Langer v Robert Quinn t/a Pyrmont Car Store

[2014] FWC 7460

[2014] FWC 7460

FAIR WORK COMMISSION

DECISION

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

Clarita Langer
v
Robert Quinn t/a Pyrmont Car Store
(U2014/5556)

VICE PRESIDENT HATCHER SYDNEY, 30 OCTOBER 2014

Application for relief from unfair dismissal.

Introduction

[1] The applicant in this matter, Ms Clarita Langer, claims an unfair dismissal remedy under s.394 of the Fair Work Act 2009 (the Act) in respect of the termination of her employment with Mr Robert Quinn in his business Pyrmont Car Store. Ms Langer contends that her dismissal was unfair, and claims monetary compensation as a remedy.

[2] Section 396 of the Act requires that four specified matters must be determined by the Commission in relation to any unfair dismissal remedy application before the merits of the application may be considered. In respect of the matters identified in paragraphs (a), (b) and (d) of s.396, it was not in issue and I find that:

(1) Ms Langer’s application was made within the 21-day period required in s.394(2)(a);

(2) Ms Langer was a person “protected from unfair dismissal” within the meaning of that expression in s.382 at the time of her dismissal by Mr Quinn;

(3) the dismissal was not a case of “genuine redundancy” as that expression is defined in s.389.

[3] In respect of s.396(c), I firstly find that Mr Quinn was at the time of the dismissal a “small business employer” within the meaning of that expression in s.23 of the Act. He gave evidence that his business only had about five employees at the time of the dismissal. There was no evidence to contradict this, and Ms Langer’s own evidence was broadly consistent with this. The issue of compliance with the Small Business Fair Dismissal Code (Code) therefore requires consideration.

[4] Mr Quinn contended that the dismissal of Ms Langer was consistent with the summary dismissal provisions of the Code. He submitted that he believed on reasonable grounds that Ms Langer’s conduct was sufficiently serious to justify immediate dismissal, and relied in that connection upon that part of the definition of “serious misconduct” in reg. 1.07(2) of the Fair Work Regulations 2009 (which definition is incorporated into the Act by s.12) which refers to “conduct that causes serious and imminent risk to ... the reputation, viability or profitability of the employer’s business”. It is necessary for that contention to be dealt with at the outset, but to do so requires an analysis of the facts as they may be discerned from the evidence of the witnesses and the relevant documents.

Witnesses

[5] Evidence concerning Ms Langer’s employment and the dismissal was given by Ms Langer, Mr Quinn and Ms Christine Lewis, a friend of Mr Quinn’s. Regrettably, something needs to be said about the credit of the witnesses at the outset. I consider Ms Langer to have been, in general, a witness of credit, but there was one aspect of her evidence concerning a particular work performance issue which could simply not be accepted. I will return to that matter later.

[6] The problems with Mr Quinn’s evidence were much more substantial. As a witness, he was argumentative and evasive, but more significantly he made a number of statements which were demonstrably false. A major example of this concerned his method of paying wages to Ms Langer. Ms Langer’s evidence in her first witness statement of 26 June 2014 was that at the time of the commencement of her employment with Mr Quinn, she gave him her tax file number, but he told her to “Leave it to me I will take care of tax”. She said she was subsequently paid in cash, with Mr Quinn writing a single cheque for the wages of all employees each week which was then cashed. She said she never received a payslip or a group certificate, and was not sure if Mr Quinn had ever remitted any income tax to the Australian Tax Office (ATO).

[7] Mr Quinn’s initial response to this, in his witness statement of 9 July 2014, was that Ms Langer had specifically requested to be paid in cash and that she had never provided her tax file number (while accepting that he had never requested it). He also said in this witness statement: “I also confirm that I have complied with my obligations to remit income tax on behalf of the Applicant as required by law from time to time”. That statement could only be understood as meaning that Mr Quinn had remitted income tax on behalf of Ms Langer to the ATO. Even this evidence as it stood raised the question of how income tax could be remitted to the ATO without a tax file number.

[8] The position changed when this evidence was tested in cross-examination and by questions from the bench. Mr Quinn said that in his 60 years in business he had always paid his employees in cash. This made the proposition that Ms Langer was paid in cash because she requested it very unlikely. He also said that Ms Langer had never asked for a group certificate even though they were “available”. This was patently a lame attempt to cover the fact that no group certificates had ever been prepared. And, most significantly, Mr Quinn admitted that he had never remitted income tax to the ATO. This admission meant that his evidence to the contrary in his first witness statement was a falsehood. Mr Quinn attempted to explain the inconsistency by saying that what he had meant by his earlier evidence was that he had paid Ms Langer an amount which permitted her to pay the appropriate amount of taxation to the ATO herself. He also said that the wages he paid to his staff were treated as the earnings of the business upon which it paid tax. I consider these “explanations” to have been further falsehoods.

