John Foster v Sushi Tribe Pty Ltd T/A Pacific Retail Management

[2016] FWC 2201

[2016] FWC 2201

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

John Foster
v
Sushi Tribe Pty Ltd T/A Pacific Retail Management
(U2015/12298)

DEPUTY PRESIDENT LAWRENCE SYDNEY, 8 APRIL 2016

Application for relief from unfair dismissal.

Introduction

[1] On 15 October 2015 Mr John Foster (the Applicant) lodged an application pursuant to s.394 of the Fair Work Act 2009 (the Act) for a remedy for unfair dismissal against Sushi Tribe Pty Ltd t/as Pacific Retail Management (the Respondent).

[2] The Applicant says that he commenced employment with the Respondent on 21 March 2007.

[3] The Applicant was notified, on 22 June 2015, of two options. Either he could take a voluntary redundancy package or become an independent contractor. The redundancy offer, which was always vague, was said to be retracted on 9 July 2015. The Applicant was “put on notice” on 4 and 13 August. He submitted his “forced resignation” on 28 August 2015.

[4] The Applicant gave four weeks’ notice so the day the alleged dismissal took effect was 25 September 2015, which was his last day at work.

[5] The Respondent was a franchising management company for sushi and juice bars. The Applicant was employed as an Art Director being responsible for the graphics for the parent company and the retail stores.

[6] The Applicant seeks compensation for lost income. In substance his claim is for the equivalent of redundancy payments and long service leave that he says he was entitled to. He also has outstanding claims for unpaid annual leave, long service leave and superannuation.

[7] Nicola Mills was the Respondent’s manager who, it is said, made his work situation intolerable leading to his forced resignation.

[8] The Applicant submits that the Respondent’s action was taken because he refused the contractor option. Despite the Applicant’s interest in it, the redundancy option was withdrawn by the Respondent. His duties were then changed and his workload substantially increased. On 13 July he was presented with a new inferior contract. The Applicant says that he was the subject of a deliberate campaign to manage him out. This had a significant negative impact on his mental and physical health such that he was forced to resign.

[9] No F8A form was filed by the Respondent.

Commission Proceedings

[10] A conciliation conference scheduled for 17 November 2015 was cancelled.

[11] On 13 November 2015 the Commission was advised by the sole director, Ms Mills, that the Respondent had gone into voluntary administration and therefore would not participate in Commission proceedings.

[12] I scheduled a telephone programming conference for 19 January 2016. Mr Daniel Frisken from BPS Recovery, the Administrators in Liquidation participated as well as the Applicant.

[13] The hearing took place on 31 January in Sydney. There was no appearance on behalf of the Respondent or lodgement of submissions and witness statements despite requests from my chambers.

[14] I received correspondence from the administrators on 28 January 2016 which confirmed that they had been appointed administrator of the company on 16 November 2015. They declined to participate in the hearing and pointed out that any claims against the Respondent, arising from a decision of the Commission would rank as an unsecured debt.

[15] The Applicant relied on a written submission and the witness statements and oral evidence of himself (Exhibit 1) and Samuel Adams (Exhibit 2) another former employee.

Protection from Unfair Dismissal

[16] An order for reinstatement or compensation may only be issued where I am satisfied the applicant was protected from unfair dismissal at the time of the dismissal.

[17] Section 382 sets out the circumstances that must exist for the applicant to be protected from unfair dismissal:

382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

Note: High income threshold indexed to $136,700 from 1 July 2015

[18] There was no dispute that the Applicant had the required service and the Applicant’s income was below the high income threshold at approximately $75,000 per annum.

[19] The Applicant was therefore protected from unfair dismissal.

Was the dismissal unfair?

[20] A dismissal is unfair if I am satisfied, on the evidence before me, that all of the circumstances set out at s.385 of the Act existed. Section 385 provides the following:

385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC 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.

Was the Applicant dismissed?

[21] A person has been unfairly dismissed if the termination of their employment comes within the definition of “dismissed” for the purposes of Part 3-2 of the Act. Section 386 of the Act provides that:

386 Meaning of dismissed

(1) A person has been dismissed if:

(a) The person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) The person has resigned from his or her employment, but was forced to do because of conduct, or a course of conduct, engaged in by his or her employer.

[22] Obviously, the Commission needs to be satisfied that the Applicant was dismissed when, by his own admission, he admits that he resigned. He submits that he had no real option other than to resign. I will return to this issue.

Harsh, Unjust or Unreasonable

[23] I must consider whether I am satisfied the dismissal was harsh, unjust or unreasonable. The criteria I must take into account when assessing whether the dismissal was harsh, unjust or unreasonable are set out at s.387 of the Act:

“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.

Approach of the Commission

[24] The ambit of the conduct which may fall within the phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 at 465 by McHugh and Gummow JJ 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.”

