Karen Lee Norkett v Central Coast Floormaster Pty Ltd
[2023] FWC 2338
•13 SEPTEMBER 2023
| [2023] FWC 2338 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Karen Lee Norkett
v
Central Coast Floormaster Pty Ltd
(U2023/4377)
| DEPUTY PRESIDENT SAUNDERS | NEWCASTLE, 13 SEPTEMBER 2023 |
Application for relief from unfair dismissal – valid reason for dismissal – dismissal not harsh, unjust or unreasonable – application dismissed.
Introduction
Ms Karen Futcher’s (nee Norkett) employment with Central Coast Floormaster Pty Ltd (Floormaster) came to an end shortly after she entered into a binding financial agreement under s 90C of the Family Law Act 1975 with her ex-husband, Mr Scott Norkett, who is the sole director and shareholder of Floormaster. Ms Futcher contends that her dismissal was harsh, unjust and unreasonable. Mr Norkett denies those allegations.
I heard Ms Futcher’s unfair dismissal case against Floormaster on 5 September 2023. Ms Futcher gave evidence in support of her case, as did Ms Georgette Shoemark, Mr Torsten Knight and Mr Andrew Kirk. Mr Norkett gave evidence for Floormaster in defence of the unfair dismissal claim.
Relevant facts
Ms Futcher and Mr Norkett married on 28 December 2014.
In October 2017, Ms Futcher and Mr Norkett started a flooring business under the ownership of Floormaster. Mr Norkett works in the Floormaster business as a Floor Layer. Prior to her dismissal on 2 May 2023, Ms Futcher worked in the Floormaster business and undertook a range of duties, including administration, payroll, marketing, sales and office management. Ms Futcher’s involvement in the Floormaster business increased after she sold her pet grooming business known as Precious Pets in June 2022.
On 26 February 2023, the marriage between Ms Futcher and Mr Norkett broke down irretrievably. Mr Norkett moved out of the family home and commenced living with his new partner, Ms Julie Yee.
On 12 April 2023, Ms Futcher and Mr Norkett entered into a binding financial agreement under s 90C of the Family Law Act 1975 (BFA). The BFA was prepared by lawyers acting for Ms Futcher and Mr Norkett. The BFA contains the following relevant provisions in relation to Floormaster:[1]
“5. Central Coast Floormaster Pty Ltd
(a)Karen will resign as a Director of Central Coast Floormaster as at the date of this Agreement.
(b)Karen will transfer her share in the company Central Coast Floormaster to Scott as at the date of this Agreement.
(c)Scott will assume all liability for and indemnify Karen against any debt secured over the business or its stock or equipment and all expenses relating to the business from the date of this Agreement.
(d)Within 14 days of this Agreement, Scott will refinance or do whatever is necessary to have Karen released as a borrower or guarantor in relation to any loans or credit held by the Company.
(e)Karen shall continue to be employed by Central Coast Floormaster Pty Ltd under the same terms as the current arrangements for a maximum period of 6 months from the date of this Agreement or sooner at the sole discretion of Karen.
(f)Scott will do all acts and things and sign all documents necessary to immediately transfer to Karen Central Coast Floormaster Pty Ltd’s right, title and interest in the motor vehicle registration no. DHY922 and cause Central Coast Floormaster to continue to pay all fees and expenses in relation to the running of that vehicle whilst Karen remains in its employ for a maximum period of 6 months.”
The agreement whereby Ms Futcher would resign as a director of Floormaster, transfer her share in Floormaster to Mr Norkett, and Mr Norkett would assume all ongoing financial responsibility and risk in connection with the Floormaster business meant that a number of practical steps had to be taken. For example, Floormaster’s banking arrangements had to be altered to reflect the fact that Ms Futcher was no longer a director of the business and enable Mr Norkett access to the relevant bank accounts and banking app, trade suppliers of Floormaster needed to be notified that Ms Norkett was no longer a director or guarantor of the business, and Mr Norkett needed to be given access to various passwords used by Ms Futcher to administer the business and its computer system. These steps involved a lot of administrative work, including preparing and signing forms, liaising with the Bendigo Bank, and teaching Mr Norkett to navigate his way around the Floormaster computer system. This was always going to be a challenging time for both Ms Futcher and Mr Norkett, because they would need to work closely together to work their way through these tasks in circumstances where Ms Futcher was devastated by the breakdown of their marriage and Mr Norkett moving in with his new partner and Mr Norkett is not computer literate; his primary skills lie in floor laying.