[9] Two other short examples of problematic evidence given by Mr Quinn will suffice. Firstly, in his second witness statement of 1 September 2014, he said that the Department of Defence had been “a client of mine for approximately 30 years” and that certain conduct on Ms Langer’s part had “seriously damaged my business relationship with this client”. In cross-examination it became clear that the Department of Defence had never itself been a client of Mr Quinn’s business and never had any business relationship with him; the true position was that individual officers in the Defence Forces had from time to time used his business. Secondly, he said in his first witness statement that when Ms Langer took a period of leave in December 2013, “I had another part-employee, Christine Lewis, fill in for the Applicant at that time and she was able to cope without difficulty”. By the time of his second statement, Mr Quinn had changed his evidence; he said that he had in fact engaged another person, Ms Emily Allen, to fill in for Ms Langer, and that after Ms Allen had encountered difficulties, he had asked Ms Lewis to provide “assistance and guidance” to her. Ms Lewis was never actually employed by Mr Quinn in any capacity. In the second statement, Ms Lewis’s intervention was presented as central to the detection of performance issues with Ms Langer, but her alleged role in this respect was simply not mentioned in the first statement. Indeed Mr Quinn’s second statement, which was not filed in accordance with the Commission’s directions but simply tendered at the hearing (and admitted in substantial part over the objection of Ms Langer) appears to have been an attempt to adjust and improve the evidence contained in Mr Quinn’s first statement.

[10] Accordingly I do not propose to determine any conflict between the evidence of Ms Langer and Mr Quinn in Mr Quinn’s favour, nor will I necessarily otherwise accept his evidence where it is uncorroborated.

[11] Ms Lewis presented as a highly argumentative witness who was anxious, through loyalty to Mr Quinn, to state opinions supportive of his case. However insofar as her evidence dealt with facts rather than opinions, I consider that it was credible.

Facts

[12] Pyrmont Car Store is a business which, as its name suggests, stores cars for clients who do not require to use them for lengthy periods. Ms Langer was employed in the business in December 2002 to perform office duties including typing correspondence, file management, answering telephones, preparing and sending invoices, maintaining a schedule of the cars arriving and leaving the storage facility and checking the registration of cars while in storage. She was 53 years of age at the time of her engagement.

[13] At the time she was engaged by Mr Quinn, Ms Langer was employed elsewhere as a casual cleaner. She was recommended to him on the basis, apparently, that unlike him she knew how to use a computer. There is nothing in the evidence to suggest that Ms Langer otherwise had any prior skills, experience or training relevant to the tasks she was employed to perform. It was also evident from the way she gave evidence and from the content of her emails that her English language skills were lacking in proficiency.

[14] Ms Langer’s evidence was that she was employed to work the hours 7.30 am to 3.30 pm Monday to Friday, with a half hour for lunch, and for this she was paid $600 in cash each week (which was increased at intervals, by $50 at a time, to $850 per week as at the time of the dismissal). Mr Quinn’s evidence was that Ms Langer was employed as a casual because permanent hours could never be guaranteed, and that the payment made to Ms Langer was “paid in excess of expected award wages so as to cover all entitlements to sick leave, annual leave and other such benefits”. I reject Mr Quinn’s evidence in this respect. It was clear that Ms Langer’s hours of work remained the same for all the period that she worked for Mr Quinn and that she was always paid a fixed amount each week, so that she cannot be said to have been in any sense engaged on a casual basis. There was no evidence that Ms Langer agreed to be engaged on the basis suggested by Mr Quinn. It is likely that Mr Quinn’s attempted characterisation of Ms Langer as a casual was an after-the event explanation for his failure to pay her or accrue on her behalf any leave entitlements or superannuation, but I do not need to reach any concluded view about this (noting that Ms Langer has instituted separate proceedings in the Federal Circuit Court to recover these entitlements). It is sufficient to find that Mr Quinn’s method of remunerating Ms Langer was highly irregular.

[15] Mr Quinn suggested that Ms Langer was also meant to do bookkeeping duties, but she proved unable to do this task and refused to undertake any further training which would have assisted her, with the result that a part-time bookkeeper, Ms Julie Frier, had to be engaged to perform the task. Ms Langer, on the other hand, said that she had never been employed as a bookkeeper and that Ms Frier had in fact been preceded by a Ms Linda Harris in the bookkeeper’s role. She also said that she had never been offered any training (apart from training on a program called “Invoice Express”), that if she had been offered training she would gladly have done it, and that her request to be trained in “MYOB” had been refused by Ms Harris on the basis that it was not necessary for her role. I accept Ms Langer’s evidence on this issue, and I reject that of Mr Quinn. The notion that Ms Langer, who had previously been a cleaner, could have been employed on the basis that she would perform bookkeeping duties without any prior training or experience in that area is simply not credible. Further, Mr Quinn accepted that Ms Frier had replaced Ms Harris in the bookkeeper’s role, so the proposition that Ms Langer had been at the outset expected to do bookkeeping work when Ms Harris was already performing that role does not make sense.

[16] Ms Langer went through over 11 years of employment, until she went on leave in early 2014, without any serious issue about her general work performance ever having been raised with her. Notwithstanding this, Mr Quinn’s evidence was that he had earlier formed serious concerns about her work performance. He said in his first statement of evidence that Ms Langer often had personality clashes with other employees, with the result that a number of staff had left his employment. He also said that on previous occasions she had taken leave, replacement staff had identified problems with her work. In his first statement of evidence he said:

“On previous occasions when the Applicant had taken long-term leave I had to engage other staff members of overhaul her accounting, billing and general paperwork, and there were always significant discrepancies which needed to be brought up-to-date. Most importantly these included the non billing of either short-term or long-term clients on a consistent basis, or failing generally to keep her overall work standard up to what I believe was an acceptable level.” 1

[17] I find it difficult to believe that an employer would have such serious concerns as these about an employee’s performance and not raise them with the employee. Mr Quinn did not identify when he formed these concerns. His evidence in this respect is inconsistent with the fact, attested to by Ms Langer and admitted by him, that he had publicly praised her work at various business functions. I do not accept Mr Quinn’s evidence in this respect.

