Kris Ting v Superstop Auto Parts

[2019] FWC 1003

[2019] FWC 1003

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Kris Ting
v
Superstop Auto Parts
(U2018/8923)

COMMISSIONER MCKINNON MELBOURNE, 15 FEBRUARY 2019

Application for relief from unfair dismissal – whether genuine redundancy – application of Small Business Fair Dismissal Code – whether harsh, unjust or unreasonable – whether reinstatement appropriate

Introduction

[1] Ms Kris Ting is a shareholder of Superstop Auto Parts Pty Ltd (Superstop) and was also employed by Superstop as Accounts Officer from 19 November 2007 until 31 August 2018 when her employment terminated on the grounds of redundancy.

[2] On 1 September 2018, Ms Ting applied to the Commission for a remedy for unfair dismissal under section 394 of the Fair Work Act 2009 (the Act).Ms Ting submits that her dismissal was unfair because it was not a genuine redundancy for the purposes of the Act. Superstop denies that the dismissal was unfair.

[3] The matter was conciliated on 27 November 2018 and was not settled. After seeking the views of the parties, I determined that a hearing would be the most effective and efficient way to resolve the matter. A hearing was held on 6 and 7 December 2018 in Melbourne. The parties were represented, including, in relation to Ms Ting, with permission.

Preliminary matters

[4] The application was filed within the standard 21 day time limit required by the Act.

[5] Under section 385, a person has been unfairly dismissed if the Commission is satisfied that they have been dismissed; that the dismissal was harsh, unjust or unreasonable; and if relevant, that the dismissal was not consistent with the Small Business Fair Dismissal Code or not a case of genuine redundancy. 1

[6] Section 382 sets out when a person is protected from unfair dismissal. Under section 382, a person is protected from unfair dismissal if, at the relevant time:

•  They have completed at least the minimum employment period; and

•  They are either covered by a modern award, employed under an enterprise agreement that applies to them or earn an annual income of less than the “high income threshold”.

[7] I am satisfied that Ms Ting completed at least the minimum employment period as an employee of Superstop and that her employment was covered by the Clerks – Private Sector Award 2010. Her annual income was less than the high income threshold. She is protected from unfair dismissal.

[8] There is no dispute that Ms Ting was dismissed from her employment.

[9] There is a factual discrepancy about the number of employees employed by Superstop and its associated entity, Bremtec Pty Ltd at the time of dismissal. The precise number of employees is unnecessary to resolve, because on either version of the facts, the total number of employees was less than fifteen. The parties agree that Superstop was a small business employer for the purposes of the Act.

Was the dismissal a case of genuine redundancy?

[10] Section 385 provides that a person has not been unfairly dismissed if their dismissal was a case of genuine redundancy. The expression ‘genuine redundancy’ is defined in section 389 of the Act, as follows:

“389 Meaning of genuine redundancy

“•  A person’s dismissal was a case of genuine redundancy if:

(a) 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

(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

(a) the employer’s enterprise; or

(b) the enterprise of an associated entity of the employer.”

[11] As noted earlier, Ms Ting was employed as a full time Accounts Officer by Superstop. Her role involved entering supplier invoices, processing payments, handling accounts queries, general administration, counting and reconciliation of monies, daily banking and resolving accounting discrepancies and completing the Daybook.  2

[12] There is no dispute that Superstop was in financial trouble at the time of Ms Ting’s dismissal. It made a loss of approximately $70,000 in the 2017/18 financial year. 3 According to Ms Ting, Superstop’s financial problems had persisted for a number of years.

[13] On 2 August 2018, Ms Ting emailed a Director of the business, Mr Steve Kreti, about the state of Superstop’s accounts. The email advised that Superstop had made a loss of $80,000 in the last financial year and its overdraft was not enough to cover the amount. The email also advised that Superstop could not afford ‘Ken, not even Evan’. 4

[14] Ken had recently been employed by Superstop at a rate of $40.00 per hour. Ms Ting’s view was that a different person could be employed to do the same work for approximately $20.00 per hour. 5

[15] Mr Kreti responded on 3 August 2018, noting that the business could not afford to lose staff ‘working on the tools’ and advising that Superstop would be meeting with the accountant either that day or Monday to work out ‘how we can turn things around’. 6

