[2018] FWC 2191

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Kerry McCulloch
v
ACN 165 180 503 Pty Ltd T/A Blackwood Fitness; Forward Half Pty Ltd T/A Blackwood Fitness
(U2017/12631)

COMMISSIONER HAMPTON

MELBOURNE, 25 MAY 2018

Application for relief from unfair dismissal – correct identity of the employer – whether second respondent true employer – no express contract between applicant and second respondent – no transfer of business – whether contract should be implied – no proper basis to infer new contract existed with second respondent – whether corporate veil should be lifted and the different corporate entities set aside to find second respondent true employer –– based upon limited material before the Commission correct identity of the employer found to be first respondent – resignation - whether dismissal at initiative of first respondent – 5 week period of notice given by applicant – employer later intervened to terminate the employment immediately – intervening event constituted dismissal at initiative of employer – dismissal harsh, unjust and unreasonable – compensation ordered.

1. Background and case outline

[1] Mrs Kerry McCulloch has made an application under s.394 of Fair Work Act 2009 (the FW Act) for a remedy in connection with an alleged unfair dismissal. In her application dated 27 November 2017, Mrs McCulloch identifies her employer as ACN 165 180 503 Pty Ltd T/A Blackwood Fitness (ACN).

[2] On 21 March 2018, a further application (Form F1) was lodged by Mrs McCulloch seeking to have Forward Half Pty Ltd T/A Blackwood Fitness (Forward Half) joined to the proceedings as a respondent. Having heard from the parties, 1 Forward Half was joined to the matter. However, no decision or findings were made in relation to whether Forward Half was the correct employer, pending further evidence and submissions at the substantive hearing.

[3] I will describe ACN and Forward Half as the respondents. Mr John Pavlis is a Director of Forward Half 2 and performs various roles within ACN (variously described as Director and Owner3, Officer Bearer4 and Manager5). Mr Pavlis, and members of his family, own and in some cases apparently run the business of Blackwood Fitness and associated entities.

[4] Mrs McCulloch commenced her employment in the business of Blackwood Fitness on 25 November 2015 as a Bookkeeper. She initially worked on a permanent part-time basis (3 days per week). On 31 October 2016, she was offered and accepted a position working on a full-time basis. This is the position she worked in until the end of her employment.

[5] Mrs McCulloch contends that her real employer at the time of the cessation of her employment was Forward Half. That is, by that time, Forward Half was in effect bankrolling and conducting the business of Blackwood Fitness and that employment contracts had been drawn up to reflect their involvement. This, she contends, was in preparation for a transfer of the business of the “insolvent” ACN to Forward Half; a pattern that she contends had occurred earlier with businesses associated with Blackwood Fitness. As such, Forward Half should be considered to be her employer.

[6] Mrs McCulloch contends that she resigned from her employment at approximately 9:15 am on 13 November 2017, giving 5 weeks’ notice, and was subsequently dismissed at 4:30 pm on the same date. In essence, her position is that she gave 5 weeks’ notice on that morning, which was accepted, there was a brief discussion during the middle of the day, but at approximately 4:30 pm she was advised by Mr Pavlis that she was dismissed and would not be required to work from the end of that day. Mrs McCulloch submits that this amounts to a dismissal under the FW Act.

[7] Mrs McCulloch is seeking a finding that her dismissal was unfair. She seeks compensation amounting to five weeks’ pay, less one day already paid, which represents the amount she would have received had she worked out her notice period.

[8] The respondents deny the application and contend that no remedy is appropriate. Firstly, Forward Half contends that it was not at the time of dismissal, or at any stage, the employer of Mrs McCulloch. Any suggestion of phoenixing or inappropriate business practices was denied by the respondents. Secondly, ACN, which it contends was the employer, did not dismiss the applicant. Rather, it submits that Mrs McCulloch resigned from her employment (with agreed immediate effect) on 10 November 2017, in the context of personal circumstances, and that this was confirmed by correspondence provided in writing to Mrs McCulloch prior to the events of 13 November 2017. The respondents further contend that during the course of 13 November 2017, Mrs McCulloch then sought to provide 5 weeks’ notice on the basis that her new employment had been delayed. That notice was not accepted by the employer, and during the course of a discussion later that day, the employer confirmed that the employment would conclude at the end of the day in a manner consistent with the original resignation.

[9] The respondents also submit that any dismissal was not unfair given that Mrs McCulloch had resigned and was leaving the business. In that context it had organised a replacement Bookkeeper and did not need to retain the applicant in employment.

[10] Accordingly, there is a significant dispute about the events at the time of, and surrounding, Mrs McCulloch’s resignation. There is also a consequential dispute about the effect of the final conversation on 13 November 2017.

[11] Having consulted with the parties, I determined that the matter would be subject to a Determinative Conference. 6 The parties presented their cases concerning the identity of the employer(s), the jurisdictional issue – whether there was a dismissal within the meaning of the FW Act, merit – whether any dismissal was unfair, and remedy – whether (in this case) compensation should be awarded.

[12] Mrs McMulloch represented herself and provided a witness statement with documents attached, and gave sworn evidence in support of her case.

[13] Mr Pavlis represented the two respondent parties. He appeared by phone due to a medical condition and gave sworn evidence in support of their cases. He also provided some documents relevant to the matter.

2. Observations on the evidence

[14] Mrs McCulloch’s written and oral evidence was objective, consistent, and largely supported by contemporaneous notes and some business records.

[15] Mr Pavlis did not provide a witness statement but gave sworn oral evidence. Whilst his evidence about the broad background facts was plausible, his testimony about the events leading to the resignation on 13 November 2017 was not consistent and not probable in some respects. I also found that Mr Pavlis appeared at times to exaggerate the facts to support his case.

[16] Where there is a direct conflict on the facts, I prefer the evidence of Mrs McCulloch.

[17] Two of the discussions on 13 November 2017 were witnessed by another employee engaged in the business. Mrs McCulloch originally sought that he be called as a witness however in the context of concerns from that employee about being drawn into the dispute with his present employer, this did not proceed. I note that as an employee within the business, that witness could also have been called by the respondents. In these circumstances, I do not propose to draw any adverse inference from their failure to lead this evidence but note that this has left the Commission without some apparently relevant evidence.

[18] There is little detailed evidence about corporate structure and business relationships concerning Blackwood Fitness before the Commission. I note that unlike most cases of this kind, both the respondents, and to some degree, Mrs McCulloch, were in a position to provide some of that evidence, given the applicant’s significant former role in the business.

3. The identity of the employer(s)

[19] Mrs McCulloch’s case in relation to the issue of the correct identity of the employer is that:

• She was employed by ACN on 25 November 2015 and following that time was employed under three contracts which recorded the employer’s trading name (“Blackwood Fitness”) without any reference to an ABN or an actual corporate entity;

• In May 2017, she was advised that Blackwood Fitness would be closing on 28 July 2017 and that a new gym would be purchased at Plympton;

• On 23 July 2017, she was advised by Mr Pavlis that new contracts would need to be drawn up for staff by the end of the week in Forward Half’s name as ACN was insolvent and was going to be wound up;

• On 28 July 2017, the ABN of Forward Half appeared on her payslip for the first (and only time) and her third contract was signed, albeit under the trading name of “Blackwood Fitness”; and

• The sale of “Blackwood Fitness” subsequently fell through and all future payslips recorded ACN as the employer, however the payment of wages was, in effect, made out of the bank account operated by Forward Half on some occasions.