[18] It is clear from the evidence that Ms Langer operated without any effective supervision. She said that Mr Quinn was not in the office very often and “trusted her to do a good job”. Mr Quinn likewise said that he did not attend the office regularly because of his age (he was approximately 80, but gave conflicting evidence about what his precise age was), and relied upon his employees to run the business appropriately. There was no other person managing the business or supervising the employees. Thus Ms Langer was largely left to her own devices as to how she went about her work. She was effectively the business’s office administrator notwithstanding her lack of any relevant qualifications, experience or training in this area.

[19] In January 2014 Ms Langer applied for and was granted permission to take five weeks’ leave in order to take an overseas trip. There was a dispute in the evidence about whether Ms Langer received holiday pay for this leave. Mr Quinn said that he paid her “the equivalent of five weeks’ wages to assist her on that trip” even though “I did not believe I had any legal obligation to do so”. If that was true, it was hardly consistent with an employer unhappy with his allegedly casual employee’s work performance. Ms Langer said she was given one week’s pay to cover the five weeks’ leave. It is not necessary for me to determine whose evidence was correct on this score.

[20] Mr Quinn arranged for the services of a temporary office administrator from a labour hire agency (Ms Emily Allen) to cover for Ms Langer’s absence. Ms Langer said, and I accept, that there was only a handover period of two days before she left, with the result that she was unable to familiarise Ms Allen with all the aspects of the job before she left.

[21] Ms Christine Lewis was a longstanding friend of Mr Quinn. She had some previous experience as a business consultant. As earlier stated, Mr Quinn’s evidence in his first witness statement was that he engaged Ms Lewis as a part-time employee to fill in for Ms Langer while she was absent. That evidence was untrue. Mr Quinn said in his second statement of evidence that he “arranged for there to be a thorough review and assessment of the files and systems under Ms Langer’s control” during the period of leave, and asked for Ms Lewis’s assistance in this process. I do not accept this evidence either. It is inconsistent with Ms Lewis’s evidence. She said that she had been asked to assist in the business on previous occasions on an unpaid basis, and that Ms Allen had been told to ring her if she had any difficulties. Ms Allen did ring her and ask for assistance because she did not understand Ms Langer’s filing system. She came in, and after having examined the position, characterised it as “a complete mess”. She reported this to Mr Quinn, who instructed her to “fix it”.

[22] On Ms Lewis’s analysis of the position, Ms Langer was running two filing systems, consisting of one system for the contract files and a separate system of manila folders, with documents printed multiple times and the files being in a state which she described as “incomplete and chaotic”. Additionally, Ms Lewis identified problems in Ms Langer’s invoicing system, in that invoice references were often inconsistent with file references, and it was difficult to tell if invoices were paid or not. Ms Langer agreed in her evidence that she did run two separate systems, one for the contracts and the other for the customer inquiries. Overall, the conclusion I draw from this evidence is that Ms Langer, being untutored in any conventional method of business operations, was running her own idiosyncratic system which she understood but may not have been transparent to third persons. In a revealing piece of evidence, Mr Quinn referred to this as “the Langer way that nobody else could understand”. He went on to say that “She’s fuddled through that and, you know, Clarita and I worked together for 12 years”. This evidence strongly indicates that Mr Quinn was perfectly aware of Ms Langer’s working methods for the entire period of her employment and had done nothing about it.

[23] Ms Lewis, apparently on her own initiative, broadened her inquiries into a wholesale investigation of all of Ms Langer’s work activities. In her statement of evidence, she made a large number of criticisms concerning Ms Langer’s work performance. Three issues identified by her received particular focus in the respondent’s case. The first concerned the nature of certain email communications between Ms Langer and various clients of the business which Ms Lewis and Mr Quinn regarded as inappropriate. These emails, which were placed into evidence, ranged in date from October 2010 through to November 2013. In relation to a number of the emails, I consider the criticism which was made of them to be exaggerated, in that while their tone might be described as over-familiar in some cases or abrupt in others, I do not consider that they would have had any discernible detrimental effect on the business.

[24] There are three cases however in relation to which more serious criticism is warranted. The first is an email dated 4 May 2012 sent by Ms Langer to Ms Allison Smith, who was the point of contact for a regular government client. In this email, she had to explain that Mr Quinn had instructed her to raise the price for a rental for which she had already sent the invoice at a lower price. After explaining the invoice, Ms Langer stated in the email: “I wish I could tell you what I am thinking but I probably will get into trouble. So this is just off the record, what I’m thinking.” Ms Langer said that she had had dealings with Ms Smith over a long period of time and they were very familiar with each other, but nonetheless this email can only be read as implicitly criticising Mr Quinn to one of his clients.

[25] The second email was dated 18 October 2013, and was sent to Mr Con Haridi, who again was the contact person for a regular client. Ms Langer began the email by saying “Please keep this off the record. The things I will tell you”. She then went on to say that Mr Quinn’s warehouse had been sold, requiring the business to move by August the following year. She then said:

“Also Darryl is sacked. He has been so bad to me bullying, discriminating, and always putting me down he was a racist. you know saying things all the time that I am too slow and I am not doing my job properly, I cannot speak English properly and so many things I lost count.

