Julie Baker v KVD Resort Management Group Pty Ltd (trading as Great Eastern Motor Inn)
[2014] FWC 7201
•10 OCTOBER 2014
| [2014] FWC 7201 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Julie Baker
v
KVD Resort Management Group Pty Ltd (trading as Great Eastern Motor Inn)
(U2014/3925)
COMMISSIONER JOHNS | MELBOURNE, 10 OCTOBER 2014 |
Application for relief from unfair dismissal - remedy - compensation in lieu of reinstatement.
[1] On 11 September 2014, the Fair Work Commission (Commission), as presently constituted, issued a decision 1 finding that KVD Resort Management Group Pty Ltd (trading as Great Eastern Motor Inn) (Respondent) unfairly dismissed Julie Baker on 8 January 2014.
[2] The Commission was not satisfied that it had been provided with sufficient evidence to determine the question of remedy. Consequently, on 18 September 2014 the Commission issued further directions for the parties to file and serve submissions and further evidence regarding the question of remedy.
[3] On 23 and 26 September 2014 the Applicant and the Respondent respectively filed submissions. As a consequence of those submissions the Commission, as presently constituted, decided that reinstatement was inappropriate. A short decision to that effect was issued on 29 September 2014 2.
[4] The matter was relisted for further hearing on 2 October 2014 in Brisbane with a video link to Gympie in order that the parties could address the Commission on the last issue to be determined, that being, whether the Commission should order the Applicant compensation in lieu of reinstatement.
[5] The Commission stated the following in its decision of 11 September 2014,
[77] Section 390(3)(b) provides the Commission may only issue an order for compensation to the Applicant if it is appropriate in all the circumstances.
....
[79] 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:
“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.
Note: subsection 392(5) indexed to $66,500 from 1 July 2014
(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.”
[81] The Commission, as presently constituted, will adopted the methodology utilised in Bowden in determining the amount of a payment of compensation after the parties have been provided with an opportunity to file additional evidence and make further submissions. In particular the Commission needs to better understand:
a) from the Applicant; all matters including in particular details of all remuneration earned by her in the 6 months following the termination of her employment on 8 January 2014 and the details of the efforts she made to mitigate her loss in those 6 months;
b) from the Respondent; all matters including in particular evidence about what affect (if any) an order for compensation will have on the viability of the Respondent’s enterprise and, if an order for compensation was made, what payment plan by instalments the Respondent submits is necessary.
(footnotes omitted)
Submissions
[6] The Applicant submits that an order for compensation is appropriate in all the circumstances of this case because:
a) she has been unable to find alternative work despite her efforts to do so; and
b) consequently, has lost “$9,2383.90 in the six months from 3/01/2014 to 30/06/2014.” 4
[7] The Respondent submits that an order for compensation is not appropriate in all the circumstances of this case because, as they submitted:
a) “in circumstances where the employee was not seeking reinstatement and did not take any action whatsoever to enquire about the possibility [of] reinstatement, even though she had not been told in direct terms that she had been dismissed, but rather chose to ask what might well be called a ‘loaded question’ and consequently seek compensation, it would be inappropriate to order any amount for payment of remuneration lost.” 5
b) “Further, we note that while the Applicant claimed to have obtained limited work, no evidence of her earnings was presented to the Commission. Accordingly, the Commission is unable to comply with the requirements under s.391(4) to take into account the amount of any remuneration earned from employment or other work during the period between the dismissal and the making of the order for reinstatement.” 6
c) “This would appear to preclude the Commission from making any order for remuneration...” 7
d) “An important consideration in calculating any compensation that might be provided, must be actions of the applicant both at the time of the dismissal and subsequently.” 8
e) “... the Applicant made no direct attempt to confirm with the Respondent that the contest message was in fact a dismissal, but did discuss the issue with other persons and came to a conclusion that she had been dismissed. The Applicant then proceeded on holidays and when she returned lodge an unfair dismissal claim, which did not seek reinstatement but only sought [compensation]”; 9
f) “The Applicant had made no effort to contact the Respondent, to confirm the exact meaning of the message which he had received, even though she had felt it necessary to consult with many other people and seek professional advice to confirm his suspicion that he had been dismissed. Nor did she consider asking her former employer to tell her why she had been dismissed or to ask if there was anything that could be done to restore her into her position.” 10
g) “Despite living immediately behind the motel, at no time during the months between lodging an application from unfair dismissal remedy and the hearing of the Applicant make any attempt to find out [whether] the Respondent might be prepared to give her any work whatsoever. The Respondent has given evidence that had such an application in May, some work almost certainly would have been available, even though it may have been reduced from the previous level due to the economic circumstances of the business.” 11
h) “.... Any reasonable person genuinely seeking work would surely have at least confirmed that their employer was no longer prepared to give them any work whatsoever for lodging a claim to compensation for unfair dismissal. Even after that claim was made there was no good reason to the applicant failed to make personal contact with the employer...” 12
i) “... The Applicant has provided no documentary evidence whatsoever as to what efforts she is made to obtain other employment. Nor has she give any documentary evidence of seeking work as a cleaning contract in her own right, although taxation declaration does indicate that she purchased a vacuum cleaner and cleaning material. In the absence of such documentary evidence, the commission cannot accept that there has been a consistent and genuine effort by the Applicant to find other work.” 13
j) “... the dismissal can only be regarded as unfair on the grounds that it was procedurally wrong.” 14
k) “Had the Responded decided that the time being it did not need the services of the Applicant and had he in fact dismissed her by following the small-business code of practice in the dismissal would not have been unfair.” 15
l) “If the commission decides to the compensation is necessary, then ... It should not exceed three weeks.” 16
[8] Having found that the Applicant was protected from unfair dismissal, that the Applicant was unfairly dismissed, but that reinstatement is inappropriate, only in the most unique cases should there not be an order for compensation in lieu of reinstatement.