[20] The respondent parties contend that:

• Forward Half was at no stage the employer of the applicant;

• The Tax Declaration Forms signed by Mrs McCulloch recorded the ACN as her employer;

• ACN was the registered owner of the Blackwood Fitness trading name and Forward Half did not at any time trade in that name; and

• The ABN of Forward Half appears on one payslip, although this was an error and once noticed it was quickly re-issued and all future payments were made under ACN.

[21] As would be evident from the above, the self-represented parties did not initially advance their cases beyond applying basic factual assertions. I have however considered the broader implications of their positions given the framework of the FW Act.

[22] ACN and Forward Half are different legal entities and despite what Mrs McCulloch may have been informed in July 2017, there is no evidence that ACN is insolvent and it continues to hold the registered trading name of Blackwood Fitness. 7 It is common ground that the formation of the (original) employment contract involved ACN as the employer, as recognised in the relevant taxation documents. In that light, it would seem that Forward Half could only become the employer of Mrs McCulloch if there was a transfer of business between the two companies; a contract with Forward Half was subsequently expressly made or could be implied; or if the Commission were to look through the apparent corporate structure and treat the different legal entities as being one and the same.

[23] Given the absence of external representation, the above proposition was put to the parties as the preliminary views of the Commission and each was also given an opportunity to make further submissions after the Determinative Conference on this particular aspect of the matter.

[24] In subsequent submissions, Mrs McCulloch contended that:

• The trading name “Blackwood Fitness” has operated under at least three different legal entities since May 2009 (being Marpav Pty Ltd, XTU Pty Ltd and ACN);

• The ABN of XTU Pty Ltd appears on payment summaries for the 2016 financial year as well as tax invoices and merchant facilities receipts even after September 2016 when a liquidator had been appointed to XTU Pty Ltd;

• There are records which show that wage payments were made to Mrs McCulloch from a bank account operated by Forward Half on at least two occasions after June 2017;

• The “Blackwood Fitness” group has been managed and directed by Mr Pavlis since 2009 irrespective of whether he was registered as a Director of each individual legal entity or not; and

• In all of the above circumstances, ACN and Forward Half should be considered to be one and the same as it is clear that (now and in the past) the different legal entities of “Blackwood Fitness” do not operate independently from one another.

[25] Mrs McCulloch provided some additional documents in support of some of these contentions.

[26] The respondent parties largely maintained their position on the issues including that ACN was Mrs McCulloch’s employer at all times. In addition, the respondent parties contended that the Commission should not have regard to any of the additional material provided by Mrs McCulloch, given that she did not produce that evidence during the hearing and it was disputed. Further, they submitted that ACN and Forward Half have different Directors and that nothing can be drawn from the documents given that there are various tenancies associated with ACN. I note in relation to the Directors, it is not clear whether this is intended to mean that the two entities have no common Directors; however, if this is what is intended, this is at odds with what Mr Pavlis has advanced at some stages on behalf of the respondents.

[27] I consider that it is appropriate to have regard to the additional documents and submissions provided by Mrs McCulloch that are responsive to the preliminary views put to the parties. However, as there has been no evidence to confirm their veracity and provide the context, little weight can be given to those documents. I also note that Mrs McCulloch sought to provide some additional submissions and materials beyond the issues raised by the Commission and I have not have regard to that material given the limited scope of matters that I sought to raise with the parties after the Determinative Conference.

[28] Having regard to the material now before the Commission I confirm the preliminary views outlined in paragraph [22] above. I will deal with each of the potential approaches in turn.

[29] Section 311 of the FW Act provides as follows:

“311 When does a transfer of business occur

Meanings of transfer of business, old employer, new employer and transferring work

(1) There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:

(a) the employment of an employee of the old employer has terminated;

(b) within 3 months after the termination, the employee becomes employed by the new employer;

(c) the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;

(d) there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).

Meaning of transferring employee

(2) An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.

Transfer of assets from old employer to new employer

(3) There is a connection between the old employer and the new employer if, in accordance with an arrangement between:

(a) the old employer or an associated entity of the old employer; and

(b) the new employer or an associated entity of the new employer;

the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):

(d) that relate to, or are used in connection with, the transferring work.

... .... ....

New employer is associated entity of old employer

(6) There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employed by the new employer.”

[30] There would not appear to be a transfer of business as contemplated by this provision. That is, although ACN and Forward Half may be associated entities, 8 there is no suggestion that the employment of Mrs McCulloch was terminated in or around the time that she contends Forward Half became relevant. A new contract was drawn up and signed to reflect a change in hours and salary, but in the end this was not made with Forward Half and there were no other signs that would be consistent with the termination of employment at that time, such as the pay out or transfer of entitlements or new taxation declarations.

[31] In relation to the events as they unfolded it is evident that the proposed purchase of the new gym and associated changes did not take place. There was however apparently a shift in banking arrangements with some funds apparently being transferred to and held in the name of Forward Half, rather than ACN. The evidence does not permit findings to be made as to the reasons for, or implications of, these changes.

[32] In Australian Workplace Solutions Pty Ltd v P. Fox⁹ the Full Bench of the Australian Industrial Relations Commission (AIRC) set out the elements of a contract as follows:

“The elements of a contract are stated in Macken, McCarry and Sappideen’s “The Law of Employment” (4th edition, 1997 by the Hon James Macken, Paul O’Grady and Carolyn Sappideen) (Macken, McCarry and Sappideen), a text to which reference was made both before Simmonds C and us, as follows (p.74):

“The law holds that before any simple contract is enforceable it must be formed so as to contain various elements. These are:

1. There must be an ‘intention’ between the parties to create a legal relationship, the terms of which are enforceable.

2. There must be an offer by one party and its acceptance by the other.

3. The contract must be supported by valuable consideration.

4. The parties must be legally capable of making a contract.

5. The parties must genuinely consent to the terms of the contract.

6. The contract must not be entered into for any purpose which is illegal.”

In relation to the first of these elements, the learned authors say (p. 74):

“The first element essential to the existence of any contract is the requirement that the parties have a mutual intention to create a legally enforceable bargain.”

[33] Given my earlier findings, the new contract did not in fact replace ACN with Forward Half. In reality the contract changed its terms (hours and salary) but simply continued to refer to the employer party as the trading name of Blackwood Fitness (which was registered to ACN). Further, other foreshadowed changes in preparation for the new gym also did not go ahead. I leave aside for the moment the change in bank accounts. Given that the changes did not proceed and the contract was not made with Forward Half, there was no express mutual intention to actually create a legal relationship with the new business. This means that the new employment contract did not expressly involve Forward Half.

[34] In that light, it is appropriate to consider whether a contract with Forward Half and Mrs McCulloch can be implied.

[35] The application of the principles set out above were considered by the Federal Court in Damevski v Giudice¹⁰ which observed as follows:

“82 Although contracts are not to be implied lightly, the Court may find exceptions to the general rule concerning express intentions. The Court may imply a contract by concluding that the parties intended to create contractual relations after examining extrinsic evidence, including what the parties said and did: see Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153; Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) NSWLR 309; Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990] 3 All ER 25 at 31 per Bingham LJ and Orion Insurance Co Plc v Sphere Drake Insurance Plc [1990] 1 Lloyd’s Rep 465 at 492-4 per Hirst J.

