Lachlan Westrip v Madinah Wheels & Tyre Pty Ltd - [2023] FWC 2632

[2023] FWC 2632

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.394—Unfair dismissal

Lachlan Westrip
v

Madinah Wheels & Tyre Pty Ltd

(U2023/4269)

COMMISSIONER MATHESON

SYDNEY, 11 OCTOBER 2023

Application for unfair dismissal remedy – Small Business Fair Dismissal Code – valid reason for dismissal – dismissal harsh – compensation awarded.

On 17 May 2023 Mr Lachlan Westrip (Applicant) made an application to the Fair Work Commission (Commission) under s.394 of the Fair Work Act 2009 (Cth) (FW Act) for a remedy, alleging that he had been unfairly dismissed from his employment with Madinah Wheels & Tyres Pty Ltd (Respondent). The Applicant seeks financial compensation.

When can the Commission order a remedy for unfair dismissal?

Section 390 of the FW Act provides that the Commission may order a remedy if:

(a) the Commission is satisfied that the Applicant was protected from unfair dismissal at the time of being dismissed; and

(b) the Applicant has been unfairly dismissed.

Both limbs must be satisfied. I am therefore required to consider whether the Applicant was protected from unfair dismissal at the time of being dismissed and, if I am satisfied that the Applicant was so protected, whether the Applicant has been unfairly dismissed.

When has a person been unfairly dismissed?

Section 385 of the FW Act provides that a person has been unfairly dismissed if the Commission 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.

Background

The uncontested factual background to the matter is as follows:
·   The Respondent provides wheel, tyre and other automotive services from two locations in Sydney. The Respondent is a small business that employs around five people.
·   The Applicant commenced working for the Respondent in mid-2019 as an apprentice before taking on a role as a trade qualified Mechanic on a full-time basis earning $64,896 per annum. The evidence of the Applicant and Mr Abdul Saidi during the hearing suggests that the Applicant commenced as an apprentice in April 2019.
·   The Applicant’s employment was terminated on 9 May 2023. At that time the Applicant was given an undated letter from ‘Sunny’ of the Respondent stating that the reason for his termination was as follows:
‘The reason for your termination is due to your recent actions of theft / miss use (sic) company wholesale dealer account details to gain profits for non-business related matters in the workplace. This type of behaviour is unacceptable and goes against the values and policies of our company’.
·   The Applicant was also given written warnings at the time he was given a termination letter on 9 May 2023.
The Applicant submitted in his application that he has been unfairly dismissed because the Respondent did not speak to him or counsel him regarding any deficiencies in his performance or conduct prior to his dismissal and that the two warning letters were given to him at the same time as the termination letter.[1]

The conference

There being contested facts involved, the Commission is obliged by s.397 of the FW Act to conduct a conference or hold a hearing.

After taking into account the views of the Applicant and the Respondent and whether a hearing would be the most effective and efficient way to resolve the matter, I considered it appropriate to hold a conference for the matter (s.399 of the FW Act).

Both parties were self-represented with the Applicant supported by his uncle, Mr David Westrip and Ms Areej Faruquie appearing for the Respondent.

Witnesses

The Applicant gave evidence on his own behalf.

Sunny Faruquie, the Director of the Respondent and Abdul Saidi, Store Manager of the Respondent, gave evidence for the Respondent.

Submissions

The Applicant’s submissions and materials

The Applicant sent an email to the Commission on 17 July 2023. In the body of that email, the Applicant set out his submissions stating that he is of the opinion that the dismissal was harsh, unjust or unreasonable for the following reasons:
·   he had no prior opportunity to respond to the two undated warnings that were given to him at the end of his shift on 9 May 2023 with the termination letter;
·   the dismissal was harsh as he was not ‘able to prove that he was not guilty of the alleged misconduct’;
·   the Respondent has provided no evidence to support its conclusion;
·   the economic and personal consequences to the Applicant were harsh as the Respondent has withheld all entitlements owed. In this regard, the Applicant says his last payslip dated 31 January 2023 recorded an annual leave balance of 560 hours and that he had a further 35 hours accrued up until 9 May 2023, being the date of his termination;
·   the Applicant’s request for a separation certificate was denied by the Respondent.
In support of his submissions the Applicant filed a number of documents. These included:
·   the Applicant’s witness statement;
·   an undated letter signed by Peter Westrip indicating that on 10 and 12 May 2023 he attempted to collect a separation certificate for the Applicant and was unsuccessful in doing so;
·   an undated termination letter which the Applicant says was provided to him on 9 May 2023;
·   two further undated letters that refer to concerns about the Applicant’s conduct and performance and which the Applicant says were provided to him on 9 May 2023 with his termination letter;
·   payslips showing gross weekly earnings of $1,248;
·   the Applicant’s statement of evidence;
·   an image of what appear to be text messages sent by the Applicant seeking a Centrelink separation certificate.

The Respondent’s submissions and materials

The Respondent did not file a Form F3 response to the Application however did file submissions and materials on 8 August 2023. This included:
·   the Respondent’s outline of arguments;
·   witness statements for Abdul Saidi and Sunny Faruquie;
·   a termination letter dated 9 May 2023, the contents of which are the same as the termination letter filed by the Applicant;
·   two warning letters dated 9 May 2023, the contents of which are the same as the undated and unsigned warning letters filed by the Applicant;
·   a series of images of text messages between Mr Saidi and the Applicant, with the Applicant communicating his lateness for work on several occasions;
·   the Applicant’s pay slip for the period between 8 May 2023 and 12 May 2023;
·   a tax invoice dated 12 April 2023 from Motospecs for a ‘Rival Aluminium Bumper Gun Revo’;
·   a proof of account balance for the Respondent dated 1 August 2023;
·   an electricity disconnection warning notice regarding an unpaid account dated 5 July 2023 addressed to the Respondent.

Has the Applicant been dismissed?

A threshold issue to determine is whether the Applicant has been dismissed from their employment.

Section 386(1) of the FW Act provides that the Applicant has been dismissed if:

(a) the Applicant’s employment with the Respondent has been terminated on the Respondent’s initiative; or

(b) the Applicant has resigned from their employment but was forced to do so because of conduct, or a course of conduct, engaged in by the Respondent.

Section 386(2) of the FW Act sets out circumstances where an employee has not been dismissed, none of which are presently relevant.

There was no dispute and I find that the Applicant’s employment with the Respondent terminated at the initiative of the Respondent.

I am therefore satisfied that the Applicant has been dismissed within the meaning of s.385 of the FW Act.

Initial matters

Under s.396 of the FW Act, the Commission is obliged to decide the following matters before considering the merits of the application:

(a) whether the application was made within the period required in subsection 394(2);

(b) whether the person was protected from unfair dismissal;

(c) whether the dismissal was consistent with the Small Business Fair Dismissal Code;

(d) whether the dismissal was a case of genuine redundancy.

Was the application made within the period required?

Section 394(2) requires an application to be made within 21 days after the dismissal took effect.

It is not disputed and I find that the Applicant was dismissed from his employment on 9 May 2023. The Commission’s records indicate the Applicant made the application on 17 May 2023. I am therefore satisfied that the application was made within the period required in subsection 394(2).

Was the Applicant protected from unfair dismissal at the time of dismissal?

I have set out above when a person is protected from unfair dismissal.

Minimum employment period

It was not in dispute and I find that the Respondent is a small business employer, having fewer than 15 employees at the relevant time.

I find that the Applicant was an employee, who commenced their employment with the Respondent in April 2019 and was dismissed on 9 May 2023, a period in excess of 12 months.

I am therefore satisfied that, at the time of dismissal, the Applicant was an employee who had completed a period of employment with the Respondent of at least the minimum employment period.

Applicant’s annual rate of earnings

It was not in dispute and I find that, at the time of dismissal, the sum of the Applicant’s annual rate of earnings (being $64,896) was less than the high income threshold, which, for a dismissal taking effect on or after 1 July 2022, is $162,000.

I am therefore satisfied that, at the time of dismissal, the Applicant was a person protected from unfair dismissal.

Was the dismissal a case of genuine redundancy?

Under s.389 of the FW Act, a person’s dismissal was a case of genuine redundancy if:

(a) the 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.

It was not in dispute and I find that the Applicant’s dismissal was not due to the Respondent no longer requiring the Applicant’s job to be performed by anyone because of changes in the operational requirements of the Respondent’s enterprise.

