Kandice Ryan v Zalcom Pty Ltd T/A Zalcom
[2017] FWC 2499
•5 MAY 2017
| [2017] FWC 2499 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Kandice Ryan
v
Zalcom Pty Ltd T/A Zalcom
(U2017/730)
COMMISSIONER SAUNDERS | NEWCASTLE, 5 MAY 2017 |
Application for relief from unfair dismissal – no valid reason – compensation ordered
[1] Ms Kandice Ryan was employed by Zalcom Pty Ltd trading as Zalcom (Zalcom) as a full-time office manager from November 2015 until 3 January 2017. Ms Ryan claims that her dismissal on 3 January 2017 was harsh, unjust and unreasonable. Ms Ryan seeks an order for compensation.
[2] Mr Zack Laudais, director of Zalcom, appeared at a directions hearing on 7 March 2017, at which time he informed the Fair Work Commission (the Commission) that he intended to call about eight witnesses to defend Ms Ryan’s unfair dismissal application.
[3] A Notice of Listing and directions were issued on 7 March 2017. Pursuant to those directions, Zalcom filed its Employer Response (Form F3). However, no witness statements, documents or submissions were filed on behalf of Zalcom.
[4] On 2 May 2017, Mr Leaudais sent an email in the following terms to the Commission:
“Hello,
I’m in port Macquarie for work at the moment and I won’t be able to make the 5th of may are we able to reschedule?
I’ll try and get some statements over this afternoon.
Thanks”
[5] Later on 2 May 2017, a response was sent to Mr Leaudais in which he was informed that:
“…The parties have been aware of the hearing date this Friday for almost two months.
The Commissioner is not prepared to vacate the hearing this Friday on the basis of the information contained in your email. The hearing will therefore commence at 10.00am this Friday, 5 May 2017.
If you do not attend the hearing on Friday, the Commissioner will proceed to hear and determine the matter on the basis of the evidence adduced by Ms Ryan.”
[6] Mr Leaudais did not attend the hearing at the Commission on Friday, 5 May 2017, nor did any other person appear on behalf of Zalcom at the hearing. As a result, Ms Ryan was the only person who gave evidence at the hearing and I have decided this case on the basis of Ms Ryan’s evidence.
Initial matters to be considered before merits
[7] Section 396 of the Fair Work Act 2009 (Cth) (the Act) requires me to decide four matters before I consider the merits of Ms Ryan’s unfair dismissal application.
Was the application made within 21 days? (s.396(a))
[8] Ms Ryan’s application was made within the period required by section 394(2) of the Act.
Was Ms Ryan protected from unfair dismissal (s.396(b))?
[9] Ms Ryan was employed by Zalcom as an Office Manager. She was paid $21.77 per hour. Ms Ryan was employed by Zalcom for about 15 months prior to her dismissal. Accordingly, I am satisfied that Ms Ryan was a person protected from unfair dismissal.
Was the dismissal consistent with the Small Business Fair Dismissal Code? (s.396(c))
[10] In its Employer Response, Zalcom contended that it had nine employees at the time Ms Ryan was dismissed and her dismissal was consistent with the Small Business Fair Dismissal Code (the Code).
[11] Ms Ryan gave evidence, which I accept, that Zalcom had the following employees at the time of her dismissal:
● nine non-office based employees, including Mr Leaudais;
● three office based employees – Ms Ryan, a trainee and Mr Leaudais’ mother;
● three “permanent” casual employees in the traffic control part of the business. Those employees worked on a regular and systematic basis for Zalcom; and
● three or four other casual employees in the traffic control part of the business.
[12] A small business employer is one that employs fewer than 15 employees (s.23(1) of the Act). A casual employee must be engaged on a regular and systematic basis to be included in the count.
[13] On the basis of the evidence given by Ms Ryan, I am satisfied that the three “permanent” casual employees in the traffic control part of Zalcom’s business were, at the time of Ms Ryan’s dismissal, employed by Zalcom on a regular and systematic basis. Once those three employees are added to the 12 other employees, it is clear that Zalcom did not have fewer than 15 employees at the time of Ms Ryan’s dismissal, with the result that it was not a small business employer at that time. It follows that the Code was inapplicable.