83 Prerequisites for an enforceable contract were set out by Grainger C and are reproduced at [40] above. However, as discussed in the relevant chapter of The Law of Employment, which was the source for the list of prerequisites, those elements of contract are to be applied subject to the various nuances of contract law. In relation to the second element listed, offer and acceptance, it is pointed out in Cheshire, Fifoot & Furmston’s Law of Contract, 14th ed, (M P Furmston), (2001), England, Butterworths LexisNexis, at p.33 that:

“These complementary ideas present a convenient method of analysing a situation, provided that they are not applied too literally and that the facts are not sacrificed to phrases.”

Lord Wilberforce’s judgment in New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd [1975] AC 154 at 167 is quoted and reference is made to cases where the courts have held that there is a contract despite the difficulty or impossibility of analysing the transaction in terms of offer and acceptance. Below the relevant passage from the decision of Lord Wilberforce in New Zealand Shipping is set out more fully:

“It is only the precise analysis of this complex of relations into the classical offer and acceptance, with identifiable consideration, that seems to present difficulty, but this same difficulty exists in many situations of daily life, e.g., sales at auction; supermarket purchases; boarding an omnibus; purchasing a train ticket; tenders for the supply of goods; offers of rewards; acceptance by post; warranties of authority by agents; manufacturers’ guarantees; gratuitous bailments; bankers’ commercial credits. These are all examples which show that English law, having committed itself to a rather technical and schematic doctrine of contract, in application takes a practical approach, often at the cost of forcing the facts to fit uneasily into the marked slots of offer, acceptance and consideration.”¹¹

[36] In Damevski v Giudice, the Federal Court also confirmed that although intention is a necessary ingredient in the formation of a contractual relationship, the test of intention is objective, not subjective; and intention may be inferred from conduct.¹²

[37] The only evidence that might produce such an inference would appear to be the notion that the new contract was to be drawn up as part of the new gym arrangements which did not proceed. The use of the ABN belonging to Forward Half on one payslip was not an intended change and Mrs McCulloch, who would have made the change and the reversion back to ACN, could not recall the circumstances whereby those changes were made. It does appear that at one stage wage payments were made to Mrs McCulloch from accounts operating in the name of Forward Half. However, based on the limited evidence provided to the Commission, it seems that this change was instigated by accounting advice rather than as a result of a corporate restructure.

[38] There would not appear to be any proper basis to infer that the new employment contract was made with Forward Half.

[39] I turn now to consider whether I should look through the corporate veil.

[40] The concept of lifting the corporate veil is generally considered as meaning:

“Although whenever each individual corporate entity is formed a separate legal entity is created, courts will on occasions look behind the legal personality to the real controllers.”13

[41] In Nansen, the AIRC was dealing with two applications concerning alleged unfair or unlawful terminations under the Workplace Relations Act 1996. The respondent did not appear or provide evidence, however the Commissioner was provided with evidence about the ownership and trading status of Nansen Enterprises P/L t/as Bayswater Sheet Metal Supplies (Nansen Enterprises) and an apparently related company, BA and BW Fabrication, which shared a common director, Mr Nansen. Ultimately, an order for compensation was made against Nansen Enterprises or BA and BW Fabrication Pty Ltd. I note that BA and BW Fabrication were not cited as a respondent to the applications.

[42] Nansen was subject to a successful appeal¹⁴ and remitted for further hearing on the following basis:

“We remit the matter to Commissioner Whelan, pursuant to s.45(7)(c) for the purpose of providing all relevant parties with an opportunity to put submissions in relation to the proper identity of the former employer of the applicants and whether an order should be made against that person or corporation. Any application for joinder or for an extension of the time within which an application for relief is to be lodged may also be dealt with by the Commissioner.”

[43] On remittal, Whelan C (as she then was), joined BA and BW Fabrications as a party, refused a joiner application against a member of the Nansen family, and referred the matter into conference.¹⁵ The substantive matter as it applied to BA and BW Fabrications was not the subject of a further decision by the Commission.

[44] The basis of the joinder by the Commissioner included the following findings:

“There was no money in any account held by BA and BW Fabrications prior to 9 January 1997 and no wages were drawn until 23 January 1997. If BA and BW Fabrications was performing work off the street during December 1996 using equipment owned by Bernard Nansen and also used by BW Nansen Enterprises it would be difficult to distinguish what work was performed for which company and by which employees.

........

From the evidence of both witnesses I am of the view that Mr Bernard Nansen controlled the company BW Nansen Enterprises and in reality continues to control the business which continues to operate from that site, using his equipment and performing much the same work. I am satisfied from my observations of the witnesses that Mr Brett Nansen would not have the capacity to operate a business and it is most likely that the company which was established in his name in December 1996 was set up in contemplation of BW Nansen Enterprises ceasing to trade.”

[45] Earlier in the decision, the Commissioner observed that there was confusion in the evidence as to which entity paid and employed the staff at various points, and noted that the letter of the dismissal to each of the applicants was provided by BA and BW Fabrications, not Nansen Enterprises.

[46] The approach in Nansen, and the subsequent decisions concerning those parties, is an example of the Commission lifting, or at least looking through, the corporate veil to ascertain the correct employer in circumstances where there is the apparent interchangeable use and confusion of company identities during the employment of the employees concerned. I note also that the Commission has taken a similar approach in another case where these circumstances applied.¹⁶ These circumstances do apply to some degree in this matter.

[47] There is no law requiring the corporate veil to be set aside in this case 17 and there has been no contention that Forward Half has operated as an agent of its controllers.18 Mrs McCulloch does however contend that the arrangements are a mere facade or sham.

[48] In this regard, care must be taken to distinguish between what might in industrial parlance be described as a “sham” arrangement and what might on the basis of the relevant authorities be held to be a sham justifying piercing the corporate veil. For this to be done, it would need to be shown that there is a mere sham or facade in which the company is playing a role or that the creation or use of the company was solely or predominately designed to enable a fiduciary obligation to be evaded or a fraud to be perpetrated.¹⁹

[49] In Equuscorp Pty Ltd v Glengallan Investments Pty Ltd²⁰ the High Court said:

“‘Sham’ is an expression which has a well-understood legal meaning. It refers to steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences (Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449).”21

[50] In Department of Justice v Lunn²² a Full Bench of the AIRC, after referring to relevant passages in the decisions in Sharrment²³ and Equuscorp²⁴, said:

“The judgments in Sharrment demonstrate that it is often a difficult matter to establish that a document that gives the appearance of creating binding legal relations is a sham.”25

[51] There is limited information before the Commission regarding these matters. Based upon what is properly in evidence, the establishment and use of Forward Half as part of the corporate arrangements was not a sham in the sense contemplated by the authorities. The use of different structures to hold assets may raise various issues as to their purpose, but based upon the evidence, there is not a sufficient basis to find that the corporate arrangements and the employment contract with ACN were a sham.