[16] On the afternoon of 3 August 2018, another Director of the business, Mr Victor Makrievski, rang Superstop’s external Accountant, Mr Michael Eefting, to discuss the businesses’ financial position. He advised that he was considering making Ms Ting’s role redundancy and replacing it with a part-time role. Eefting confirmed that he thought the role could be performed in a part time capacity of between 16 and 20 hours per week. 7 It is relevant that Ms Ting’s rate of pay was approximately $41.00 per hour.8 I find that Mr Makrievski decided to make Ms Ting’s full time position redundant in that phone call.9

[17] The events that then unfolded are the subject of some dispute.

[18] It is agreed that at approximately 5.30pm on 6 August 2018, Mr Makrievski and Mr Kreti advised Ms Ting that her role was to be made redundant, and offered her the same role in a part time capacity. It is also agreed that the option of her working 20 hours per week was discussed.

[19] Superstop says Ms Ting did not agree to the part time role and that the meeting ended on the basis that she was to let them know by Friday if she wanted it. Ms Ting’s witness statement states that she offered to do the role part time on the basis of 20 hours per week but that she also requested more time to explore the options. It states that Ms Ting was told her job would finish at the end of the month, and to “just let us know by Friday whether you want to do part time”. In the hearing, Ms Ting said the offer of 20 hours per week was agreed in the meeting but that she was expecting more information from Mr Makrievski about it by the following Friday. I prefer her initial recollection of events, which is consistent with the evidence of Mr Makrievski and Mr Kreti. In my view, the parties discussed the prospect of Ms Ting working part time but no agreement was reached in the meeting on 6 August 2018. Instead, Ms Ting was to let the business know by the following Friday whether she wished to take it up.

[20] Later in the evening of 6 August 2018, it is not in dispute that Ms Ting had a conversation with Mr Kreti. She advised him that the value of her accrued annual leave entitlement was approximately $70,000. According to Ms Ting, Mr Kreti was surprised and said “we will need to talk to the Accountant about that, to see if there is a way around it, so we don’t have to pay that.” Mr Kreti agrees that he was taken by surprise, but denies saying such a thing. He says the amount of Ms Ting’s annual leave was not an issue. I prefer Ms Ting’s evidence on this question, because it makes sense in the context of Superstop’s financial position at the time, and the events that then followed.

[21] On 7 August 2018, Mr Kreti and Mrs Vivienne Makrievski (wife of Victor Makrievski) attended Ms Ting’s office in what they describe as a “HR meeting” and Ms Ting describes as an “interrogation”. 10 According to Ms Ting, Mr Kreti arrived unannounced at her office and asked if he could use her printer. He then asked for her leave details. Mrs Makrievski then arrived and they sat down and started asking Ms Ting about her late start and finish every night.

[22] There was a discussion about Ms Ting’s hours of work and why she was always working so late. Ms Ting says she was asked if she had another job and why she was tired. Ms Ting said she needed to work late as she had anaemia and her heart might stop at any time. The meeting became tense. According to Ms Ting, Mrs Makrievski raised her voice and accused her of breaching occupational health and safety (OH&S) by working alone after hours. I accept this aspect of Ms Ting’s evidence.

[23] Mr Kreti denies that one of the purposes of the unannounced meeting on 7 August 2018 was to get Ms Ting’s leave records. However, according to Mrs Makrievski, “that was one of the things he was going to do in that meeting”, at her request. I find that obtaining Ms Ting’s leave records was one of the purposes of the meeting. 11

[24] Superstop says in the meeting on 7 August 2018, Mr Kreti also asked Ms Ting to confirm if she wanted to accept the part time role and she confirmed she was not interested in the position. Ms Ting has no memory of the part time role being raised, but concedes that it may have been. I find that it was again discussed and rejected by Ms Ting.

[25] The meeting occurred in the context of Ms Ting wanting to leave to meet her tow truck, as she had broken down earlier that day and needed to ensure she could get home. Once the tow truck arrived, the meeting came to an end.