[14] However, even if Zalcom was a small business employer at the time it dismissed Ms Ryan, I am satisfied that Zalcom did not comply with the Code in relation to Ms Ryan’s dismissal. In particular, Ms Ryan was dismissed with immediate effect on 3 January 2017, even though she was later paid two week’s wages in lieu of notice. It is therefore necessary to consider whether the dismissal was consistent with the “Summary dismissal” section of the Code. 1 In the absence of any evidence from Zalcom, I am not satisfied that (a) Zalcom genuinely held a belief that Ms Ryan’s conduct was sufficiently serious to justify immediate dismissal, (b) any such belief on the part of Zalcom was, objectively speaking, based on reasonable grounds, or (c) Zalcom carried out a reasonable investigation into the matter. I am also not satisfied that Zalcom complied with “Other dismissal” section of the Code, if it be applicable, because Zalcom did not give Ms Ryan a warning or reason why she was at risk of being dismissed.
Genuine redundancy (s.396(d))
[15] Zalcom did not assert the dismissal was a case of genuine redundancy in its Employer Response. Further, although Mr Leaudais informed Ms Ryan that she was being dismissed because Zalcom was in a poor financial position and her position was no longer needed on the basis that Mr Leaudais and his mum would be taking over all the office work to save on wages and the separation certificate provided to Ms Ryan recorded the reason for separation as “shortage of work”. I accept Ms Ryan’s evidence that she attended the workplace about a week after her dismissal and observed another employee who appeared to be working in her position. Ms Ryan’s evidence in that regard is supported by the following information contained in section 3.2 of the Employer Response:
“1. Originally we had planned to take over the office ourselves because of the lost clients due to Kandice.
2. A family friend quit her job early in the new year that has 15 years experience within the industry.
3. Her position is not the same as the position Kandice was working in.”
[16] As to point 3 above, Ms Ryan gave evidence, which I accept, that, save for doing the payroll, she was responsible for all the office related duties and responsibilities at Zalcom; it is therefore difficult to imagine how the new employee’s position is “not the same as the position Kandice was working in.” Further, there was no consultation with Ms Ryan about any redundancy.
[17] In the absence of any evidence from Zalcom and in light of the matters referred to in the previous two paragraphs, I am satisfied that Ms Ryan’s dismissal was not a case of genuine redundancy.
Was the dismissal harsh, unjust or unreasonable?
[18] The ambit of the conduct which may fall within the phrase “harsh, unjust or unreasonable” was explained in Byrne v Australian Airlines Ltd 2 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 misconduct which the employee 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.”
[19] The criteria I must take into account when assessing whether the dismissal was harsh, unjust or unreasonable are set out in section 387 of the Act. I will deal with each of these matters in turn below.
Valid reason (s.387(a))
[20] The employer must have a valid reason for the dismissal of the employee, although it need not be the reason given to the employee at the time of the dismissal. 3 The reason for the dismissal should be “sound, defensible and well founded”4 and should not be “capricious, fanciful, spiteful or prejudiced.”5
[21] The Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer. 6 The question the Commission must address is whether there was a valid reason for the dismissal related to the employee’s capacity or conduct (including its effect on the safety and welfare of other employees).7
[22] In cases relating to alleged conduct, the Commission must make a finding, on the evidence provided, whether, on the balance of probabilities, the conduct occurred.8 It is not enough for an employer to establish that it had a reasonable belief that the termination was for a valid reason. 9
[23] I put to Ms Ryan the reasons for dismissal recorded in section 3.1 of the Employer Response. Ms Ryan denied those allegations and the responses she gave to those matters were both direct and responsive. I accept Ms Ryan’s evidence in relation to Zalcom’s asserted “reasons for dismissal” as credible and reliable.
