Kylie Sharpv.Arwon's Little Angels Child Care Centre

[2011] FWA 2849

[2011] FWA 2849

FAIR WORK AUSTRALIA

DECISION

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

Kylie Sharp
v.
Arwon's Little Angels Child Care Centre
(U2010/14217)

COMMISSIONER CONNOR WOLLONGONG, 9 MAY, 2011

Applications for alleged unfair dismissal - question of genuine redundancy - no valid reason for dismissal - dismissal considered to be unfair - monetary compensation ordered

Introduction

[1] Mrs Kylie Sharp was employed as a child care teacher with Arwon's Little Angels Child Care Centre in Nowra. Ms Cathryn Austin, the principal/licensee of the child care centre wrote to Mrs Sharp in the following terms:

"...With regret, I am writing to give you two weeks notice...to terminate your position as early child care teacher at Arwon's Little Angels. Thank you for your assistance throughout the time you spent with us at the centre. Your input was most valuable. However, we are making some changes to the centre and cut backs to the staff due to unrest by some staff members.

I was happy to discuss this position with you but have made my decision now based on the conversation with your husband who threatened and made me a promise to cause problems should your roster be changed. Be advised I will not be threatened by your husband's phone call and will take this to his superior officer if I see problems arising from his conversation. My concerns at the centre are to have the best for the children at all times, with no conflict between staff members. And will defiantly not be engaging in family members dictating their opinions.

We wish you all the very best in the future..."

[2] That letter was dated Tuesday, 9 November, 2010 and was received by mail by Mrs Sharp on Friday, 12 November, 2010.

[3] On Tuesday, 16 November, 2010 Mrs Sharp lodged an application under s.394 of the federal Fair Work Act 2009 (FW Act). Conciliation was arranged by teleconference on Monday, 6 December, 2010 but that conciliation was aborted when Ms Austin indicated that she was not prepared to take part in it. The file was allocated to me for hearing. I set the matter down for mention and programming on Tuesday, 18 January, 2011, proceeding by way of a telephone conference, as far as the child care centre was concerned, and ultimately intending to proceed to hearing on Monday, 28 March, 2011. Subsequently, a solicitor — Mr Busuttil — was appointed by Arwon's Little Angels to represent it in the hearing and he wrote on Thursday, 10 February, 2011 to seek another date for the hearing. I reconvened the proceedings on Tuesday, 1 March, 2011 to arrange another hearing date for the convenience of the parties. Mrs Sharp was by then also represented by a solicitor at that time but that solicitor subsequently ceased to act for her. In any event that hearing was rescheduled for Tuesday, 12 April, 2011. All proceedings before me were conducted in the premises at 90 Crown Street, Wollongong which Fair Work Australia now shares with the Industrial Relations Commission of New South Wales.

[4] Mrs Sharp presented her own case in the hearing, with the assistance of her husband, and she and her husband both gave evidence in the hearing. Mr Busuttil called Ms Austin to give evidence in the hearing. He also called Ms Lesley Verdon, the deputy director at the child care centre, as a witness in the proceedings.

Preliminary Jurisdictional Issue

[5] Initially, there is the question of whether or not the termination of Mrs Sharp's services was a genuine redundancy. By virtue of s.396(d), cases of genuine redundancy are excluded from jurisdiction and that issue must be considered as a threshold, preliminary matter. I brought that issue to the attention of the parties in the proceedings on Tuesday, 18 January, 2011 and Tuesday, 1 March, 2011 when I programmed the matter for arbitration.

[6] In terms of s.389:

"(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."

[7] Mrs Sharp in written submissions indicated that she believed that it was not a genuine redundancy situation and Mr Busuttil did not raise that issue as a challenge to jurisdiction. Nevertheless, it seems appropriate that at least I address that issue, since it remains fundamental to my jurisdiction.

[8] Essentially, a job becomes redundant when an employer no longer desires it to be performed by anyone [R v. Industrial Commission of South Australia; ex parte Adelaide Milk Co-operative Limited (1977) 44 SAIR 1202 at p.1205]. But often with retrenchment situations the restructuring of operations simply means the rationalisation of a business to the extent that functions formerly performed in a particular position are subsumed with other positions, resulting in a general overall reduction of staff numbers or a reduction in working hours. Ryan J of the Federal Industrial Relations Court in Jones v. Department of Energy and Minerals (1995) 60 IR 304 commented (at p.308):

"...It is within the employer's prerogative to rearrange the organisational structure by breaking up the collection of functions, duties and responsibilities attached to a single position and distributing them among the holders of other positions, including newly-created positions..."