I wish I could tell you my problems here. But I am plodding along. I am strong so the doctor say, but I don’t feel that I am.

That is why when a customer of Bob like you does not give me problems I always appreciate it and will miss you when you go.”

[26] Although Mr Haridi’s reply was sympathetic and does not indicate that he was in any way affronted by Ms Langer’s email, and although Ms Langer must have been in somewhat of a distressed state when she sent the email, nonetheless by any objective standard it was inappropriate to use the business’s email system to send a communication of that nature to a client.

[27] The third example was an exchange of emails on 27 November 2013 with Mr David Ince, who worked for the Department of Defence and had made a personal inquiry about the cost of car storage over a three year period. The initial quote was ambiguous (Mr Ince interpreted the “special rate of $1,950.00 for the first 2 years” as meaning that the first two years would cost $1,950.00 in total rather than $1,950.00 per year). When the difference in interpretation became clear, Ms Langer, instead of simply clarifying the matter and apologising, persisted in insisting to Mr Ince that the original quote was clear and that he had been in error. Even after Mr Ince had plainly indicated his displeasure at her responses and requesting that she not respond further to his emails, she sent another email saying: “No apologies needed because everything was clear and sent to you and you have not sign in a contract with us yet. Yes, good luck to your search for the right storage place I am sure you will find one”. This precipitated a final angry response from Mr Ince, who said in effect that he would seek to dissuade his colleagues in the Department of Defence from using Pyrmont Car Storage in the future.

[28] When asked to explain this episode in cross-examination, Ms Langer initially said the she had been under stress when she wrote the emails because she had been subject to workplace bullying by another colleague, Darryl. However, when it was pointed out to her that Darryl had been dismissed some time earlier (as revealed by Ms Langer’s email to Mr Haridi of 18 October 2013), Ms Langer said she still remained under stress because of the bullying. I do not accept that evidence. I consider this a case where Ms Langer foolishly fell into conducting an argument with a potential client.

[29] The second issue identified by Ms Lewis was that there was insufficient follow-up on invoices that had been sent out, particularly in relation to the requirement to pay the first month’s rental in advance. Ms Lewis said that there were a number of accounts that were seriously in arrears, and that after she and Ms Allen had reorganised the filing system, they began making phone calls to recover outstanding amounts on a wide range of accounts with the result that the business’s cash flow improved significantly. Ms Langer’s evidence was that there were only four accounts in arrears when she went on leave. Ms Lewis accepted that Ms Langer honestly believed this, but that she was wrong due to her disorganised filing system.

[30] I accept that the system put in place by Ms Lewis and Ms Allen resulted in the more efficient recovery of amounts owing. However it is less clear that any difficulties which existed before this time could be attributed, or solely attributed, to Ms Langer. Although it is clear that there was a requirement to pay the first month’s rent in advance, there was not, as Mr Quinn accepted, any requirement that that payment had to be made before the client’s car was accepted for storage. Ms Langer’s evidence about the invoicing practice was a little confusing, but I understood it to be that she sent the invoice for any given month six days before the end of the preceding month, but that Mr Quinn allowed 30 days to pay. If the invoice was not paid and the outstanding payment exceeded $800, her role was to inform Mr Quinn so that he could chase up the payment. Mr Quinn did not clearly contradict this. Ms Langer said that she always informed Mr Quinn when payments on invoices were not made within the required period. There was no evidence that Mr Quinn himself had any consistent process for recovering overdue payments that were referred to him. He denied that Ms Langer always properly informed him when payments on invoices issued were overdue. There was no evidence of any document setting out what the procedures were for recovering payments. There was further no evidence that anything Ms Langer was doing in respect of invoicing in the period immediately before she went on leave in January 2014 was any different to what she had been doing over the entire eleven years of her employment. I consider that the invoicing problems identified by Ms Lewis were the result of the lack of any proper training, management or supervision of Ms Langer, insufficient activity on the part of Mr Quinn to ensure that invoices were paid, and the lack of any clear procedures concerning invoicing and debt recovery.

[31] The third issue concerned the discovery of an allegedly excessive amount of computer printer cartridges and other stationery that Ms Langer had ordered. This was said to be beyond the needs of the business, and (according to his first statement of evidence) led Mr Quinn to conclude that Ms Langer “was obtaining these items for her own benefit at my business’ expense” and that this amounted to “unconscionable conduct or worse ... which could have entitled me to immediately and summarily terminate her employment with my business”. The expenditure on stationery had significantly reduced after Ms Langer’s dismissal, and no printer cartridges had been ordered. However it emerged in the evidence that:

(a) Mr Quinn had been shown the accounts received for stationery orders, and had signed the cheques to pay them;

(b) the printer cartridges had been necessary because there were two printers which were used in the office, and the cartridges did not last long;

(c) a new laser printer had been purchased after Ms Langer’s dismissal; and

(d) Ms Langer did not own a home computer, so she could not have had any personal use for printer cartridges.

[32] Ultimately, when he was subject to cross-examination, Mr Quinn denied that he had ever regarded Ms Langer as having done anything dishonest, and thus effectively retracted the allegation that Ms Langer had been ordering stationery and printer cartridges for personal use. Having regard to what he had said in his first witness statement, this denial was of course not true.