[24] On the basis of the evidence adduced in these proceedings, I am not satisfied, on the balance of probabilities, that the conduct alleged by Zalcom against Ms Ryan in the “reasons for dismissal” section of the Employer Response occurred. Accordingly, I find that there was no valid reason for Ms Ryan’s dismissal related to her capacity or conduct.
Notification of the valid reason and opportunity to respond (s.387(b)&(c))
[25] Notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made 10, and in explicit11 and plain and clear terms.12 In Crozier v Palazzo Corporation Pty Ltd a Full Bench of the Australian Industrial Relations Commission dealing with a similar provision of the Workplace Relations Act 1996 stated the following (at [73]):
“As a matter of logic procedural fairness would require that an employee be notified of a valid reason for the termination before any decision is taken to terminate their employment in order to provide them with an opportunity to respond to the reason identified. Section 170(3)(b) and (c) would have very little (if any) practical effect if it was sufficient to notify employees and give them an opportunity to respond after a decision had been taken to terminate their employment. Much like shutting the stable door after the horse has bolted.”
[26] An employee protected from unfair dismissal should be provided with an opportunity to respond to any reason for their dismissal relating to their conduct or capacity. This criterion is to be applied in a common sense way to ensure the employee is treated fairly and should not be burdened with formality. 13
[27] Ms Ryan received a telephone call from Mr Leaudais on 3 January 2017, when she was on holidays, telling her that she was dismissed because Zalcom was in a poor financial position and her position was no longer needed on the basis that Mr Leaudais and his mum would be taking over all the office work to save on wages. At no time prior to her dismissal did Zalcom inform Ms Ryan of any of the “reasons for dismissal” set out in section 3.1 of the Employer Response, nor was she given any opportunity to respond to any such reason(s).
Unreasonable refusal by the employer to allow a support person (s.387(d))
[28] Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, the employer should not unreasonably refuse that person being present.
[29] There is no positive obligation on an employer to offer an employee the opportunity to have a support person:
“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.”14
[30] Apart from the telephone discussion on 3 January 2017, Ms Ryan did not have any discussions with Mr Leaudais or any other person on behalf of Zalcom in relation to her dismissal or the reason(s) for it. Accordingly, she did not have any occasion to request that a support person be present during any such discussions. It follows that there was no unreasonable refusal by Zalcom to allow Ms Ryan to have a support person present to assist at any discussions relating to dismissal.
Warnings regarding unsatisfactory performance (s.387(e))
[31] Where an employee protected from unfair dismissal is dismissed for the reason of unsatisfactory performance, the employer should warn the employee about the unsatisfactory performance before the dismissal.
[32] Apart from being told by Mr Leaudais to ensure that she included her email signature on work related emails, even when such emails were being sent to Mr Leaudais’ father, who also worked in the business, Ms Ryan was not given any warnings about unsatisfactory performance before her dismissal.
Impact of the size of the employer’s enterprise on procedures followed (s.387(f))
[33] It is clear that Zalcom is a relatively small business. The small size of its business may to some extent excuse it for following a less than ideal procedure to effect a dismissal. However, the size of Zalcom’s business does not provide an excuse or explanation for the insensitive way in which Ms Leaudais called Ms Ryan while she was on holidays to inform her of her dismissal.
Absence of dedicated human resources management specialist/expertise on procedures followed (s.387(f))
[34] Like many relatively small businesses, Zalcom does not have dedicated human resource management specialists or expertise. However, that did not excuse it from failing to afford Ms Ryan any procedural fairness in connection with the termination of her employment.
Other relevant matters (s.387(h))
[35] Section 387(h) of the Act provides the Commission with a broad scope to consider any other matters it considers relevant.
[36] The impact of the dismissal on Ms Ryan’s personal and economic circumstances is a relevant consideration in this matter. Ms Ryan has been able to obtain alternative employment, but she is working as an attendant in a service station and is working fewer hours per week in her alternative employment than she received from Zalcom. The difference in Ms Ryan’s earnings is about $200 net per week.