Both parties approached the period after the signing of the BFA on 12 April 2023 with the best of intentions, hoping they would be able to work together in a cooperative manner. Unsurprisingly, given the recent irretrievable breakdown in their marriage and the work and stress involved in transitioning Mr Norkett as the sole director and shareholder of the Floormaster business, tensions rose and Ms Futcher was dismissed on 2 May 2023. I do not accept Ms Futcher’s contention that she and Mr Norkett were working well together in the weeks leading up to 2 May 2023. One of Ms Futcher’s long-term friends, Mr Kirk, gave evidence that in April 2023 he told Ms Futcher that it was a shame her job may not last for much longer. Mr Kirk made this comment because he had “knowledge of developing circumstances”,[2] which he explained in his oral evidence to mean that he spoke with Ms Futcher on a regular basis in April 2023 and was aware from those discussions of tension in the relationship between Ms Futcher and Mr Norkett. Mr Kirk heard from Ms Futcher that she believed hostilities were developing through Mr Norkett’s attitude to Ms Futcher and her perception that he wanted to get her out of the business.
Mr Norkett contends that in the two week period leading up to 2 May 2023, he had many conversations with Ms Futcher, mostly over the telephone, in which she refused to assist him with work-related tasks, withheld work-related information from him, gave a limited handover of passwords for Floormaster’s computer system, refused to give her authority to transfer the Bendigo Bank app from Ms Futcher to Mr Norkett, which meant he effectively had to start from scratch in his banking with Bendigo Bank, was argumentative and non-cooperative, and did not follow instructions given by Mr Norkett. Ms Futcher denies all of these allegations and contends that she acted appropriately at all times. As to the Bendigo Bank app, Ms Futcher says that Mr Norkett needed to establish his own customer reference number with the bank in order to have the bank accounts and app transferred from her customer reference number and Mr Norkett became frustrated with this process.
During the morning of 2 May 2023, Mr Norkett attended the Floormaster showroom. Ms Futcher was present in the showroom, as was Mr Knight, who is a Sales Assistant employed by Floormaster and the partner of one of Ms Futcher’s daughters. Ms Futcher began showing Mr Norkett how to use the Floormaster computer system. After some time, Mr Norkett became frustrated and left. He says he was frustrated because he could not see very well as a result of a recent medical condition. Ms Futcher says that she agreed with Mr Norkett that they would go over everything the following Thursday. Mr Norkett does not recall any discussion about doing anything on Thursday.
Later on 2 May 2023, Mr Norkett telephoned Ms Futcher while she was still at the showroom. Mr Norkett asked Ms Futcher for a password for a particular account. There is no dispute that Ms Futcher did not provide the password to Mr Norkett. Ms Futcher gave the following explanation in her statutory declaration dated 4 August 2023 for not providing the password to Mr Norkett:[3]
“A while after he left he called requesting a password, I told him it would be best to sort it out on the agreed day, I was not wanting to discuss the matter with Julie Yee in the background as I felt it was inappropriate. I did not raise my voice or behave in any manner that was unprofessional as I was in the showroom. After the call I left the showroom to have a mental health break as I was quite upset with the manner Mr Norkett was talking to me. He was bullying and rude. I informed him all passwords were in the drawer at Floormaster and preset into the computer system…”
In her oral evidence, Ms Futcher gave a range of different reasons as to why she did not provide the password to Mr Norkett when he requested it during their telephone call on 2 May 2023, including that it was not appropriate to provide the password to Mr Norkett while Ms Yee was in his presence, two step authentication was required to access the account Mr Norkett was trying to access, she did not have access to the password at that time, and all passwords were preset into the Floormaster computer system or written down and located in the drawer at the showroom.
Mr Knight gave evidence that he heard Mr Norkett ask Ms Futcher for a password when he telephoned the showroom on 2 May 2023, to which Ms Futcher said, “Please come into the showroom tomorrow so we can work this out”.[4] Mr Knight says that after Mr Norkett’s telephone call, Ms Futcher explained to him that she did not give the password to Mr Norkett because he was trying to log in from an unknown device and she did not want the account to be frozen.[5] In Mr Knight’s opinion, Ms Futcher was not belligerent or rude at any point during her telephone conversation with Mr Norkett on 2 May 2023.
