Joanna Macdougall v Health Axis Pty Ltd T/A Raymond Hader Clinic

[2012] FWA 8628

[2012] FWA 8628

FAIR WORK AUSTRALIA

REASONS FOR DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Joanna Macdougall
v
Health Axis Pty Ltd T/A Raymond Hader Clinic
(U2011/2650)

SENIOR DEPUTY PRESIDENT KAUFMAN MELBOURNE, 9 OCTOBER 2012

Unfair dismissal.

[1] On 11 April 2012 Commissioner Roe published a decision finding that Ms Macdougall had been an employee of the respondent and not an independent contractor, as it alleged. Accordingly, the applicant was a person protected from unfair dismissal within section 382 of the Fair Work Act 2009. The file was then allocated to me to deal with the merits of the application for a remedy. I set out an extract from the Commissioner’s decision by way of background.

[1] This is an application for an unfair dismissal remedy pursuant to Section 394 of the Fair Work Act 2009 (the Act). The Application for unfair dismissal remedy was made on 23 December 2011 by Joanna Macdougall (the Applicant) in respect of her dismissal by Health Axis Pty Ltd T/A Raymond Hader Clinic (the Respondent). It is not in contention that the Applicant provided services to the Respondent between August 2010 and 13 December 2011. The Respondent submitted that they employed 20 full time equivalent personnel.

[2] The matter was not resolved through conciliation on 31 January 2012. On 6 February 2012 the Respondent provided a response to the Application. In that response the Respondent made a jurisdictional objection that the Applicant was at all times an independent contractor and not an employee.

[5] On 30 March 2012 the Applicant gave sworn evidence and I heard some brief supplementary submissions.

[2] The Commissioner then set out the legal principles.

[7] The Applicant worked for the Respondent as an alcohol and other drugs (AOD) support worker, and subsequently as a senior AOD support worker, for patients attending the Respondent’s drug and alcohol clinic, the “Raymond Hader Clinic.”

[13] I also note the evidence of the Applicant that the role she performed is not a professional role requiring a high level qualification or membership of a profession or trade. The Respondent says that the qualification required is a Certificate level 4 in Alcohol and Other Drug Work. The Applicant was paid $25 per hour.

[3] It is apparent from the Commissioner’s reasoning that there was a sound basis upon which the respondent could reasonably have believed that the applicant was not an employee. This assumes importance because the fact that the respondent believed that the applicant had been an independent contractor was a critical factor in the manner in which the respondent effected the termination of the employment of the applicant.

[4] Several witnesses called on behalf of the respondent conceded that had they thought that the applicant was an employee they would have gone about the processes that led to her dismissal in a different manner.

Amanda Brown, former clinical manager:

“......And based on the fact that she, at the time, was a contractor, we believe that we didn't need to renew her contract”. 1

“And can you tell me why the Raymond Hader policy on discipline was not followed?-

... - We believed that from the advice that we were working with there had been enough conversations stating that we experienced a lack of confidence in Ms Macdougall's ability to manage in the circumstances in the environment in the workplace. And that given that she was a contractor we were advised that we didn't need to work under the normal guidelines of working with an employee. Therefore, we followed what we were advised to do in working with a contractor”. 2

“So you say that the discipline policy didn't apply, is that what your evidence is?

---Yes, we operated on the basis that she was employed as a contractor. And given that she'd failed to agree to come on board as an employee in the August, we believed that she was still a - she was a contractor. We were paying - paying to Retroskins her business name. So we were fully under the belief that she was contractor and her contract didn't need to be renewed. We'd experienced such despair in trying to communicate and we had experiences general lack of confidence over and over and over many times. So as a contractor, we didn't feel we needed to renew her contract”. 3

“......Could I add, though, had she come in, we were going to issue a written document - disciplinary document to have a discussion with her and hopefully bring her practice into some kind of alignment. However, she refused to work with us”. 4

“......She - for the purposes of this hearing, I take she was an employee, but your evidence is that you acted in the way you did because you believed she was a contractor?---That's right, yes”. 5

“Why on earth didn't you send that document regardless of the fact that she didn't come in or, as I said to you earlier, why didn't you wait until the Friday to deal with it?---Because at the time, and I'm sorry to say it again, but at the time we were advised, given she was a contractor, that if she wasn't willing to work with us, we didn't need to go through that process. I'm sorry to reiterate that, but that was the reason”. 6

“So is it your evidence that had your believed her to be an employee, you would have treated her differently?---Yes”. 7

Belinda Walsh, the treatment services manager:

“MR HULL: So are you saying that it was the decision - I'll go right back. What, as far as you were concerned, was the reasons for Ms Macdougall's dismissal?