[33] When Ms Langer attended for work on 14 February 2014 after she returned from leave, one of her work colleagues approached her and said “We need your security key because we have lost ours”. He then handed her an envelope and said “This is a letter for you. Mr Quinn is not here so he told you to take another week off”. The letter contained a week’s pay ($850.00) and a letter dated 12 February 2014 which simply said:

“Clarita Langer,

I request you hand your security keys to whoever is in the office. Please accept the envelope attached. Please ring me on Thursday 20th or Friday 21st February.”

[34] Ms Langer rang Mr Quinn on 20 February 2014 as directed. He said to her: “Your services are no longer required”. When Ms Langer inquired why this was the case, Mr Quinn said “You’ve made a mess”. Ms Langer pressed him for further details of the reason for her dismissal, but he refused to provide them. On 21 February 2014 Ms Langer went to the office in an attempt to see Mr Quinn but he was not there, and Ms Lewis told her he had food poisoning. She went to the office again on 24 February 2014, and was able to see Mr Quinn on this occasion. She requested a termination letter, and was provided with a letter dated 21 February 2014 and signed by Mr Quinn which said: “Please be informed your casual employment with the above business is terminated, effective from 24/2/14”. He then gave her $800.00 (or perhaps $850.00) cash which he took from his pocket and said: “This is your last pay”. Apart from this cash amount, Ms Langer was not paid any amount representing payment in lieu of notice or for accrued annual leave or long service leave.

Small Business Fair Dismissal Code

[35] As earlier stated, Mr Quinn relied upon compliance with the summary dismissal provisions of the Code, which provide as follows:

“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.”

[36] It is apparent that the reference to the employer’s belief on reasonable grounds is a different concept to that of a “valid reason for the dismissal related to the person’s capacity or conduct” found in s.387(a) of the Act. This was discussed in the Full Bench decision in John Pinawin T/A RoseVi.Hair.Face.Body v Mr Edwin Domingo 2 as follows:

“[29] We believe that the approach and observations in these two decisions are correct. There are two steps in the process of determining whether this aspect of the Small Business Fair Dismissal Code is satisfied. First, there needs to be a consideration whether, at the time of dismissal, the employer held a belief that the employee’s conduct was sufficiently serious to justify immediate dismissal. Secondly it is necessary to consider whether that belief was based on reasonable grounds. The second element incorporates the concept that the employer has carried out a reasonable investigation into the matter. It is not necessary to determine whether the employer was correct in the belief that it held.

[30] Acting reasonably does not require a single course of action. Different employers may approach the matter differently and form different conclusions, perhaps giving more benefit of any doubt, but still be acting reasonably. The legislation requires a consideration of whether the particular employer, in determining its course of action in relation to the employee at the time of dismissal, carried out a reasonable investigation, and reached a reasonable conclusion in all the circumstances. Those circumstances include the experience and resources of the small business employer concerned.”

[37] The provisions of the Code which relate to dismissals other than summary dismissals require a reason to be given to the employee for dismissal which is a “valid reason based on the employee’s conduct or capacity to do the job”. It is difficult to understand why the Code requires a valid reason for a dismissal on notice, but not for the more serious step of summary dismissal. Ms Langer submitted that the Code should be read as requiring a valid reason for all dismissals including summary dismissal. While that submission is from a logical perspective an attractive one, the plain language of the Code and the Full Bench decision in Pinawin militate against me adopting it.

[38] The Code requires, in respect of summary dismissal, that the employer believe on reasonable grounds that “the employee’s conduct is sufficiently serious to justify immediate dismissal”. At law, leaving aside any express terms of the employment contract which may deal with the circumstances in which the employment may be terminated, an employee may be dismissed summarily for conduct which is repudiatory in nature or which constitutes a breach of an essential term of the employment contract or a sufficiently serious breach of a non-essential term. The breach may be constituted by misconduct, disobedience, incompetence or negligence. 3 The rubric of “serious misconduct” (or “serious and wilful misconduct”) is often used to describe the type of misconduct permitting summary dismissal. However there is no rule of law which defines the degree of misconduct which may justify summary dismissal, although it must be “sufficiently grave”, the “seriousness of the act of termination and the effect of summary dismissal are factors which place a heavy burden on the employer to justify dismissal without notice”, and the “circumstances ... must establish that the breach was of a serious nature”.4

[39] It is reasonably apparent that when the Code refers to conduct which is sufficiently serious to justify immediate dismissal, it is contemplating conduct which at law would justify summary dismissal. The reference to “Serious misconduct” and the examples given of “theft, fraud, violence and serious breaches of occupational health and safety procedures” confirm this. The checklist for compliance with the Code similarly asks the employer whether the employee was dismissed because it was believed on reasonable grounds that the employee had stolen goods or money, defrauded the business, threatened or committed violence, or committed a serious breach of occupational health and safety procedures, or whether the employee had been dismissed “for some other form of misconduct”.

[40] Therefore, in order for a summary dismissal by a small business employer to comply with the Code, there must be a reasonable basis to conclude that the conduct which the employer believes the employee has engaged in is conduct which would, at law, justify summary dismissal. This proposition is implicit in the Pinawin decision. In that case, the employer believed that the employee had engaged in illegal drug-taking activity “out of hours” in a manner which affected his work. As well as satisfying itself that there was, in a factual sense, a reasonable basis for this belief, the Full Bench also considered 5 whether there was a reasonable basis to conclude that such conduct was of a nature that would, at law, justify summary dismissal.