[52] As outlined earlier, the applicant has contended that the arrangements amounted to, or were designed to facilitate a phoenixing arrangement. Although there is no established meaning of such arrangements, I understand that the term is often used in the following sense:

“Phoenix activity is the deliberate and systematic liquidation of a corporate trading entity which occurs with the fraudulent or illegal intention to:

Avoid tax and other liabilities, such as employee entitlements; and

Continue the operation and profit taking of the business through another trading entity.”²⁶

[53] The respondents deny any phoenix activity or sham arrangements. I do accept that the business of Blackwood Fitness has previously been conducted by a different corporation involving the same or similar Directors 27 and that a number of corporate entities appear to be involved in that business.

[54] I am in no position to determine whether some form of phoenix activity has occurred, or is now being contemplated, in breach of relevant corporations laws or whether the directors of the companies have committed any offences under relevant legislation.

[55] The relevant question for the Commission is whether the circumstances of this case are such that the corporate veil should be lifted, and more importantly, the different corporate entities set aside to find, in effect, that Forward Half was the employer of the applicant.

[56] Given the material before the Commission, the approach being urged by the applicant would represent a significant extension to the attitude adopted by Courts and Industrial Tribunals to such matters. That is, I am being requested to, in effect, completely ignore the two different legal entities and treat Forward Half as the employer, at least for present purposes, despite the evident contractual connection between ACN and the applicant, and the absence of a proper connection with Forward Half.

[57] The objects,²⁸ broad statutory powers and charter²⁹ given to the Commission by the FW Act provides sufficient scope for me to overlook administrative and procedural technicalities; to deal with matters according to equity, good conscience and the merits; to, subject to affording natural justice, inform myself as I see fit; and to provide a fair go all around. However, this does not permit the Commission to ignore the statutory and other legal parameters applying to this jurisdiction.

[58] I have earlier found that based upon the limited material before the Commission, I could not conclude that the role of Forward Half was a facade or a sham within the meaning of the authorities. I do not consider that any other basis that might exist to lift the corporate veil so as to produce the result contended here has been demonstrated in this matter. I do not discount the possibility that a more complete exposure of the circumstances here could lead to a different outcome. However, I must determine the issue based upon the material that is properly before this Commission.

[59] I do accept, at least based upon Mrs McCulloch’s understanding of the financial arrangements, that there is a greater risk that any compensation order made against ACN would not be paid – as at least some of the resources appear to be held by Forward Half. However, if ACN has no resources, it would in effect be trading insolvent and this would be a breach of the Corporations Act 2001 (Cth) with serious implications for Mr Pavlis and the Directors. I am not implying or making any finding about this prospect, and there is insufficient evidence to do so.

[60] In the circumstances of this case, I do not consider that there is a basis to find that Forward Half was the employer of the applicant at any stage. Notwithstanding concerns about the potential effect of the arrangements upon the applicant, this is a bridge too far in the present circumstances. Accordingly, Forward Half is not properly a respondent, at least in the sense of being the employer of the applicant at any relevant time. Rather, I will determine this matter on the basis that, as originally nominated by Mrs McCulloch, ACN was the applicant’s employer.

4. Was Mrs McCulloch dismissed within the meaning of the FW Act?

4.1 What is a dismissal for present purposes?

[61] Section 386 of the FW Act provides as follows:

“386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

(2) However, a person has not been dismissed if:

(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or

(b) the person was an employee:

(i) to whom a training arrangement applied; and

(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;

and the employment has terminated at the end of the training arrangement; or

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and

(ii) he or she remains employed with the employer that effected the demotion.

(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.”

[62] Mrs McCulloch relies upon s.386(1)(a) of the FW Act; that is, that the employer through Mr Pavlis dismissed her as result of the final conversation on 13 November 2017. Although unhappy about her treatment by the respondents at various stages, she does not contend that her resignation was forced within the meaning of s.386(1)(b).

[63] The Full Bench of the AIRC discussed the application of related concepts in P. O’Meara v Stanley Works Pty Ltd 30in the following terms:

“[19]The circumstances in which a resignation, while apparently a termination of employment by the employee, nevertheless constitutes a termination at the initiative of the employer, have been considered in a number of cases. A prominent authority is the decision of a Full Court of the Federal Court of Australia in Mohazab v Dick Smith Electronics Pty Ltd31 (Mohazab). In that case, the employer made a threat that unless the employee resigned the employer would ask the police to charge the employee with an offence. The analysis of the concept of termination at the initiative of the employer by the Court in that case has not always been quoted in full. It is desirable that we do so in this case. After referring to dictionary definitions of the term “initiative” and the convention giving rise to the statutory provisions, the Full Court said:

“These definitions reflect the ordinary meaning of the word ‘initiative’. Viewed as a whole, the Convention is plainly intended to protect workers from termination by the employer unless there is a valid reason for termination. It addresses the termination of the employment relationship by the employer. It accords with the purpose of the Convention to treat the expression ‘termination at the initiative of the employer’ as a reference to a termination that is brought about by an employer and which is not agreed to by the employee. Consistent with the ordinary meaning of the expression in the Convention, a termination of employment at the initiative of the employer may be treated as a termination in which the action of the employer is the principal contributing factor which leads to the termination of the employment relationship. We proceed on the basis that the termination of the employment relationship is what is comprehended by the expression ‘termination of employment’: Siagian v Sanel (1994) 1 IRCR 1 at 19; 54 IR 185 at 201. In many, if not most, situations the act of the employer that terminates the employment relationship is not only the act that puts in train the process leading to its termination but is, in substance, the entire process. An example would be a situation where the employer decided to dismiss an employee and did so orally or in writing with immediate effect. Other situations may be more complex as exemplified by the circumstances considered by Moore J in Grout v Gunnedah Shire Council (1994) 1 IRCR 143; 57 IR 243 where an employee had given written notice purporting to terminate the employment relationship. The notice was not reasonable but was accepted by the employer which later refused to allow the employee to withdraw the notice. A question arose as to whether that was a termination of the employment at the initiative of the employer and his Honour held it was. His Honour said at 160-161; 259:

‘I have already said that Div 3 concerns termination at the initiative of the employer. The respondent submits that “initiate” means “to begin, commence, enter upon; to introduce, set going, or initiate”: see Shorter Oxford English Dictionary. In this matter, it is submitted, it was the applicant and not the respondent that initiated the termination by writing the letter of 18 May. This, in my opinion, gives the expression “termination” in the Act, read in conjunction with Art 3 of the Convention which speaks of “termination … at the initiative of the employer”, a narrow meaning that was not intended. A principal purpose, if not the sole purpose, of Div 3 is to provide an employee with a right to seek a remedy in circumstances where the employee did not voluntarily leave the employment. An employee may do some act which is the first in a chain of events that leads to termination. An example would be an employee who engaged in misconduct at work which ultimately led to the employer dismissing the employee. However, that situation and the present are not situations where the termination was at the initiative of the employee. In both instances the step or steps that effectively terminated the employment or purported to do so were taken by the employer.’

In these proceedings it is unnecessary and undesirable to endeavour to formulate an exhaustive description of what is termination at the initiative of the employer but plainly an important feature is that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship. This issue was addressed by Wilcox CJ in APESMA v David Graphics Pty Ltd (unreported, Industrial Relations Court of Australia, 12 July 1995, Wilcox CJ). His Honour, at p 3, referred to the situation of an employee who resigned because ‘he felt he had no other option’. His Honour described those circumstances as:

‘… a termination of employment at the instance [of] the employer rather than of the employee.’