[26] On 8 August 2018, Mr Kreti gave Ms Ting two letters. 12 The first letter13 set out a number of assertions about Ms Ting’s hours of work, made ‘findings’ that she had breached OH&S and not followed a directive and put her on notice that failure to work between the hours of 9.00am and 5.00pm would lead to the termination of her employment without notice. The letter also said as follows:

“Further to these discoveries the following actions need to take place:

•  Kris will enter in personal and annual leave for every day since 24th November 2014 that she has commenced work late.

•  Kris will work 9am-5pm going forward. Kris will not stay back after 5pm. Failure to comply with this direction may result in termination of employment.

•  Vic and Steve will monitor Kris’ starting and finishing times to ensure that she is conducting herself in a safe and healthy manner while at work.

•  Kris will surrender her keys to the Superstop premises to ensure that she cannot work outside of business hours.”

[27] Mr Kreti denies that Superstop sought to eliminate Ms Ting’s annual leave entitlement, but at the same time says it was seeking to offset her leave against the hours Ms Ting “owed back to the company”. According to Mr Kreti, “It was just about being fair to our company. So any amount she didn’t take should have been taken off her accrual.” 14 Revealingly, Mrs Makrievski says “we were looking for ways to reduce the annual leave claim if we could”.15

[28] As the first letter above makes plain, Superstop directed Ms Ting to adjust her leave records so that any hours not worked between 9am and 5pm, Monday to Friday, were claimed as leave. This direction may not have been lawful, and it certainly was not reasonable. It asked Ms Ting to disclaim any entitlement in relation to her hours of work after 5pm each day, despite the consensus being that she had in fact worked late most nights for a number of years and that as a full time employee, she worked full time hours.

[29] The second letter 16 confirmed the redundancy of Ms Ting’s position with effect from 31 August 2018. Mr Kreti says he offered to “rip up” the redundancy letter if Ms Ting accepted the part time role. Ms Ting strongly denies his claim. She says she asked Mr Kreti about the part time role, and he looked away. I prefer Ms Ting’s account of this exchange. In my view, if Superstop were still seeking her agreement to work part-time, it would have reiterated the offer of employment in one of the two letters provided to her that day. No mention was made of part time employment in either letter. The second letter was unequivocal. It said as follows:

“Further to the conversation that you had with us on Monday 6th August, we regret to inform you that your role as full-time Accounts Officer will be made redundant on 31 August 2018. At this time you will be retrenched.”

[30] Mr Kreti asked Ms Ting to sign the letters and Ms Ting refused. Ms Ting advised Mr Kreti that she had contacted Ai Group and that Superstop may be liable for a fine of up to $58,000.

[31] On 9 August 2018, Mrs Makrievski came to see Ms Ting again. According to Ms Ting, she was angry that Ms Ting had contacted Ai Group and said that if Ms Ting sued Superstop, it would counter sue her for the amount it said she owed them for offsetting her leave. Mrs Makrievski denies that she was angry but I am satisfied that she was being forceful in her approach, and this was perceived as anger by Ms Ting. There was another discussion about Ms Ting’s hours of work.

[32] Mrs Makrievski says she made clear to Ms Ting at the outset of a discussion on 9 August 2018 that there were two issues to be discussed – the redundancy and Ms Ting’s late hours of work and annual leave. Vivienne says she asked Ms Ting about her hours of work to investigate if there was any misconduct on her part, because she was concerned about OH&S. 17 In my view, the concern about misconduct was not limited to OH&S but also about whether Ms Ting was trying to take advantage of the business in relation to her accrued annual leave.18 It is agreed that Mrs Makrievski asked Ms Ting for her office keys, which she reluctantly relinquished. According to Ms Ting, it made her cry and that she asked why she could not continue employment with reduced hours, carrying over her leave accrual. Mrs Makrievski did not agree. She denies that Ms Ting cried or that she asked about continuing in employment. I prefer Ms Ting’s version of the encounter.

[33] On 21 August 2018, Ms Ting commenced a period of sick leave related to what she perceived as unfair treatment at the hands of Superstop. Her employment came to an end ten days later, on 31 August 2018. A formal letter of termination was sent to her home by courier on that day.

