Justin Marshman v Emgtee Holdings Pty Ltd T/A Spotless Professional Automotive Detailers

[2014] FWC 8670

[2014] FWC 8670

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Justin Marshman
v
Emgtee Holdings Pty Ltd T/A Spotless Professional Automotive Detailers
(U2014/12565)

SENIOR DEPUTY PRESIDENT O’CALLAGHAN ADELAIDE, 8 DECEMBER 2014

Application for relief from unfair dismissal - continued operation of respondent business unclear - small business fair dismissal code - harsh unjust and unreasonable - compensation.

[1] On 16 September 2014 Mr Marshman lodged an application pursuant to s.394 of the Fair Work Act 2009 (the FW Act), in which he argued that the termination of his employment with EMGTEE Holdings Pty Ltd T/A Spotless Professional Automotive Detailers (Spotless) was unfair.

[2] Mr Marshman’s application was the subject of a telephone directions conference on 5 November 2014. At this directions conference Ms Taylor participated, as a Director of Spotless and indicated that Spotless regarded itself as a small business for the purposes of the unfair dismissal provisions of the FW Act. The application was subsequently listed for consideration of the extent to which the termination of Mr Marshman’s employment was consistent with the Small Business Fair Dismissal Code and, by agreement with the parties, the merits of the application. At this directions conference I confirmed the requirement for both parties to file in the Commission and serve on each other, by close of business 25 November 2014:

● a brief summary of their positions with respect to both the Small Business Fair Dismissal Code and the factors set out in s 387 of the FW Act,
● a statement for each person to be giving evidence, and
● a copy of any document to be relied upon.
[3] Because of subsequent developments, I note that Ms Taylor provided no indication that Spotless was no longer trading or operating.

[4] Mr Marshman provided material consistent with these directions. Spotless did not provide any further material, including an Employers Response (Form F3). As a consequence, on 26 November 2014 my Associate provided written advice to Spotless which confirmed the 5 November 2014 Directions and sought urgent compliance with those Directions.

[5] At the 2 December 2014 conference Mr Marshman represented himself. Despite being advised and then reminded of the determinative conference and the requirement to comply with directions I issued on 5 November 2014, Spotless did not participate in this conference and attempts to telephone Ms Taylor were unsuccessful. Accordingly, the conference proceeded without any significant information being provided by Spotless. At the commencement of the conference I confirmed that the Australian Securities & Investments Commission register recorded that EMGTEE Holdings Pty Ltd was deregistered with effect from 26 January 2014. Mr Marshman confirmed that he had been employed well after that date and that he understood that the Spotless business was still operating, or had been operating until very recently. In the absence of any definitive information about the current standing of the Spotless business, I have proceeded to determine the application.

[6] At the determinative conference I confirmed that s.396 stated:

396 Initial matters to be considered before merits

The FWC must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:

(a) whether the application was made within the period required in subsection 394(2);

(b) whether the person was protected from unfair dismissal;

(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;

(d) whether the dismissal was a case of genuine redundancy.”

[7] The information before me indicated that the application was made within the statutory time limit, that Mr Marshman was a person who was protected from unfair dismissal and that the termination of his employment was not a case of genuine redundancy. The only issue of an initial nature related to whether the termination of his employment was consistent with the Small Business Fair Dismissal Code. Mr Marshman confirmed that he understood that Spotless engaged approximately eight employees at the time of the termination of his employment. Mr Marshman was not aware of any entities associated with Spotless. For the avoidance of doubt, I have considered whether the Small Business Fair Dismissal Code (the Code) was applied in Mr Marshman’s circumstances.

[8] Section 385 of the FW Act establishes that, if the Code has application and any employment termination was consistent with that Code, that dismissal cannot be unfair. The Code relevantly states:

“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.”

[9] I have initially considered this issue.

The evidence

[10] Mr Marshman’s evidence was that Spotless provides car detailing services to the public and to specified retailers. His evidence was that he commenced working with Spotless as a car detailer in around 1990. He advised that, in about 2007 the business was bought by Mr and Ms Taylor and in 2010 he was promoted to the position of Workshop Manager. In August 2012 he was then promoted to the position of General Manager. Mr Marshman provided a copy of a contract to this effect together with a position description. From 31 August 2013 his salary was specified to be $60,000 per annum in addition to a company vehicle and a mobile phone. He also understood he was to be offered a share in the profits of the business.