[37] I am satisfied that Ms Ryan’s dismissal was harsh in its consequences for her personal and economic situation.
Conclusion as to whether the dismissal was unfair
[38] Having considered each of the matters specified in section 387 of the Act, I am satisfied the dismissal of Ms Ryan by Zalcom was harsh, unjust and unreasonable.
Remedy
[39] In light of my findings that Ms Ryan was protected from unfair dismissal, and that her dismissal was harsh, unjust and unreasonable, it is necessary to consider what, if any, remedy should be granted to her.
[40] Ms Ryan seeks the remedy of compensation. I am satisfied that reinstatement would be inappropriate because it is clear that Ms Ryan does not have any trust or confidence in Zalcom.
[41] A compensation remedy is designed to compensate an unfairly dismissed employee in lieu of reinstatement for losses reasonably attributable to the unfair dismissal within the bounds of the statutory cap on compensation that is to be applied. 15
[42] Having regard to the fact that Ms Ryan has suffered financial loss as a result of her unfair dismissal, I consider that an order for payment of compensation to her is appropriate in all the circumstances of this case.
[43] It is necessary therefore for me to assess the amount of compensation that should be ordered to be paid to Ms Ryan. In assessing compensation, I am required by section 392(2) of the Act to take into account all the circumstances of the case including the specific matters identified in paragraphs (a) to (g) of this subsection. In undertaking this task, I shall use the established methodology for assessing compensation in unfair dismissal cases which was elaborated upon in the context of the current Act in Bowden v Ottrey Homes Cobram and District Retirement Villages Inc (Bowden). 16
Remuneration Ms Ryan would have received, or would have been likely to receive, if she had not been dismissed (s.392(2)(c))
[44] I find that Ms Ryan would have remained in employment with Zalcom for a period of two years but for the termination of her employment on 3 January 2017. I make that finding for the following reasons:
(a) Ms Ryan was employed by Zalcom for about 15 months. Apart from the discussion concerning use of her email signature on all work related emails, Ms Ryan did not receive any warnings during her employment with Zalcom. She was given significant responsibilities associated with the running of the business when Mr Leaudais was away on holidays for about 12 weeks during Ms Ryan’s period of employment at Zalcom;
(b) Ms Ryan gave evidence, which I accept, that sometimes Mr Leaudais was in a good mood and was easy to get along with, but on other occasions he was difficult to deal with. However, Mr Leaudais was often not in the office and Ms Ryan was able to get on with the office duties she had to undertake;
(c) Ms Ryan enjoyed working for Zalcom. She got on well with the other employees and felt she had significant duties and responsibilities in her role as Office Manager. Zalcom’s office is located close to Ms Ryan’s home. The hours Ms Ryan worked for Zalcom suited her and her need to care for her young child. I accept Ms Ryan’s evidence that she had no intention of leaving her employment at Zalcom;
(d) Ms Ryan’s good employment record with Zalcom and her strong desire to remain employed by Zalcom suggest a long anticipated period of employment had she not been dismissed on 3 January 2017; and
(e) in determining the anticipated period of employment, I have had regard to Ms Ryan’s evidence that she was aware from her position as Office Manager that Zalcom was late in paying some of its accounts in late 2016/early 2017. That evidence suggests the possibility of Zalcom being in some financial trouble, which may at some point have jeopardised the future viability of the business and/or Ms Ryan’s employment with the business. However, the fact that Zalcom employed a new employee to work in the office very soon after Ms Ryan’s dismissal, Zalcom was still in business on 2 May 2017, 17 and the absence of any evidence or any suggestion in Zalcom’s Employer Response that its decision to dismiss Ms Ryan was related in any way to its financial position, does not suggest that Zalcom’s financial position was likely to have an impact on Ms Ryan’s ongoing employment with it.
