Kristen Severino v Galaxy Electric International Pty Ltd T/A Coonanbarra Cafe

[2013] FWC 477

[2013] FWC 477

FAIR WORK COMMISSION

DECISION

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

Kristen Severino
v
Galaxy Electric International Pty Ltd T/A Coonanbarra Cafe
(U2012/12059)

VICE PRESIDENT WATSON SYDNEY, 8 FEBRUARY 2013

Application for an unfair dismissal remedy - whether dismissal harsh, unjust or unreasonable - whether there was a valid reason for dismissal - whether termination result of genuine redundancy - Fair Work Act 2009 ss. 387, 389, 394.

Introduction

[1] This decision relates to an application for an unfair dismissal remedy by Mrs Kristen Severino (Mrs Severino) concerning the termination of her employment by Galaxy Electric International Pty Ltd trading as Coonanbarra Cafe (Galaxy Electric). The application is made under s.394 of the Fair Work Act 2009 (the Act).

[2] At the hearing on 11 January 2013, Ms K Edwards of counsel appeared on behalf of Mrs Severino. Having sought and being granted an adjournment on 4 December 2012 to obtain legal advice Galaxy Electric did not appear in the proceedings on 11 January 2013.

[3] In correspondence to my chambers prior to the proceedings Galaxy Electric sought a further adjournment on the basis that its barrister Mr Donnelly was unavailable. No correspondence was received from Mr Donnelly. Ms Edwards informed me of contact she had made with Mr Donnelly. She said that her understanding from that conversation was that Mr Donnelly had not been briefed to appear in the matter. Ms Edwards asked that the matter proceed in the light of the two listings of the matter, the costs that had been incurred by her client in attending the two proceedings, and the inadequate basis for seeking the further adjournment of the matter.

[4] In the light of these circumstances I determined to hear the matter on 11 January 2013. I admitted into evidence all documentary material filed by Galaxy Electric prior to the hearing. Nevertheless it should be recorded that the failure of the employer to attend or be represented has presented difficulties in assessing its case and the circumstances generally.

Background

[5] Mrs Severino commenced employment at the Coonanbarra Cafe on 1 October 1990 as a part time waitress. In December 1991 she became a full time employee. In early 1992 she held the position of “Front of House Manager”. At that time the Connanbarra Cafe was owned by Wahroonga Village Stores Pty Limited (WVS).

[6] Galaxy Electric purchased the Coonanbarra Cafe business from WVS on 29 August 2011. At the time of the sale of the business WVS had paid Mrs Severino all outstanding entitlements in relation to annual leave and long service leave. As it was understood that Mrs Severino’s employment would continue with Galaxy Electric, WVS did not pay her notice of termination or redundancy entitlements.

[7] In a meeting convened a week prior to the completion of the sale of business, Mrs Severino was asked by Galaxy Electric if she would continue her employment in the same position. She accepted the offer, and on Monday 29 August 2011, continued work on the same basis as before. Mrs Severino contends that approximately one week later Galaxy Electric asked her to sign a document headed “Contract of Employment”. Mrs Severino said that the document described her current hours and remuneration and that she subsequently signed the document. Mrs Severino does not possess a copy of the document. Galaxy Electric states that no such document ever existed.

[8] On 13 July 2012 Mrs Severino was advised in writing of Galaxy Electric’s decision to terminate her employment effective 21 July 2012. The letter described the reasons for the termination as follows: 1

“As you know, the business is facing a difficult economic climate at the moment and the owner(sic) have decided to take actions to keep the business afloat. Unfortunately as part of the downsizing and cost saving plan, we have decided that the business can no longer afford to continue your employment.

I would like to make clear that in no way does your termination reflect that the company are in any way unhappy with your performance. In fact, you have been regarded as one of our most valuable team members. Unfortunately, you have been let go simply because of the general economic downturn and a significant reduction of the business’s revenue.”