And at p 5:

‘I agree with the proposition that termination may involve more than one action. But I think it is necessary to ask oneself what was the critical action, or what were the critical actions, that constituted a termination of the employment.’”³²

[20] Moore J, one of the members of the Full Court in Mohazab, addressed the question further in Rheinberger v Huxley Marketing Pty Limited³³ (Rheinberger). His Honour said, after referring to extracts from Mohazab:

“However it is plain from these passages that it is not sufficient to demonstrate that the employee did not voluntarily leave his or her employment to establish that there had been a termination of the employment at the initiative of the employer. Such a termination must result from some action on the part of the employer intended to bring the employment to an end and perhaps action which would, on any reasonable view, probably have that effect. I leave open the question of whether a termination of employment at the initiative of the employer requires the employer to intend by its action that the employment will conclude. I am prepared to assume, for present purposes, that there can be a termination at the initiative of the employer if the cessation of the employment relationship is the probable result of the employer's conduct.”³⁴

[21] In this Commission the concepts have been addressed on numerous occasions and by a number of Full Benches. In Pawel v Advanced Precast Pty Ltd³⁵ (Pawel) a Full Bench said:

“[13] It is plain that the Full Court in Mohazab considered that an important feature in the question of whether termination is at the initiative of the employer is whether the act of an employer results directly or consequentially in the termination of the employment and that the employment relationship is not voluntarily left by the employee. However, it is to be noted that the Full Court described it as an important feature. It plainly cannot be the only feature. An example will serve to illustrate this point. Suppose an employee wants a pay rise and makes such a request of his or her employer. If the employer declines and the employee, feeling dissatisfied resigns, can the resignation be said to be a termination at the initiative of the employer? We do not think it can and yet it can be said that the act of the employer i.e. refusing the pay rise, has at least consequentially resulted in the termination of the employment. This situation may be contrasted with the position where an employee is told to resign or he or she will be terminated. We think that all of the circumstances and not only the act of the employer must be examined. These in our view, will include the circumstances giving rise to the termination, the seriousness of the issues involved and the respective conduct of the employer and the employee. In the instant case the uncontested factual findings are that the applicant had for almost the whole of his employment performed welding duties; that there was no objective threat to his health and safety involved in the requirement that he undertake welding duties so long as it was not on a continuous basis and that the welding he was required to do was not continuous.”³⁶

[22] In the Full Bench decision of ABB Engineering Construction Pty Ltd v Doumit³⁷ (ABB Engineering) it was said:

“Often it will only be a narrow line that distinguishes conduct that leaves an employee no real choice but to resign employment, from conduct that cannot be held to cause a resultant resignation to be a termination at the initiative of the employer. But narrow though it be, it is important that that line be closely drawn and rigorously observed. Otherwise, the remedy against unfair termination of employment at the initiative of the employer may be too readily invoked in circumstances where it is the discretion of a resigning employee, rather than that of the employer, that gives rise to the termination. The remedies provided in the Act are directed to the provision of remedies against unlawful termination of employment. Where it is the immediate action of the employee that causes the employment relationship to cease, it is necessary to ensure that the employer’s conduct, said to have been the principal contributing factor in the resultant termination of employment, is weighed objectively. The employer’s conduct may be shown to be a sufficiently operative factor in the resignation for it to be tantamount to a reason for dismissal. In such circumstances, a resignation may fairly readily be conceived to be a termination at the initiative of the employer. The validity of any associated reason for the termination by resignation is tested. Where the conduct of the employer is ambiguous, and the bearing it has on the decision to resign is based largely on the perceptions and subjective response of the employee made unilaterally, considerable caution should be exercised in treating the resignation as other than voluntary.”³⁸

[23] In our view the full statement of reasons in Mohazab which we have set out together with the further explanation by Moore J in Rheinberger and the decisions of Full Benches of this Commission in Pawel and ABB Engineering require that there to be some action on the part of the employer which is either intended to bring the employment to an end or has the probable result of bringing the employment relationship to an end. It is not simply a question of whether “the act of the employer [resulted] directly or consequentially in the termination of the employment.”³⁹ Decisions which adopt the shorter formulation of the reasons for decision should be treated with some caution as they may not give full weight to the decision in Mohazab. In determining whether a termination was at the initiative of the employer an objective analysis of the employer’s conduct is required to determine whether it was of such a nature that resignation was the probable result or that the appellant had no effective or real choice but to resign.”

[64] In ABB Engineering the AIRC Full Bench dealt with the circumstances where a resignation may become a termination at the initiative of the employer. In finding that a termination had not occurred in the circumstances of that case, it stated:

“In the circumstances, whether the termination of any connection between Mr Doumit and the company on 15 May 1996 was a termination at the initiative of the employer depends on whether there was any relationship to terminate after the company received the resignation.

.....

The effect of giving of notice is summarised by Gray J in the Federal Court in Birrell v Australian National Airlines Commission:

“The giving of notice of termination of a contract, in accordance with the terms of that contract, is a unilateral right. Its exercise does not depend in any way on the acceptance or rejection of the notice by the other party to the contract. The giving of such a notice operates to determine the contract by effluxion of the period of notice.”

McCarry “Termination of Employment Contracts by Notice” sums up his view of the situation as:

“A valid notice of termination, once received, will operate to end the contract of employment when the period of notice expires or is due to expire, unless in the meantime the contract is ended by some other independent cause. The employer/employee relationship will end with the contract, if it has not ended earlier, but aspects of the contract can still be enforced thereafter.”

....

The employer took no issue with the notice and acted, or at least intended to act, in accord with the contract by giving pay in lieu of notice. It proffered the payment in lieu because it considered that the contract had been terminated. That was a reaction. It was not an initiative to terminate the employment so as to bring the termination under Part VIA Division 3 of the Act as a termination at the initiative of the employer. In the employer’s perspective, its actions did not substitute a fresh termination for that which was initiated by Mr Doumit. However, the employer’s action did operate to substitute an earlier termination of the employment relationship than that initiated by Mr Doumit. The employer’s action operated to reduce some of the benefits that would have accrued if Mr Doumit had worked out the notice period.

We consider that having regard to all relevant circumstances and particularly the length of the notice period, and the scale of payment to Mr Doumit, the company’s action to bring forward the date of effect may and should be conceived as consequential to the resignation. In our view the circumstances of the case do not establish matters of fact or degree that would justify our finding that the employer took advantage of the resignation to in effect substitute a termination of the employment of its own initiative. We do not preclude the possibility of there being such a case, particularly in circumstances where a long period of notice is given in the form of a resignation. But this is not such a case.”