[45] In calculating the remuneration Ms Ryan would have earned had she not been dismissed, it is necessary to identify what her rate of payment would have been. The evidence establishes that Ms Ryan’s gross weekly earnings as a full-time employee with Zalcom were $870.80 gross per week. I have taken that figure from the separation certificate provided by Zalcom to Ms Ryan on her dismissal. I am of the view that Ms Ryan would have been likely to receive such weekly payments had she not been dismissed.
[46] Ms Ryan would therefore have received $90,563.20 gross in remuneration in the two years following 3 January 2017 had she not been dismissed at that time (104 weeks x $870.80 = $90,563.20).
Remuneration earned (s.392(2)(e)) and income reasonably likely to be earned (s.392(2)(f))
[47] Ms Ryan commenced alternative casual work on about 15 February 2017 as an attendant in a service station. In that job Ms Ryan has been working 24 hours a week, earning $25 per hour ($600 per week). Ms Ryan has worked in this casual position on a continuous basis from about 15 February 2017 until the date of the hearing on 5 May 2017.
[48] In my view, it is reasonably likely that, in the period from 5 May 2017 until the end of the 24 month period (2 January 2019), Ms Ryan will continue to earn about $600 gross per week. It is possible Ms Ryan will secure other alternative employment, or more hours of work in the service station, prior to the end of the 24 month period, but I will take this factor into account when assessing whether to apply a discount for contingencies.
[49] The calculation at this point is as follows:
(a) $90,563.20 (gross remuneration Ms Ryan would likely have earned had she not been dismissed by Zalcom and instead continued to be employed by Zalcom until 2 January 2019);
(b) Less $1,741.60 (two weeks’ pay in lieu of notice paid to Ms Ryan on termination);
(c) Less $58,800 (expected gross remuneration from 15 February 2017 to 2 January 2019 = $600/week x 98 weeks = $58,800);
(d) Subtotal = $30,021.60.
[50] This calculation is intended to put Ms Ryan in the position she would have been in but for the termination of her employment. 18
Other matters (s.392(2)(g))
[51] It is necessary to consider whether to discount the remaining amount for "contingencies". This step is a means of taking into account the possibility that the occurrence of contingencies to which Ms Ryan was subject to might have brought about some change in earning capacity or earnings. 19 Positive considerations which might have resulted in advancement and increased earnings are also taken into account.
[52] The discount for contingencies should only be applied in respect to an “anticipated period of employment” that is not actually known, that is a period that is prospective to the date of the decision. 20 In this case, that period is from 6 May 2017 to 2 January 2019.
[53] In my view, it is appropriate in the circumstances of this case to apply a 50% discount for contingencies. I have had regard to the following factors in assessing the 50% discount rate:
(a) Ms Ryan is motivated to find new or additional work to supplement her current income. However, she is finding it difficult to find suitable new employment in the regional area in which she lives (Central Coast, New South Wales). On her side is the fact that she has had good experience in undertaking a wide range of office duties for Zalcom. In my view, there is a reasonably good prospect that, in the period from the date of this decision until 2 January 2019, Ms Ryan will be able to earn more remuneration from either the service station in which she is working or an alternative employer than her current weekly amount of $600. There is, of course, the prospect that Ms Ryan could become unemployed, or earn less than $600 per week, for some or all of the period prior to 2 January 2019, but in my view that is less likely than the chance of her earning more than $600 per week during that period;
(b) There is the risk that Ms Ryan could have suffered a loss of income during the anticipated period of employment with Zalcom by reason of sickness, accident, death, resignation, or a closure or other restructure of Zalcom’s business;
(c) Some allowance should be made for the fact that the moneys are to be received as a lump sum; and
(d) The anticipated period of employment in this case is reasonably lengthy (ie until 2 January 2019). A long anticipated period of employment justifies a higher percentage discount for contingencies. 21
[54] Once a 50% deduction rate is applied to the prospective period, the calculation becomes:
(a) in respect of the period from 3 January 2017 to 5 May 2017, the figure is $6,624.48 (3 January 2017 to 14 February 2017 is 6 weeks, but Ms Ryan received payment of two weeks’ wages in lieu of notice, so her loss in that period is four weeks ($3,483.20). From 16 February to 5 May 2017 is 11.6 weeks. Ms Ryan’s loss for each of those weeks is $270.80 per week ($870.80 - $600 = $270.80). 11.6 weeks x $270.80/week = $3,141.28. Add $3,141.28 plus $3,483.20 = $6,624.48);
(b) in respect of the period from 6 May 2017 to 2 January 2019 the figure is $11,698.56 ($270.80/week x 86.4 weeks = $23,397.12, less a 50% discount for contingencies = $11,698.56);
(c) Total = $18,323.04
[55] I have considered the impact of taxation, but I prefer to determine compensation as a gross amount and leave taxation for determination.