[11] Mr Marshman advised that he was never given any warnings relative to the manner of his conduct at work but that some 12 months ago he noticed that the business began to be irregularly behind in the payment of wages to himself and to other employees. He consequently had a number of discussions with Ms Taylor about this issue and outstanding superannuation payments. His evidence was that Ms Taylor advised that the problem would be resolved. Mr Marshman’s evidence was that the superannuation payments continued to be not properly made. Mr and Ms Taylor were absent on holiday in August 2014 and Mr Marshman raised the unpaid wages concern with friends and relatives of Mr and Ms Taylor who were overseeing the business whilst they were away. One of these persons was named Belinda. He understood that Belinda then discussed the issue with Mr and Ms Taylor. Mr Marshman provided a copy of a text message received from Belinda on 19 August 2014 in the following terms:

“I’m not particularly interest in your opinions, it’s $3500 it’s paid and if you continue to be painful I will simply direct Belinda to terminate your employment.” 1

[12] I have taken this message to refer to payments asserted by Spotless to have been made to Mr Marshman in response to his requests.

[13] Mr Marshman approached the Fair Work Ombudsman (the FWO) about the non-payment of wages on 22 August 2014 and received an email proposing mediation on 29 August 2014. That mediation did not proceed.

[14] Mr Marshman met with Ms Taylor on 1 September 2014 and also participated in a staff meeting held on that day. He raised the unpaid wages concern on his own behalf and that of other persons and was told that the issue would be remedied. He provided evidence that two cheques, lodged on 4 September 2014 were subsequently dishonoured.

[15] Mr Marshman’s evidence was that he was absent from work on sick leave from 3 to 5 September 2014 and provided a medical certificate for these days. He received a telephone call from the FWO on 4 September 2014 and was advised by the FWO officer that he had been dismissed. His evidence was that after this advice one of the friends of Mr and Ms Taylor who were involved in the operation of the business whilst Mr and Ms Taylor were away then sent a text message to Mr Marshman’s wife requiring him to immediately return the car and telephone to avoid a report being made to the police to the effect that this property was stolen.

[16] Mr Marshman gave evidence that, on 7 September 2014 he spoke with Mr Taylor and then met with Mr Taylor and Belinda and discussed his concerns with respect to outstanding wages, superannuation and long service leave and annual leave entitlements. He advised that Mr Taylor informed him that he was suspended without pay at that time as a consequence of his arranging staff meetings whilst Mr and Ms Taylor were away. Mr Marshman met again with Mr Taylor and Belinda on 11 September 2014. His evidence was that he was told that he would be paid outstanding wages in the amount of $5844 but that this payment would be made on condition that he agreed that he would not seek any further entitlements with respect to long service leave, annual leave or superannuation. He refused to agree to that condition and his evidence was that Mr Taylor then advised him that he had been dismissed on 1 September 2014 for: “badmouthing the business to car dealers and for stirring up other employees at meetings”. 2

[17] Mr Marshman denied that he had spoken of the business in derogatory terms or that he had inappropriately met with the staff.

[18] Ms Marshman’s evidence went to the extent of underpayments made to Mr Marshman and her concern that those underpayments persisted whilst Mr and Ms Taylor were on an overseas holiday. Ms Marshman lodged the complaint with the FWO on Mr Marshman’s behalf. Her evidence went to a text advice she received on 2 September 2014 in the following terms:

“On 2 September 2014 at about 12.28pm I received a text message from the telephone number xxxx xxx xxx. It read:

I put you on notice you are to immediately and cease and desist with the deliberate attempts to devalue my business or I will commence an action on the Magistrates Court for damages.”

[19] Ms Marshman’s evidence went to continuing underpayments prior to receipt of a telephone call and then a further text message from Belinda on 4 September 2014 which demanded the return of the Spotless car and telephone. Her evidence went to further text messages received on 13 September 2014 which appear to assert that the person sending those messages was alleging that Mr Marshman was undertaking independent work in breach of the terms of his employment.

[20] On the information before me, if Spotless is a small business for the purposes of s.23 of the FW Act, the termination of Mr Marshman’s employment must be regarded as a summary dismissal. There is no information before me which establishes that there were reasonable grounds upon which Spotless could regard Mr Marshman’s conduct as sufficiently serious to justify instant dismissal. No conduct of a nature which could be described as serious misconduct has been detailed to me.

[21] Even if the termination of Mr Marshman’s employment was regarded as something other than summary dismissal there is simply nothing before me that establishes that there was a valid reason for that termination which was based on his conduct or capacity in the job. There is nothing that indicates that he was warned or that he had the opportunity to respond to any warning. The manner of the termination of Mr Marshman’s employment meant that he had no opportunity to have someone assist him in discussions about that possibility.

[22] Accordingly, I do not consider that, if the Code had application to Spotless, the termination of Mr Marshman’s employment was consistent with that Code.

