Kazuyoshi Goto v Allen Aus Pty Ltd t/a Momo Sushi
[2023] FWC 2689
•16 OCTOBER 2023
| [2023] FWC 2689 |
| FAIR WORK COMMISSION |
| DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Kazuyoshi Goto
v
Allen Aus Pty Ltd t/a Momo Sushi
(U2023/6890)
| DEPUTY PRESIDENT COLMAN | MELBOURNE, 16 OCTOBER 2023 |
Unfair dismissal application – not a genuine redundancy – dismissal unfair – compensation
Kazuyoshi Goto has made an application for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (Act). Mr Goto worked as a chef for Allen Aus Pty Ltd (respondent) at its sushi shop in Melbourne. In July 2023, the respondent’s owner, Allen (Gang) Chen, dismissed Mr Goto with effect from the following day. Mr Goto contends that his dismissal was unfair and seeks compensation. Mr Chen submits that the dismissal was a genuine redundancy because he could no longer afford to employ a chef and decided to take over the work himself. He also contends that the dismissal was consistent with the Small Business Fair Dismissal Code (Code).
Mr Goto said that on 9 July 2023, the day before he was due to return to work from leave, Mr Chen sent him a text stating that the company had big financial problems and that Mr Goto was no longer required. Mr Goto said that his dismissal came as a complete surprise. There had been no indication that the business was in financial trouble or that his job was at risk. Mr Goto said that he was the main cook and was very aware of business volumes, and that work had remained busy. His rate of pay, which was above the award rate, had even been increased four months earlier.
Mr Goto submitted that his position still existed, because the work that he used to do was still being done. This work involved preparing food for customers, taking orders, maintaining a clean kitchen, and serving on the counter when required. Mr Goto said that the respondent had engaged a new employee to cover his position while he was on annual leave, and that he believed that this person was still employed. He said that since his dismissal, Mr Chen had another employee, meaning that there were now three employees working at the shop, as well as Mr Chen, when previously there had been only two employees plus Mr Chen.
Mr Goto contended that his dismissal was not a case of genuine redundancy. He said that the dismissal was unfair because there was no good reason for it and because he received less than one full day’s notice. He said that if he had known that he was going to be dismissed, he would not have taken leave to go overseas on a holiday, and that this had now caused him financial hardship. Mr Goto said that the way in which he was dismissed, in a text message from Mr Chen, was also unfair, and that this had adversely affected his mental health. He said that if the business was having financial problems, Mr Chen should have spoken to him about this, as they may have been able to agree on a different outcome.
Mr Chen said that since the COVID-19 pandemic he has had a hard time running his takeaway shop, and that he has had big financial problems. He said that the situation got worse on 1 July 2023 when the rate of employer superannuation contributions increased, together with the minimum wage. His rent, and interest rates, had also gone up. Mr Chen said that he could no longer afford to employ a chef and that he was working all day with no rest in order to cover the work himself. Mr Chen said that during Mr Goto’s period of leave he hired another worker, but this person left before Mr Goto returned. He said that at the time of Mr Goto’s dismissal, there was one other employee, Karen, working at the store on a part-time basis. He said that he has since hired two part-time workers to serve at the counter and to washup for five hours on different days. On any one day, there are three people working in the shop; Karen, one of the part-time workers, and him. Mr Chen is the only chef.
Mr Chen contended that Mr Goto’s dismissal was a case of genuine redundancy because he no longer needed Mr Goto’s position as a chef to be done by anyone. He also said that the dismissal of Mr Goto complied with the Code because it occurred for a good reason and he could not reasonably have redeployed him.
Consideration
Section 385 of the Act provides that a dismissal cannot be unfair if it was consistent with the Code, or if it was a case of genuine redundancy. I find that the respondent was a small business, however I reject the respondent’s contention that the dismissal was consistent with the Code. In cases where an employee is dismissed for reason of redundancy, neither of the two limbs of the Code is relevant, because there is no question of summary dismissal for misconduct, and no reason for dismissal related to the employee’s conduct or capacity.
