Lisa Tarbuck v Frockk Pty Ltd T/A Frockk

[2016] FWC 3279

[2016] FWC 3279

FAIR WORK COMMISSION

DECISION

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

Lisa Tarbuck
v
Frockk Pty Ltd T/A Frockk
(U2015/14043)

COMMISSIONER CAMBRIDGE SYDNEY, 27 MAY 2016

Application for unfair dismissal remedy - alleged genuine redundancy - small business fair dismissal code - paucity of evidence from respondent - no valid reason for dismissal - significant procedural deficiencies - dismissal harsh, unjust and unreasonable - compensation Ordered.

[1] This matter involves an application for unfair dismissal remedy made under s. 394 of the Fair Work Act 2009 (the Act). The application was lodged at Sydney on 30 October 2015, and it was made by Lisa Tarbuck (the applicant). The respondent employer was identified as Frockk Pty Ltd T/A Frockk [ABN 59 864 614 033] (the employer).

[2] The application indicated that the date that the applicant’s dismissal took effect was 12 October 2015. Consequently, the application was made within the 21 day time limit prescribed by subsection 394 (2) of the Act.

[3] The matter was not resolved at conciliation, and it has proceeded to arbitration before the Fair Work Commission (the Commission) in a Hearing conducted at Sydney on 11 February 2016.

[4] At the Hearing, the applicant represented herself, and she provided evidence as the only witness called in support of the unfair dismissal claim. The employer was initially represented at the Hearing by Mr F Vrachas from the firm of Rothsay Chartered Accountants. Following the departure from the proceedings of Mr Vrachas, a Mr J Sobol represented the employer. Mr Sobol did not call any witnesses to provide evidence on behalf of the employer, but he did introduce evidence in the form of a letter 1 dated 15 January 2016, addressed to Unfair Dismissal Rosters from Rothsay Chartered Accountants.

Factual Background

[5] The applicant was dismissed from employment on Monday, 12 October 2015, at which time she had been employed for a period of almost five years. The applicant was engaged in a position which can be described as a Retail Store Manager. The applicant worked part-time and was ordinarily rostered to work on Thursdays to Sundays.

[6] The employer operates a retail boutique clothing store selling women’s clothes and accessories. The employer’s retail operation is located in the Sydney suburb of Bronte. The employer is a small business, and it has only two or three employees.

[7] The employment of the applicant appeared to be without recorded incident or complaint. In accordance with her regular rostered part-time work arrangements, the applicant was not at work on Monday, 12 October 2015, when she received a text message from the employer which advised that an urgent meeting was needed to discuss her position in the employer’s business. The applicant telephoned the employer and made arrangements to attend the employer’s retail premises at around midday.

[8] The applicant arrived at the employer’s retail premises and was directed into a back room where she attended a meeting with three representatives of the employer. The employer advised the applicant that her employment was being terminated because of a serious deterioration in the financial position of the retail operation. The applicant enquired about whether the retail shop would close or continue to operate. The employer told the applicant that the shop would continue to operate, and the applicant then questioned why she, rather than other staff, was being dismissed. The employer said that the applicant was to be dismissed because she was paid more than other staff, and the applicant confirmed with the employer that there was no prospect for her to negotiate any alternative arrangements.

[9] During the meeting on 12 October, the applicant made general complaint about the circumstances of the dismissal as had been advised to her by the employer. Further, the applicant raised complaint about alleged underpayment of wages and superannuation. These matters were not resolved during the meeting on 12 October 2015, and at the time the applicant was given a cheque for her last week’s wages and a further week in respect to notice. The applicant was not provided with any letter of dismissal, or other written documentation regarding the termination of her employment.

[10] The applicant has sought alternative employment since the dismissal. However, she has only obtained some limited remuneration of approximately $1000 from alternative employment since her dismissal.

The Case for the Applicant

[11] The applicant made oral submissions in addition to a documentary outline of submissions which had been filed on her behalf.

[12] The written submissions which had been filed on behalf of the applicant rejected the proposition that had been made by the employer, that the Commission did not have jurisdiction to deal with the application because the dismissal of the applicant was a case of genuine redundancy, and that it was also consistent with the Small Business Fair Dismissal Code (the Code).

[13] The written submissions of the applicant asserted that as she had never been provided with any verbal or written warnings as required by the Code, her dismissal could not be considered to have been compliant with the Code. In addition, the written submissions contended that the asserted financial difficulties of the employer were without foundation. It was asserted that the employer’s business continued to operate, and that the work performed by the applicant continued to be required to be performed by other staff, including one of whom was employed after the applicant’s dismissal.