[9] And I also note particularly the comments to similar effect made by Hamberger SDP in his decision of Friday, 19 February, 2010 in Kekeris v. A Hartrodt Australia Pty Limited[2010] FWA 674 at para 27 and by the Full Bench of FWA (Boulton J - SDP, Drake SDP and McKenna C in Ulan Coal Mines Limited v. Howarth (2010) 196 IR 32 at pp.37 and 38.

[10] According to Mrs Sharp, Ms Austin hired another person to occupy her position after she was dismissed. In any event, it is clear from Ms Austin's letter of Tuesday, 30 September, 2010 that, whilst the change in Mrs Sharp's employment from three days to one day may possibly have arisen out of a restructuring of the child care centre (to my mind, without appropriate consultation with her and due to alleged but unspecified "...unrest by some staff members..."), the motivation for Mrs Sharp's ultimate dismissal was apparently related, at least to a large extent, to the alleged conduct of Mrs Sharp's husband on the telephone, which Ms Austin perceived to be a threat, and alleged performance issues which Ms Austin spoke of in her evidence (but did not include in the letter terminating Mrs Sharp's services). I am satisfied that it was not a genuine redundancy situation within the meaning of s.389, in any event.

The Evidence

[11] Mrs Sharp has worked for Arwon's Little Angels since early in 2009 as a permanent part-time teacher for three days each week. In a written statement which formed the basis of Ms Austin's evidence in this hearing she gave three reasons for the termination of Mrs Sharp's employment, viz:

(i) an incident which had occurred at the child care centre on Thursday, 16 September, 2010 (when Mrs Sharp was the teacher on duty with responsibility for four other staff members) in which a child was caught in a barrel and was covered in sand;

(ii) a reluctance which Ms Austin perceived in Mrs Sharp discussing employment issues with her; and

(iii) a concern which Ms Austin had of a risk to children in Mrs Sharp's care.

[12] The incident on Thursday, 16 September, 2010 resulted in an investigation by the New South Wales Department of Community Services. Mrs Sharp was not directly involved in the incident. She was working inside the child care centre at the time of the incident and was not present in the playground when the incident occurred. The staff of the centre who had witnessed the incident did not report it to her — as they should have done. Mrs Sharp was unaware of the incident until it was raised with her by a parent of the child concerned. Nevertheless, Ms Austin formed the impression that Mrs Sharp, as the person in charge of the day care centre at the time, was not treating the incident as seriously as she believed was warranted.

[13] Nor did Ms Austin believe that Mrs Sharp was performing the duties of proper training to children in the child care centre and she had never observed Mrs Sharp teaching children, which was her duty. Ms Verdon has suggested that Mrs Sharp had disregard staff/child ratios at the child care centre but Mrs Sharp denies that allegation. It is also Ms Verdon's belief that Mrs Sharp had started a rumour in the child care centre among staff that they were facing redundancies and that the staff were becoming very upset and worried about their positions — not without some justification it would appear, since in Ms Austin's evidence in this hearing she spoke of the difficulties she was experiencing with her wages bill for the child care centre. However, there is nothing before me in the evidence to support Ms Verdon's assertion that Mrs Sharp was actually upsetting staff at the centre.

[14] In any event, in the light of what Ms Austin perceived was irrational behaviour on the part of Mrs Sharp, she, in consultation with Ms Verdon, decided to reduce Mrs Sharp's shifts from three day shifts each week to one day shift. Mrs Sharp's hours of work were reduced but that decision was not communicated to Mrs Sharp until Monday, 8 November, 2010 when she checked her hours of work and was informed that her hours of work had been reduced to one day each week.

