Joanna Sinclair v The Lotus Spa at Barwon Heads
[2017] FWC 2559
•9 MAY 2017
| [2017] FWC 2559 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Joanna Sinclair
v
The Lotus Spa at Barwon Heads
(U2016/13028)
COMMISSIONER HARPER-GREENWELL | MELBOURNE, 9 MAY 2017 |
Application for relief from unfair dismissal.
[1] On 27 October 2016, Ms Joanna Sinclair 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 The Lotus Spa at Barwon Heads (Lotus Spa).
[2] Ms Sinclair claims that the termination of her employment by the Lotus Spa on 8 October 2016 was unfair.
[3] Ms Sinclair commenced employment with the Lotus Spa on 3 August 2015 as a part-time receptionist and beauty therapist working Monday, Tuesdays, Wednesdays and every second Saturday. She continued to work on Thursdays and Fridays as a barista. 1
[4] At the commencement of her employment Ms Sinclair was initially earning $25 per hour.
[5] On 14 July 2016 Ms Lyndal McKechnie, owner of the Lotus Spa, requested Ms Sinclair extend her hours to include Thursdays, Ms Sinclair agreed and ceased working in her role as Barista.
[6] Ms Sinclair submits that during the days she worked she became increasingly responsible for the rostering and management of the other staff members.
[7] On the morning of the 15 September 2016 Ms McKechnie spoke to Ms Sinclair about her wages and offered to pay her a manager’s rate as Ms Sinclair had been assisting with looking after the business whilst Ms McKechnie was unwell. 2
[8] On the evening of 16 September 2016 Ms McKechnie became ill and was hospitalised until 26 September 2016. On 20 September 2016 her father, Mr McKechnie, drove from Adelaide and arranged to meet with Ms Sinclair on Wednesday 21 September 2016. Mr McKechnie asked Ms Sinclair to assist his daughter by managing the day to day running’s of the business whilst Ms McKechnie was in hospital.
[9] In his daughters absence Mr McKechnie and Ms Sinclair came to an arrangement where Ms Sinclair would receive $30 per hour plus some additional payments for the treatments she performed. Mr McKechnie said due to his daughter’s ill health he felt they were in a position where he had no choice but to agree to increase Ms Sinclair’s wages.
[10] Mr McKechnie said he informed Ms Sinclair that when his daughter returned they would review the agreement.
[11] Mr McKechnie said he received a text from Ms Sinclair not long after the meeting requesting her wage increase applied to the entire week including the days prior to her meeting with Mr McKechnie, which he agreed to. 3
[12] On 29 September 2016 Ms Sinclair met with Mr McKechnie and Ms McKechnie at the Lotus Spa. Ms McKechnie said it was too difficult to process Ms Sinclair’s pay at the rate of $30 per hour plus a percentage rate for any additional treatments she performed.
[13] Instead, Ms McKechnie suggested that Ms Sinclair either bill them as a sub-contractor for the treatments whilst retaining a flat hourly rate, or that they pay Ms Sinclair a flat rate of $35 per hour. Mr McKechnie told Ms Sinclair to consider the proposals overnight and advise them in the morning which option she preferred to go with.
[14] After the meeting Ms Sinclair took a call from Ms McKechnie during which they again discussed her pay rate. Ms McKechnie offered Ms Sinclair $35 per hour to which she said she reluctantly agreed. On 3 October 2017 Ms Sinclair confirmed by text message to Ms McKechnie that she would accept the new rate of $35 per hour. 4
[15] The following morning, 4 October 2016 at 9:24am, Ms Sinclair sent a text message to both Mr McKechnie and Ms McKechnie stating the following;
“Good morning John and Lyndal, I have woken up this morning with a bad feeling after our conversation Lyndal… I’m not happy with $35 per hr. For what I’m doing, I think I’m worth at least $40 an hour. I’ll be in treatment until 11:30 this morning. Joanna” 5
[16] Ms McKechnie responded that same day letting Ms Sinclair know she was upset that Ms Sinclair continued to push for more money given the circumstances. Ms McKechnie’s text message read;
“… Yesterday you verbally and in written content agreed to this new rate which I have graciously accepted your worthiness to be….I am doing the pays at the agreed rate…” 6
[17] Ms McKechnie went on to say;
“… Please let me know today your feelings on this as I am placing an ad in the paper today for staffing and don’t want to have to miss the ad being correctly aligned with what the business needs to function at its highest potential.” 7
[18] Ms McKechnie’s oral evidence was that she needed to know whether or not Ms Sinclair had decided to continue to work for them and manage the Spa on $35 per hour. It was her understanding that Ms Sinclair had informed them she would not work for them for less than $40 per hour. Ms McKechnie was placing ads for her holiday staff and couldn’t afford to pay Ms Sinclair any more than she herself was earning. 8
[19] Ms Sinclair took this as a threat that she would lose her job if she didn’t accept the amount on offer. 9
[20] Ms Sinclair said she had felt so distressed by the text message she had received she rang the doctors and got the earliest appointment that she could get. 10
[21] Ms Sinclair forwarded the text message sent by Ms McKechnie to Mr McKechnie, stating she was upset and distressed to have received Ms McKechnie’s message.