[14] The oral submissions made by the applicant during the Hearing challenged the alleged basis for the dismissal. In particular, the applicant submitted that the employer’s business continued to operate, and it continued to pay other employees’ wages including employees who were engaged after she had been dismissed. The applicant also submitted that she had not been paid her correct entitlements including superannuation.

[15] The applicant made further submissions which asserted that there was not a substantial downturn in the sales of the business, and that two new employees had been engaged after her dismissal. Further, the applicant said that she had tried to negotiate alternative arrangements involving the prospect that other employees would be dismissed or work rearranged, and that this proposition had been rejected by the employer. The applicant stressed that she believed that her dismissal was not a case of genuine redundancy.

[16] The applicant said that her dismissal was unfair. The applicant was seeking remedy in terms of financial compensation for her unfair dismissal.

The Case for the Employer

[17] The submissions of the employer were articulated by Mr Sobol. Mr Sobol referred to the financial information provided in Exhibit 2. Mr Sobol said that there was a net deficiency of assets within the employer’s business. Mr Sobol submitted that the financial position of the business was such that it required structural change involving the removal of one employee.

[18] Mr Sobol made a further submission which rejected the applicant’s assertion that new staff had been hired after the dismissal of the applicant. Mr Sobol said that it was not new staff that had been hired, but staff that were engaged to cover for an existing employee who had become injured.

[19] The submissions made by Mr Sobol stressed that the employer believed that the dismissal of the applicant was a case of genuine redundancy. Mr Sobol referred to subsection 389 (1) (a) of the Act, and he said that the operational requirements of the employer’s business had significantly changed, and that these changes satisfied the meaning of genuine redundancy. Mr Sobol also referred to subsection 389 (1) (b) of the Act, and he said that the employer did contact the applicant in regard to discussing the redundancy when it sent the text message to the applicant on Monday, 12 October 2015.

[20] The Commission has inferred from the submissions made on behalf of the employer that it believed that the dismissal of the applicant was a case of genuine redundancy, and that it was also compliant with the Code. Further, the Commission has inferred that the employer believed that the claim for unfair dismissal should be dismissed.

Consideration

[21] Section 385 of the Act stipulates that the Commission must be satisfied that 4 cumulative elements are met in order to establish an unfair dismissal. These elements are:

(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.

[22] In this instance, there was contest regarding subsections 385 (b), (c) and (d) of the Act. The Commission has been required to determine whether; the dismissal of the applicant was a case of genuine redundancy; consistent with the small business fair dismissal code; and potentially, whether it was harsh, unjust or unreasonable.

Small Business Fair Dismissal Code

[23] The employer is a small business and the provisions of subsection 385 (c) of the Act require consideration. Specifically, it is necessary to determine whether the dismissal of the applicant was or was not consistent with the Small Business Fair Dismissal Code (referred to as “the Code”). Logically, a determination of any application of the Code should precede any more general contemplation of whether the dismissal was a case of genuine redundancy and whether it was harsh, unjust or unreasonable.

[24] The Code is in the following terms:

“Small Business Fair Dismissal 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.”

[25] In this case, the applicant was dismissed for reason of alleged genuine redundancy, and that part of the Code relating to Other Dismissal would appear to have potential application to the particular circumstances surrounding the dismissal of the applicant. However, the Code appears to broadly address circumstances involving dismissal in respect to capacity or conduct of an employee, as opposed to any genuine redundancy circumstance.

[26] In any event, to the extent that the Other Dismissal provisions of the Code may have application, it was clear from the evidence that the applicant was not given any opportunity to suggest alternative arrangements which may have avoided the dismissal. The Other Dismissal provisions of the Code may not be apposite any alleged redundancy circumstance. However, these provisions generally introduce a requirement for some opportunity for an employee to offer explanation or suggestion, to address the concerns of any employer contemplating the dismissal of that employee. In this instance, the applicant was denied any opportunity to offer alternative suggestions which she sought to canvass during the meeting with the employer representatives held on 12 October 2015.

[27] Consequently, the dismissal of the applicant cannot be held to have been consistent with the Code.

Genuine Redundancy - s. 389 of the Act

[28] A dismissal that is a genuine redundancy could not be an unfair dismissal. Such is the effect of the operation of subsection 385 (d) of the Act.

[29] Section 389 of the Act provides for a meaning of genuine redundancy:

“389 Meaning of genuine redundancy

(1) A person’s dismissal was a case of genuine redundancy if:

(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and

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

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

(a) the employer’s enterprise; or

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

[30] An examination of the provisions of s. 389 of the Act identifies three specific elements which, if satisfied in combination, determine whether or not a dismissal was a case of genuine redundancy. Subsection 389 (1) contains two affirmative elements, both of which must be established, in order to allow for a finding that a dismissal was a case of genuine redundancy, and subsection 389 (2) contains one negatory element which, if established, renders the dismissal not to be a case of genuine redundancy.