[15] On Tuesday, 9 November, 2010 Mrs Sharp asked if she could speak to Ms Austin to discuss her job. According to Mrs Sharp, Ms Austin was reluctant to hold the meeting with her, preferring to talk on the telephone and certainly did not wish to have Mrs Sharp's husband accompany her to any meeting to discuss the issue. According to Ms Austin, she offered to have a conversation with Mrs Sharp firstly at her home and later at a coffee shop but Mrs Sharp declined those suggestions. Ms Austin indicated in her evidence that she had no difficulties with Mrs Sharp being accompanied by her husband but the venues being proposed for the meeting presented some difficulties to her.

[16] Mrs Sharp proposed to have the meeting at the Nowra police station where Mrs Sharp's husband worked as a police officer. Ms Austin, naturally enough, declined that suggestion and, as Mr Sharp conceded in his evidence, that was a most inappropriate venue for the meeting. Mrs Sharp then asked that her husband accompany her at the meeting and that it be held at the child care centre. Ms Austin again proposed a coffee shop. She did not want to have the meeting at the child care centre because she claimed that it may cause unrest with other staff members and did not want Mrs Sharp's husband to accompany her at the child care centre.

[17] Mrs Sharp informed Ms Austin that she was not comfortable talking to her on the telephone and that she would ask her husband to call her to discuss the matter. Mr Sharp subsequently spoke to Ms Austin on the telephone and told her that he understood that his wife was entitled to have a support person present at any meeting to discuss her future. It is alleged by Mrs Sharp's husband that Ms Austin was very abrupt on the telephone. However, Ms Austin's recollections of the telephone conversation was:

Mr Sharp: Why are you putting Kylie back in hours?

Ms Austin: We are having problems with Kylie's attitude at the centre. She has become erratic and we decided to give her one day a week to assess her position at the centre for the sake of the children. There are going to be cutbacks to the centre due to the unrest of staff members and a number of incidents that were unsatisfactory. In particular, one of the incidents that Kylie was party to concerning a child in a barrel that put the child at risk.

Mr Sharp: You can be sure I'm going to take this further.

Ms Austin: Are you threatening me?

Mr Sharp: No, I'm not threatening you. It's a promise.

[18] Ms Verdon, who overheard Ms Austin on the telephone, recalled that Ms Austin was upset by the telephone call after she hung up. Of course, she can give no evidence of what Mr Sharp actually said on the other end of the telephone to upset Ms Austin. It is Mr Sharp's assertion that the "threat" he made was to take the matter further within his legal rights, ie before an industrial tribunal. However, he claimed that his comment was not made with the passion which Ms Austin alleges. And Ms Austin was prepared to respond with a threat of her own in the letter of Tuesday, 9 November, 2010 terminating Mrs Sharp's services, ie to take Mr Sharp's conduct to his superior officer.

[19] Mr Sharp's recollection of the telephone conversation was outlined in a written statement he provided as the basis of his evidence:

"...I was of the belief (Mrs Sharp's) hours could not be cut back without notice. I informed the respondent that Kylie would not be having a meeting to discuss the matter further without having a support person present. The respondent informed me there was going to be cutbacks at the centre due to the unrest of some staff members. I reiterated to the respondent that she could not cut back Kylie's hours without notice as she was employed in a permanent part-time position. The respondent informed me she would not be giving Kylie any further days..."

[20] No comment relating to Mrs Sharp's performance or the barrel incident. At which point Mr Sharp made the comment that he proposed to take the matter "...further to Industrial Relations...". At which point Ms Austin hung up.

[21] Mrs Sharp was unwell at that time and obtained a medical certificate excusing her from work which her husband dropped off at the child care centre on Wednesday, 10 November, 2010. By that time Mrs Sharp had been dismissed by Ms Austin's letter of Tuesday, 9 November, 2010 which was received in the post on Friday, 12 November, 2010.

Conclusion

[22] The first issue I propose to address in this hearing is whether a proposal to substantially reduce the hours of work for a permanent part-time employee constitutes a dismissal for the purposes of a s.394 application. The word "dismissal" for proceedings flowing from a s.394 application ordinarily denotes an actual discharge from employment — a severance of the contract of employment in its entirety. As Brereton J of the New South Wales Supreme Court commented in his separate judgement in Ex Parte Wurth; Re Tully (1954) 55 SR(NSW) 47 at p.59, the word "dismissal" must be given its ordinary and natural meaning in the context in which it lies in particular legislation and:

"…both by use and by derivation its basic meaning is 'to send away'…"

[23] But equally where there is such a fundamental unilateral alteration to the terms of a contract of employment — as a change from three days per week to one day per week — I think it is open to suggest that there has already been such a break in the existing contract of employment and its attempted replacement with an entirely new contract of employment — made apparently with no consultation with the employee concerned — as to constitute to my mind a dismissal for the purposes of a s.394 application.