---In the end it was because she was a contractor and it was - - - 8

No, you didn't dismiss her because she was a contractor. Why - you did dismiss her because she was a contractor?---Well, we were told by John Ballis that she was really, in effect, why are we going to go to all of this problem when she was a contractor. Now, I understand the courts have determined that, in effect, she wasn't, but that was the advice that we had. Why go through all the problems with, you know, going to the next step and the next step and the next step to terminate. It was definitely leading to a termination at some point, yes”. 9

“Yes, "She's a contractor, you don't have to give her the same rights as you'd give to an employee," is basically what you seem to be saying to me?---Yes”. 10

“- - - that Ms Macdougall was not an employee, the decision was taken that Ms Macdougall's services could be terminated without concern about process or reason. Is that right?---Yes, because he said that it was an ongoing problem, so that she was a problem in the organisation and why did we have to (indistinct) yes. He also, yes, said it could have been a first and final warning”. 11

Richard Smith, the principal director and owner of the respondent.

“What was that information?---It was a number of pieces of information, one of them being that she had gone and purchased some items for somebody on a personal shopping trip with the, which was against everything I've said, and that it was money used from another client's cash. Then there was the ongoing issue of boundaries with her befriending clients, and since then more has come to light that she actually had a relationship with an ex client, so there's a whole lot of things that were discussed at that time, and I said, "I think it's probably time to let this contractor go."  12

“What I'm putting to you is that that was the factor in the decision to terminate Ms Macdougall?---No, this is, like, months - this is now how I feel. This is seeing the document yesterday and saying, "How come this was happening?" So I've expressed to you how I felt yesterday. It had nothing to do with the decision to let a contractor cease work for me”. 13

[5] Those concessions are virtually an admission that the respondent did not afford procedural fairness to the applicant. Whether there was a valid reason for the dismissal of the applicant or not, the dismissal was harsh, unjust and unreasonable and therefore unfair.

[6] The applicant first started working for the respondent in about May 2010 as an alcohol and other drugs (AOD) support worker. Immediately prior to that time she had been self-employed in a swimwear business that traded under the name “Retroskins”. Her initial hours of approximately two 14 hour days, including sleepovers, increased to approximately 42 hours per week including three sleepovers. She was promoted to a position of senior support worker on about 3 August 2011.

[7] Because of the conclusion that I have come to, it is not necessary to set out in detail the evidence. Shortly put, the sequence of events leading to the dismissal of the applicant was that:

• A client, M, had returned from one of the respondent’s facilities in Bali. The applicant was of the view, perhaps because she had been misled by M, that M did not have appropriate clothing for the cooler Victorian climate;



• M was shortly to proceed on a retreat in the country and the applicant was of the view that she urgently required appropriate clothing to wear on the retreat;



• M did not have money in her client account, or any other money, to use for the purchase of the clothing;



• The respondent’s policies forbade the expenditure of money on clients unless there was sufficient money in their client accounts to use for the purchase;



• These policies were frequently breached and clients’ accounts were often in arrears;



• Another client, B, had had money found in her room;



• The respondent’s policies also forbade clients keeping money, mobile phones and credit cards on their person or in their rooms;



• The applicant had confiscated a sum of money from B. This was subsequently placed in a safe kept on the respondent’s premises. It is common ground that the money confiscated from B was properly accounted for;



• The day after the money had been confiscated from B, the applicant removed money from the safe which may have comprised the actual banknotes that had been confiscated;



• The applicant removed this money from the safe in order to take M shopping to buy the clothing that M had persuaded the applicant that she needed;



• It is common ground that the applicant properly accounted for the money that she had removed from the safe in order to take M shopping;