I am therefore satisfied that the dismissal was not a case of genuine redundancy.

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

As mentioned above, I find that the Respondent was a small business employer within the meaning of s.23 of the FW Act at the relevant time, having fewer than 15 employees (including casual employees employed on a regular and systematic basis).

While the Respondent did not make submissions expressly addressing the Small Business Fair Dismissal Code (Code), the Commission has an obligation to satisfy itself that it has the jurisdiction to perform a particular function.[2] In this regard, s.396 of the FW Act requires the Commission must decide whether the dismissal was consistent with the Code before considering the merits of the Application.

Section 388 of the FW Act provides that a person’s dismissal was consistent with the Small Business Fair Dismissal Code if:

(a) immediately before the time of the dismissal or at the time the person was given notice of the dismissal (whichever happened first), the person’s employer was a small business employer; and

(b) the employer complied with the Small Business Fair Dismissal Code in relation to the dismissal.

I have considered the circumstances surrounding the dismissal to consider whether the Code has in fact been complied with by the Respondent based on the materials and evidence before the Commission.

Dismissal grounds

In deciding whether the Code has been complied with it is necessary to consider the nature of the dismissal to determine which part of the Code would have application. This is because the Code divides the different types of dismissal into the categories of “Summary Dismissal” and “Other Dismissal” and states:

“The Code

Summary Dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other Dismissal

In other cases, 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.

Procedural Matters

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.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements”.

In its outline of argument, the Respondent has submitted that it dismissed the Applicant for both misconduct and poor work performance. Where dismissal grounds relate to both misconduct and performance, the Code is awkward in its application. This is because it delineates the considerations for ‘Summary Dismissal’ for serious misconduct and ‘Other Dismissal’. In cases of summary dismissal the focus is on the belief held by the employer and in cases of ‘other dismissal’ the focus is on the procedure followed by the employer.

In Ryman v Thrash Pty Ltd T/A Wishart’s Automotive Services[3] the Full Bench considered the Code and said, drawing on its earlier conclusions and the ratio in Pinawin T/A RoseVi.Hair.Face.Body v Domingo[4] and, in considering whether the Summary Dismissal section of the Code had application, found that the Code operates in the following way:

“(1) If a small business employer has dismissed an employee without notice – that is, with immediate effect – on the ground that the employee has committed serious misconduct that falls within the definition in reg.1.07, then it is necessary for the Commission to consider whether the dismissal was consistent with the “Summary dismissal” section of the Code. All other types of dismissals by small business employers are to be considered under the “Other dismissal” section of the Code.

(2) In assessing whether the “Summary dismissal” section of the Code was complied with, it is necessary to determine first whether the employer genuinely held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal and, second whether the employer’s belief was, objectively speaking, based on reasonable grounds. Whether the employer has carried out a reasonable investigation into the matter will be relevant to the second element”.

In order to identify whether it is necessary to consider whether the dismissal was consistent with the “Summary Dismissal” section of the Code, it is therefore necessary to firstly identify whether the Respondent has dismissed the Applicant with immediate effect and secondly whether the dismissal was on the ground that the Applicant committed serious misconduct falling within the definition of reg. 1.07 of the Fair Work Regulations 2009 (Cth) (FW Regulations).

It is not in dispute and I am satisfied that in this case that the Applicant’s dismissal occurred with immediate effect, without provision of notice.

The next consideration is whether the dismissal was on the grounds of serious misconduct. Regulation 1.07 of the FW Regulations defines serious misconduct as follows:

“Meaning of serious misconduct

(1) For the definition of serious misconduct in section 12 of the Act, serious misconduct has its ordinary meaning.

(2)   For subregulation (1), conduct that is serious misconduct includes both of the following:
(a)   wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;
(b)   conduct that causes serious and imminent risk to:
(i)the health or safety of a person; or
(ii)the reputation, viability or profitability of the employer’s business.

(3) For subregulation (1), conduct that is serious misconduct includes each of the following:

(a) the employee, in the course of the employee’s employment, engaging in:
(i)       theft; or
(ii)      fraud; or
(iii)      assault; or
(iv)      sexual harassment;

(b) the employee being intoxicated at work;

(c) the employee refusing to carry out a lawful and reasonable instruction that is consistent with the employee’s contract of employment.

(4) Subregulation (3) does not apply if the employee is able to show that, in the
circumstances, the conduct engaged in by the employee was not conduct that made employment in the period of notice unreasonable.

(5) For paragraph (3)(b), an employee is taken to be intoxicated if the employee’s
faculties are, by reason of the employee being under the influence of intoxicating liquor or a drug (except a drug administered by, or taken in accordance with the directions of, a person lawfully authorised to administer the drug), so impaired that the employee is unfit to be entrusted with the employee’s duties or with any duty that the employee may be called upon to perform.”

In the termination letter provided to the Applicant the reason for the dismissal is stated as follows:

‘The reason for your termination is due to your recent actions of theft / miss use (sic) company wholesale dealer account details to gain profits for non-business related matters in the workplace. This type of behaviour is unacceptable and goes against the values and policies of our company’.

Mr Faruquie is the Director of the business and was the person who made the decision to dismiss the Applicant. Mr Faruquie gave evidence during the hearing that the “ultimate reason” for the dismissal was the Applicant’s “theft of using the [Respondent’s] shop account for his benefit without confirming it”. Mr Faruquie’s evidence was that this was the main reason for the Applicant’s dismissal because the Applicant was allowed to use the Respondent’s workshop after hours for his own advantage and he could no longer trust him. Mr Faruquie said that the only reason the Respondent found out about the purchase of the bull bar was because it was a large purchase. Mr Fauquie said that he orders less expensive parts through another supplier and receives invoices on a monthly basis and as the Applicant did smaller personal jobs after hours, it would be very difficult to determine whether parts purchased were for the Applicant’s personal jobs or the Respondent’s jobs and whether the Applicant had paid for the parts or not.

Notwithstanding that prior concerns about punctuality and performance are likely to have featured in Mr Faruquie’s mind when he made the decision to dismiss the Applicant, I am satisfied that that the ultimate reason for the dismissal was the use of the Respondent’s company account without the Respondent’s authorisation which the Respondent described as ‘theft’. In these circumstances I am satisfied that the Applicant’s dismissal occurred with immediate effect, without provision of notice, on the ground of serious misconduct and as such, the provisions of the Code in relation to ‘Summary Dismissal’ warrant consideration.

Summary dismissal

In Narong Khammaneechan v Nanakhon Pty Ltd ATF Nanakhon Trading Trust T/A Banana Tree Cafe Deputy President Bartel said:

“[60] At the outset it is appropriate to note that unlike a consideration of the dismissal of an employee of a business that is not a small business employer, the function of FWA is not to determine on the evidence whether there was a valid reason for dismissal. That is, the exercise in the present matter does not involve a finding on the evidence as to whether the applicant did or did not steal the money. The application of the Small Business Fair Dismissal Code involves a determination as to whether there were reasonable grounds on which the respondent reached the view that the applicant’s conduct was serious enough to justify immediate dismissal. As such, the determination is to be based on the knowledge available to the employer at the time of the dismissal, and necessarily involves an assessment of the reasonableness of the steps taken by the employer to gather relevant information on which the decision to dismiss was based.”

As such, the Commission does not have to make a finding, on the evidence, whether the conduct occurred but needs to find whether the employer had a reasonable belief that the conduct of the employee was serious enough to warrant immediate dismissal.[5] It is not necessary for the Commission to determine whether the employer was correct in the belief that it held.[6]

As to whether a belief is held on reasonable grounds in Harley v Rosecrest Asset Pty Ltd T/A Can Do International[7] Deputy President McCarthy said:

“[8] For an employer to believe on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal, it is firstly necessary for the employer to establish that the employer did in fact hold the belief that as a matter of fact that (i) the conduct was by the employee; (ii) the conduct was serious; and (iii) that the conduct justified immediate dismissal. This is to be contrasted to the provisions of s.387(a) where FWA, in determining whether there was a valid reason for the dismissal, must find whether the conduct in fact occurred.

[9] Secondly, it is necessary for the employer to establish that there are reasonable grounds for the employer holding the belief. It is thus necessary for the employer to establish a basis for the belief held which is reasonable. In this regard it would usually be necessary for the employer to establish what inquires or investigations were made to support a basis for holding the belief. It would also ordinarily be expected that the belief held be put to the employee, even though the grounds for holding it may not be. Failure to make sufficient inquiries or to put the accusation to the employee in many circumstances might lead to a view that there were no reasonable grounds for the belief to be held.”