[65] These principles have been adopted and applied in a number of cases 40 including in Isabel Nohra v Target Australia Pty Ltd,41 where the applicant provided her resignation advising that her last date of employment would be approximately 7 months later. The respondent accepted her resignation but with almost immediate effect. In that matter, Roberts C said:

“[10] Ms Nohra had been through a protracted process with Target concerning the Company’s wish to transfer her from the Bankstown store to the Rockdale store. That proposed transfer was canvassed at length during proceedings but, in my view, there is no need to do so in this decision. In brief, Ms Nohra’s letter of resignation shows on its face that she did not intend the employment relationship to end almost immediately but rather, for it to end prospectively on 3 December 2010. Target’s action in purporting to accept the resignation but making it immediate was indisputably a termination at the initiative of the employer. Ms Nohra’s resignation letter was highly conditional and may, or may not, have constituted a constructive dismissal. That issue does not matter at this time as Target intervened to actively terminate the employment relationship immediately. Even if Ms Nohra was voluntarily standing on a metaphorical high ledge announcing that she would jump from employment in about seven months’ time, it was Target that then pushed her.”

[66] This approach remains relevant under the terms of the FW Act, at least as applied to the present circumstances. This means that where notice of a resignation is validly given and the employer accepts such resignation but elects to pay out the notice period without requiring the employee to work the notice, the resignation does not become a dismissal at the initiative of the employer merely because of that action. However, conduct subsequent to a resignation may mean that the employment is ended by some intervening event and in certain circumstances, a dismissal by the employer could in effect be substituted for, or replace, the resignation.

4.2 The events surrounding and following the resignation

[67] Prior to the meetings on 13 November 2017, it is evident that there had been discussions between Mrs McCulloch and Mr Pavlis in relation to concerns she had expressed arising from developments in her personal life. Those discussions did not lead to Mrs McCulloch tendering her resignation, or to giving any definitive indication that she would resign at a later date, and it is apparent that there had been no resignation prior to 13 November 2017. On balance, I also do not accept that a letter confirming an alleged resignation was provided to Mrs McCulloch by Mr Pavlis at any time prior to these proceedings.

[68] Mrs McCulloch had been seeking alternative employment and prior to these events had applied for a position as an Accounts Manager with what was to become her new employer in early September 2017. On 26 September 2017, Mrs McCulloch interviewed for the position and was offered the job on the same date. The position was scheduled to commence in early 2018 (and commenced on 15 January 2018). There is no evidence to indicate that this was disclosed to Mr Pavlis.

[69] On 13 November 2017, there were three separate discussions between Mrs McCulloch and Mr Pavlis in relation to her resignation.

[70] Mrs McCulloch attended the workplace as normal with a pre-prepared resignation letter. At approximately 9:05 am, she approached Mr Pavlis in the upstairs office and asked if she could meet with him. Mrs McCulloch attended the meeting 10 minutes later with another staff member (FC), who she had asked to come as a support person and as a witness to the resignation.

[71] At the meeting, Mrs McCulloch stated that her time there had come to an end and that she was giving her 5 weeks’ notice. Mr Pavlis questioned the reason for the length of notice, to which Mrs McCulloch responded that she was giving that time to allow him to find a replacement and to finish up prior to Christmas. She handed him the pre-prepared resignation letter confirming her last day at work was to be 15 December 2017. Mr Pavlis then asked FC how long he had known Mrs McCulloch was going to resign, to which he responded that he did not know until that morning.

[72] There was a brief discussion about whether Mrs McCulloch would accept a casual position or one as a “contractor”. Mr Pavlis advised her that he would think about whether he would consider any contract work. He also said that he would consider the length of the notice period after 2 weeks and reassess it depending on how quickly he could find a replacement.

[73] The second discussion occurred approximately 30 minutes later when Mrs McCulloch approached Mr Pavlis to say that her resignation was not a “personal attack” on him and that she wanted to “end things” amicably. Mr Pavlis responded that he had considered the contract work and said that it would not be practical unless she could work 2 hours’ per day. This was not suitable and so Mrs McCulloch declined the offer and said that she would prepare a memo to go to staff in relation to her resignation. There was no discussion about the notice period during this meeting.

[74] The third and final meeting occurred at approximately 4:30 pm. Mr Pavlis asked Mrs McCulloch to meet with him in his office with the other staff member, FC. Mr Pavlis advised that he had made a few phone calls and that her position would be filled and that therefore she was dismissed immediately, effectively at the end of the day. Mrs McCulloch confirmed her intention to work the 5 weeks’ notice period, but this was refused by Mr Pavlis.

[75] Mrs McCulloch left the workplace at the end of the day on 13 November 2017 and did not return.

[76] On 15 November 2017, two days after her resignation, Mrs McCulloch received a draft Deed of Release proposing a resolution of all employment related matters along with a cover letter from Mr Pavlis. 42 She did not sign or return the Deed.

[77] Despite claims to the contrary by Mr Pavlis, there was no evidence that Mrs McCulloch’s new employment arrangements had been delayed so as to provide a basis for her to belatedly seek to give 5 weeks’ notice. Rather, the evidence supports the notion that Mrs McCulloch had secured her new employment from a date after the upcoming school holidays, and the five weeks’ notice was given in the knowledge of that arrangement.

4.3 Was this a dismissal?

[78] Given the events as they unfolded, I consider that Mrs McCulloch was dismissed within the meaning of the FW Act. The resignation, previously given with a reasonable notice period was the subject of an intervening event when Mr Pavlis indicated that the applicant was to be dismissed with effect from the end of that day.

[79] This is the kind of intervening event contemplated in ABB Engineering and other authorities. The employment was terminated at the initiative of the employer.

5. Was Mrs McCulloch dismissal unfair within the meaning of the FW Act?

[80] Section 385 of the FW Act provides as follows:

“385 What is an unfair dismissal

(1) A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

(b) the dismissal was harsh, unjust or unreasonable; and

(d) the dismissal was not a case of genuine redundancy.”

[81] I have found that Mrs McCulloch was dismissed. ACN is not a small business and the concept of a redundancy is not relevant here. As a result, the applicant’s dismissal will be unfair if it was harsh, unjust or unreasonable.

[82] The FW Act relevantly provides as follows:

“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 is 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.”

[83] It is clear that s.387 of the FW Act contemplates that an overall assessment as to the nature of the dismissal must be made by the Commission. In so doing, the FW Act sets out a number of considerations that must, where relevant, be weighed up in totality.

[84] It is convenient therefore to use the various provisions of s.387, with reference to the relevant circumstances, to outline my consideration of the matter.

Section 387(a) – whether there was a valid reason for the dismissal related to Mrs McCulloch’s capacity or conduct (including its effect on the safety and welfare of other employees).

[85] Valid in this context is generally considered to be whether there was a sound, defensible or well-founded reason for the dismissal. Further, in considering whether a reason is valid, the requirement should be applied in the practical sphere of the relationship between an employer and an employee where each has rights, privileges, duties and obligations conferred and imposed on them. That is, the provisions must be applied in a practical, common sense way to ensure that the employer and employee are each treated fairly.⁴³

[86] It is also clear from the authorities that the reason for termination must be defensible or justifiable on an objective analysis of the relevant facts before the Commission. That is, it is not enough for an employer to rely upon its reasonable belief that the termination was for a valid reason.⁴⁴

[87] Mrs McCulloch gave her 5 weeks’ notice on 13 November 2017 before she was dismissed later on the same day by Mr Pavlis. The length of notice given by Mrs McCulloch was reasonable, in particular, for a person working in a senior position. Whilst I would accept that there would be circumstances where a resignation might itself provide a valid reason for dismissal, I do not consider that this was so in this case. There is no evidence that having Mrs McCulloch remain in the relationship during the notice period was problematic, confirmed by the fact that Mr Pavlis considered having her work on a reduced basis at the end of her employment, although this did not ultimately proceed. Further, the period of 5 weeks was reasonable and not excessive and although Mr Pavlis indicated that he had made alternative arrangements, there was no evidence provided to the Commission to support that notion.