[22] On 5 October 2016, Ms Sinclair sent the following text message in reply;
“Lyndal, I am in reply to your message yesterday (sic). Since July, I have bent over backwards for you in anyway I could, to assist in running your business for you whilst you took time off. I have never asked for an increase in wages during those weeks. You personally asked me to manage before you went to hospital and it was then that a higher rate was discussed. Since receiving your hurtful message, I am now very distressed, feel very ‘unappreciated’ and now understand why other staff members have resigned in the past due to your attacks on them. I have been to the doctors this morning and will send you through a copy of my doctors certificate… I no longer wish to talk with you whilst you are still clearly unwell, and will only speak with John from now on. I have always had our best intentions at heart and wish you well." 11
[23] Ms Sinclair attached a medical certificate stating she was unfit for work from 5 October 2016 to 8 October 2016 inclusive.
[24] Ms McKechnie had received a call earlier that morning from a customer inquiring as to whether or not the Lotus Spa was going to be open that day. After making some inquiries with her junior staff Ms McKechnie was informed that Ms Sinclair had phoned in sick.
[25] Mr McKechnie contacted Ms Sinclair shortly after Ms McKechnie had received the above text message from her as she had advised that she would only communicate with Mr McKechnie from that point onwards.
[26] Mr McKechnie and Ms Sinclair exchanged a number of text messages over the following days and arranged to meet at a café on 7 October 2017.
[27] After some discussion, Mr McKechnie informed Ms Sinclair the request for $40, being a 56% pay increase, was unacceptable and $35 per hour was no longer on offer either. Mr McKechnie explained they would pay Ms Sinclair at a Level 6 Beauty Therapist rate with a 10% loading.
[28] At the meeting Mr McKechnie also informed Ms Sinclair it was unacceptable to have not informed Ms McKechnie that she was not going to attend work due to being sick, and that her refusal to communicate with Ms McKechnie was unreasonable.
[29] Mr McKechnie said he felt Ms Sinclair had attempted to take advantage of his good nature and the fact that his daughter was unwell by holding them to ransom over pay increase demands during a difficult time.
[30] On 8 October 2016 Ms McKechnie sent a text message to Ms Sinclair stating that she was terminating Ms Sinclair’s employment as she needed to travel to Brazil with a clear path for her life and business.
[31] Ms McKechnie’s evidence was that she had not provided Ms Sinclair with any form of oral or written warnings as the relationship had broken down to a point where they were no longer communicating.
[32] Ms McKechnie said she didn’t believe that she needed to give Ms Sinclair any warnings. Nor was there any direction given to Ms Sinclair that she was to communicate directly with Ms McKechnie. Ms McKechnie said she was suffering from chronic fatigue and this made her too unwell at the time to deal with the issue. 12
[33] Ms Sinclair provided the witness statements of two Lotus Spa former employees, Ms Rani Stockell and Ms Kellie Doyle. Neither witness could attend the hearing in person.
[34] Neither Ms Stockell nor Ms Doyle were employed by the Lotus Spa at the time of the dismissal, nor were they witness to the events between Ms Sinclair, Mr McKechnie and Ms McKechnie that took place prior to the dismissal. The contents of the witness statements did not go to the relevance of the matters I need to consider; therefore no weight has been attributed to those statements.
Preliminary matters
[35] It is not disputed that the Lotus Spa is a small business as defined in s23 of the Fair Work Act 2009 (the Act).
[36] The Fair Work Act 2009 at s.385 provides that a person has not been unfairly dismissed if the Fair Work Commission (the Commission) 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.”
[37] It is not disputed that the Small Business Fair Dismissal Code (the Code) applies.
“The Code
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.”