I do not accept that Ms Futcher did not have access to the password requested from her by Mr Norkett on 2 May 2023. Ms Futcher pointed out in both her written evidence and her oral evidence that all passwords for the Floormaster business were either stored in the computer or written down and kept in a drawer at the showroom.[6] Ms Shoemark gave oral evidence to the same effect. I consider that Mr Norkett’s request to Ms Futcher to be provided with the password on 2 May 2023 was a lawful and reasonable direction. I am satisfied that Ms Futcher did not have a reasonable excuse not to comply with the direction during the telephone call. Mr Norkett was attempting to run the business following the agreement whereby he became the sole director and shareholder; he needed to access various accounts to do so. I find, on the balance of probabilities, that the real reason Ms Futcher did not provide the password to Mr Norkett during their telephone call on 2 May 2023 was because Ms Yee was in the background and was assisting Mr Norkett to run the Floormaster business. This was the explanation provided by Ms Futcher in her first statutory declaration.[7] It is also closely related to Ms Futcher’s contention that Mr Norkett dismissed her in order to employ Ms Yee in the Floormaster business.
It was unreasonable of Ms Futcher not to provide the password requested by Mr Norkett during their telephone call on 2 May 2023, simply because Ms Yee was present and was assisting Mr Norkett in attempting to run the business. Mr Norkett plainly needs assistance to run the Floormaster business, including operating the computer system and attending to a whole range of managerial and administrative tasks. It was reasonable for Mr Norkett to obtain Ms Yee’s assistance, from home, to undertake those tasks.
I am also satisfied that the telephone conversation on 2 May 2023 was not the only occasion on which Ms Futcher failed to act reasonably and follow lawful and reasonable directions from Mr Norkett, the sole director and shareholder of the business, to assist him to run the Floormaster business in the two-week period leading up to 2 May 2023. I prefer Mr Norkett’s evidence in relation to these issues over the evidence given by Ms Futcher for a number of reasons. First, I do not consider that Ms Futcher gave credible or reliable evidence in relation to the differing reasons she provided for not giving Mr Norkett the password he requested on 2 May 2023. Secondly, it is understandable and natural that Ms Futcher would be upset that Mr Norkett was obtaining assistance from Ms Yee – the woman for whom he had left Ms Futcher – to run the Floormaster business. Thirdly, although I accept the evidence given by Mr Kirk, Mr Knight and Ms Shoemark that Ms Futcher behaved professionally and appropriately while she was working in the Floormaster showroom in the period leading up to her dismissal, including by providing passwords to Mr Norkett,[8] the difficulties in the working relationship between Mr Norkett and Ms Futcher arose primarily during their telephone conversations, to which other persons were not privy for the most part. It was during these telephone conversations that I am satisfied, on the balance of probabilities, Ms Futcher told Mr Norkett that she would not assist with various work-related tasks, by saying such things as “not my problem” and “I am not going to do that”. I also accept that during these telephone conversations Mr Norkett told Ms Futcher to stop her behaviours or the arrangement with her working in the Floormaster business would stop.[9]
At 4:28pm on 2 May 2023, Mr Norkett sent an email to Ms Futcher, at the [email protected] address, terminating her employment. The email stated:[10]
“Hi Karen
After receiving advice from my lawyer, it was identified that there were several breaches to the Financial Agreement contract.The breaches include:
·Withholding information
·Limited handover of passwords
·Handing over computer access, business information and banking details
·Demonstrated abusive behaviours (e.g. non-compliance, raising voice after being advised to be civil)
·Not following with instructions provided by the Director
As advised, your employment at FloorMaster will cease today at 5pm Tuesday, 4th May 2023. Please return the following by close of day:
·All vehicle (Kangoo), shop, spare and warehouse keys
·Shop mobile
·List of all passwords
·All other intellectual property
Thank you for your services,”
On the termination of her employment, Ms Futcher was paid four week’s wages in lieu of notice and her accrued annual leave.[11]
Initial matters to be considered
Section 396 of the Fair Work Act2009 (Cth) (Act) sets out four matters which I am required to decide before I consider the merits of the application.
There is no dispute between the parties and I am satisfied on the evidence that:
(a)Ms Futcher’s application for unfair dismissal was made within the period required in s 394(2) of the Act;
(b)Ms Futcher was a person protected from unfair dismissal;
(c)Ms Futcher’s dismissal was not consistent with the Small Business Fair Dismissal Code; and
(d)Ms Futcher’s dismissal was not a genuine redundancy.
Was the dismissal harsh, unjust or unreasonable?
Section 387 of the Act requires that I take into account the matters specified in paragraphs (a) to (h) of the section in considering whether Ms Futcher’s dismissal was harsh, unjust and/or unreasonable. I will address each of these matters in turn below.