As to the respondent’s contention that the dismissal was a case of genuine redundancy, the starting point is s 389, which states that a person’s dismissal was a genuine redundancy if the person’s employer ‘no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise’, and the employer complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.
I find that the respondent no longer required Mr Goto’s job to be performed by anyone. I accept Mr Chen’s statement that he could no longer afford to employ a chef and that he would cover this work. This was the change in the operational requirements of the business. The fact that the work that Mr Goto used to perform is still being done does not mean that his job is still required. It is very common that a position is abolished and the work of that position is distributed among other employees, or, in the case of a small business, is taken over by the owners of the business.
However, it is clear that the respondent did not comply with its obligations under the relevant award to consult with Mr Goto about his redundancy. Mr Goto was covered by the Fast Food Industry Award 2020 (Award). Clause 28 of the Award requires an employer to consult with employees about major workplace change. Clause 28.1 states that where an employer has made a definite decision to make major changes in organisation, structure, or various other matters that are likely to have significant effects on employees (which includes termination), the employer must give notice of the changes to the affected employees and discuss the changes and their likely effect on employees. It is also required to give employees information in writing for the purposes of these discussions. The respondent did not discuss the effects of the change with Mr Goto, or provide him with information in writing. The respondent did not undertake any consultation with Mr Goto about its decision to make his job redundant.
As the respondent did not comply with its award obligations to consult with Mr Goto about his redundancy, the requirements of s 389 have not been satisfied in this case. The dismissal was therefore not a case of ‘genuine redundancy’.
A finding that a dismissal was not a case of genuine redundancy does not necessarily mean that the dismissal was unfair. Rather, the Commission proceeds to consider the unfair dismissal application on its merits. Section 387 states that in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission must take into account the matters in subsections 387(a) to (h).
Where a person is dismissed for reason of redundancy, there is no ‘valid reason for the dismissal related to the person’s capacity or conduct’ (s 387(a)). There was no concern about Mr Goto’s capacity or conduct. The reason for dismissal in this case, redundancy, is considered in connection with s 387(h), ‘any other matters the Commission considers relevant’, to which I return below. Similarly, the considerations in ss 387(b) and (c) are not relevant. They concern whether the employee was ‘notified of that reason’ (that is, the valid reason in 387(a)), and whether the person was given an opportunity to respond to any such reason.
The consideration in s 387(d) is whether there was ‘any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal.’ There was no such refusal in this case. Nor were there any discussions. If a dismissal relates to unsatisfactory performance, s 387(e) requires the Commission to consider whether the person has been warned about that performance prior to the dismissal. But this case does not concern performance.
The Commission is required to consider the degree to which the size of the employer’s enterprise, and the absence of dedicated human resources expertise, would be likely to impact on the procedures followed in effecting the dismissal (ss 387(f) and (g)). The respondent is a small business employer, and these matters contributed to the unsatisfactory approach that it took to the dismissal of Mr Goto.
Section 387(h) states that the Commission is to take into account any other matters that it considers relevant. My conclusions in relation to the ‘genuine redundancy’ jurisdictional objection are relevant to the question of whether the dismissal was unfair. The respondent did not need Mr Goto’s job to be undertaken by anyone. This was a legitimate reason to end his employment in the circumstances. Even though the dismissal was not a genuine redundancy for the purposes of the jurisdictional objection, it was nevertheless a real redundancy. Mr Goto said that he was not previously aware of the business having any financial difficulties. But even though he would have a good sense of business volume, Mr Goto did not claim to understand the company’s overall financial situation. Mr Goto also said that he was paid above award rates, and that his wage was not affected by the increase in award wages. But it was not just his wage, or wages generally, that were causing difficulties, but also higher rent and interest rates. Mr Chen said that he could no longer afford to employ a chef and that he decided to take over and do the chef work himself. I accept this. Mr Chen had a good reason for Mr Goto’s dismissal. This tells against a finding that the dismissal was unfair.