• The applicant took M shopping and the money that was taken from the safe was used to purchase various items of clothing for M;



• It appears that the shopping incident occurred sometime during November 2011;



• In early December Ms Walsh and Ms Brown, had a discussion with the applicant about the expenditure on M’s shopping trip in circumstances where M’s client account was in arrears and money taken from B had been used;



• According to Ms Walsh, the applicant told her that what she had done was common practice;



• As this was contrary to the respondent’s policies, Ms Walsh decided to make enquiries of other members of staff to verify what she had been told by the applicant;



• Ms Walsh made enquiries of three other staff members who led her to believe that what she had been told by the applicant was incorrect. Ms Walsh formed the view that the applicant had lied to her;



• A further meeting was arranged with the applicant for 13 December 2011, which was not a day upon which the applicant was scheduled to work;



• The applicant informed Ms Walsh that she would not be able to attend the meeting of 13 December;



• There was however, a meeting scheduled with the applicant for a different purpose for 14 December 2011;



• On 13 December 2011 the applicant’s services were terminated by an e-mail transmitted at 12:15 PM in the following terms:

[8] It is apparent from the letter of termination that the respondent had formed the view that it was not common practice to use cash that had been taken from one client to be spent on another, nor to extend credit to clients when their accounts were in arrears, at least for non-essential items, other than those approved by management. The applicant, corroborated by M, maintained that she had obtained approval from Ms Walsh, who denied that she had given approval for that particular purpose.

[9] Ms Walsh and Ms Brown formed the view that the applicant had falsified information about what was common practice. Having regard to the failure of the applicant to attend the meeting of 13 December 2011, the respondent considered that it was able to terminate her services as a contractor pursuant to the terms of its contract with her.

[10] At the hearing several complaints were made about other aspects of the applicant’s employment, although it is not clear to me whether all or any of these matters were part of the reason for the termination of her employment. In any event they were not raised with her between the first meeting in December and her dismissal.

[11] Mr Smith, the principal director and owner of the respondent is the person who was ultimately responsible for the dismissal of the applicant. He had been consulted by his managers about the conduct of the applicant and had been informed of the conclusions to which they had come regarding, what they considered to be, the use of B’s money to purchase unnecessary items of clothing for M whilst M’s client account was in arrears, as well as the unauthorised shopping trip.

[12] Mr Smith formed the view that the applicant had used money that had been found in B’s room to purchase clothing for M, that M’s client account had been in arrears at the time, that the applicant had taken M on an unauthorised shopping trip in circumstances where permission from management was required and that both Belinda Walsh and Amanda Brown, had had issues with the applicant, specifically surrounding her lack of professionalism and inability to maintain boundaries with clients.

[13] Mr Smith was told of the applicant’s failure to attend the meeting of 13 December 2011 and as he understood that the applicant was an independent contractor engaged under the Contractor Services Agreement, her services were able to be terminated under its terms. The agreement provides that either party can terminate the agreement by giving to the other party prior notice in writing. 14

[14] In his evidence in chief Mr Smith said that he had had ongoing concerns over a considerable period of time about clients’ accounts being in arrears. This had become a personal bugbear because clients frequently left the clinic with their accounts in arrears and the monies owing were almost impossible to recover. Ultimately, Mr Smith’s evidence seemed to boil down to the fact that, although he acknowledged that the money taken from B and the money spent on M had been properly accounted for, the applicant had acted inappropriately in the manner in which she used the cash and in the manner in which she had taken M shopping. He had also had ongoing concerns about the applicant’s performance, particularly what he perceived to be her inability to maintain professional boundaries with clients.

[15] It is apparent that for a variety of reasons the termination of the applicant’s employment was unfair. She was not afforded procedural fairness. I accept her evidence that it was not made apparent to her that the meeting to which she was called on 13 December 2011 was to deal with issues that might have led to the termination of her services. It was unfair not to have scheduled another meeting to deal with those issues. As I have noted, the applicant was to attend a meeting on 14 December at which time the matter that had been intended to have been discussed with her on 13 December could have been dealt with. There was no urgency. The applicant was afforded no opportunity to put her side of the story.