[9] Attached to the termination letter and also dated 13 July 2012 was a letter headed “Causal Employment Offer”. It read as follows: 2

“I am pleased to write this letter to inform you that we are offering a causal(sic) employment with the coonanbarra cafe.

The position we are offering is that of waitress at hourly rate. It’s a causal(sic) position.

We would like you to start work on 23th July 2012. If this date is not acceptable, please contact me immediately.”

[10] Mrs Severino formally rejected the offer of a casual position in an email to Galaxy Electric on the evening of 13 July 2012. In the email, Mrs Severino requested that Galaxy Electric provide in writing the details of her entitlements, including clarification of an ongoing issue relating to leave loading.

[11] A reply email from Galaxy Electric outlined calculations of Mrs Severino’s entitlements. The calculations were as follows: annual leave accumulated from 1 April 2012 to 21 July 2012 - $650.70; leave loading of 17.5% from 29 August 2011 to 31 March 2012 - $280.00; one weeks’ notice - $691.00; totalling $1601.70.

[12] In further correspondence, Mrs Severino indicated that she did not agree with the calculations and asked Galaxy Electric to confirm whether the termination of her employment was, in effect, a case of redundancy.

[13] At the time of the termination of her employment, Mrs Severino was earning $800.00 gross of tax per week, working Monday to Friday from 9:00am to 3:00pm.

Applicant’s Submissions

[14] Counsel for Mrs Severino submits that there was no break in her employment as a result of the sale of business by WVS to Galaxy Electric. On the basis of that submission, she claims to have been continuously employed within the meaning of s.22 of the Act from 1 October 1990 to the termination of her employment on 21 July 2012.

[15] Counsel for Mrs Severino submits that the termination letter demonstrates that the dismissal had nothing to do with her performance as an employee of Galaxy Electric. In addition, the letter of termination and further correspondence from Galaxy Electric reveals that they are not relying upon a case of genuine redundancy.

[16] Counsel for Mrs Severino submits that the offer of a casual position represents a significant demotion and reduction in remuneration. It is contended that the demotion could be assessed as either actual or potential given the difference between work as Front of House Manager, the nature of casual work at the Coonanbarra Cafe and the allegation that Galaxy Electric has employed others to perform the tasks that she formerly undertook. She further submits that Galaxy Electric provided no direct evidence supporting the claim that there was a downturn in business affecting the financial position of the Coonanbarra Cafe. Likewise, there is no evidence as to how the structure, or nature of positions have been changed, evidencing the removal of the Front of House Manager position.

[17] Counsel for Mrs Severino further submits that Galaxy Electric has not complied with clause 8 of the Restaurant Industry Award 2010 3 (the Award) to consult with her in relation to major workplace change resulting in the termination of her employment.

[18] In addition to submitting that the termination of her employment was unfair and not a case of genuine redundancy, Mrs Severino submits that her family responsibilities formed part of the reason for her dismissal. Mrs Severino contends that the reasons provided by Galaxy Electric for the dismissal amount to an admission of a breach of the Sex Discrimination Act 1984 (Cth). She further submits that discrimination on the ground of family responsibilities is harsh, unjust and unreasonable within the meaning of s.385(c) of the Act.

[19] Mrs Severino submits that she was unfairly dismissed and that reinstatement is not a viable option. She does not feel she can return to work for Galaxy Electric as a consequence of its discriminatory conduct. On that basis, she feels that compensation is the appropriate form of relief.

Respondent’s Submissions

[20] Galaxy Electric submits that at the time of purchasing the business, all employees were informed that there would be no contracts of employment, as time was needed to better understand and manage the business.

[21] Galaxy Electric submits that business turnover was decreasing, that it required an employee who could spend more time at the Coonanbarra Cafe, at times when functions were booked and that Mrs Severino’s availability did not suit its needs. Galaxy Electric submits that the option to change Mrs Severino from a part time to a casual employee was the best course of action for the efficient running of the business.