[34] To summarise the factual dispute, Superstop’s submission is that Ms Ting continually refused the part time role of Accounts Officer, which it continued to offer to her. Ms Ting says the part time role was not offered to her after 6 August 2018 and that while she kept trying to raise it, after the annual leave entitlement issue arose, it was no longer an option available to her.

[35] I find on the evidence that Ms Ting’s job was no longer required to be performed by anyone because of changes in Superstop’s operational requirements – specifically, it could no longer afford to retain her full time role of Accounts Officer.

[36] However, I consider that it would have been reasonable in all the circumstances for Ms Ting to be redeployed into the part time role at Superstop. I accept that Ms Ting was offered the part time role on 6 August 2018 and that while no agreement was reached, she was given additional time to consider the offer until 10 February 2018. In the intervening period, the relationship between the parties deteriorated rapidly as Ms Ting raised a query about whether her significant annual leave accrual would be paid, and Superstop sought to nullify the accrual through a misconceived attempt to ‘offset’ what it said were hours paid for, but not worked. I find that Superstop withdrew its offer of part time employment to Ms Ting such that at the time of her dismissal, it was not in contemplation. It follows that I am not satisfied that the dismissal was a case of genuine redundancy.

[37] Given the findings above, it is not necessary to also consider whether Superstop complied with any obligation in a modern award or enterprise agreement that applied to Ms Ting’s employment and required consultation about the redundancy. 19

Was the dismissal consistent with the Small Business Fair Dismissal Code?

[38] The Code applies to small business employers with fewer than 15 employees. 20 A person is not unfairly dismissed if the dismissal is consistent with the Code and immediately before dismissal or at the time notice of the dismissal is given, whichever is earlier, the employer is a small business employer.21

[39] The Code does not, on its terms, appear to encompass situations of redundancy. A dismissal on the grounds of redundancy is neither a summary dismissal nor a dismissal related to the conduct or capacity of the employee. As was noted in an earlier decision of this Commission, 22 Part 3 of the Small Business Fair Dismissal Code Checklist specifically addresses the situation of redundancy, but the Checklist does not form part of the Code. Instead, the questions in Part 3 of the Checklist appear to relate to the statutory definition of ‘genuine redundancy’ in section 389 of the Act.

[40] That does not meant that the Code can never apply to dismissals where the reason given for dismissal was ‘redundancy’, because in a particular case, the reason for dismissal may not be the given reason of ‘redundancy’. However, that is not the case here. I am satisfied that the reason for dismissal was redundancy (even though it was not a genuine redundancy for the purposes of the Act). The Code is not relevant to the dismissal.

Was the dismissal harsh, unjust or unreasonable?

[41] The phrase ‘harsh, unjust or unreasonable’ was explained in Byrne v Australian Airlines Ltd 23 as follows:

“....It may be that the termination is harsh but not unjust or unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”

[42] In determining whether a dismissal was harsh, unjust or unreasonable, the Commission must take into account the criteria in section 387 of the Act. Those are considered in turn.

Was there a valid reason for the dismissal related to capacity or conduct?

[43] I have set out above my findings in relation to the factual circumstances relating to the dismissal. There was a valid reason for Ms Ting’s dismissal which was that her full time role was redundant. The reason did not relate to Ms Ting’s capacity or conduct.

Was that reason notified to the employee and was she given an opportunity to respond?

[44] Ms Ting was notified of the redundancy prior to her dismissal and had a number of opportunities to discuss the redundancy with Superstop before it took effect.

Was there any unreasonable refusal to allow a support person to be present to assist at any discussions relating to dismissal?

[45] There is no evidence of any unreasonable refusal to allow a support person to be present to assist Ms Ting at any discussions relating to the dismissal.

Was the Applicant warned about relevant unsatisfactory performance?

[46] Ms Ting’s dismissal was not related to unsatisfactory performance.