Valid reason (s 387(a))
General principles
It is necessary to consider whether the employer had 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.[12] In order to be “valid”, the reason for the dismissal should be “sound, defensible and well founded”[13] and should not be “capricious, fanciful, spiteful or prejudiced.”[14]
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.[15] 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).[16]
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.[17] It is not enough for an employer to establish that it had a reasonable belief that the termination was for a valid reason.[18]
The question of whether there was a valid reason must be assessed by reference to facts which existed at the time of the dismissal, even if they did not come to light until after the dismissal.[19]
The employer bears the evidentiary onus of proving that the conduct on which it relies took place.[20]
Consideration
I am not satisfied on the evidence before the Commission that Ms Futcher “was very rarely at work, when she did turn up she always left early”.[21] I accept Mr Knight’s evidence that Ms Futcher worked in the Floormaster showroom about 20-30 hours, on average, each week and she performed other work outside of the showroom.
Nor am I satisfied on the evidence that Ms Futcher “raised her voice after being advised to be civil”.[22] I am persuaded by the evidence given by Ms Shoemark, Mr Kirk and Mr Knight about this issue, with the caveat that they only heard Ms Futcher’s conversations while she was in the Floormaster showroom or in their personal discussions with Ms Futcher.
I am, however, satisfied that Floormaster had a valid reason to terminate Ms Futcher’s employment. I have reached that conclusion for two reasons. First, I am satisfied, for the reasons explained above, that Ms Futcher did not at all times comply with lawful and reasonable directions given to her by Mr Norkett, in the two weeks prior to her dismissal, to assist with various work-related tasks. Secondly, I am satisfied on the evidence before the Commission that the relationship between Mr Norkett and Ms Futcher in the latter half of April and early May 2023 was severely damaged by their recent marital breakdown, such that it was untenable for Ms Futcher to continue to work in a small business with Mr Norkett. It is clear that Ms Futcher was understandably upset that Mr Norkett had left her for Ms Yee and Mr Norkett was frustrated and annoyed at (a) the fact that he felt as though he had been taken advantage of by signing the BFA, which he considered to be a one-sided deal in Ms Futcher’s favour, at a time when he was unwell and (b) a significant number of administrative steps had to be undertaken to give effect to the agreement whereby Ms Futcher ceased to be a director or shareholder of Floormaster, the execution of which involved experience and skills which Mr Norkett did not possess. Having regard to those circumstances and notwithstanding that both Ms Futcher and Mr Norkett commenced the period following the signing of the BFA on 12 April 2023 with the best intentions of working well together, it is altogether unsurprising that Ms Futcher and Mr Norkett were not able to work together in a cooperative manner. I am satisfied on the evidence that by 2 May 2023 their relationship had broken down and it was untenable for them to continue working together in a small business. The existence of an interpersonal conflict in a small workplace which had reached the point where it had become incapable of any resolution and was affecting the performance of work may itself provide a valid reason for a dismissal.[23] That was the situation in this case.
That Floormaster had sound, defensible and well-founded reasons to terminate Ms Futcher’s employment weighs against Ms Futcher’s contention that her dismissal was harsh, unjust and unreasonable.
Notification of reason and opportunity to respond (s 387(b) & (c))
Ms Futcher was not notified of, nor given an opportunity to respond to, the reasons for her dismissal. The first time she was notified of the reasons for her dismissal was when she received the termination email on the afternoon of 2 May 2023.
I have found that Mr Norkett did tell Ms Futcher to stop her behaviours or the arrangement with her working in the Floormaster business would stop.[24] However, I do not consider that this communication notified Ms Futcher of the reasons for her dismissal, or gave her an opportunity to respond to those reasons, before a decision was made to terminate her employment.
Having regard to all the circumstances, I am satisfied that these factors (s 387(b) and (c) of the Act) weigh in support of Ms Futcher’s argument that her dismissal was unfair.
Unreasonable refusal to allow a support person (s 387(d))
There were no discussions held with Ms Futcher in relation to her dismissal. It follows that there was not an unreasonable refusal by Floormaster to allow Ms Futcher to have a support person present to assist in any discussions relating to her dismissal.
Warnings of unsatisfactory performance (s 387(e))
Ms Futcher was not dismissed for unsatisfactory performance. This factor is not relevant to my assessment of the fairness of Ms Futcher’s dismissal.
Size of enterprise and absence of human resource specialists or expertise (s 387(f) and (g))
Floormaster is a small employer. It did not have any dedicated human resource management specialists or expertise in its enterprise at the time it decided to terminate Ms Future’s employment. I am satisfied that these matters had an impact on the procedures followed in effecting Ms Futcher’s dismissal. So much is apparent from the lack of any process whereby allegations were put to Ms Futcher for her response prior to any decision being made about the termination of her employment. In all the circumstances, I consider that these factors (s 387(f) & (g)) weigh slightly in favour of Floormaster’s argument that its dismissal of Ms Futcher was not harsh, unjust or unreasonable.