[22] Galaxy Electric says that it made inquiries with the Fair Work Ombudsman and engaged in communications with three Fair Work Inspectors via telephone and email. Galaxy Electric submits that on all occasions they were advised that Mrs Severino was employed for less than one year and was therefore entitled to one weeks’ notice of termination.

[23] Galaxy Electric submits that the termination of Mrs Severino’s employment was fair based on the advice of the Fair Work Ombudsman.

Relevant Legislation

[24] Section 385 of the Act relevantly provides:

“385 What is an unfair dismissal

A person has been unfairly dismissed if FWA is satisfied that:

(a) the person has been dismissed; and

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

(c) the dismissal was not consistent with the Small Business Fair Dismissal Code; and

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

Note: For the definition of consistent with the Small Business Fair Dismissal Code: see section 388.”

[25] Section 387 sets out the criteria for determining whether a dismissal was harsh, unjust or unreasonable, as shown below:

“387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA 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 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 FWA considers relevant.”

[26] One of the elements that the Fair Work Commission must be satisfied in determining that a person has been unfairly dismissed is that the dismissal was not a case of genuine redundancy: s.385(d). Genuine redundancy is defined in s.389 of the Act as follows:

“389 Meaning of genuine redundancy

(1) 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.”

[27] Section 394 of the Act relevantly provides:

“394 Application for unfair dismissal remedy

(1) A person who has been dismissed may apply to FWA for an order under Division 4 granting a remedy.

Note 1: Division 4 sets out when FWA may order a remedy for unfair dismissal.

Note 2: For application fees, see section 395.

Note 3: Part 6-1 may prevent an application being made under this Part in relation to a dismissal if an application or complaint has been made in relation to the dismissal other than under this Part.

(2) The application must be made:

(a) within 14 days after the dismissal took effect; or

(b) within such further period as FWA allows under subsection (3).

(3) FWA may allow a further period for the application to be made by a person under subsection (1) if FWA is satisfied that there are exceptional circumstances, taking into account:

(a) the reason for the delay; and

(b) whether the person first became aware of the dismissal after it had taken effect; and

(c) any action taken by the person to dispute the dismissal; and

(d) prejudice to the employer (including prejudice caused by the delay); and

(e) the merits of the application; and

(f) fairness as between the person and other persons in a similar position.”

Genuine Redundancy

[28] I do not consider that the circumstances fall within the definition of a genuine redundancy under s.389 of the Act. Although it might be said that the previous position is no longer required to be performed at the same time and on the same basis as previously, it could not be seriously contended that consultation obligations under the Award have been followed. I find that this is not a case of genuine redundancy.

Harsh Unjust or Unreasonable

[29] The determination of this question must involve a consideration of the factors in s.387 of the Act. I consider them in turn.

Valid reason - s.387(a)

[30] In this case Galaxy Electric determined that it needed an employee in charge of events who worked different hours to Mrs Severino and different hours to those on which it considered Mrs Severino to be available. However, the details of the requirements, the extent to which they differ from Mrs Severino’s regular hours and her future availability are all uncertain because of the lack of consultation leading to the termination and the scant details provided by Galaxy Electric in defending its position in this case. Galaxy Electric is a small business. Its owner does not speak English as a first language, and it sought advice on the legality of its proposals prior to taking the action it did.

[31] Counsel for Mrs Severino submitted that the reason was not valid because it was in breach of anti-discrimination legislation and the prohibition on discrimination on the ground of family responsibilities.

[32] The test for a valid reason is whether the reasons are sound, defensible and well founded. This requires a consideration of the justification for the termination, the legitimacy of such reasons, and the basis for adopting them in this case. I consider that the argument concerning discrimination is of a somewhat different character which I will consider in relation to other relevant factors. On balance I am prepared to find that there was a valid reason in this case, although because of the circumstances one that has not been strongly established. Galaxy Electric clearly decided that it did not need someone performing Mrs Severino’s role during the hours she was previously employed. I consider that such matters are legitimately within the employer’s prerogative to determine. Clearly the process adopted left a lot to be desired but this, as with the discrimination argument, require separate consideration.