[9] The Respondent maintained that, to the extent that the Applicant understood the Contested Phrase 17 to mean that employment was terminated, there was a misunderstanding on her behalf. However, the Commission, as presently constituted, rejected that characterisation. In its decision of 11 September 2014 the Commission found that,
a) “overall the Commission, as presently constituted, formed the view that Mr Connolly was attempting to put a ‘spin’ on the Contested Phrase to suit his purpose.” 18
b) “It was a spin that sought to deny the ordinary meaning of the words contained in the Contested Phrase.” 19
[10] Having made the findings above, the Respondent's submissions (against the making of an order for compensation in lieu of reinstatement) exhibit a sense of denial. The Commission has rejected Mr Connolly’s evidence that he did not intend to terminate the employment of the Applicant. However, even if the Commission had accepted that Mr Connolly did not intend to terminate the employment of the Applicant, it would have found that the Applicant was, in any case, entitled to treat herself as having been sacked by Mr Connolly by virtue of the Contested Phrase. The Applicant formed the view that any reasonable person would have formed if they had found themselves in receipt of an e-mail that said “I would suggest you look for alternative work.”
[11] The Commission, as presently constituted, has already found that the sending of the e-mail of 8 January 2014 effected the termination of the Applicant’s employment at the employer's initiative. That dismissal was unfair because it was unjust, unreasonable and harsh.
[12] It was unjust because the Applicant had not engaged in any conduct that justified the termination of her employment. There was no valid reason for the termination of the Applicant’s employment.
[13] It was unreasonable because the only possible premise for dismissal (a downturn in business) did not eventuate to the extent that the motel needed less staff. The average occupancy rate prior to the termination of the Applicant’s employment was 58.06% and three people were employed during that period. The average occupancy rate after the termination of the Applicant's employment was 52.02% and three people were employed also during this period (although there was a reduction in some hours).
[14] It was harsh because of the personal circumstances of the Applicant, a single mother trying her best to eke out an existence on Centrelink payments and casual work. The loss of her only other source of income was exacerbated by the fact that she lives in a local government area where the unemployment rate for the December quarter 2013 was 8.1% (i.e. 37% higher than the Queensland unemployment rate of 5.9%). 20
[15] Further, the Respondent's submissions (against the making of an order for compensation in lieu of reinstatement) also manifest an air of unreality. In the face of the e-mail of 8 January 2014 the Applicant cannot be criticised (or penalised, as the Respondent urges the Commission to do) for not calling Mr Connolly and asking him to 1) confirm whether he intended to terminate her employment, and 2), in a sense, beg for her job back. Having suffered the indignity of being unfairly dismissed by Mr Connolly the Commission rejects the Respondent’s submission that the Applicant’s failure to contact Mr Connolly after her return from annual leave should disentitle her to compensation in lieu of reinstatement or cause the Commission to only award her a nominal amount.
[16] The Commission, as presently constituted, having considered the submissions made by the parties in this matter is satisfied that an order for compensation in lieu of reinstatement is appropriate in all the circumstances of this case.
[17] I will now consider each of the criteria in s.392 of the Act.
Remuneration that would have been received: s.392(2)(c)
[18] The Applicant’s remuneration with the Respondent was $18.02 per hour. In the 6 months prior to the termination of her employment the Applicant worked an average of 21.33 hours per week. Consequently, the Commission finds that the Applicant’s:
a) Weekly rate of pay was $384.36; and
b) Annual rate of pay was $19,987.
[19] The Commission should 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 she not been dismissed.
