090.96 for the remuneration he has lost during the period 20 July 2012 to 19 December 2012.

[47] The Order to give effect to my decision will be issued today.

COMMISSIONER

Appearances:

Mr J Pearce of counsel for the Applicant

Hearing details:

2012

Melbourne to Sydney by video link

December 18

 1   Letizia v Australian Music Group T/A Allans Billy Hyde Music and Ryan v AMG Shared Services Pty Ltd, Australian Music Group Pty Ltd, Allans Music Group Australia Pty Ltd, Allans Music & Billy Hyde Pty Ltd Trading as Allans Billy Hyde [2012] FWA 9609

 2   See Sayer v Melsteel Pty Ltd[2011] FWAFB 7498

 3   Witness Statement of John Ryan, Exhibit A3 at [20]

 4   Ibid at [31] - [33]

 5   See Edward v Giudice (1999) 94 FCR 561 at [6]; King v Freshmore (Vic) Pty Ltd (2000) AIRC (FB), 54213

 6   See Illich v R [1988] 162 CLR 110 per Wilson & Dawson JJ at [123]

 7   Tenix Defence Systems Pty Ltd v Fearnley (2000) AIRC (FB) 56238 at [83]

 8   Exhibit R1

 9   Further Outline of Submissions dated 10 December 2012, Exhibit A2 at Annexure B

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