[24] In any event, with the letter Ms Austin forwarded to Mrs Sharp on Tuesday, 9 November, 2010 there cannot be any doubt that events had overtaken any issues arising out of a proposal to reduce Mrs Sharp's hours of work: she was ultimately dismissed and the reason given by Ms Austin in the letter she received from her at the time of the dismissal appears primarily to relate to a perceived problem with Mrs Sharp's husband — not Mrs Sharp herself.

[25] In her evidence, Ms Austin raised the incident on Thursday, 16 September, 2010 where the child in care was caught in a barrel and covered by sand as grounds for Mrs Sharp's dismissal. I accept that this incident was a serious issue for the child care centre and Ms Austin is correct to treat it as such. But it would appear to me that this incident is not something which can be regarded as the fault of Mrs Sharp and it would not be a legitimate ground for her dismissal. In my opinion, I do not believe that Mrs Sharp is guilty of any wrongdoing over this incident. I note also that almost two months had elapsed between the incident and Mrs Sharp's dismissal, suggesting to me that it was not really a reason for the dismissal. Instead, it appears more likely to me that the incident and the other allegations now made against Mrs Sharp were no more than an afterthought on Ms Austin's part to provide further justification for the decision to dismiss Mrs Sharp after she had already been dismissed — an ex poste facto rationalisation.

[26] It is the terms of the letter of Tuesday, 9 November, 2010 which Mrs Austin wrote to Mrs Sharp which sets out the grounds for the dismissal. Ms Austin claimed that she did not set out the other issues of which she now complains in the letter because she was attempting to spare Mrs Sharp's feelings. But what she already wrote was hardly conciliatory, in my opinion.

[27] In his submissions, Mr Busuttil conceded that the dismissal of Mrs Sharp "...could have been handled better..." but he disputed that it justified my intervention in support of Mrs Sharp and that, in all the circumstances, her dismissal was unfair. Mrs Sharp has a remedy in this hearing if she can establish that her dismissal from the child care centre was "harsh", "unjust" or "unreasonable", to use the language of s.385(b). In particular, the criteria for considering whether a dismissal was unfair in that context is set out in s.387 and I take those matters into account in my determination of Mrs Sharp's application, viz:

"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 the dismissal; and

(e) if the dismissal related to the unsatisfactory performance by the person - whether the person had been warned about the 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."

[28] I am satisfied that there was no valid reason for Mrs Sharp's dismissal [s.387(a)]. Any issue between Ms Austin and Mrs Sharp's husband, as distinct from Mrs Sharp herself, are not legitimate issues to take into account and, moreover, even on the basis of Ms Austin's own evidence in the hearing (which is disputed by Mr Sharp), the alleged threat that Mrs Sharp's husband made was that the reduction in Mrs Sharp's hours of work would be taken further by a challenge — which was a matter open to Mrs Sharp in the first place. Mrs Sharp was given no opportunity to respond to the decision taken by Ms Austin to terminate her services [s.387(c] and I conclude from the evidence before me in this hearing that Mrs Sharp was refused a support person, ie her husband, to discuss the issues concerning her employment at the child care centre [s.387(d)]. It would seem to me from the evidence that Ms Austin was acting on her belief that, whilst Mrs Sharp was entitled to a support person to discuss issues, that support person may not necessarily be her husband. That is clearly incorrect. Mrs Sharp is entitled to rely on a support person of her choosing, including her husband.

[29] There was no warning over allegedly unsatisfactory conduct by Mrs Sharp [s.387(e)]. I do not believe that at any time Mrs Sharp ever received anything in nature of counselling from Ms Verdon over any alleged unsatisfactory performance issues — at least to the extent that would take the matter into the realm of a disciplinary meeting. What appears to have taken place is simply discussions between the two women from time to time.