[23] Accordingly, I have then considered whether the termination of Mr Marshman’s employment was unfair. Section 387 sets out the factors I am required to take into account in this respect. This section states:

“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.”

[24] On the information before me I am not satisfied that there was a valid reason for the termination of Mr Marshman’s employment. On the approach adopted by Northrop J in Selvachandran v Peterson Plastics Pty Ltd 3 I can only regard the information before me as indicating that Mr Marshman’s dismissal lacked any objective basis.

[25] I am not satisfied that Mr Marshman was notified of the reason for his dismissal before that dismissal took effect, or that the reason which was ultimately given to him on 11 September 2014 accurately reflected the reasons for the termination of his employment.

[26] Mr Marshman did not have an opportunity to respond to any concerns relative to his capacity or his conduct. In this regard I have taken the termination of his employment to have occurred at some time prior to the 4 September 2014 advice provided to him by the FWO about that dismissal.

[27] The manner of the advice provided to Mr Marshman about the termination of his employment meant that he had no opportunity to have a support person present in discussions about that dismissal.

[28] I have taken into account the extent to which, even if it was not a small business for the purposes of the FW Act, Spotless appears to be a small business and hence may not have sophisticated procedures to be followed in the consideration of an employment termination. The absence of any sophisticated procedures does not, however, provide a licence for blatant unfairness. In the same respects, I have taken it that Spotless did not have access to dedicated human resource management specialists or expertise in the decision to terminate Mr Marshman’s employment. Once again, had advice of this nature been sought or obtained the situation before me may have been avoided.

[29] I do not consider that there are any other matters relevant to this application. I note that issues such as the underpayment or lack of payment of wages, superannuation or other leave entitlements are matters outside the scope of my consideration in this matter. The pursuit of those entitlements is a matter for Mr Marshman.

[30] On the evidence before me I am satisfied that the termination of Mr Marshman’s employment was harsh, unjust and unreasonable. It was blatantly unfair. In these circumstances s.390 provides that I may order a remedy. The primary remedy is that of reinstatement.

[31] Mr Marshman does not seek reinstatement and, on the information before me, I do not consider that reinstatement would be appropriate. The manner of his dismissal leaves little doubt that reinstatement would be inappropriate. However, given the evidence before me about the nature of the termination of Mr Marshman’s employment, I consider that compensation is appropriate pursuant to s.390(3).

[32] Section 392 sets out the factors which must be considered relative to the determination of an amount of compensation. I have considered each of these criteria on the evidence before me.

[33] There is no definitive evidence about the effect of an order for compensation on the viability of the employer’s enterprise. Mr Marshman had been employed some 24 years and I regard that as a long period of employment. Had Mr Marshman not been dismissed I would have expected that he would indefinitely remain an employee of Spotless, provided that business remained operational. Absent any clear indication that Spotless is now no longer trading, I have concluded that Mr Marshman’s employment may have continued for some years. There is some uncertainty about the evidence before me relative to Mr Marshman’s annual salary was $50,000 at the time of the termination of his employment. He advised me that this was $50,000 per annum but his witness statement indicated that it was $60,000 per annum. I have adopted the higher amount for the purposes of consideration of the matters in s 392. In addition to his annual salary Mr Marshman had provided to him, a motor vehicle and telephone. I have assessed this to equate to an annual salary of $69,000 or, in gross weekly terms, around $1327. Mr Marshman commenced alternative employment as a subcontract car detailer on 23 October 2014. His gross average weekly income since that time is $830. I expect that this average income will continue for at least the foreseeable future and, as a consequence, there is an ongoing weekly shortfall in the income achieved by Mr Marshman as a result of the unfair termination of his employment. I do not consider that any further deductions to the amount of compensation payable to Mr Marshman are appropriate in these circumstances. I have noted that Mr Marshman may well pursue underpayment claims with respect to his employment at Spotless but have not taken this into account in the assessment of an amount of compensation.

[34] I have applied the approach set out in Sprigg v Paul’s Licensed Festival Supermarkets 4 so as to arrive at an overall amount of compensation. That amount exceeds the maximum amount that might be ordered pursuant to s.392(6). Accordingly, I consider that the amount of compensation payable to Mr Marshman should be 26 weeks pay. An Order (PR558493) giving effect to this decision will be issued.

Appearances:

J Marshman on his own behalf.

Hearing (Determinative Conference) details:

2014.

Adelaide:

December 2.

 1   Exhibit A2, JKM3

 2   Exhibit A2, para 47

 3 (1995) 62 IR 371 at 373

 4   AIRC, Print R0235, (24 December 1998)

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<Price code C, PR558492>