In summary, for an employer to believe on reasonable grounds that the conduct of the employee was serious enough to justify immediate dismissal, the employer must establish that they did in fact hold the belief that:

·     the conduct was by the employee,
·     the conduct was serious, and
·     the conduct justified immediate dismissal.

The employer must also establish that they had reasonable grounds to hold the belief, which could be established by providing evidence of inquiries or investigations the employer undertook to establish their belief.

The decision to dismiss the Applicant was made by Mr Faruquie, the Director and controlling mind of the Respondent. While the Respondent’s grounds for dismissing the Applicant included theft and this was a term that Mr Faruquie used to describe the Applicant’s conduct in his evidence, for the reasons below I am not satisfied that the Respondent did, as a matter of fact, actually believe that the Applicant had stolen from it.

The Applicant reported to Mr Saidi, the Respondent’s Shop Manager, and Mr Faruquie. In more recent times, Mr Faruquie had stepped back in his management responsibilities at the store where the Applicant worked with these responsibilities falling to Mr Saidi.

By way of summary, Mr Saidi’s evidence was that on 10 April 2023 the Applicant approached him for a quote on a bull bar, that he provided the quote and that the Applicant said he would come back to him. Mr Saidi said that the Applicant had also told him he was looking to buy the bull bar for a personal job for his friend and asked him how much he should charge for the labour. The Applicant does not dispute that he approached the Respondent for a quote on the part. It is also not in dispute that the Respondent allowed the Applicant to do small jobs after hours in his personal time for his own benefit.

Mr Saidi said that after this conversation, the Respondent’s supplier, Moto Spec, sent an invoice to the Respondent’s inbox for the bull bar. Mr Saidi said he called Moto Spec to advise them that the Respondent did not purchase the part. Mr Saidi said during that phone call the supplier confirmed that the Applicant had attended its store in Glendenning and told the staff that he was purchasing the item for the business and this enabled him to secure a trade price. Mr Saidi said in his statement that Mr Faruquie spoke to the Applicant who denied this however “after showing him proof” the Applicant said he returned the bull bar anyway as he had ordered the incorrect part.

Mr Saidi said that he had told Mr Faruquie about this and other concerns he had about the Applicant and on 9 May 2023 coordinated a meeting between the Applicant and Mr Faruquie in which the Applicant was dismissed. Mr Faruquie’s evidence during the hearing was that Mr Saidi told him about the Applicant’s purchase of the bull bar using the Respondent’s company account and that he rang the Applicant to discuss this. Mr Faruquie said the Applicant told him during this phone call that he was busy and didn’t want to speak to him and then hung up on him. The Applicant said that when Mr Faruquie called him to discuss the invoice for the bull bar he was at the shops and had bad service. The Applicant said that during this call he tried to plead his case but Mr Faruquie didn’t want to hear it and because the conversation kept cutting out due to bad service he hung up on Mr Faruquie. The Applicant said he later tried to call Mr Faruquie back but did not get an answer. The Applicant says he paid for the bull bar using his own money and did not steal it.

Given the references to ‘theft’ in the termination letter and in Mr Faruquie’s earlier evidence I sought to understand during the hearing whether Mr Faruquie had formed a belief that the Applicant had stolen from the Respondent. Mr Faurquie clarified that he did not form that belief but went on to provide details relevant to his state of mind in deciding to dismiss the Applicant. In particular Mr Faruquie said that the Applicant had a small family and his partner had just fallen pregnant and in these circumstances he had been lenient with the Applicant and gave him “many chances” in the past due to his family and financial circumstances. Mr Faruquie said that the account that the Applicant used is a company account and that the Respondent has built a business relationship with the supplier in order to get a trade discount. Mr Faruquie said that the Applicant was not allowed to purchase the bull bar himself using the Respondent’s trade discount.

Mr Faruquie went on to say that he allowed the Applicant to use the Respondent’s workshop and do personal jobs to make more money after hours and that the purchase of the part raised concerns that the Applicant may have been ordering parts that he was not aware of, including through other suppliers, for his personal jobs. Mr Faruquie said that he was concerned that if the Applicant was purchasing parts using the company account he would not be able to tell which ones were for the Respondent and which ones were for the Applicant’s private purposes and that this was a “big trust issue”. Mr Faruquie said that the only reason he found out about the bull bar was because it was a large purchase but noted that the Respondent orders less expensive parts through another supplier and is invoiced on a monthly basis.

I am not satisfied that the Respondent believed that the Applicant had stolen or engaged in “theft” but rather suspected there was a future risk of this and that it would be difficult to detect if the Applicant was stealing. I am however satisfied that the Respondent believed, based on the Applicant’s earlier request for a quote for the bull bar, Mr Saidi’s enquiry with Moto Spec and the invoice that it had received, that the Applicant had attended the Moto Spec store to purchase a bull bar for personal use and misrepresented to Moto Spec that he was purchasing it on behalf of the Respondent to gain trade rates that are only available to the Respondent. A further question arises as to whether the Respondent believed that this conduct was serious and justified immediate dismissal.

The invoice for the bull bar provided with the Respondent’s evidence was dated 12 April 2023. Mr Faruquie’s evidence was that he called the Applicant to discuss the invoice a couple of days after receiving it. While the parties were not clear on the date of the call between Mr Faruquie and the Applicant to discuss the invoice, the evidence of Mr Faruquie and the Applicant suggests this was at least several days before the Applicant was dismissed on 9 May 2023 and that the Applicant continued to work after the invoice had been received. Mr Faruquie’s evidence was that he had been in Dubai and had the meeting with the Applicant in which he was dismissed a couple of days after he returned to Australia. In enabling the Applicant to continue work after having received the invoice and in providing the Applicant with two ‘warnings letters’ at the time of his dismissal in respect of other concerns it is apparent that upon forming the belief that the Applicant had misused the company account to secure a trade discount the Respondent did not consider that the conduct was so serious that it justified immediate dismissal. Rather, it seems likely that the Respondent believed that the misuse of the company account was not, in and of itself, a sufficient reason to dismiss the Applicant but that it was rather the ‘straw that broke the camel’s back’ in the context of an employee with whom the Respondent had other concerns about performance and punctuality.

However even if the Respondent did hold the belief that the conduct was so serious that it justified immediate dismissal, this is not, in my view, a belief that the Respondent held on reasonable grounds without having had a conversation with the Applicant to understand his version of events. While Mr Faruquie attempted to call the Applicant upon learning about the invoice for the bull bar, the Applicant was not in the workplace and was at a shopping centre. I accept that the Applicant was unlikely to have been in a position to have a conversation about the matter at that time. I also accept that the Applicant tried to call Mr Faruquie back. It would have been reasonable for Mr Faruquie to have a discussion with the Applicant about the purchase when he saw him or call him back so he could hear the Applicant’s version of events before making a decision, particularly in circumstances when the Applicant was in the workplace and continued to work for the Respondent following the phone call. I do not consider the steps taken by the Respondent to gather relevant information on which the decision to dismiss was made to be reasonable without the Respondent having a conversation with the Applicant about the conduct in an appropriate context. As such, I am not satisfied that the ‘Summary Dismissal’ section of the Code has been complied with.

Having considered the findings of the Full Bench in RoseVi.Hair.Face.Body v Domingo[8] and in finding that the dismissal was a dismissal without notice on the grounds of serious misconduct, it was the ‘Summary Dismissal’ section of the Code that needed to be complied with an the considerations under the “Other dismissal” section of the Code are not relevant. However, I observe that some of the considerations applicable to “Other dismissals”, when considered alongside relevant caselaw, are similar to those I deal with below, including whether there is a valid reason for the dismissal related to capacity or conduct (s.387(a)), whether the employer gave the employee a reason why he or she is at risk of being dismissed (s.387(b)), whether the employee had been warned that they were at risk of being dismissed (s.387(c)). Having considered each of the initial matters, I am required to consider the merits of the Applicant’s application. I deal with the considerations in s.387 of the FW Act below.

Was the dismissal harsh, unjust or unreasonable?

Section 387 of the FW Act provides that, in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission 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 the FWC considers relevant.

I am required to consider each of these criteria, to the extent they are relevant to the factual circumstances before me.[9]

I set out my consideration of each below.