Consideration
Was the dismissal consistent with the Small Business Fair Dismissal Code?
[38] Ms Sinclair was dismissed with immediate effect. Ms McKechnie said the dismissal was for a number of reasons that related to Ms Sinclair’s conduct, summarised as follows:
● Ms Sinclair had persistently requested wage increases, although $35 per hour was in one form or another eventually agreed to by all parties;
● After a series of text message exchanges between Ms Sinclair and Ms McKechnie, Ms Sinclair refused to talk to Ms McKechnie; and
● Ms Sinclair did not inform Ms McKechnie she was going to be absent from work on the morning of 5 October 2016. Ms McKechnie was informed of Ms Sinclair’s absence by a customer
[39] Ms McKechnie declined Ms Sinclair’s request for an increase in her rate of pay, which an employer has the right to do.
[40] However, even though Ms McKechnie felt she could no longer tolerate the persistent requests and felt she was being taken advantage off at a time where she was feeling vulnerable, terminating the employment of an employee for requesting a pay increase is not a valid reason for dismissal.
[41] Following Ms Sinclair’s refusal to communicate with her, Ms McKechnie decided the situation had become unbearable and, although Mr McKechnie was attempting to resolve the matter, she decided to terminate Ms Sinclair’s employment without warning or notice.
[42] Mr McKechnie had held a meeting with Ms Sinclair in an attempt to resolve the matters between the parties in which he discussed Ms Sinclair’s failure to notify Ms McKechnie that she was sick. However neither Mr McKechnie nor Ms McKechnie provided her with a warning or informed Ms Sinclair that she was at risk of being dismissed.
[43] Ms McKechnie’s evidence was that she had not provided any form of verbal or written warnings directing Ms Sinclair to communicate directly with her or that her employment was at risk of being terminated. Consequently Ms Sinclair was not provided with an opportunity to respond.
[44] Therefore, it follows that the termination of Ms Sinclair’s employment was inconsistent with the Small Business Fair Dismissal Code.
[45] Having determined that the dismissal was not consistent with the Code I must now consider if the termination was harsh, unjust and unreasonable.
Harsh, Unjust Unreasonable
[46] 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.”
[47] 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.13 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.”14
[48] 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)
[49] As discussed above, the reasons Mr and Ms McKechnie gave for Ms Sinclair’s termination at the hearing were that Ms Sinclair had refused to talk to Ms McKechnie and had not advised her that she had taken sick leave. Further reasons provided were that Ms Sinclair had continued to pressure Ms McKechnie for a pay rise.
[50] Whilst Ms Sinclair’s refusal to speak to Ms McKechnie could constitute a valid reason for the dismissal, Ms McKechnie gave evidence during the hearing that she had not given Ms Sinclair any direction to speak with her.
[51] Further, during the hearing Ms McKechnie stated the following:
“To me, if she doesn’t want to speak with me and she wants to deal with my father, well, that’s fine because I’m actually too… too stressed.” 15
[52] In relation to the sick leave taken by Ms Sinclair, there was no dispute between the parties that Ms Sinclair had contacted a co-worker to advise that she was unwell and would not be attending work. 16
[53] Further, at 10:25am Ms Sinclair sent a copy of her medical certificate to Ms Sinclair advising her of her absence.
[54] I do not find that either of these reasons would constitute a valid reason for dismissal.
[55] Ms McKechnie’s final reason for Ms Sinclair’s dismissal, being that she had continued to pressure Ms McKechnie for a pay rise, is not a valid reason for dismissal.
[56] Accordingly, there was no valid reason for the termination of Ms Sinclair.
Notification of the Valid Reason –s.387(b)
[57] In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account whether the person was notified of the reason.17 Procedural fairness requires that an employee be notified of a valid reason for their termination before any decision is taken to terminate their employment.18 The notification of the valid reason must be in explicit, plain and clear terms.19
[58] Ms Sinclair was advised that her employment was terminated as Ms McKechnie needed to travel to Brazil with a clear intention of the support structure for The Lotus Spa. I do not consider that this notification was of a valid reason nor was it in explicit, plain and clear terms.
Opportunity to Respond –s.387(c)
[59] In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person.20 An employee must be notified of the reason for termination and must also be given an opportunity to respond to that reason before the decision to terminate is made.21 This process does not require any formality and is to be applied in a common sense way to ensure the employee has been treated fairly.22 Where an employee is aware of the precise nature of the employer’s concern about his or her conduct or performance and has a full opportunity to respond to this concern, this is enough to satisfy the requirements of this section.23
[60] Ms Sinclair was not provided with any prior notice that any of the reasons relied on by the Respondent had put her at risk of being dismissed.