[25] Vice President Ross, as he then was, in B Rose v Telstra Corporation Limited (1998) Q9292 (Rose) restated the above proposition and also stated:

“In my view whether there has been a `fair go all round’ is a matter which I think is relevant and hence I am to have regard to it determining whether the termination was harsh, unjust or unreasonable. It is not necessarily determinative but it is a factor to be taken into account.”

The Applicant’s Argument

[26] Obviously, it is unsatisfactory to decide this matter on the basis of the Applicant’s case only. However, the Respondent had every opportunity of responding and chose not to. In these circumstances, the Commission must reach a decision based on the evidence it has. Of course, enforcement of any order is another issue.

[27] The Applicant’s case is essentially as summarised at the commencement of this decision. He provided extensive documentation and he and Mr Adams were able to be questioned by the Commission at the hearing.

[28] Some additional points were revealed:

● The Applicant’s status was changed from full-time to part-time following his rejection of the change to independent contractor. The new contract reduced his hours and added new duties.

● There were a number of confrontations between the Applicant and Ms Mills and another staff member, Kate McMahon which show that the Applicant was entitled to be fearful about his future employment. Unrealistic workloads and timelines were, he says, being imposed.

● Mr Adams gave evidence confirming what had occurred to the Applicant. He, himself, took a redundancy payment as part of the same chain of events.

[29] I found the Applicant to be an open and credible witness. His version of events was supported by Mr Adams.

Was the Applicant Dismissed Pursuant to s.386?

[30] Cases such as Mohazab v Dick Smith Electronics Pty Ltd (No. 2) (1995) 62 IR 200 (Mohazab) and O’Meara v Stanley Works Pty Ltd [2006] AIRC 496 (O’Meara) deal with s.386(1)(a). A termination is at the employer’s initiative when its action “directly and consequentially” results in the termination of employment, and the employee would have still been employed but for that action. An analysis of all the circumstances is required. The Full Bench states in O’Meara:

“[23] In our view the full statement of reasons in Mohazab which we have set out together with the further explanation by Moore J in Rheinberger and the decisions of Full Benches of this Commission in Pawel and ABB Engineering require that there to be some action on the part of the employer which is either intended to bring the employment to an end or has the probable result of bringing the employment relationship to an end. It is not simply a question of whether “the act of the employer [resulted] directly or consequentially in the termination of the employment.” Decisions which adopt the shorter formulation of the reasons for decision should be treated with some caution as they may not give full weight to the decision in Mohazab. In determining whether a termination was at the initiative of the employer an objective analysis of the employer’s conduct is required to determine whether it was of such a nature that resignation was the probable result or that the appellant had no effective or real choice but to resign.”

[31] Where an Applicant claims they were forced to resign they must show they had no real choice, Mohazab. The onus is on the employee to prove that they did not resign voluntarily and that the employer forced them to do it, Australian Hearing v Peary (2009) 185 IR 359. An employer is generally able to treat a clear and unambiguous resignation as such, Ngo v Link Printing Pty Ltd (1999) 94 IR 375.

[32] Deputy President Wells in Dawes v Presbyterian Care [2014] FWC 4067 provides the following useful summaries of the approach to be taken:

“[4] The Explanatory Memorandum to the Fair Work Bill 2008 (Cth) said in respect of now s.386(1) that:

“Clause 386 – Meaning of dismissed

1528. This clause sets out the circumstances in which a person is taken to be dismissed. A person is dismissed if the person’s employment with his or her employer was terminated on the employer’s initiative. This is intended to capture case law relating to the meaning of ‘termination at the initiative of the employer’ (see, e.g., Mohazab v Dick Smith Electronics Pty Ltd (1995) 62 IR 200).

1529. Paragraph 386(1)(b) provides that a person has been dismissed if they resigned from their employment but were forced to do so because of conduct, or a course of conduct, engaged in by their employer. Conduct includes both an act and a failure to act (see the definition in clause 12).

1530. Paragraph 386(1)(b) is intended to reflect the common law concept of constructive dismissal, and allow for a finding that an employee was dismissed in the following situations:

● where the employee is effectively instructed to resign by the employer in the face of a threatened or impending dismissal; or

● where the employee quits their job in response to conduct by the employer which gives them no reasonable choice but to resign.”

. . .

[59] In order for there to be access to a remedy to unfair dismissal, the employee must have been dismissed in accordance with s.386 of the Act. Accordingly, I am required to determine on the evidence whether Ms Dawes was dismissed at the initiative of PCT or whether she was forced to resign due to the conduct engaged in by PCT.

[60] In order to amount to a termination at the initiative of the employer the applicant must have been forced to resign by a course of conduct engaged in by PCT.”

[33] I am satisfied that the Applicant’s resignation was, in fact, a constructive dismissal. I have come to this conclusion because of:

● The Respondent’s attempt to achieve a redundancy or independent contractor change.