Section 387 (a) - Was there a valid reason for the dismissal related to the Applicant’s capacity or conduct?

In order to be a valid reason, the reason for the dismissal should be “sound, defensible or well founded”[10] and should not be “capricious, fanciful, spiteful or prejudiced.”[11] However, the Commission will not stand in the shoes of the employer and determine what the Commission would do if it was in the position of the employer.[12]

Submissions

In summary, the Applicant submitted that there was no valid reason for the dismissal related to the Applicant’s capacity or conduct because the Respondent had no evidence to support the conclusion reached about his conduct.

The Respondent submitted that there was a valid reason for the dismissal related to the Applicant’s conduct and performance.

In relation to the allegations of misconduct I have earlier found that the Respondent believed that the Applicant had attended the Moto Spec store to purchase a bull bar for personal use and misrepresented to Moto Spec that he was purchasing it on behalf of the Respondent to gain trade rates that are only available to the Respondent. This led the Respondent to believe that it could not trust the Applicant.

In relation to the allegations of poor performance the Respondent submitted that the Applicant’s work performance had led to the damage of customer vehicles, coming at a cost to the business. In particular, the Respondent submitted that in August 2022 the Applicant recklessly reversed into a customer’s Mercedes resulting in the Respondent paying approximately $10,0000 in damages. The Respondent submitted there was a further incident in which the Applicant did not tighten the rear wheel of a vehicle and when he took it for a test drive the wheel fell off, damaging parts of the car and resulting in the Respondent paying approximately $5,000 in damages. The Respondent submitted that the Applicant agreed to pay for damages however this never occurred and as a small business it was not aware of its rights regarding deductions from pay. The Respondent also submitted there were 3-4 other incidents where customers’ wheels have fallen off their vehicles and the Respondent has had to utilise resources to assist with the vehicle retrieval. The Respondent submitted that while the damage from these incidents was minimal it significantly impacted employee safety, customer safety and the Respondent’s reputation.

The Respondent also submitted that the Applicant was frequently late for work and text messages filed by the Respondent suggest this was the case. The Respondent says it spoke to the Applicant about this and he advised that a number of personal issues were impacting him. The Respondent submitted that as a small business, it supported the Applicant by allowing him to take additional time off when his personal leave balances had been exhausted.

Evidence and consideration

The Respondent filed a series of images of text messages between Mr Saidi and Applicant, with the Applicant communicating his lateness for work on several occasions. These included:

· messages from the Applicant at 8.26am on 2 August, 8.26am on 8 September, 8.12am on 16 September, 8.22am on 14 October, 8.22am on 1 February, 8.20am on 22 February, 8.19am on 20 March indicating he was running late;

· a message from the Applicant at 8.27am on 9 August indicating he was stuck in road works;

· a message from the Applicant at 8.40am on 6 February indicating he had forgotten to turn his alarm on;

· a message from the Applicant at 8.18am on 13 February indicating he would be late due to an issue with his work clothes;

· a message from the Applicant at 8.17am on 14 March indicating he would be late as he had forgotten to turn his alarm on;

· messages from the Applicant at 8.20am on 22 March, 8.22am on 28 March and at 8.28am on 5 May indicating he would be late due to traffic;

· messages from the Applicant at 8.15am on 29 March and at 8.14am on 17 April indicating he had slept through his alarm;

· messages from the Applicant at 7.35am on 30 March stating that he would not be in as he had been up all night vomiting and would get a doctor’s certificate;

· a message from the Applicant at 8.39am on 27 April suggesting he had slept in and would be there soon;

· a message from the Applicant at 8.27am on Friday 28 April indicating that he was stuck in traffic and would be about 5 minutes late;

· a message from the Applicant at 8.25am on 2 May indicating that he would not be in due to health issues;

· a message from the Applicant at 6.02pm on 2 May communicating his inability to attend work as he needed to see a specialist for his back;

· a message from the Applicant at 7.02am on 8 May indicating that he would not be in as he was in pain and could not bend or pick anything up.

The evidence, including Mr Saidi’s evidence, Mr Faruquie’s evidence and the text messages between Mr Saidi and the Applicant, establish that the Applicant was frequently late for work. I accept the Applicant’s evidence that Mr Faruquie had said to him in the past that if he was a bit late for work he could stay back and make up the time. However I also accept the Respondent’s evidence that the Applicant’s problems with punctuality became an increasing problem such that Mr Saidi would need to call the Applicant to wake him up in the morning. When Mr Faruquie stepped back from being the Applicant’s manager on a day to day basis I accept he felt he could not cover for him anymore and had concerns about the impact of the Applicant’s lateness for work on Mr Saidi who had stepped into the management role.

In relation to the concerns about the Applicant’s workmanship, Mr Saidi’s evidence was that:

· The Store Manager at the Respondent’s Kirrawee store reported an incident to him in August 2023 in which the Applicant was said to have reversed into a customer’s Mercedes vehicle.

· In March 2023 the Applicant caused damage to a Hilux vehicle as he didn’t tighten the rear wheel or use tools appropriately and when he took the vehicle for a test drive this resulted in damage to the car.

· There have been at least three to four times where he needed to speak to the Applicant due to wheels falling off vehicles and at times others have had to assist with vehicle retrieval.

During the hearing Mr Westrip gave evidence that in March 2023 he attended to the tyres on a Hilux and when he took it for a test drive one of the wheels fell off as they had been incorrectly tightened. Mr Wetsrip also noted that he had damaged a Mercedes by reversing into it and he was unsure when this occurred.

During cross examination the Applicant took Mr Saidi to the paragraph in his evidence regarding the incident involving damage to the Hilux vehicle and which suggested that the Applicant did not tighten the rear wheel or use tools appropriately. The Applicant put to Mr Saidi that he had raised with him multiple times that the torque wrench was broken and that when he went to torque up a wheel it could not be tightened correctly. In response Mr Saidi said the Applicant had mentioned it had a “skipping tooth”. The Applicant put to Mr Saidi that he said it needed to be replaced to which Mr Saidi responded “possibly”.

Mr Saidi also gave evidence that both he and Mr Faruquie had conversations with the Applicant and had purchased tools to enable wheels to be tightened correctly to ensure that the issue did not occur and that there were multiple times where the Applicant did not use the tools at all and just relied on what he thought was a tight wheel when sending a customer’s vehicle away.

The Applicant commenced with the Respondent as an apprentice in 2019 and as such, is a relatively recently trade qualified mechanic. I accept that there have been issues with the Applicant’s workmanship in the past and that the Applicant’s performance was of concern to the Respondent in a small business environment where it is apparent that the Applicant carried significant responsibilities for the work carried out in relation to customer vehicles.

However, the concerns the Respondent had about the Applicant in relation to punctuality and performance were not in and of themselves the reasons that resulted in the Applicant’s dismissal. It is apparent that the Applicant’s use of the company account appears to have been the primary reason and ‘final straw’ for the Respondent. I have earlier found that the Respondent believed that the Applicant had attended the Moto Spec store to purchase a bull bar for personal use and misrepresented to Moto Spec that he was purchasing it on behalf of the Respondent to gain trade rates that are only available to the Respondent. This led the Respondent to believe that it could not trust the Applicant.

The context in which the Respondent came to the view that it could not trust the Applicant is relevant. It is not in dispute that the Applicant was allowed to use the Respondent’s workshop after hours to do personal jobs. Mr Fauquie’s evidence suggests that he understood that the Applicant had a small family and was accommodating of his personal and financial circumstances in that he enabled him to do this to make some extra money. While the Applicant said that in practice, he didn’t use the Respondent’s workshop for personal use after hours, he accepts that he was allowed to use it and I am satisfied that at the very least it appears that the Applicant was doing personal jobs from his home. This is evident from his purchase of a bull bar with the intention of fitting it to a friend’s vehicle and after having had a conversation with Mr Saidi about how much he should charge for the labour. In his evidence Mr Faruquie indicated that he held a concern that if the Applicant was purchasing parts using the company account he would not be able to tell which ones were for his shop and which ones were for the Applicant’s private purposes and that this was a “big trust issue”.