[41] As the passage from Pinawin earlier quoted makes clear, the belief of the employer must be one that is held at the time of the dismissal. In this case it is not entirely clear what beliefs about Ms Langer’s conduct were actually held by Mr Quinn at the time of the dismissal, as distinct from beliefs formed in the time since the dismissal. These matters were mixed together in Mr Quinn’s evidence. For example, Mr Quinn’s evidence concerning the stationery purchases made by Ms Langer referred to the fact that there had been no purchases of printer cartridges and much reduced purchases of other stationery in the period after her dismissal as supporting his belief that her purchases of these items was “unconscionable ... or worse”. Such matters could not of course have informed his thinking at the time of the dismissal. Likewise Mr Quinn referred to improved car movement numbers since the dismissal as demonstrating the inefficiency of Ms Langer’s work practices, and the lack of any bookings from defence personnel during the year 2014 to date as demonstrating the detrimental effect of Ms Langer’s email exchange with Mr Ince in November 2013. Equally such matters cannot have been in Mr Quinn’s mind when he decided to dismiss Ms Langer in mid-February 2014.

[42] The only reason which Mr Quinn gave for Ms Langer’s dismissal at the time was the statement “You’ve made a mess”. This suggests to me that the primary reason in his mind for the dismissal at the time was his concern about the state of the files, invoicing and debt recovery as reported to him by Ms Lewis. While I accept that there were reasonable grounds for him to believe, as a matter of fact, that there were problems with Ms Langer’s work performance in these areas, I do not consider that there were reasonable grounds to believe on this basis that Ms Langer had engaged in conduct which was sufficiently serious to justify summary dismissal. It is apparent from the evidence that Ms Langer’s work practices at the time of the dismissal were no different from her practices she had adopted during the entire eleven-year period of her employment. That those practices were significantly inefficient is reasonably clear, but I consider them to be the result of a known lack of any relevant prior training, qualifications and experience on her part and the failure by Mr Quinn to provide the necessary training to Ms Langer, to properly supervise her, or to appropriately manage the business by putting in place clear procedures for Ms Langer to follow and to follow up any failure to comply with those procedures. Ms Langer had every reason to believe, because of the praise she had received from Mr Quinn and the lack of any substantial criticism of her work over a very long period of time, that she was working to an appropriate standard. Mr Quinn himself said that “I believe she thought honestly that she was doing a good job up till when she left”.In those circumstances, it could not reasonably be considered that Ms Langer had engaged in conduct that (to use the language of reg. 1.07) caused serious and imminent risk to the reputation, viability or profitability of Mr Quinn’s business. To dismiss her summarily in those circumstances rather than to identify her shortcomings and give her some opportunity to adjust to the new work procedures developed by Ms Lewis was objectively unreasonable.

[43] It may be added that Mr Quinn failed to conduct a reasonable investigation into Ms Langer’s work performance issues in that he never raised those issue with her or sought her response. There was no reason why he could not have done this, particularly as he paid Ms Langer to stay at home for a week before dismissing her. However I consider in any event that the circumstances which Ms Langer would have been entitled to have raised in her own defence, which I have set out, were well known to Mr Quinn. This supports the conclusion that Mr Quinn did not have reasonable grounds to believe that Ms Langer’s work performance issues were sufficiently serious to justify summary dismissal.

[44] Mr Quinn asserted in his first statement of evidence that the purported “discovery” of Ms Langer’s alleged excessive expenditure on printer cartridges and stationery was “Of particular concern ...” to him, suggesting that it played a major part in his decision to dismiss her. For the reasons I have earlier set out, it is far from clear that Mr Quinn’s belief about this issue was contemporaneous with the dismissal. Even if it was, I do not consider that this belief was based on reasonable grounds. If Mr Quinn had conducted a reasonable investigation of the issue by speaking to Ms Langer about it, he would have discovered (to the extent he did not already know about) the matters identified in (a), (b) and (d) of paragraph [31] above. I consider that those matters would have provided a complete answer to Mr Quinn’s concern about the stationery and printer cartridge purchases.

[45] In respect of the problematic emails, I likewise consider that it has not clearly been established by Mr Quinn that at the time of the dismissal he held the belief that they, either in isolation or together with the other matters, justified summary dismissal. In particular, Mr Quinn’s belief about the seriousness of the email exchange with Mr Ince from the Department of Defence was clearly informed, as earlier stated, by the lack of any Department of Defence personnel as customers during 2014. Although I accept that Ms Lewis drew Mr Quinn’s attention to at least some of the emails prior to Ms Langer’s dismissal, what he actually believed about the emails as at 20 February 2014 cannot readily be discerned from the evidence. Mr Quinn’s general lack of credibility as a witness contributes to this difficulty. In any event, even if I were to accept that Mr Quinn held the requisite belief at the time of dismissal, I do not consider that there were reasonable grounds for such a belief. Mr Quinn relied, as earlier stated, upon Ms Langer’s conduct representing a serious and imminent risk to the reputation, viability and profitability of his business. The small number of emails which were genuinely problematic represented isolated instances of idiosyncratic behaviour on Ms Langer’s part. There was no basis to believe that any of the emails prior to the exchange with Mr Ince had caused any detriment to Mr Quinn’s business. The email exchange with Mr Ince certainly represented ill-judgment on Ms Langer’s part, but this occurred three months before the dismissal, and could not reasonably have been believed to have constituted a “serious and imminent risk” at the time of the dismissal that was sufficiently serious as to warrant summary dismissal.