[20] Paragraphs [39] - [40] of the decision of 11 September 2014 set out in detail the evidence concerning the occupancy rates of the motel and its need for housekeepers. In the six months prior to the termination of the Applicant’s employment the motel needed three housekeepers. In the six months after the termination of the Applicant’s employment the motel needed three housekeepers. A new housekeeper started after the termination of the Applicant’s employment. In effect the new housekeeper took over the vast majority of the Applicant’s hours. Had the Applicant not been dismissed she could have (and would in all likelihood have) worked as a housekeeper over the six-month period that her replacement worked.
[21] Therefore, the Commission, as presently constituted, finds that the Applicant would have continued to be employed by the Respondent for six months had she not been dismissed. The Applicant could have performed all the work undertaken by the replacement housekeeper.
[22] Based on her pre-termination income the amount of remuneration the Applicant would have received (in the 6 months following her dismissal) is therefore 26 x $384.36 = $9,993.36.
Remuneration earned: s.392(2)(e)
[23] The Applicant submitted evidence of her earnings in the six months following the termination of her employment. Having produced the Australian Taxation Office Notice of Assessment for the year ending 30 June 2014 the Applicant explained that she earned (in the six months following the termination of employment) $1,420.
[24] Consequently, the Commission, as presently constituted, finds the Applicant earned $1,420 in remuneration for employment or other work during the period since the dismissal and will deduct this amount from the compensation to be ordered.
Income likely to be earned: s.392(2)(f)
[25] Because six months has passed since the termination of the Applicant’s employment the issue of income likely to be earned does not arise.
Other matters: s.392(2)(g)
[26] Having regard to be evidence concerning the variation in occupancy rates at the motel the Commission, as presently constituted, finds it is appropriate in the circumstances of this matter that a contingency should be applied.
[27] Prior to the termination of employment the Applicant worked on average 21.33 hours. The replacement housekeeper worked on average 15.42 hours (i.e. 72% of the hours previously worked by the Applicant).
[28] Therefore, the Commission, as presently constituted, will reduce the amount of compensation to be ordered by 28%.
[29] This reduction is because it would have been open to the Respondent to alter the hours of work as between the Applicant and the other housekeepers. Consequently the Commission finds that, in the six months that the Applicant would have continued in employment, her average hours would have been 15.42 hours per week. The amount of remuneration the Applicant would have received is therefore $277.86 per week (x 26 = $7,224.57).
[30] The Commission, as presently constituted, will reduce the amount of compensation to be ordered by $2,768.79 (i.e to $7,224.57).
Viability: s.392(2)(a)
[31] The Applicant submits that an order of compensation will not affect the viability of the Respondent. She submits that,
“Mr Connolly has the leasehold of the motel for sale for $1,220,000 plus SAV with a net profit of $319,000 being advertised, this can be seen on resortbrokers.com.au.” 21
[32] The Respondent submits that the “economic viability of the business is a matter which affects not only the amount of compensation, but also the capacity of the business to make any lump-sum payment”. 22 However, the Respondent decided not to produce any evidence about its present viability. It relies entirely upon financial statements at to the financial year ending 30 June 2014.
[33] The Respondent provided the Commission with considerable detail about the corporate and family trust arrangements governing the operation of the motel. It also provided evidence from a chartered accountant about the profit and loss experienced in the financial years 2013/14 and 2012/13 (and earlier). Further it provided the Commission with detailed financial statements for the Connolly Family Trust
[34] It is submitted that the information contained in the financial statements should be treated as “Commercial in Confidence”. The Commission, as presently constituted, considers it appropriate to treat the material on that basis under s.594 of the Fair Work Act 2009 having regard to the confidential nature of that evidence.
[35] The Commission has had regard to the confidential evidence and in general terms notes the following:
a) in 2013 there was a profit;
b) in 2014 there was a loss;
c) between 2013 and 2014 there was a reduction in:
i. total trading income;
ii. gross profit from trading; and
iii. total expenses.
[36] However, the Commission also notes that as between 2013 and 2014 there has been an increase in Total Current Assets. In particular there has been an increase in Receivables. As a consequence Total Current Assets as at 30 June 2014 are more than capable of covering the amount of compensation to be ordered. Sundry debts and loans to beneficiaries could be called in for this purpose.
[37] As such the Commission, as presently constituted, finds an order for compensation in the amount proposed will not affect the viability of the Respondent’s enterprise.
Length of service: section (s.392(2)(b))
[38] The Commission, as presently constituted, finds that the Applicant’s period of service with the Respondent, being nearly 2 ½ years, should not affect the amount of compensation to be ordered. It was relatively short service.