Where a dismissal relates to an employee’s conduct, the Commission must be satisfied that the conduct occurred and justified termination.[13] “The question of whether the alleged conduct took place and what it involved is to be determined by the Commission on the basis of the evidence in the proceedings before it. The test is not whether the employer believed, on reasonable grounds after sufficient enquiry, that the employee was guilty of the conduct which resulted in termination.”[14]

Based on the evidence before me I am satisfied that the Applicant asked his employer for a quote on the bull bar he wished to purchase for his personal job and decided he would go direct to the Respondent’s supplier. I accept the Applicant’s evidence that he was never expressly told not to use the company account but the Applicant did accept that he was told that if he was to use the company account he needed to ask for permission. The Applicant attended the supplier’s store to purchase the bull bar and I accept that the Applicant intended to pay for the part directly. In other words, he was not intending that the Respondent would pay for the part. Differing accounts of events are provided by the Applicant and Respondent regarding how the purchase came to appear on an invoice directed to the Respondent.

The Applicant’s evidence during the determinative conference was that when he was looking around for prices for the bull bar he did ask Mr Faruquie and Mr Saidi for a price and after that he called the supplier directly about the bull bar, letting the supplier know where he was from. The Applicant said that when he asked to order the bull bar he asked if it could not be on the Respondent’s account and they said this was fine. The Applicant said that when he went in to pick up the bull bar he paid for it and did not pay attention to the invoice. Mr Saidi’s evidence was that when he called the supplier upon receipt of the invoice the supplier had told him that the Applicant had attended its store at Glendenning and had purchased the bull bar under the Madinah account.

It seems likely to me that the Applicant, not being satisfied with the price that the Respondent had quoted him for the bull bar, decided he would try and secure the trade discount for himself and attended the supplier’s store to purchase the bull bar with that intention. I accept the Respondent’s evidence that trade discounts are not available to the public and find that the Applicant likely represented to the supplier that he was purchasing the bull bar in some capacity as a representative of the Respondent, that he needed permission to do this and did not have permission. This conduct was opportunistic and, in circumstances where the Applicant bypassed the Respondent to secure the part and made false representations to the supplier to get the discount, was in my view dishonest.

Where an employee has been found to have been dishonest, it does not necessarily follow that there was a valid reason for the dismissal. As a Full Bench of the Australian Industrial Relations Commission said, “[I]n some cases, the fact that the applicant has lied might support the conclusion that the termination was not harsh, unjust or unreasonable: McIndoe v BHP Coal Pty Ltd [Print PR901846, 2 March 2001]. In other cases despite the applicant having lied it might be held that there was no valid reason for the termination: Allied Express Transport Pty Ltd v Anderson. Whilst the facts of particular cases might be instructive in a general sense, it is inappropriate to attempt to compare the facts of one case too closely with the facts of another. It is the totality of the relevant facts in each case which must be considered in the context of both the particular employment relationship and the employer’s undertaking.”[15]

A young man with a family, newborn child and who is in tight financial circumstances might, dependent upon the circumstances, be forgiven for opportunistically trying to secure a trade discount by ‘name dropping’ his employer’s name in some way. However, in considering the totality of the facts in this case, the context in which the Applicant’s conduct occurred is in my view important. The Respondent had recognised the Applicant’s personal circumstances and endorsed him making additional money by doing jobs on the side. It had even permitted him to use its workshop for this purpose after hours. The rule however, as acknowledged by the Applicant, was that if he wanted to use the company account he needed to ask for permission. The Applicant should have asked for permission before he approached the supplier directly to get the Respondent’s trade discount.

It is important to note that I find that the Applicant did not steal. I am satisfied that he always intended to pay for the part himself and so the misconduct does not rise to the level of serious misconduct that might be associated with theft. However, the Respondent had placed trust in the Applicant in extending him the privilege to use it resources and in my view, by bypassing the Respondent to buy the part directly from the supplier under the Respondent’s name, the Applicant had overstepped the boundaries and abused that trust. The other concerns related to the Applicant’s punctuality and performance further tipped the scales against him. Having regard to the matters I have referred to above, I find that there was a valid reason for the dismissal related to the Applicant’s conduct.

Section 387 (b) - Was the Applicant notified of the valid reason?

Proper consideration of s.387(b) requires a finding to be made as to whether the applicant “was notified of that reason”. Contextually, the reference to “that reason” is the valid reason found to exist under s.387(a).[16]

The Applicant was dismissed on 9 May 2023. The Applicant’s evidence surrounding the events of 9 May 2023 was that:

· The Applicant arrived at work at 7.55 am to start at 8am.

· Mr Saidi asked that he clean up the workshop which he did for the rest of the day.

· Mr Faruquie arrived at around 10.30 am and did not speak to the Applicant until he was called into the office at 4.50pm.

· When the Applicant was called into the office Mr Faruquie and Mr Saidi were both there and proceeded to hand the Applicant two warning letters plus a letter of termination.

· Mr Faruquie then asked the Applicant about paying Mr Saidi $3,000 for damages.

· The Applicant walked out of the office, packed his tools into his car and left.

Mr Saidi said in his witness statement:

“On the day of the dismissal, I was part of the discussion with Sunny and Lachlan and can confirm Sunny explained the reason why he was being dismissed. Sunny also discussed all the past issues with Lachlan which Lachlan did not deny.”

I made further enquiries of Mr Saidi about his account of events in the lead up to the dismissal. During the conference Mr Saidi said that before the Applicant came into the show room he had mentioned to Mr Faruquie that he had used the business account and ‘other things’. Mr Saidi said he coordinated the meeting between the Applicant and Mr Faruquie who then took over the process. Mr Saidi said he was behind the counter and Mr Faruquie and the Applicant were discussing dismissal on the showroom floor. Mr Saidi said he heard Mr Faruquie explain to the Applicant the reasons why he decided he would be terminated, including “running late all the time, damages to customers cars far too frequently and purchasing a bull bar for his own customer using the business account”. Mr Saidi saw that Mr Faruquie gave the Applicant three pieces of paper which he understood to be two warning letters and a termination letter but confirmed he had not seen their contents before these proceedings.

By way of summary, Mr Faruqiue’s evidence was that on the day of the dismissal:

·he saw the Applicant and informed him that he needed to have a meeting with Mr Fauquie and Mr Saidi;

·he explained to the Applicant that he was relocating overseas and Mr Saidi didn’t “want to baby him any more by having to wake him up and monitor that he turns up to work on time”;

·he explained the issues that the Respondent had with the issues in the past and how it had supported him through this and however the biggest issue was concerning the purchase the Applicant made with its supplier, MotoSpec;

·he provided the Applicant with three written warnings explaining the issues, including one that affected “instant dismissal given it was seen as misconduct/stealing from the business as he had knowingly used the company account for personal gain when he was aware this was no condoned”;

·the Applicant advised that he “knew this was coming” and was “already looking for a job”;

·he explained to the Applicant that he would be processing his final pay and the Applicant acknowledged he owed the Respondent money for damages and that he had no leave left despite his payslip showing otherwise.

It is apparent that the Applicant was notified of the reason for his dismissal on the afternoon of 9 May 2023 when Mr Faruquie explained the reasons for his dismissal and handed him the letter of termination together with the warning letters. However notification of a valid reason for termination must be given to an employee protected from unfair dismissal before the decision is made to terminate their employment,[17] and in explicit[18] and plain and clear terms.[19] When the Applicant was notified of the reason for his dismissal the decision had already been made.

In these circumstances, I find that the Applicant was not notified of the reason for his dismissal as contemplated by s. 387(b) of the FW Act.

Section 387 (c) - Was the Applicant given an opportunity to respond to any valid reason related to their capacity or conduct?

An employee protected from unfair dismissal should be provided with an opportunity to respond to any reason for their dismissal relating to their conduct or capacity. An opportunity to respond is to be provided before a decision is taken to terminate the employee’s employment.[20]

In order to be given an opportunity to respond, the employee must be made aware of allegations concerning the employee’s conduct so as to be able to respond to them and must be given an opportunity to defend themself. As Justice Moore has stated, “the opportunity to defend, implies an opportunity that might result in the employer deciding not to terminate the employment if the defence is of substance. An employer may simply go through the motions of giving the employee an opportunity to deal with allegations concerning conduct when, in substance, a firm decision to terminate had already been made which would be adhered to irrespective of anything the employee might say in his or her defence. That… does not constitute an opportunity to defend.”[21]

The requirements of s.387(c) of the FW Act will be satisfied “[w]here the employee is aware of the precise nature of the employer’s concern about his or her conduct or performance and has a full opportunity to respond to this concern…”[22]

The opportunity to respond does not require formality and this factor is to be applied in a common sense way to ensure the employee is treated fairly.[23] Where the employee is aware of the precise nature of the employer’s concern about his or her conduct or performance and has a full opportunity to respond to this concern, this is enough to satisfy the requirements.[24]

I have earlier found that Mr Faruquie attempted to call the Applicant upon learning about the invoice for the bull bar and the Applicant was not in the workplace and was at a shopping centre at that time. I accept, based on the Applicant’s evidence, that the Applicant was unlikely to have been in a position to have a conversation about the matter at that time and that it would have been reasonable for Mr Faruquie to have a discussion with the Applicant about the purchase when he saw him or call him back so he could hear the Applicant’s version of events before making a decision, particularly in circumstances when the Applicant was in the workplace and continued to work for the Respondent following the phone call.