● The abrupt withdrawal of the redundancy offer.

● The subsequent treatment of the applicant which affected his health and welfare and family life.

● The reduction in his hours and the increase in his workload.

[34] Therefore I find that the Applicant was dismissed pursuant to s.385(a).

Conclusion on s.387

[35] Given the nature of this case, the Applicant paid little attention to s.387. I find that there is nothing which would support a finding that the dismissal was not harsh, unjust or unreasonable.

[36] I find that there was no valid reason for the dismissal. There is no consideration in relation to sub-section (b) to (h) which would detract from a conclusion that the dismissal was harsh, unjust and unreasonable.

[37] I find that the Applicant’s dismissal was unfair within the terms of s.385.

Compensation

[38] Having found that the dismissal was unfair, I now turn to the appropriate remedy.

[39] 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.”

[40] The Applicant does not seek reinstatement and obviously it would not be appropriate.

[41] Section 390(3)(b) provides that I may only issue an order for compensation to the Applicant if it is appropriate in all the circumstances.

[42] I have found that the applicant has been unfairly dismissed and that reinstatement is not appropriate in all the circumstances. I am satisfied that an order for compensation should be made.

[43] Section 392 of the Act sets out the circumstances that must be taken into consideration when 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 provides:

“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.”

[44] The method for calculating compensation under s.392 of the Act was dealt with by a Full Bench of the Commission in Bowden, G v Ottrey Homes Cobram and District Retirement Villages Inc. T/A Ottrey Lodge,[2013] FWCFB 431 (Bowden). In that decision the Full Bench set out the order in which the criteria and other factors should be applied, taking into account authority under the Workplace Relations Act 1996 in Sprigg v Paul’s Licensed Festival Supermarket, (1998) 88 IR 21 and Ellawala v Australian Postal Corporation, Print S5109 (Ellawala). I have adopted the methodology utilised in Bowden in determining the amount of a payment of compensation.

[45] I will now consider each of the criteria in s.392 of the Act.

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

[46] The Applicant’s remuneration with the Respondent was approximately $75,000 per annum.

[47] I now determine the period of time the Applicant would have remained employed by the Respondent, or would have likely remained employed with the Respondent, had he not been dismissed.

[48] The Applicant stated that he intended to remain with the Respondent for a further two years so that he achieved 10 years’ service. In the circumstances, I think this is unrealistic. I determine that the period of employment would have been four months. The remuneration the Applicant would have received is therefore $25,000.

Remuneration earned - s.392(2)(e)

[49] The evidence was that the Applicant had not had employment since the dismissal and therefore there has been no remuneration earned during the period since the dismissal.

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

[50] I consider it unlikely the Applicant will earn income during the period between the period of the order for compensation and the actual compensation.

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

[51] A broad discretion is given to the Commission to consider other matters. The Applicant suffered financially and health-wise as a result of the Respondent’s actions.

Viability - s.392(2)(a)

[52] This will need to be dealt with in relation to the enforcement of the Order attached to this decision.

Length of Service - s.392(2)(b)

[53] The Applicant had some eight years’ service with the Respondent that I have taken into account.

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

[54] In considering whether the Applicant has taken steps to mitigate the loss suffered as a result of the dismissal I should take into account whether the Applicant acted reasonably in the circumstances, (Ellawala).

[55] I find that the Applicant has made efforts to mitigate his loss suffered as a result of the dismissal but was constrained by his family circumstances and some health issues.

Misconduct: s.392(3)

[56] No adjustment to the compensation is appropriate on this ground.

Shock, Distress: s.392(4)

[57] I note that the amount of compensation calculated does not include a component for shock, humiliation or distress.

Compensation cap: s.392(5)

[58] I must reduce the amount of compensation to be ordered if it exceeds the lesser of the total amount of remuneration received by the Applicant, or to which the Applicant was entitled, for any period of employment with the employer during the 26 weeks immediately before the dismissal, or half the amount of the high income threshold immediately prior to the dismissal.

[59] The high income threshold component is $66,500.

[60] The amount of compensation I will order does not exceed the compensation cap.

[61] I will order the Respondent to pay to the Applicant an amount of $25,000.

Conclusion

[62] I am satisfied that the Applicant was protected from unfair dismissal, and that the dismissal was unfair and a remedy of compensation is appropriate. In accordance with s.381(2) of the Act, I am further satisfied that each party has been accorded a ‘fair go all round’.

[63] An order (PR578879) will be issued with this decision.

DEPUTY PRESIDENT

Appearances:

J.A. Foster, self-applicant.

Hearing details:

2016

Sydney:

January 19 (tele-conference) 31.

Printed by authority of the Commonwealth Government Printer

<Price code A, PR578831>