Mitigating efforts: s.392(2)(b)
[39] In considering whether the Applicant has taken steps to mitigate the loss suffered as a result of the dismissal the Commission, as presently constituted, should take into account whether the Applicant acted reasonably in the circumstances. 23
[40] The evidence of the Applicant is that she has attempted to find alternative employment to no avail. In addition to seeking employment she attempted to establish a cleaning business. She has had little success. She has earned $1,420 from cleaning in the 6 months following her dismissal. However, she also expended monies on a vacuum cleaner and cleaning products at a cost of $700. Accordingly, her net profit from cleaning, post the dismissal, was $720.
[41] The Respondent complained that there is no documentary evidence of the Applicant’s attempts to mitigate her loss. While documentary evidence might be preferable, it does not render of no use the uncontested oral evidence of the Applicant. The Applicant presented as a credible witness, honest and hard-working. There was no attempt by the Respondent to impugn her credibility; nor could there have been.
[42] Further, as stated above the Commission takes judicial notice of the fact that the Applicant lives in a local government area where the unemployment rate for the December quarter 2013 was 8.1% (i.e. 37% higher than the Queensland unemployment rate of 5.9%). It is not surprising that the Applicant found it difficult to find alternate employment in this difficult economic environment. That difficulty is not of her own making.
[43] The Commission, as presently constituted, finds that the Applicant made efforts to mitigate the loss she suffered as a result of the dismissal. As such the compensation amount of $7,224.57 is to be reduced by her earnings since her dismissal (i.e by $1,420).
[44] This brings the amount of compensation to $5,804.57.
Misconduct: s.392(3)
[45] The Commission, as presently constituted, has not found any misconduct by the Applicant that contributed to the dismissal.
Shock, Distress: s.392(4)
[46] The Commission, as presently constituted, notes that the amount of compensation calculated does not include a component for shock, humiliation or distress.
Compensation cap: s.392(5)
[47] The Commission 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 the high income threshold immediately prior to the dismissal.
[48] The high income threshold immediately prior to the dismissal was $129,300. The Applicant’s annual income was around $19,987.
[49] The amount the Applicant would have earned, or to which the Applicant was entitled, for the 26 week period immediately prior to the dismissal was at least $7,224.57.
[50] Therefore, the amount of compensation the Commission will order does not exceed the compensation cap.
Payment by instalments: s.393
[51] No evidence was presented by the Respondent about its current trading circumstances. The last reliable evidence is for the financial year ending the 30 June 2014. Having regard to that evidence, it is more likely than not that the reduction in Total Trading Income presents some cash flow difficulties for the Respondent.
[52] As such the Commission, as presently constituted, will order the Respondent to pay to the Applicant an amount of $5,804.57 in instalments over 3 months (commencing 21 days after the date of this decision).
Conclusion
[53] The Commission, as presently constituted, is satisfied that the Applicant was protected from unfair dismissal, that the dismissal was unfair and a remedy of compensation in the amount of $5,804.57 is appropriate and that it should be paid to the Applicant in instalments over three months.
[54] An order will be issued with this decision.
COMMISSIONER
1 [2014] FWC 6374.
2 [2014] FWC 6802.
3 (1998) 88 IR 21.
4 Final Submissions by the Applicant (15 July 2014), page 3.
5 Final Submissions by the Respondent (15 July 2014), para 54.8.
6 Final Submissions by the Respondent (15 July 2014), para 54.9.
7 Final Submissions by the Respondent (15 July 2014), para 54.10.
8 Respondent’s Submissions Regarding Remedy (30 September 2014), para 10.
9 Respondent’s Submissions Regarding Remedy (30 September 2014), para 10.1.
10 Respondent’s Submissions Regarding Remedy (30 September 2014), para 10.2.
11 Respondent’s Submissions Regarding Remedy (30 September 2014), para 10.4.
12 Respondent’s Submissions Regarding Remedy (30 September 2014), para 10.5.
13 Respondent’s Submissions Regarding Remedy (30 September 2014), para 10.7.
14 Respondent’s Submissions Regarding Remedy (30 September 2014), para 21.
15 Respondent’s Submissions Regarding Remedy (30 September 2014), para 22.
16 Respondent’s Submissions Regarding Remedy (30 September 2014), para 25.
17 See definition of “Contested Phrase” in [2014] FWC 6374, [18]
18 [2014] FWC 6374, [19].
19 [2014] FWC 6374, [20].
20 The Commission, as presently constituted, takes judicial notice of the unemployment rate in the Gympie local government area. Applicant’s Outline of Submission in regards to Remedy (23 September 2014).
22 Respondent’s Submissions Regarding Remedy (30 September 2014), para 11.
23 Biviano v Suji Kim Collection PR915963 at [34].
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