I have found when Mr Faruquie had the discussion with the Applicant about the reasons for his dismissal on 9 May 2023 the decision to dismiss the Applicant had already been made and I do not consider that the Applicant had a proper opportunity to defend himself before that decision was made.

Having regard to the matters referred to above, I find that the Applicant was not given an opportunity to respond to the reason for his dismissal prior to the decision to dismiss being made.

Section 387(d) - Did the Respondent unreasonably refuse to allow the Applicant to have a support person present to assist at discussions relating to the dismissal?

Where an employee protected from unfair dismissal has requested a support person be present to assist in discussions relating to the dismissal, an employer should not unreasonably refuse that person being present.

There is no positive obligation on an employer to offer an employee the opportunity to have a support person:

“This factor will only be a relevant consideration when an employee asks to have a support person present in a discussion relating to dismissal and the employer unreasonably refuses. It does not impose a positive obligation on employers to offer an employee the opportunity to have a support person present when they are considering dismissing them.”[25]

The Applicant did not ask for a support person to assist at discussions relating to the dismissal and as such the Respondent did not unreasonably refuse to allow the Applicant to have a support person present at discussions relating to the dismissal. It is likely that the Applicant did not have such an opportunity as he only became aware that the discussion related to his dismissal at the actual time of that discussion.

Section 187(e) - Was the Applicant warned about unsatisfactory performance before the dismissal?

I have found that the primary reason for the Applicant’s dismissal was his conduct. I note however that the performance and attendance reasons were considerations in the Respondent’s decision to dismiss the Applicant.

I asked Mr Westrip whether the Respondent made him aware of any concerns regarding his performance or conduct before the date of his dismissal. Mr Westrip’s evidence was that he “had a few verbal conversations” with Mr Faruquie but was not given any “formal warnings”. Mr Westrip’s evidence was that these were discussions about his performance including being late to work and the incidents with the Mercedes and Hilux vehicles. Mr Westrip could not recall the specifics of the conversation however did indicate that Mr Faruquie had said to him multiple times that he didn’t mind if he started a little bit late as he stayed back to finish off any work that needed to be done and that sometimes he was still at work at 9 or 10 o’clock at night. Mr Westrip’s evidence was that he was not warned that his employment would come to an end if his performance did not improve.

Mr Saidi’s evidence was that he had discussions with the Applicant about his attendance and performance issues. When I asked Mr Saidi in the conference if he had ever warned the Applicant that his employment was at risk if he did not improve, Mr Saidi’s evidence was that he told the Applicant had he been working for him, he would have “sacked him”. This indicates that Mr Saidi has expressed his dissatisfaction with the Applicant’s performance but did not consider himself the decision maker regarding dismissal of the Applicant.

Mr Saidi also said that he had spoken to the Applicant “informally a number of times regarding his recklessness” and that there was an incident where he had told the Applicant to “pack his bags and leave” however Mr Faruquie spoke to the Applicant and he returned to work. Mr Saidi’s evidence was that there had been at least three to four times where he had to speak to the Applicant “due to wheels failing off” customers cars and each time he reminded the Applicant of his responsibilities to keep the Respondent’s customers and employees safe through his workmanship.

Mr Faruquie’s evidence was that he had “plenty of verbal warnings” and every week there were issues with performance and punctuality and that the Applicant was told he would need to look for another job if he didn’t improve. However Mr Faruquie also gave evidence that although he never formally acted on the performance concerns he would often speak to the Applicant and explain the issues and concerns. Mr Faruquie’s evidence was that he “would feel bad for his circumstances as he would cite he had a number of personal issues and needed the money” and would often want to assist his employees in whatever way he could. Mr Fauquie’s evidence was that he “never formally acted on these issues until there was a serious issue of misconduct that occurred”.

On the evidence before me, I find that the Respondent did have conversations with the Applicant about the performance and attendance issues however until the misconduct involving use of the company account to secure a trade discount the Applicant’s employment was not at risk. It seems more likely that the verbal conversations involved counselling but that the Applicant was not warned in clear terms that his employment was at risk if he did not improve. This is because it was ultimately the Applicant’s conduct that resulted in his dismissal, not his performance and attendance issues and I do not consider s.187(e) relevant in these circumstances.

Section 387(f) and (g) - To what degree would the size of the Respondent’s enterprise and absence of dedicated human resource management specialists or expertise be likely to impact on the procedures followed in effecting the dismissal?

It is apparent that the Respondent was a small business with approximately five employees and did not have any human resources management specialists or experts at the time of the Applicant’s dismissal.

The Respondent submitted that it is a small business and therefore wants to retain its employees and despite the Applicant’s poor work performance, it provided him with a number of opportunities to succeed in his role. The Respondent submitted the Applicant would often report personal issues that would impact his work performance however as an employer it was understanding of this and would often let small nuisances go without formally addressing them.

The Respondent submitted that if it did have human resources expertise, it may have led to an earlier dismissal of the Applicant based on his prior work performance. The Respondent submitted that it had informally addressed the Applicant’s poor performance and tardiness but did not formally document this due to being a small business. The Respondent submitted that it would be looking to employ the services of a Human Resources professional to assist with employee conduct in the future.

It is apparent that Mr Faruquie was the decision maker regarding decisions to dismiss employees, that he was unaware of the Code and FW Act, had two business premises in Sydney and travelled between Australia and overseas and, given the size of the Respondent, Mr Faruquie did not have human resources support available to him in effecting the dismissal. The Respondent did not dedicate resources to a process in which the Applicant had an opportunity to defend himself before his employment was brought to an end. It seems likely that in dismissing the Applicant, the Respondent thought it needed to give multiple written warnings and this has led to the peculiar situation in which the Applicant was given two warning letters for different issues at the same time the termination letter was given to him. I accept that both the small size of the Respondent’s enterprise and its absence of dedicated human resource management specialists or expertise likely impacted the procedures it followed in effecting the dismissal and that had the Respondent been a larger enterprise with specialist resources available to it, the procedural deficiencies in effecting the dismissal may have been avoided.

Notwithstanding this, while the FW Act recognises that “small business are genuinely different in nature both organisationally and operationally”,[26] it does not follow that such an employer’s procedures in effecting a dismissal can be entirely devoid of fairness. Further, the absence of dedicated human resource management specialists does not relieve an employer of extending an appropriate degree of courtesy to its employees “even when implementing something as difficult and unpleasant as the termination of a person’s employment.”[27] The size of the business and absence of human resources did not, in my view, prevent the Respondent from providing the Applicant with an opportunity defend himself before the decision to dismiss him was made. This was an opportunity that should have been extended to the Applicant in a common sense way.

What other matters are relevant?

Section 387(h) requires the Commission to take into account any other matters that the Commission considers relevant.

The degree of seriousness of the misconduct may be taken into account as a relevant matter under s.387(h) when considering whether “dismissal was a proportionate response to the conduct in question.”[28] While I have found that the Applicant purchased a bull bar under the Respondent’s name to secure its trade discount without permission and that this constituted a valid reason for the dismissal in the circumstances, the conduct did not in my view amount to misconduct of such a serious nature that it warranted dismissal without notice. While the Applicant’s conduct was dishonest and gave the Respondent reason to distrust him, there was no suggestion or evidence that there was a history of this type of conduct by the Applicant or that the Respondent had suffered any obvious harm because of the misconduct. It is also apparent that the Applicant continued working after the invoice was discovered suggesting that the Respondent itself did not consider the conduct so serious that it needed to immediately remove him from the workplace.