Notification of Reason - s.387(b)

[33] The letter of termination dated 13 July effectively disclosed the reason for termination - albeit without prior notice or discussion.

Opportunity to Respond - s.387(c)

[34] Conduct was not a reason for the dismissal but her capacity to work some alternative arrangement was clearly relevant to the change implemented by Galaxy Electric. There was no opportunity provided to Mrs Severino to discuss these matters prior to the implementation of the decision. I find that there was a prospect of devising a suitable alternative working arrangement given Mrs Severino’s length of employment, good employment record and experience in the business. The failure to discuss these matters was a significant failure in the circumstances as it might well have resulted in an alternative working arrangement.

Support Person - s.387(d)

[35] This is not a significant factor in this case because Mrs Severino was not given an opportunity for input into the decision at all and was well able to convey her views, availability and capacity herself if given the opportunity. Understandably she made no request for a support person to be present.

Unsatisfactory Performance - s387(e)

[36] This factor is not relevant as there is no such allegation against Mrs Severino.

Procedures for implementing dismissal - s.387(f) and (g)

[37] The procedures adopted in this case left a lot to be desired as I have already found. I find that the size of the business and the absence of Human Resources professionals are factors that gave rise to this deficiency.

Other Factors

[38] I note the argument on behalf of Mrs Severino that the termination was unlawful discrimination because the restrictions on her working hours were the product of family responsibilities. However, it does not appear clear to me that unlawful discrimination has occurred in this case. Galaxy Electric determined to adopt different operational and staffing practices. It did not wish to have a person perform Mrs Severino’s duties at the times she was employed to work. It did so for reasons that appear to be legitimate business reasons. The change impacted on Mrs Severino because her previous hours were ideal for her family responsibilities and any alternative would be less than ideal. But it would appear that the change, and presumably other associated changes, would have been sought regardless of the responsibilities of the incumbents in the roles they were performing and Mrs Severino was not treated any differently than any actual or hypothetical others who did not have those responsibilities. I do not consider that a case for unlawful discrimination would be a strong one.

Conclusions

[39] Assessing the overall circumstances outlined above I consider that the termination of Mrs Severino’s employment was unreasonable. The defect in failing to discuss the operational difficulties and attempt to devise a mutually acceptable alternative working arrangement in this case was significant because the failure precluded the real potential of avoiding termination. Against this must be balanced the prospect that no such arrangement would have been reached and the apparent business reasons behind the termination. I note in this regard the efforts currently being made by Mrs Severino to obtain training for alternative work as a teacher’s aid with the same hours as she worked with Galaxy Electric. In this case these factors are not such as to alter my conclusion that the termination was unreasonable but they may nevertheless be relevant to the question of remedy to which I now turn.

Remedy

[40] I agree with the applicant that reinstatement is not an appropriate remedy in this case. Section 392 of the Act relevantly provides:

“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), FWA 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 FWA considers relevant.”

[41] I consider that an award of compensation is warranted. I have had regard to all of the circumstances including the basis of my finding of unreasonableness and my assessment of the likely events if a more appropriate process had been followed. I am not satisfied that employment on a basis suitable to Mrs Severino would have continued indefinitely if a proper consultation process had been followed. I have had regard to this contingency.

[42] In all the circumstances I consider that an order of compensation of 12 weeks pay is appropriate. An order reflecting this decision is issued with this decision. 4 The applicant has reserved its rights to make an application for an order for payment of her costs. Any such application must be made by way of written submissions within 21 days of this decision.

VICE PRESIDENT WATSON

Appearances:

K. Edwards of counsel for Mrs K. Severino

Hearing details:

2012.

Sydney.

11 January.

 1   Exhibit E3 - Statement of Kristen Margaret Severino: Annexure A - Employee Termination Letter at [2] and [3].

 2   As above - Annexure A - Causal Employment Offer at [1] to [3].

 3   MA000119.

 4   PR533859.

Printed by authority of the Commonwealth Government Printer

<Price code C, PR533370>