[88] Having considered all of the relevant circumstances based upon the findings of the Commission, I am not persuaded that there was a valid reason for dismissal.

Section 387(b) – whether Mrs McCulloch was notified of the reasons for dismissal.

[89] This consideration requires the Commission to assess whether the applicant concerned was relevantly notified of the reasons leading to the dismissal before that decision was taken.⁴⁵

[90] There was no notification of the reasons for dismissal as contemplated by this provision.

Section 387(c) – whether Mrs McCulloch was given an opportunity to respond to any reason related to his capacity or conduct.

[91] The reason for dismissal did not relate to the capacity or conduct of Mrs McCulloch. Accordingly, this consideration is not relevant.

Section 387(d) – any unreasonable refusal by the respondent to allow Mrs McCulloch a support person.

[92] In reality, there was no meeting to discuss any concerns held by the employer. In any event, no request for a support person arose after the initial meeting, where one was present. Accordingly, this consideration is not relevant.

Section 387(e) – if the dismissal is related to unsatisfactory performance by Mrs McCulloch – whether she has been warned about that unsatisfactory performance before the dismissal.

[93] The dismissal was not related to unsatisfactory performance by Mrs McCulloch and therefore this consideration is not relevant.

Section 387(f) – the degree to which the size of the respondent’s enterprise would be likely to impact on the procedures followed in effecting the dismissal.

Section 387(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.

[94] I will deal with these two considerations together.

[95] Despite not being a small business, ACN does not have dedicated human resource management specialists. I accept that this circumstance would have impacted upon how the dismissal was handled.

[96] This is a factor to be taken into account in assessing the overall fairness of the dismissal and I have made a meaningful allowance for the manner and procedures adopted by the employer.

Section 387(h) - other matters considered to be relevant.

[97] Amongst other considerations, the Commission should consider the impact of the dismissal upon the applicant given all of the circumstances. Mrs McCulloch was denied the opportunity to work out the reasonable notice period and was dismissed without any notice.

Conclusions on merit

[98] Having regard to the above findings, I am satisfied that the dismissal was harsh, unjust and unreasonable.

6. Remedy

[99] Division 4 of Part 3-2 of the FW Act provides as follows:

“Division 4—Remedies for unfair dismissal

390 When the FWC may order remedy for unfair dismissal

(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:

(a) the FWC is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and

(b) the person has been unfairly dismissed (see Division 3).

(2) the FWC may make the order only if the person has made an application under section 394.

(3) the FWC must not order the payment of compensation to the person unless:

(a) the FWC is satisfied that reinstatement of the person is inappropriate; and

(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.

Note: Division 5 deals with procedural matters such as applications for remedies.

… …

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.

(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.

393 Monetary orders may be in instalments

To avoid doubt, an order by the FWC under subsection 391(3) or 392(1) may permit the employer concerned to pay the amount required in instalments specified in the order.”

[100] The prerequisites of ss.390(1) and (2) have been met in this case. Section 390 makes it clear that compensation is only to be awarded as a remedy where the Commission is satisfied that reinstatement is inappropriate and that compensation is appropriate in all of the circumstances. Mrs McCulloch does not seek reinstatement and given all of the prevailing circumstances, including her new employment, and my findings more generally, I accept that reinstatement would be inappropriate.

[101] As a result, I need to consider whether compensation is appropriate, and if so, to what extent.

[102] A Full Bench in McCulloch v Calvary Health Care Adelaide⁴⁶ (McCulloch) confirmed, in general terms, that the approach to the assessment of compensation as undertaken in cases such as Sprigg⁴⁷ remains appropriate in that regard.

[103] Section 392(2) of the FW Act requires me to take into account all of the circumstances of the case including the factors that are listed in paragraphs (a) to (g). Without detracting from the overall assessment required by the FW Act,⁴⁸ it is convenient to discuss the identified considerations under the various matters raised by each of the provisions.

Section 392(2)(a) – The effect of the order on the viability of ACN.

[104] Despite some initial contrary suggestions, ACN did not seek to rely upon this consideration, at least in terms of the nature of the compensation remedy sought by Mrs McCulloch.

Section 392(2)(b) – The length of Mrs McCulloch’s service with ACN.

[105] Mrs McCulloch had a few weeks short of two years’ service with ACN.

Section 392(2)(c) – The remuneration Mrs McCulloch would have received, or would have been likely to receive, if she had not been dismissed.

[106] This involves in part a consideration of the likely duration of Mrs McCulloch’s employment in the absence of what I have found to be an unfair dismissal.

[107] The Full Bench in McCulloch also confirmed that when assessing likely lost remuneration, cogent evidence was required for any assumption that a short period of likely future employment would have occurred where the Commission had not found a valid reason for dismissal.⁴⁹ There are cogent reasons in this case given the applicant’s resignation.

[108] In all of the circumstances I consider that the employment relationship would, in the absence of the dismissal, have continued for a further period of no more than 5 weeks of paid employment. That is, the notice period provided by Mrs McCulloch. Whilst it is conceivable that the employment could have concluded earlier, any such dismissal would need to have been on the basis of reasonable notice. Allowing some time for the employer to find a replacement or make reasonable alternative arrangements and then to give reasonable notice, the period of five weeks is a reasonable assessment of the projected employment.

[109] On the basis of the material provided to the Commission, Mrs McCulloch was paid a salary of $85,000 per annum. This equates to a salary of $1,635 per week (rounded). Using that rate produces a lost remuneration figure of $8,175.

Section 392(2)(d) – The efforts of Mrs McCulloch to mitigate the loss suffered by her because of the dismissal.

[110] Mrs McCulloch did not make any efforts to obtain alternate work for the period of notice that she would have, but for the dismissal, worked out with ACN as she had already been successful in obtaining a role with a new employer which was scheduled to commence in January 2018.

[111] In these particular circumstances, given the length of the period between her dismissal and the start date for the new employer, it is not appropriate to reduce the amount of compensation as a result of any failure to pursue alternate work or other mitigation strategies during that period.

Section 392(2)(e) – The amount of any remuneration earned by Mrs McCulloch from employment or other work during the period between the dismissal and the making of the order for compensation.

Section 392(2)(f) – The amount of any income reasonably likely to be so earned by Mrs McCulloch during the period between the making of the order for compensation and the actual compensation.

[112] Mrs McCulloch was paid for one day of the 5 week projected period of employment. This would amount to $327 and this amount is to be deducted.

Section 392(2)(g) – Any other matter that the FWC considers relevant and the remaining statutory parameters.

[113] There is no demonstrated misconduct that is appropriate to take into account as provided by s.392(3) of the FW Act.

[114] In accordance with s.392(4) of the FW Act, I make no allowance for any shock, distress or humiliation that may have been caused by the dismissal.

[115] As all of the projected period of employment, and the compensation contemplating losses in that context, has already occurred, I have made no specific allowance for future contingencies.