[46] There is one additional and discrete reason why I do not consider that the dismissal was consistent with the summary dismissal provisions of the Code, namely that it was not in fact a summary dismissal at all. Ms Langer was notified of her dismissal on 20 February 2014, but the dismissal did not take effect, according to the dismissal letter dated 21 February 2014, until 24 February 2014. It was therefore a dismissal on four calendar days’ notice or two business days’ notice. The dismissal did not comply with the provisions of the Code concerning “Other Dismissal” because Ms Langer was not warned that she risked dismissal if her performance did not improve, and she was not given any opportunity to respond to any such warning or any reasonable chance to rectify the problem.

[47] I am satisfied, for the purpose of s.385(c) of the Act, that the dismissal was not consistent with the Code.

An unfair dismissal?

[48] Section 387 of the Act requires the Commission, in considering whether a dismissal was harsh, unjust or unreasonable, to take into account a number of matters specified in paragraphs (a) to (h) of the section. I will deal with each of these matters in turn below.

Paragraph 387(a)

[49] I do not consider that there was a valid reason for Ms Langer’s dismissal. In this respect, I rely largely upon the conclusions I have already stated about the matters relied upon by Mr Quinn to justify her dismissal. In summary:

● Ms Langer’s work methods and performance at the time of her dismissal were no different than at any time during the eleven years of her employment.

● Ms Langer’s work had been publicly praised by Mr Quinn a number of times, and had never been the subject of significant criticism, so that she had every reason to believe that she was performing her work to an appropriate standard.

● The difficulties with Ms Langer’s work performance which were eventually identified by Ms Lewis were the result of her lack of relevant prior qualifications, training and experience, and the failure of Mr Quinn to provide her with appropriate training, supervision or working procedures.

● Mr Quinn himself was significantly responsible for the poor conduct of the business, due to his lack of proper management, his inactivity and his failure to establish clear working procedures. He himself adopted practices for the business which were highly irregular and not in keeping with community standards.

● There was no reason why Ms Langer could not have been given an opportunity to improve her work performance with the benefit of training and guidance in accordance with the new work procedures established by Ms Lewis.

● The allegation concerning excessive purchase of stationery and printer cartridges was without substance. There was no basis for the assertion that Ms Langer derived some personal benefit from this. Mr Quinn sighted all the relevant accounts and had signed the cheques to pay them.

● The emails sent by Ms Langer which were genuinely problematic represented isolated instances of idiosyncratic behaviour on her part. Although Mr Quinn inferred that the lack of Defence Department personnel as customers during 2014 was the result of the email exchange with Mr Ince in November 2013, he also stated that he had never been able to predict the amount of business he received. Mr Ince himself had not been a prior customer of the business.

● There was no reason why, upon the discovery of the emails, Ms Langer could not have been warned about this issue and assisted, through appropriate training and guidance, to adopt a more professional approach to her email communications with customers.

Paragraph 387(b)

[50] Ms Langer was not notified of any reason for her dismissal related to her capacity or conduct prior to being informed that she was dismissed.

Paragraph 387(c)

[51] Ms Langer was not given any opportunity to respond to any reason for her dismissal relating to her capacity or conduct.

Paragraph 387(d)

[52] There were no discussions relating to Ms Langer’s dismissal, so the issue of a support person being present did not arise.

Paragraph 387(e)

[53] Ms Langer was not warned about her unsatisfactory performance before the dismissal.

Paragraph 387(f)

[54] The small size of Mr Quinn’s business undoubtedly impacted upon the procedures followed in effecting the dismissal, but nonetheless there was no reason why Mr Quinn could not have discussed the concerns he had about Ms Langer’s work performance with her prior to deciding to dismiss her.

Paragraph 387(g)

[55] The absence of any dedicated human resources management specialists or expertise in Mr Quinn’s business undoubtedly impacted upon the procedures followed in effecting the dismissal, but nonetheless there was no reason why Mr Quinn could not have discussed the concerns he had about Ms Langer’s work performance with her prior to deciding to dismiss her.

Paragraph 387(h)

[56] I consider the following matters to be relevant in that they support the conclusion that Ms Langer’s dismissal was harsh, unjust and unreasonable:

(a) Ms Langer had been employed by Mr Quinn for a period of over eleven years.

(b) Ms Langer was 64 years of age at the time of dismissal.

(c) She was not paid any accrued leave entitlements upon her dismissal. She was patently entitled to at least long service leave under the Long Service Leave Act 1955 (NSW). Mr Quinn made no superannuation contributions on her behalf.

(d) Her age, lack of qualifications, and no more than adequate English-language skills make it unlikely that she will obtain further employment. She has been unemployed since the dismissal.

(e) Ms Langer has been forced to move to the country since her dismissal, partly because she could not afford her rent in Sydney. She had credit card debt which she could not pay off. She lives on the Newstart Allowance.