Viability (s.392(2)(a))
[56] There is no evidence to suggest that an order requiring Zalcom to pay Ms Ryan $18,323.04 would impact the viability of Zalcom’s enterprise. Accordingly, this is a neutral consideration.
Length of service (s.392(2)(b))
[57] I consider that Ms Ryan’s 14 month period of service with Zalcom does not in all the circumstances justify any increase or reduction to the amount of compensation otherwise payable.
Mitigation efforts (s.392(2)(d))
[58] Ms Ryan has made extensive efforts to obtain alternative employment. I accept her evidence that she has applied for in excess of 100 jobs since her dismissal on 3 January 2017. The only alternative employment she has been able to obtain is in the role of an attendant in a service station. I am satisfied that Ms Ryan has made significant efforts to mitigate her loss. Accordingly, I will make no adjustment on this score.
Misconduct (s.392(3))
[59] Based on the findings I have made in this matter, Ms Ryan did not commit any misconduct, so this has no relevance of the assessment of compensation.
Shock, Distress (s.392(4))
[60] I note that the amount of compensation calculated does not include a component for shock, humiliation or distress.
Compensation cap (s.392(5)&(6))
[61] The amount of $18,323.04 is less than the compensation cap for Ms Ryan (26 weeks x $870.80 = $22,640.80).
Instalments (s.393)
[62] No application was made to pay any compensation by instalments.
Conclusion on remedy
[63] In my view, the application of the Sprigg formula does not, in this case, yield an amount that is clearly excessive or clearly inadequate.
[64] For the reasons set out above, I am satisfied that a remedy of compensation in the sum of $18,323.04 in favour of Ms Ryan is appropriate in the circumstances of this case. I will issue an order [PR592709] to that effect.
COMMISSIONER
Appearances:
Ms K Ryan, self-represented.
Hearing details:
2017.
Newcastle.
May 5.
1 Ryman v Thrash Pty Ltd[2015] FWCFB 5264 at [42]
2 (1995) 185 CLR 410 at 465
3 Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 373, 377-8.
4 Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 at 373
5 Ibid
6 Walton v Mermaid Dry Cleaners Pty Ltd(1996) 142 ALR 681 at 685
7 Ibid.
8 King v Freshmore (Vic) Pty Ltd (unreported, AIRCFB, Ross VP, Williams SDP, Hingley C, 17 March 2000) Print S4213 [24].
9 Ibid
10 Chubb Security Australia Pty Ltd v Thomas Print S2679 at [41]
11 Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at 151
12 Previsic v Australian Quarantine Inspection Services Print Q3730
13 RMIT v Asher (2010) 194 IR 1 at 14-15
14 Explanatory Memorandum, Fair Work Bill 2008 (Cth) [1542].
15 Kable v Bozelle, Michael Keith T/A Matilda Greenbank [2015] FWCFB 3512 at [17]
16 [2013] FWCFB 431
17 See paragraphs [3] and [4] above
18 Bowden at [24], citing Ellawala v Australian Postal Corporation Print S5109 at [35]
19 Ellawala v Australian Postal Corporation Print S5109 at [36]
20 Enhance Systems Pty Ltd v Cox PR910779 at [39]
21 Enhance Systems Pty Ltd v Cox PR910779 at [40]
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