Degree to which the size of the employer’s business would be likely to impact on procedures followed in effecting the dismissal

[47] Superstop is a small business and in my view that had an effect on the procedure followed in effecting the dismissal. The issues between Ms Ting and Superstop arose in the context of a long and relatively close relationship between them. Ms Ting was not just an employee, she was a shareholder and the only person in the business with a detailed knowledge of its financial position. She was given licence to shape the role as she saw fit, because she also had a direct interest in the business. Her history of independence and direct dealings with the business is likely to have coloured the approach of both Ms Ting and the officers of Superstop. Rather than drawing on external support or advice, Superstop sought to manage the issues themselves in circumstances where they had neither the necessary expertise or information to act upon. Their objectivity in navigating the difficult issues of redundancy and Ms Ting’s accrued entitlements was undermined. This weighs both in favour of unfair dismissal, because of the effect it had on Ms Ting, and against it having regard to the particular circumstances of the business and its relationship with her.

Degree to which absence of dedicated human resources management specialists or expertise in the business would be likely to impact on procedures followed in effecting the dismissal

[48] In this case, I am not satisfied that the absence of dedicated human resource management or expertise in Superstop’s enterprise is likely to have affected the procedures followed by Superstop in relation to the dismissal. That is because even if it had its own human resources function, I am not satisfied that its approach would have been any different. It was suggested that Mrs Makrievski had relevant human resources expertise external to Superstop. There is certainly no evidence that she was employed in the business and nor did she have all the facts available to her at the time she sought to assist Superstop, in a rather robust manner. That said, it is evident that she had more than a mere professional interest in the matter, which operated to the detriment of Ms Ting.

Other relevant matters

[49] I accept Ms Ting’s evidence that her final wages on termination were not paid as required by the Act and the Award until some time after dismissal. This weighs in favour of a finding of unfair dismissal.

Conclusion on merits

[50] Having considered each of the matters specified in section 387, I am satisfied that the dismissal of Ms Ting was unreasonable. Accordingly, I find that her dismissal was unfair.

Remedy

[51] Reinstatement is the primary remedy available under the Act. In my view, reinstatement may have been the appropriate remedy in this case had it been possible to reinstate Ms Ting to the part-time Accounts Officer role, although I am concerned about the prospect of restoring a harmonious and productive working relationship between the parties in light of what has occurred. The Act limits the orders for reinstatement that can be made to the position in which the person was employed immediately before the dismissal, or to another position on terms and conditions no less favourable. 24 An order requiring Superstop to reinstate Ms Ting to the part-time role would necessarily be on less favourable terms and conditions, because it would involve fewer hours of work, and proportionately lower pay. For that reason, and because of my concern about the state of the relationship between the parties, I do not consider reinstatement to be appropriate.

[52] That leaves the question of whether compensation is an appropriate remedy in this case.

[53] Ms Ting is directed to file evidence of any income earned in the period from 31 August 2018 to date within 14 days.

[54] Superstop is directed to file any evidence on which it seeks to rely in relation to the effect of any order for compensation on the viability of its business within 14 days.

[55] Further materials can be forwarded by email to [email protected].

[56] The matter will be then listed for hearing on the question of compensation, unless the parties advise the Commission that their preference is for the matter to be dealt with on the papers.

COMMISSIONER

Appearances:

J Lim for the Applicant

R Scougall and A Runia for the Respondent

Hearing details:

2018.

Melbourne:

December 6 and 7.

Printed by authority of the Commonwealth Government Printer

<PR704994>

 1   Fair Work Act 2009 (Cth), s.385

 2   Exhibit 1

 3   Exhibit 6

 4   Exhibit 7

 5   Audio file of hearing, 6 December 2018; Exhibit 7

 6   Exhibit 7

 7   Exhibit 5

 8   Audio file of hearing, 6 December 2018

 9   Exhibit 5

 10   Audio file of hearing, 6 December 2018

 11   Audio file of hearing, Exhibit 5

 12   Exhibit 3; Exhibit 7

 13   Exhibit 7

 14   Audio file of hearing

 15   Audio file of hearing

 16   Exhibit 7

 17   Audio file of hearing

 18   Audio file of hearing

 19   Fair Work Act 2009 (Cth), s.389(1)(a)

 20   Fair Work Act 2009 (Cth), s.23

 21   Fair Work Act 2009 (Cth), s.385; s.388

 22   Nalevansky v Thought Equity Motion Inc[2010] FWA 3707

 23 (1995) 185 CLR 410 at 465

 24   Fair Work Act 2009 (Cth), s391