It has long been established that the effects of dismissal on the personal or economic situation of the dismissed employee may be taken into consideration under s.387(h) of the FW Act.[29] The Respondent was aware of the Applicant’s financial and personal circumstances and would have been aware that his immediate dismissal would have had an acute impact on the Applicant and his family. Further, I accept the Applicant’s evidence that the Respondent did not provide him with a separation certificate when he requested it and this impacted his access to welfare payments.

Procedural fairness is also a factor that the Commission may take into consideration when deciding if a dismissal has been harsh, unjust or unreasonable. It concerns the decision-making process followed or steps taken by a decision maker, rather than the actual decision itself. Ordinarily, procedural fairness requires that an allegation be put to a person and they be given an opportunity to answer it before a decision is made.[30] I do not consider that the Applicant had a proper opportunity to answer the allegations of misconduct or defend himself before the decision to dismiss him was made and that he was not afforded procedural fairness in this regard.

Is the Commission satisfied that the dismissal of the Applicant was harsh, unjust or unreasonable?

I have made findings in relation to each matter specified in section 387 as relevant.

I must consider and give due weight to each as a fundamental element in determining whether the termination was harsh, unjust or unreasonable.[31]

Having considered each of the matters specified in section 387 of the FW Act, I am satisfied that the dismissal of the Applicant was harsh because the Applicant was dismissed without notice and without an opportunity to defend himself before the decision to dismiss him was made. The misconduct did not amount to the level of ‘serious misconduct’ warranting summary dismissal. The harshness in dismissing the Applicant without notice was exacerbated by the Respondent’s awareness of the Applicant’s personal and financial circumstances that would have made the impacts of the dismissal upon him more acute, as well as its failure to provide the Applicant with a separation certificate so he could access welfare payments.

I am therefore satisfied that the Applicant was unfairly dismissed within the meaning of section 385 of the FW Act.

Remedy

Being satisfied that the Applicant:

· made an application for an order granting a remedy under section 394;
· was a person protected from unfair dismissal; and
· was unfairly dismissed within the meaning of section 385 of the FW Act,

I may, subject to the FW Act, order the Applicant’s reinstatement, or the payment of compensation to the Applicant.

Under section 390(3) of the FW Act, I must not order the payment of compensation to the Applicant unless:

(a) I am satisfied that reinstatement of the Applicant is inappropriate; and

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

Is reinstatement of the Applicant inappropriate?

The Applicant found alternative employment and commenced work in his new role on 13 June 2023 earning a little more than he did prior to his dismissal. The Applicant did not seek an order for reinstatement. As stated by a Full Bench, “[i]n assessing whether reinstatement is an appropriate remedy, it is obviously relevant as to whether the dismissed employee has obtained alternative employment. Where that new employment is satisfactory to the employee, it will be no remedy at all to reinstate the employee to the pre-dismissal employment to which the employee, for well-founded reasons, has no desire to return.”[32]

Having regard to the matters referred to above, I consider that reinstatement is inappropriate. I will now consider whether a payment for compensation is appropriate in all the circumstances.

Is an order for payment of compensation appropriate in all the circumstances of the case?

Having found that reinstatement is inappropriate, it does not automatically follow that a payment for compensation is appropriate. As noted by the Full Bench, “[t]he question whether to order a remedy in a case where a dismissal has been found to be unfair remains a discretionary one…”[33]

Where an applicant has suffered financial loss as a result of the dismissal, this may be a relevant consideration in the exercise of this discretion.[34]

The Applicant’s evidence was that the Respondent declined to provide a separation certificate and this prevented him from accessing welfare payments. The Applicant commenced his new role on 13 June 2023. I am satisfied that in the five week period between the date of the Applicant’s dismissal and the Applicant’s commencement in his new role he suffered financial loss as a result of the dismissal.

In all the circumstances, I consider that an order for payment of compensation is appropriate.

Compensation – what must be taken into account in determining an amount?

Section 392(2) of the FW Act requires all of the circumstances of the case to be taken into account when determining an amount to be paid as compensation to the Applicant in lieu of reinstatement including:

(a)the effect of the order on the viability of the Respondent’s enterprise;

(b)the length of the Applicant’s service;

(c)the remuneration that the Applicant would have received, or would have been likely to receive, if the Applicant had not been dismissed;

(d)the efforts of the Applicant (if any) to mitigate the loss suffered by the Applicant because of the dismissal;

(e)the amount of any remuneration earned by the Applicant from employment or other work during the period between the dismissal and the making of the order for compensation;

(f)the amount of any income reasonably likely to be so earned by the Applicant during the period between the making of the order for compensation and the actual compensation; and

(g)any other matter that the Commission considers relevant.

I consider all the circumstances of the case below.

Section 392(2)(a) - Effect of the order on the viability of the Respondent’s enterprise

The Respondent submitted that it is a small business still recovering from the COVID-19 pandemic and in circumstances where high end car modifications were ‘scaled back’. The Respondent submitted that it is operating at a loss and is often behind in payment of its utilities.

The Respondent provided a proof of account balance from its financial institution showing its balance and more limited available balance as well as a recent disconnection warning from its electricity provides for an overdue account.

I accept based on the evidence before me that a significant order of compensation may have an effect on the viability of the Respondent’s enterprise. However having regard to the Applicant’s income and actual loss as well as the method of calculating compensation applying the “Sprigg formula” (discussed below), a significant order of compensation is not contemplated in this case.

Section 392(2)(b) - Length of the Applicant’s service

The Applicant’s length of service was 4 years and one month.

I consider that the Applicant’s length of service does not support reducing nor increasing the amount of compensation ordered.

Section 392(2)(c) - Remuneration that the Applicant would have received, or would have been likely to receive, if the Applicant had not been dismissed

As stated by a majority of the Full Court of the Federal Court, “[i]n determining the remuneration that the Applicant would have received, or would have been likely to receive… the Commission must address itself to the question whether, if the actual termination had not occurred, the employment would have been likely to continue, or would have been terminated at some time by another means. It is necessary for the Commission to make a finding of fact as to the likelihood of a further termination, in order to be able to assess the amount of remuneration the employee would have received, or would have been likely to receive, if there had not been the actual termination.”[35]

I have found there was a valid reason for the dismissal and in the context of the Respondent’s previous concerns about the Applicant’s punctuality and performance it is unlikely that the Applicant would have prevented the termination of his employment, even if there had been a process implemented such that it was effected in a fair manner. I do however consider that had the Applicant not been dismissed in the manner that he was he would have at least been able to work through his statutory notice period under the National Employment Standards which, for a period of service of between 3 and 5 years, would have been a period of 3 weeks. During this period the remuneration he would have been likely to receive is $3,744.

Section 392(2)(d) - Efforts of the Applicant to mitigate the loss suffered by the Applicant because of the dismissal

The Applicant must provide evidence that they have taken reasonable steps to minimise the impact of the dismissal.[36] What is reasonable depends on the circumstances of the case.[37] The Applicant was successful in securing and commencing alternative employment only five weeks after his dismissal. I am satisfied that the Applicant took reasonable steps to mitigate his loss.

Section 392(2)(d) and (f) - Amount of remuneration earned and reasonably likely to be earned

The Applicant’s evidence is that he did not commence his new role until 13 June 2023 and that he is now earning a little more in this role than in his prior role. I have found that the Applicant would have remained in his role for a further three weeks in working through his statutory notice period but for the dismissal, i.e. up until 30 May 2023.

I am satisfied that the Applicant did not earn remuneration during this period.

Section 392(2)(g) - Other relevant matters

The Respondent submitted that it believed that the Applicant is in debt to it for damages caused to customer vehicles during the course his employment. The Applicant submitted that the Respondent has not paid him his accrued but unused annual leave on termination. The Respondent submits that the Applicant’s annual leave balance as reflected in his payslips is wrong and that the Applicant has used his leave. I do not consider that these are matters that should be taken into account in deciding compensation however note that if the Applicant had concerns that he has been underpaid in respect of annual leave he may wish to contact the Fair Work Ombudsman.

Compensation – how is the amount to be calculated?

As noted by the Full Bench, “[t]he well-established approach to the assessment of compensation under s.392 of the FW Act… is to apply the “Sprigg formula” derived from the Australian Industrial Relations Commission Full Bench decision in Sprigg v Paul’s Licensed Festival Supermarket (Sprigg).[38] This approach was articulated in the context of the FW Act in Bowden v Ottrey Homes Cobram and District Retirement Villages[39].”[40]

The approach in Sprigg is as follows:

Step 1: Estimate the remuneration the employee would have received, or have been likely to have received, if the employer had not terminated the employment (remuneration lost).