Other relevant matters
Section 387(h) of the Act provides the Commission with a broad scope to consider any other matters it considers relevant.
Ms Futcher contends that Mr Norkett has failed to comply with a number of his obligations under the BFA, including to sign all documents necessary to transfer to Ms Futcher his right, title and interest in a property and to employ her “for a maximum period of 6 months”.[25] Mr Norkett alleges that he should not have signed the BFA and was taken advantage of at a time when he was unwell, having just come out of hospital. Mr Norkett is effectively contending that he entered into the BFA under duress. I explained to the parties, both in the directions hearing and at the hearing on 5 September 2023, that I do not have jurisdiction to determine any claim relating to whether or not the BFA is binding on the parties to it or whether its provisions have been breached. Each party has every right to commence legal proceedings in a court of competent jurisdiction to enforce their rights under the BFA.
Ms Futcher contends that it was unfair of Mr Norkett to dismiss her so that he could employ his new partner, Ms Yee, in the Floormaster business. I do not accept the premise of this contention. I accept Mr Norkett’s evidence that he did not dismiss Ms Futcher so that he could employ Ms Yee in the business. True it is that Ms Yee commenced working in Floormaster’s business on 18 May 2023, but I accept that she did so because Mr Norkett needed help running the business. Mr Norkett clearly does not have the computer or administrative skills to run the business on his own. I am satisfied that Mr Norkett made the decision to terminate Ms Futcher’s employment for the reasons set out in his email sent on 2 May 2023, not because he wanted to employ Ms Yee in the business.
Apart from the short period leading up to Ms Futcher’s dismissal on 2 May 2023, I accept that Ms Futcher and Mr Norkett worked hard in the Floormaster and contributed to its success. Ms Futcher’s contribution to the Floormaster business over a significant period of time adds weight to her argument that she has been unfairly dismissed.
In assessing the harshness of the dismissal, it is relevant that I consider the personal and economic impact which the dismissal has had on Ms Futcher. She has not obtained alternative employment following her dismissal. Ms Futcher is working in a new pet grooming business which she assisted her daughter to commence. Ms Futcher is not being paid a wage for her work in that business. She is relying on the charity of her daughter to buy her groceries and pay for petrol. Ms Futcher has also had to borrow money from a friend to survive from a financial perspective in the period since her dismissal. It is fair to say that Ms Futcher’s dismissal has had a significant negative impact on her personal and economic circumstances.
Conclusion
After considering each of the matters specified in section 387 of the Act, my evaluative assessment is that Floormaster’s dismissal of Ms Futcher was not harsh, unjust or unreasonable in all the circumstances. Floormaster had a valid reason for the dismissal. I am satisfied that it was untenable for Ms Futcher to continue working in the business after 2 May 2023. In my experience, this is commonly the case following a marriage breakdown in circumstances where the parties work together in a small business. Ms Futcher was not afforded procedural fairness in the process that led to the termination of her employment. She made a valuable contribution, as an employee, to the Floormaster business over a significant period of time, and her dismissal has caused her financial harm. These matters weigh in her favour. However, in my assessment, they are outweighed by the reasons for the dismissal.
I therefore find that Floormaster’s dismissal of Ms Futcher was not unfair. Ms Futcher’s application for an unfair dismissal remedy is dismissed.
DEPUTY PRESIDENT
Appearances:
Ms K Futcher, on her own behalf
Mr S Norkett, on behalf of Central Coast Floormaster
Hearing details:
2023
Newcastle
5 September.
[1] Ex A3
[2] Ex A9 at [3]
[3] Ex A1 at [5]
[4] Ex A8 at [8]
[5] Ex A8 at [8]
[6] Ex A1 at [5] and Annexures B and C
[7] Ex A1 at [5]
[8] Ex A8 at [2]
[9] Ex R1
[10] Court Book at p 33
[11] Ex A5
[12] Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 373, 377-8
[13] Selvachandran v Peterson Plastics Pty Ltd (1995) 62 IR 371 at 373
[14] Ibid
[15] Walton v Mermaid Dry Cleaners Pty Ltd (1996) 142 ALR 681 at 685
[16] Ibid
[17] King v Freshmore (Vic) Pty Ltd (unreported, AIRCFB, Ross VP, Williams SDP, Hingley C, 17 March 2000) Print S4213 [24]
[18] Ibid
[19] Newton v Toll Transport Pty Ltd[2021] FWCFB 3457 at [99]
[20] Ibid
[21] Ex R1
[22] Court Book at p 33
[23] Lumley v Bremick Pty Ltd[2014] FWCFB 8786 at [13]-[17]
[24] See paragraph [16] above
[25] Ex A3 at clause 5(e)
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