[30] I appreciate that the child care centre is a relatively modest operation [s.387(f)] and, as Mr Busuttil submitted, with less than 15 employees engaged in the child care centre, in terms of s.396(c) the dismissal must be considered in the context of the Small Business Fair Dismissal Code. But that does not excuse it from following what I regard as fairly common industrial practices when it dismisses an employee. The procedure Ms Austin put in place were not acceptable, in my opinion.

[31] The dismissal of an employee of a small business is unfair, in terms of s.385(c) if it was carried out in a manner not consistent with the Code. In particular, the obligations on a small business to give a dismissed employee reasons for a dismissal parallel those outlined in S.387. For instance, the Code provides that for (other than summary dismissal):

"... the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee's conduct or capacity to do the job. The employee must be warned verbally, or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee's response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer's job expectations."

[32] And the Code also indicates:

"In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity."

[33] Ultimately, the question before me remains to determine, having regard to the terms of s.381(2), whether or not when Mrs Sharp was dismissed there was a "fair go all round". That suggests that s.394 applications should be considered having regard to the interests of both the employee and the employer and to ensure that they both received a "fair go". That concept was initially approved by Sheldon J of the former New South Wales Industrial Commission in Re Loty and Holloway and the Australian Workers Union (1971) AR(NSW) 95 at p.99. It has now been adopted and given statutory recognition in s.381(2). Ultimately, in determining the matter before me I should approach the issue on the basis of an assessment of what a reasonable observer would believe to be fair and reasonable, having regard not only to the position of the employee but the position of the former employer, having particular regard to the principles set out in s.387. I do not believe that Mrs Sharp was given a "fair go".

[34] The second issue, on a decision that a particular dismissal was unfair, is to determine the appropriate remedy for the dismissed employee — reinstatement or, alternatively, monetary compensation in lieu thereof, with preference being given to reinstatement over monetary compensation and that latter remedy only being available if reinstatement is impracticable [Ss.390, 391 and 392]. Mrs Sharp has not sought her reinstatement and in the circumstances described to me in this hearing I do not believe that the restoration of any working relationship between Mrs Sharp and Ms Austin would be practicable. There has been far too much friction between Mrs Sharp, Ms Austin and Ms Verdon already to make the restoration of an effective employment relationship between them feasible. Mrs Sharp's application is therefore confined to monetary compensation alone.

[35] The criteria for deciding the amount of compensation for an unfairly dismissed employee is set out in s.392(2), viz:

"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 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."

[36] And s.392(3) provides further:

"If FWA is satisfied that misconduct of a person contributed to the employer's decision to dismiss the person, FWA must reduce the amount it would otherwise order under subsection (i) by an appropriate amount on account of the misconduct."

[37] Mrs Sharp earned the net sum of $561.40 for her three shifts each week. She indicated in her evidence that since the termination of her services she has obtained some casual employment but she did not provide much detail concerning the nature of that casual employment in her evidence. In making an assessment of the appropriate level of monetary compensation I have noted the guidelines described by the Full Bench of the former Australian Industrial Relations Commission (Munro J, Duncan DP and Jones C) in Sprigg v. Paul's Licensed Festival Market (1998) 88 IR 21 at pp.21 and 24.

[38] But as I see the position, a certain amount of speculation still exists over the calculation of appropriate monetary compensation under s.392(2). To my mind, such an approach is contemplated by the language actually used in s.392(2) when, among other things, for instance, it directs me to consider "...the effect of the order on the viability of the employer's enterprise...", the efforts made by the dismissed employer to mitigate loss of earnings received by the dismissed employee, the amount of remuneration that an employee "...would have been likely to receive..." were it not for her dismissal and "...any income reasonably likely to be earned during the period between the making of the order for compensation and the actual compensation...". And on the issues raised in s.392(3), ie that any misconduct of the dismissed employee should be considered in assessing monetary compensation, that would involving quantifying an essentially unquantifiable matter.

[39] Having regard to the provisions of s.392(2)— s.392(3) is not relevant in this hearing — I propose that Mrs Sharp should be paid the sum of $4,800.00. I make a separate order to give effect to that decision.

COMMISSIONER

Appearances:

Applicant appeared unrepresented, supported by her husband

Richard Busuttil of Richard Busuttil and Company for the respondent

2011

Wollongong

April, 12

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