Conclusion

[57] I find that Ms Langer’s dismissal was harsh, unjust and unreasonable. There was no valid reason for her dismissal. She was denied procedural fairness. The reason for her dismissal was fundamentally performance-based, but she was never warned about her work performance or given an opportunity to improve it. She was a low-paid employee who lacked relevant experience and qualifications, was not given any proper training or supervision, and worked in a business which was ill-managed and attended by highly irregular business practices. Her dismissal has caused her significant economic loss and social dislocation.

Remedy

[58] I consider that reinstatement would be an inappropriate remedy. Ms Langer did not seek reinstatement. She gave evidence that she was “scared of Bob’s associates”, and this was another reason why she left Sydney. I do not need to consider for present purposes whether this perception had any objective basis to it, but it was clearly genuinely held by her. That perception, as well as the small size of Mr Quinn’s business, his highly unfavourable attitude towards her, her move from Sydney and the ongoing court litigation between them clearly makes reinstatement untenable.

[59] Ms Langer sought a compensation order under s.392. I consider, for the purpose of s.390(3)(b), that a compensation order is appropriate in the circumstances of the case. As earlier stated, it is apparent that Ms Langer has suffered financial loss and unemployment as a result of her unfair dismissal.

[60] It is necessary therefore for me to assess the amount of compensation that should be ordered to be paid to Ms Langer. In assessing compensation, I am required by s.392(2) of the Act to take into account all the circumstances of the case including the specific matters identified in paragraphs (a)-(g) of the subsection. In undertaking this task, I shall use the established methodology for assessing compensation in unfair dismissal cases which was most recently elaborated upon in the context of the current Act in Bowden v Ottrey Homes Cobram and District Retirement Villages 6.

Remuneration that would have been received (s.392(2)(c))

[61] Ms Langer’s evidence was she had expected to continue working for Mr Quinn until her retirement. She did not specify a retirement age in her evidence, but I note that she became eligible for the Age Pension upon turning 65 on 5 October 2014. I will treat that as her intended retirement age for the purpose of the analysis. Had Ms Langer been given the appropriate training, guidance and support, I do not consider that there is any reason why she could not have continued to perform work for Mr Quinn at a standard acceptable to him until she turned 65. That would have meant an additional 32 weeks employment.

[62] In calculating the remuneration Ms Langer would have received had she not been dismissed, it is necessary to identify what her rate of payment would have been. Ms Langer submitted that the cash payment of $850 per week which she was being paid at the time of her dismissal should be treated as if it was an after-tax amount, and that compensation should be calculated on a higher notional gross weekly pay rate. I do not accept that submission. There was no evidence that the parties agreed that the $850 weekly payment was an after-tax amount. Accordingly I will use the rate of $850 in calculating remuneration foregone.

[63] Ms Langer would therefore have received $27,200 ($850 per week x 32 weeks) in remuneration had she not been dismissed.

Remuneration earned (s.392(2)(e)) and income reasonably likely to be earned (s.392(2)(f))

[64] Ms Langer began receiving the Newstart allowance on 19 March 2014. From that date until 4 September 2014, she received a total of $6,989 in Newstart and supplementary payments. That represents an average amount of about $291 per week ($6,989/24 weeks). I consider that it is likely that she continued to earn the same average weekly amount until she turned 65. Therefore the total of remuneration earned and likely to be earned is $8,153 ($6,989 + 4 weeks x $291). Deducted from the starting point of $27,200, this leaves $19,047.

Other matters (s.392(2)(g))

[65] I do not consider that there should be any further deductions for “contingencies”. I have considered the impact of taxation, but I prefer to determine compensation as a gross amount and leave taxation for determination, particularly given the uncertainty in the circumstances of this case concerning taxation liability.

Viability (s.392(2)(a))

[66] There was no evidence that any particular amount of compensation would affect the viability of Mr Quinn’s business. No adjustment will be made on this account.

Length of service (s.392(2)(b))

[67] I consider that Ms Langer’s service (eleven years and two months) does not in all the circumstances justify any increase or reduction to the amount of compensation otherwise payable.

Mitigation efforts (s.392(2)(d))

[68] There was no evidence concerning Ms Langer’s mitigation efforts one way or the other. I accept, for reasons already stated, that it will be very difficult for Ms Langer to obtain any further employment. I will make no adjustment on this score.

Misconduct (s.392(3))

[69] Ms Langer did not commit any misconduct, so this has no relevance to the assessment of compensation.

Compensation cap (s.392(5))

[70] The amount of $19,047 is below the compensation cap.

Instalments (s.393)

[71] There was no submission that any compensation amount should be payable by instalments, and I do not consider that payment by instalments is warranted.

Conclusion

[72] I will order that Mr Quinn pay Ms Langer the amount of $19,047 as compensation for her harsh, unjust and unreasonable dismissal. The amount shall be payable within 14 days of the date of this decision. A separate order to this effect will be issued at the same time as this decision.

VICE PRESIDENT

Appearances:

L. Andelman of counsel with M. McCabe solicitor for Clarita Langer

M. Harmer with S. Redmond solicitors for Robert Quinn t/a Pyrmont Car Store

Hearing details:

2014.

Sydney:

1,4-5 September.

 1   Statement of Robert Quinn dated 9 July 2014 at [11]

 2   [2012] FWAFB 1359

 3   Rankin v Marine Power International (2001) 107 IR 117 at [238]-[239] and [250]

 4   Ibid at [240] and [250].

 5   At [36]

 6   [2013] FWCFB 431

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