Step 2: Deduct monies earned since termination. Workers’ compensation payments are deducted but not social security payments. The failure of an applicant to mitigate his or her loss may lead to a reduction in the amount of compensation ordered.

Step 3: Discount the remaining amount for contingencies.

Step 4: Calculate the impact of taxation to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.

Step 1

I have estimated the remuneration the Applicant would have received, or would have been likely to have received, if the Respondent had not terminated the employment to be $3,744 on the basis of my finding that the Applicant would likely have remained in employment for a further period of 3 weeks. This estimate of how long the Applicant would have remained in employment is the “anticipated period of employment”.[41]

Step 2

Only monies earned since termination for the anticipated period of employment are to be deducted[42] and I have found that the Applicant did not earn any income in the three weeks following dismissal. I therefore do not make any deductions from the amount of $3,744.

Step 3

I do not consider there are any contingencies that would have impacted the amount likely to be earned by the Applicant for the remainder of the anticipated period of employment and have not made any adjustments on this basis.

Step 4

I have considered the impact of taxation but have elected to settle a gross amount of $3,744 with taxation to be deducted as required by law.

Having applied the formula in Sprigg, I am nevertheless required to ensure that “the level of compensation is an amount that is considered appropriate having regard to all the circumstances of the case.”[43]

I am satisfied that the amount of compensation that I have determined above takes into account all the circumstances of the case as required by s.392(2) of the FW Act.

Compensation – is the amount to be reduced on account of misconduct?

If I am satisfied that misconduct of the Applicant contributed to the employer’s decision to dismiss, I am obliged by section 392(3) of the FW Act to reduce the amount I would otherwise order by an appropriate amount on account of the misconduct. I am satisfied that the misconduct of the Applicant contributed to the employer’s decision to dismiss. However I am not satisfied that the misconduct was so serious that it warranted dismissal without notice and given the compensation I have calculated equates to the payment the Applicant received had he worked through his statutory notice period, I have not reduced the amount of the payment.

Compensation – how does the compensation cap apply?

Section 392(5) of the FW Act provides that the amount of compensation ordered by the Commission must not exceed the lesser of:

(a)the amount worked out under section 392(6); and

(b)half the amount of the high income threshold immediately before the dismissal.

The amount worked out under section 392(6) is the total of the following amounts:

(a)the total amount of the remuneration:

(i) received by the Applicant; or

(ii) to which the Applicant 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 Applicant 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 Applicant for the period of leave in accordance with the regulations.

The Applicant was not on leave without pay or without full pay during the 26 weeks immediately before the dismissal.

There was no dispute and I find that the total amount of the remuneration received by the Applicant during the 26 weeks immediately before the dismissal was $32,448.

There was no dispute and I find that the total amount of the remuneration to which the Applicant was entitled during the 26 weeks immediately before the dismissal was $32,448.

The high income threshold immediately before the dismissal was $162,000. Half of that amount is $81,000.

The amount of compensation ordered by the Commission must therefore not exceed $32,448.

In light of the above, I will order that the Respondent pay $3,744 gross less taxation as required by law to the Applicant in lieu of reinstatement within 21 days of the date of this decision.

COMMISSIONER

Appearances:

Mr Lachlan Westrip on his own behalf
Ms Areej Faruquie for the Respondent

Hearing details:

2023.
Sydney (by Video)

August 21 and 24.

[1] Form F2 – Unfair Dismissal Application.

[2] Hewitt v Topero Nominees Pty Ltd t/a Michaels Camera Video Digital [2013] FWCFB 6321 at [15].

[3] [2015] FWCFB 5264.

[4] [2012] FWAFB 1359.

[5] Khammaneechan v Nanakhon Pty Ltd ATF Nanakhon Trading Trust T/A Banana Tree Café [20210] FWA 7891 at [60]; Pinawin T/A RoseVi.Hair.Face.Body v Domingo [2012] FWAFB 1359 at [27], [29]; Steri-Flow Filtration (Aust) Pty Ltd v Erskine [2013] FWCFB.

[6] Pinawin T/A RoseVi.Hair.Face.Body v Domingo [2012] FWAFB 1359 at [29].

[7] [2011] FWA 3922.

[8] [2012] FWAFB 1359.

[9] Sayer v Melsteel Pty Ltd[2011] FWAFB 7498, [14]; Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002), [69].

[10] Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371, 373.

[11] Ibid.

[12] Walton v Mermaid Dry Cleaners Pty Ltd(1996) 142 ALR 681, 685.

[13] Edwards v Justice Giudice [1999] FCA 1836, [7].

[14] King v Freshmore (Vic) Pty Ltd Print S4213 (AIRCFB, Ross VP, Williams SDP, Hingley C, 17 March 2000), [23]-[24].

[15] Woodman v The Hoyts Corporation Pty Ltd PR906309 (AIRCFB, Giudice J, Watson SDP, Grainger C, 11 July 2001), [30].

[16] Bartlett v Ingleburn Bus Services Pty Ltd [2020] FWCFB 6429, [19]; Reseigh v Stegbar Pty Ltd [2020] FWCFB 533, [55].

[17] Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137, 151.

[18] Previsic v Australian Quarantine Inspection Services Print Q3730 (AIRC, Holmes C, 6 October 1998).

[19] Ibid.

[20] Crozier v Palazzo Corporation Pty Ltd t/a Noble Park Storage and Transport Print S5897 (AIRCFB, Ross VP, Acton SDP, Cribb C, 11 May 2000), [75].

[21] Wadey v YMCA Canberra [1996] IRCA 568.

[22] Gibson v Bosmac Pty Ltd (1995) 60 IR 1, 7.

[23] RMIT v Asher (2010) 194 IR 1, 14-15.

[24] Gibson v Bosmac Pty Ltd (1995) 60 IR 1, 7.

[25] Explanatory Memorandum, Fair Work Bill 2008 (Cth), [1542].

[26] Williams v Top Image Hair Design[2012] FWA 9517, [40].

[27] Sykes v Heatly Pty Ltd t/a Heatly Sports PR914149 (AIRC, Grainger C, 6 February 2002), [21].

[28] Gelagotis v Esso Australia Pty Ltd t/a Esso[2018] FWCFB 6092, [117].

[29] Ricegrowers Co-operative v Schliebs PR908351 (AIRCFB, Duncan SDP, Cartwright SDP, Larkin C, 31 August 2001), [26].

[30] Kioa v West [1985] HCA 81, [22] (per Wilson J).

[31] ALH Group Pty Ltd t/a The Royal Exchange Hotel v Mulhall (2002) 117 IR 357, [51]. See also Smith v Moore Paragon Australia Ltd PR915674 (AIRCFB, Ross VP, Lacy SDP, Simmonds C, 21 March 2002), [92]; Edwards v Justice Giudice [1999] FCA 1836, [6]–[7].

[32] Seitz v Ironbay Pty Ltd t/a City Beach IGA [2018] FWCFB 1341, [24].

[33] Nguyen v Vietnamese Community in Australia t/a Vietnamese Community Ethnic School South Australia Chapter[2014] FWCFB 7198, [9].

[34] Vennix v Mayfield Childcare Ltd [2020] FWCFB 550, [20]; Jeffrey v IBM Australia Ltd [2015] FWCFB 4171, [5]-[7].

[35] He v Lewin [2004] FCAFC 161, [58].

[36] Biviano v Suji Kim Collection PR915963 (AIRCFB, Ross VP, O’Callaghan SDP, Foggo C, 28 March 2002), [34] citing Lockwood Security Products Pty Ltd v Sulocki and Ors PR908053 (AIRCFB, Giudice J, Lacy SDP, Blair C, 23 August 2001), [45].

[37] Biviano v Suji Kim Collection PR915963 (AIRCFB, Ross VP, O’Callaghan SDP, Foggo C, 28 March 2002), [34] citing Payzu Ltd v Saunders [1919] 2 KB 581.

[38] (1998) 88 IR 21.

[39] [2013] FWCFB 431.

[40] Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries[2016] FWCFB 7206, [16].

[41] Ellawala v Australian Postal Corporation Print S5109 (AIRCFB, Ross VP, Williams SDP, Gay C, 17 April 2000), [34].

[42] Ibid.

[43] Double N Equipment Hire Pty Ltd t/a A1 Distributions v Humphries[2016] FWCFB 7206, [17].

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