[16] I expressed these sentiments to Mr Smith after he had given his evidence in the following terms:

Yes, well, before you do - because you're the principal director of the respondent, I will be putting ... to your barrister when she makes submissions, that on the evidence of Ms Brown and Ms Walsh, it seems very likely that procedural fairness was not afforded to Ms Macdougall, because it was thought that she was a contractor, and the way in which she was treated as a contractor was different to the way they would have dealt with her had she been an employee. I just want you to be aware of that, because instructions will no doubt be sought from you after I make those comments to Ms Forsyth when she's making her submissions. I just want you to be aware of that. 15

[17] Having reviewed the evidence I am confirmed in my view. It is apparent that because the respondent believed that it was dealing with an independent contractor it was merely necessary to give notice of the termination of the contract in accordance with its terms. This is what was done. The principal witnesses for the respondent accept that had they known that the applicant was an employee rather than an independent contractor they would have dealt with the matter differently.

[18] In my view, there was not a valid reason for the termination of the applicant’s employment. Although the respondent had detailed policies, these were lengthy and dealt largely with regulatory matters. The policies were updated on an ad hoc basis and there was little if any training given to employees in relation to their contents. Insofar as the policies that the applicant is alleged to have breached, although I am satisfied that Mr Smith sought to emphasise that client’s accounts were not to fall into arrears, this practice continued until relatively shortly before the termination of the applicant’s employment. Further, the applicant had properly accounted for all the monies relevant to this incident. I am also of the view that she believed that she was acting in the best interests of M, and that she was behaving in a manner that had been tolerated in the past, albeit that it was contrary to the respondent’s policies.

[19] Although the other matters going to the applicant’s performance which were related in the evidence of Ms Brown and Ms Walsh might have given rise to a valid reason for the termination of the applicant’s employment, she has provided what appears to me to be an acceptable explanation in respect of each of them. I prefer her evidence over that of Ms Brown and Ms Walsh, both of whose evidence appeared to me to be somewhat vague and unreliable.

[20] Although I have not taken the orthodox manner of dealing sequentially and separately with the matters referred to in section 387 of the Act, it should be apparent that I have had regard to each of those elements that are relevant to the facts of this case.

[21] Having found that the dismissal of the applicant was unfair, I consider it appropriate that I provide a remedy. Although I consider it inappropriate to order reinstatement, I do consider that an order for payment of compensation is appropriate in all the circumstances of this case. Reinstatement is inappropriate because it is clear that the relationship between the applicant and the respondent has broken down, the applicant does not seek reinstatement and she has secured alternative employment.

[22] There is no suggestion that any order of compensation will affect the viability of the respondent’s enterprise.

[23] The applicant seeks the equivalent of six months remuneration, being the maximum that I can award. This is not justified. The applicant had been employed with the respondent for a relatively short time, approximately 18 months. Although she sought to mitigate the effects of the dismissal by seeking alternative employment she was not able to obtain another job until fairly recently. However, I doubt that her employment with the respondent would have continued for significantly longer than it did. It is apparent that the respondent had a number of concerns with the performance of the applicant. Many of these concerns seem to relate to the “boundaries” that the applicant was required to work within. Having seen and heard the applicant in the witness box, I doubt that, even with proper performance management, she would have been able to maintain the professional boundaries required of her. The applicant’s attitude seemed to be that, come what may, she would care for the clients for whom she was responsible in the manner that she thought was appropriate. In my view, even if the respondent were to properly manage the applicant’s performance, it is unlikely that she would have been employed for more than another three months.

[24] I will order that the compensation be the equivalent of three month’s remuneration. The parties are directed to agree upon the appropriate amount and advise my Chambers of that amount. I will reserve liberty to apply in the event that no agreement is reached.

SENIOR DEPUTY PRESIDENT

Appearances:

Mr P. Hull, solicitor, appeared on behalf of the Applicant.

Ms A. Forsyth, of counsel, appeared on behalf of the Respondent.

Hearing details:

2012

Melbourne

July 5, September 3, 4

Final written submissions:

Applicant’s final submissions 17 September 2012 and submissions in reply 1 October 2012.

Respondent’s final submissions 24 September 2012.

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 14   Attachment RS 1 to Exhibit R4

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