[116] The amount of compensation that I have determined is far less than the maximum prescribed by s.392(5) of the FW Act as applied in this matter.⁵⁰

[117] The figures used for the calculation are expressed in gross terms and appropriate taxation is to be deducted from the final amount of compensation.

[118] The compensation amount confirmed below is also appropriate having regard to all of the particular circumstances of this matter and the Commission’s statutory charter to ensure that a “fair go all round” is accorded to both the employer and employee concerned.⁵¹

Conclusions on remedy

[119] After taking into account each of the relevant considerations, I find that compensation in lieu of reinstatement is appropriate in this matter. Further, I find that the compensation should be assessed and paid having regard to the factors outlined above.

[120] That compensation is to be $7,848.

[121] Although Mr Pavlis sought that any order be paid in instalments, there was no basis advanced for this beyond the notion that a new Bookkeeper had now been engaged (and was being paid). ACN is not an insignificant business and there is no evidence before the Commission that the payment of compensation of this amount would cause difficulties, including from a cash flow perspective. In all of the circumstances of this matter I am not persuaded that an order for payments by instalments should be made in this case.

7. Conclusions and orders

[122] I have found that Mrs McCulloch was dismissed and that such dismissal was unfair within the meaning of the FW Act.

[123] I have also found that compensation is appropriate and the amount determined above is appropriate in all of the circumstances.

[124] The payment of the compensation amount, less any required deduction of taxation, is to be made to Mrs McCulloch by ACN within 14 days of this decision. An order⁵² is being issued in conjunction with this decision.

COMMISSIONER

Appearances:

K McCulloch, the applicant, on her own behalf.

J Pavlis, on behalf of ACN 165 180 503 Pty Ltd and Forward Half Pty Ltd.

Hearing details:

Determinative Conference

2018

Adelaide

April 20.

Final Written submissions:

Mrs McCulloch – 11 May 2018

ACN 165 180 503 Pty Ltd and Forward Half Pty Ltd – 11 and 18 May 2018.

Printed by authority of the Commonwealth Government Printer

1 Telephone hearing conducted on 28 March 2018.

2 Transcript (28 March 2018) at PN22.

3 Exhibit R1.

4 Transcript (20 April 2018) at PN129.

5 Transcript (20 April 2018) at PN768.

6 FW Act, ss.398 and 399.

7 Exhibit R2.

8 Section 50AAA of the Corporations Act 2001.

9 AIRC Print S0253.

10 (2003) 133 FCR 438.

11 Ibid per Marshall J.

12 Ibid per Wilcox J at par 3.

13 Pioneer Services Ltd v Yelnah Pty Ltd (1986) 5 NSWLR 254 per Young J.

14 BA and BW Fabrications Pty Ltd (1997) AIRC Print P3537.

15 DePaul and Moras v Nansen Enterprises P/L t/as Bayswater Sheet Metal Supplies (1997) AIRC Print P6737.

16 See for example: R Donovan v Concrete Waterproofing Pty Ltd, AIRC PR910467 (2001) per Lacy SDP and the discussion of the approach taken by the court in Australian Insurance Employees Union v WP Insurance Services Pty Ltd, 42 ALR 598 at 606; 1 IR 212 at 216; Textile Footwear & Clothing Union of Australia v Bellechic Pty Ltd & Ors [1998] 1465 FCA (19 November 1998).

17 For example, the relationship between companies is relevant to the assessment as to whether a business is a small business (s.23(3)) and the consideration of related corporations is relevant to the assessment of service (s.384).

18 See Australian Liquor, Hospitality and Miscellaneous Workers Union, Western Australian Branch v Burswood Catering and Entertainment Pty Ltd (Burswood) [2002] WAIRComm 4778. This was upheld on appeal: Burswood Catering and Entertainment Pty Ltd v Australian Liquor, Hospitality and Miscellaneous Workers Union, Western Australian Branch [2002] WASCA 354. See also Spreag v Paeson Pty Ltd (1990) 94 ALR 679.

19 See Pioneer Services Ltd v Yelnah Pty Ltd (1986) 5 NSWLR 254 per Young J.

20 (2004) 218 CLR 471.

21 Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 at [46].

22 (2006) 158 IR 410.

23Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449.

24 EquuscorpPty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471.

25 Department of Justice v Lunn (2006) 158 IR 410 at [36].

26 See Phoenix Activity: Sizing the problem and matching solutions, a report for the Fair Work Ombudsman by PwC, June 2012.

27 Exhibit A2. See also Harvey v XTU Pty Ltd (ACN 140 390 307) T/A Blackwood Fitness[2015] FWC 8457.

28 S.3 and s.381 of the Act.

29 Including s.577, s.578, s.590 and s.591 of the Act.

30 Print PR973462, 11 August 2006.

31 (1995) 62 IR 200.

32 Ibid at 205-6.

33 (1966) 67 IR 154.

34 Ibid at 160-1.

35 Print S5904, 12 May 2000 per Polites SDP, Watson SDP and Gay C.

36 Ibid at paragraph 13.

37 Print N6999, 9 December 1996 per Munro J, Duncan DP and Merriman C; quoted with approval in BC Stubbs v Austar Entertainment Pty Ltd, Print Q0008, 17 December 1998 per Ross VP, Munro J and Harrison C and in Mosey v Australian Customs Service (2002) 116 IR 1.

38 Ibid at page 12.

39 Mohazab at page 205.

40 See for example Christopher Patterson v Re-Engage Youth Services Incorporated T/A Re-Engage Youth Services[2018] FWC 2018, Anthony Marks v Melbourne Health[2011] FWA 4024.

41 [2010] FWA 6857.

42 Exhibit A1, Attachment K.

43 Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 as cited in Potter v WorkCover Corporation (2004) 133 IR 458 and endorsed by the Full Bench in Industrial Automation Group Pty Ltd T/A Industrial Automation [2010] FWAFB 8868, at [36].

44 See Australia Meat Holdings Pty Ltd v McLauchlan (1998) 84 IR 1; King v Freshmore (Vic) Pty Ltd AIRCFB Print S4213 per Ross VP, Williams SDP, Hingley C, 17 March 2000; Edwards v Giudice (1999) 94 FCR 561; Crozier v Palazzo Corporation Pty Limited t/as Noble Park Storage and Transport AIRCFB Print S5897 per Ross VP, Acton SDP and Cribb C, 11 May 2000 and Rode v Burwood Mitsubishi AIRCFB Print R4471 per Ross VP, Polites SDP, Foggo C, 11 May 1999.

45 See Trimatic Management Services Pty Ltd v Daniel Bowley [2013] FWCFB 5160.

46 [2015] FWCFB 873.

47 Sprigg v Paul’s Licensed Festival Supermarket (1998) 88 IR 21. See also Bowden v Ottrey Homes Cobram and District Retirement Villages Inc T/A Ottrey Lodge[2013] FWCFB 431.

48 Smith and Others v Moore Paragon Australia Ltd (2004) 130 IR 446.

49 McCulloch at [27].

50 The maximum compensation limit in this case would be the lesser of 26 weeks remuneration or $71,000.

51 S.381(2) of the FW Act. See also Smith and Others v Moore Paragon Australia Ltd (2004) 130 IR 446 at par [32].

52 PR602064.

Kerry McCulloch v ACN 165 180 503 Pty Ltd T/A Blackwood Fitness