However, it is also relevant to consider the manner in which Mr Goto was dismissed. Under the Award, he was entitled to be consulted in a particular way. This did not occur. The process leading to Mr Goto’s dismissal was deficient because the respondent did not comply with the Award consultation requirements. Further, Mr Goto received only one day’s notice of his dismissal, and he was dismissed by text. Even taking into account the fact that the respondent is a very small business, the manner in which Mr Goto was dismissed was unfair. I conclude that for this reason, the dismissal was harsh and therefore unfair.
Section 390(3) states that the Commission must not order the payment of compensation unless it is satisfied both that reinstatement is inappropriate, and that an order for compensation is appropriate. Reinstatement is inappropriate in this case, as Mr Goto’s position has ceased to exist and he does not seek reinstatement. In my view an award of compensation is appropriate.
Section 392(2) states that in determining an amount of compensation, the Commission is to take into account all the circumstances of the case, including the matters identified in subsections 392(2)(a) to (g). As to the question of what effect any compensation order would have on the viability of the employer’s enterprise (s 392(2)(a)), I accept that the respondent is experiencing real financial difficulties. A significant compensation order might affect its viability. As to Mr Goto’s length of service (s 392(2)(b)), I note that he had worked for the company for over three years. Section 392(2)(c) of the Act directs the Commission to take into account the remuneration that the person would have received if they had not been dismissed. This requires the Commission to consider what would have occurred if the person was not dismissed, and how long the person would have remained employed. This is a hypothetical situation involving an estimation. However, given the company’s financial situation and the fact that it had decided Mr Goto’s role was not required, I consider it likely that, had Mr Goto not been dismissed on 10 July 2023, he would have been dismissed a short time afterwards.
I assess this hypothetical situation from the standpoint that any subsequent dismissal of Mr Goto would have occurred in accordance with the Award. If the respondent had made Mr Goto redundant in compliance with its consultation obligations, it would have, among other things, provided him with information in writing about his redundancy and the reasons for it and discussed the situation with him. I consider that this would have taken one week. Mr Goto said that if he had been consulted, he might have agreed to work part-time. But Mr Chen had decided that he would do the chef’s work. I think it improbable that Mr Chen would have agreed to have Mr Goto do all of the counter work that was later done by the part-time employees. This was much lower-grade work, and although Mr Goto had done some such work, he was a chef, and unlikely to be suited to a counter-based role. In any event, it was only after Mr Goto’s dismissal that Mr Chen decided that he needed assistance with the counter work. I infer that he realised this after having done the chef work himself for a period. If consultation had occurred according to the Award, it would have taken one week. In my opinion, an order for one week’s compensation is the appropriate amount of compensation in this case, having regard to s 392 of the Act and all the circumstances.
Mr Goto submitted payslips indicating that his gross weekly salary was $1057.60. I will base my order for one week’s pay on this amount. I will add 11% in respect of superannuation, which is $116.34, resulting in a sum of $1173.94.
Mr Goto said that after his dismissal he looked for work, and that he has now found alternative employment. I accept that in relation to the period in respect of which I will order compensation, Mr Goto made efforts to mitigate the loss he suffered from his dismissal.
Mr Goto asked that the Commission order the respondent to pay for his application fee and pay him redundancy. However, the Commission has no power to make such orders. Further, as to redundancy, s 121(1)(b) exempts small business employers from the obligation to make severance payments under s 119 of the Act.
I am satisfied that a remedy should be ordered in this matter. Reinstatement is inappropriate, but compensation is appropriate in the circumstances. I will order compensation to be paid to Mr Goto in the amount of $1173.94 with deduction of any taxation required by law. This amount is to be paid by the respondent to Mr Goto within 28 days of this decision. An order giving effect to this decision is separately issued in PR767259.
DEPUTY PRESIDENT
Appearances:
K. Goto and D. McGuire for the applicant
A. Chen for the respondent
Hearing details:
2023
Melbourne
12 October
Printed by authority of the Commonwealth Government Printer
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