[61] I accept that Ms McKechnie had been unwell at the time she had dismissed Ms Sinclair. However Ms Sinclair had been taking directions from and consulting with Mr McKechnie in Ms McKechnie’s absence.
[62] Mr McKechnie had met with Ms Sinclair just prior to her dismissal to inform her that she was to discuss matters directly with Ms McKechnie and there is no evidence before me that Ms Sinclair, post that meeting, had refused to do so.
[63] Although Mr McKechnie stepped in to try and assist with the matters, the evidence is that he also was unable to adequately manage the situation. Mr McKechnie did not provide any warning or notice to Ms Sinclair that her employment may be at risk of termination.
Unreasonable Refusal of a Support Person – s.387(d)
[64] 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 at any discussions relating to dismissal.24 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.25
[65] There is no evidence that Ms Sinclair requested to have a support person present in her discussions with Mr McKechnie or that Mr or Ms McKechnie refused such a request.
Warnings regarding Unsatisfactory Performance – s.387(e)
[66] 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.26 Unsatisfactory performance is more likely to relate to the employee’s capacity to do the job, than their conduct.27 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.28
[67] This is not a case of unsatisfactory performance.
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)
[68] 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.29 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.30
[69] The Lotus Spa is a small business. Neither Ms McKechnie nor Mr McKechnie consulted with anyone outside of the business to obtain advice prior to the dismissal. The lack of human resource management specialist skills and knowledge contributed to the problem with procedure in this matter.
Other Relevant Matters – s.387(h)
[70] In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account any other matters that the Commission considers relevant.31
[71] There are no other relevant matters to be considered in this application.
Conclusion
[72] There was no valid reason for the termination of Ms Sinclair’s employment and no process whatsoever in effecting the termination. On the evidence, having regard to the matters in s.387 of the Act, I am satisfied that Ms Sinclair’s dismissal was harsh, unjust or unreasonable and Ms Sinclair was unfairly dismissed.
Remedy
[73] Based on the evidence and submissions provided in the proceedings, I am unable to come to a concluded view about what remedy is appropriate. During proceedings the parties were put on notice should I find for the applicant both parties would accordingly be directed to provide further written submissions dealing with these considerations. Directions on the filing of submissions dealing with remedy will be issued to the parties following this decision.
COMMISSIONER
Appearances:
J. Sinclair for herself
J. McKechnie for the Respondent
Hearing details:
2017
Melbourne
14 February
1 Exhibit A2
2 Ibid
3 Exhibit R5
4 PN, 158, 159, 168
5 Exhibit A6
6 Ibid
7 Ibid
8 PN1362
9 PN 170
10 PN 171
11 Exhibit R5
12 PN1375-1396
13 (1995) 185 CLR 410.
14 Ibid at 465.
15 PN1408-1410
16 Exhibit A2, Exhibit R2
17 Fair Work Act 2009 (Cth) s.387(b).
18 Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151: Gooch v Proware Pty Ltd T/A TSM (The Service Manager)[2012] FWA 10626.
19 Previsic v Australian Quarantine Inspection Services (unreported, AIRC, Holmes C, 6 October 1998) Print Q3730.
20 Fair Work Act s.387(c).
21 Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151.
22 Royal Melbourne Institute of Technology v Asher (2010) 194 IR 1, 14 citing Gibson v Bosmac Pty Ltd (1995) 60 IR 1, 7 (Wilcox CJ).
23 Royal Melbourne Institute of Technology v Asher (2010) 194 IR 1, 14-15 citing Gibson v Bosmac Pty Ltd (1995) 60 IR 1, 7 (Wilcox CJ).
24 Fair Work Act 2009 (Cth) s.387(d).
25 Explanatory Memorandum, Fair Work Bill 2009 (Cth) [1542].
26 Fair Work Act (Cth) s.387(e).
27 Annetta v Ansett Australia Ltd (2000) 98 IR 233, 237.
28 Johnston v Woodpile Investments Pty Ltd T/A Hog’s Breath Café – Mindarie[2012] FWA 2 [58].
29 Fair Work Act (Cth) s.387(f).
30 Fair Work Act (Cth) s.387(g).
31 Fair Work Act (Cth) s.387(h).
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