[31] In this instance, the employer asserted that the provisions of subsections 389 (1) (a) and (b) of the Act were satisfied. There was no suggestion that subsection 389 (2) had any application.

[32] Firstly, in respect to subsection 389 (1) (a) of the Act, the employer asserted that it no longer required the applicant’s job to be performed by anyone, because of changes in its operational requirements arising from the difficult financial position that was said to be confirmed by the material provided as Exhibit 2. Upon examination of Exhibit 2, there can be no extrapolation made that any apparent business downturn translated into a requirement that the employer no longer required the applicant’s job to be performed.

[33] There was a complete absence of evidence provided by the employer upon which the Commission could conclude that any of the apparent financial difficulties of the employer necessitated the reduction of one employee. The evidence provided by Exhibit 2, in broad summary, revealed that the employer’s business had made a year-to-date profit of $2,707.29, and that its accumulated net liabilities exceeded assets by $80,000. There was no evidence provided by the employer that this particular level of year-to-date profit and/or its accumulated net debt position, meant that the business, as it operated on 12 October 2015, needed to make one employee redundant.

[34] Secondly, there was no evidence provided by the employer that it had complied with the requirements of subsection 389 (1) (b) of the Act. There was no mention of what would presumably be the relevant Modern Award, namely the General Retail Industry Award 2010 [MA00004]. In particular, there was no evidence that the employer complied with the consultation provisions of that Award, which are contained at clause 8, and which are in the following terms:

“8.1 Consultation regarding major workplace change

(a) Employer to notify

(i) Where an employer has made a definite decision to introduce major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must notify the employees who may be affected by the proposed changes and their representatives, if any.

(ii) Significant effects include termination of employment; major changes in the composition, operation or size of the employer’s workforce or in the skills required; the elimination or diminution of job opportunities, promotion opportunities or job tenure; the alteration of hours of work; the need for retraining or transfer of employees to other work or locations; and the restructuring of jobs. Provided that where this award makes provision for alteration of any of these matters an alteration is deemed not to have significant effect.

(b) Employer to discuss change

(i) The employer must discuss with the employees affected and their representatives, if any, the introduction of the changes referred to in clause 8.1(a), the effects the changes are likely to have on employees and measures to avert or mitigate the adverse effects of such changes on employees and must give prompt consideration to matters raised by the employees and/or their representatives in relation to the changes.

(ii) The discussions must commence as early as practicable after a definite decision has been made by the employer to make the changes referred to in clause 8.1(a).

(iii) For the purposes of such discussion, the employer must provide in writing to the employees concerned and their representatives, if any, all relevant information about the changes including the nature of the changes proposed, the expected effects of the changes on employees and any other matters likely to affect employees provided that no employer is required to disclose confidential information the disclosure of which would be contrary to the employer’s interests.”

[35] The evidence of the abrupt manner that the employer advised the applicant of her dismissal on the basis of alleged redundancy, would, upon any reasonable assessment, fail to provide even the most elementary level of consultation. There was no evidentiary basis upon which the Commission could make findings that the dismissal of the applicant was a case of genuine redundancy, such that it complied with the meaning of genuine redundancy as established by subsections 389 (1) (a) and (b) of the Act.

Harsh, Unjust or Unreasonable

[36] Consequently, the dismissal of the applicant was not consistent with the Code, nor was it a case of genuine redundancy. Therefore, the remaining contested element of s. 385 of the Act, namely, whether the dismissal was harsh, unjust or unreasonable, has required consideration.

[37] Section 387 of the Act contains criteria that the Commission must take into account in any determination of whether a dismissal is harsh, unjust or unreasonable. These criteria are:

(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.

387 (a) - Valid reason for the dismissal related to capacity or conduct

[38] The alleged reason for the applicant’s dismissal was redundancy due to the financial difficulties of the employer’s business operation. This reason of alleged redundancy would not relate to the capacity or conduct of the applicant. However, there was considerable doubt that the alleged redundancy was the true reason for the dismissal of the applicant.

[39] The employer provided no evidence by way of witness statement, nor did it call any individual to provide witness evidence. The employer sought to provide financial information upon which it attempted to establish the basis for the alleged redundancy as the reason for the dismissal of the applicant. However, strangely, the employer’s response document, (Form F3), did not indicate in answer to point 2.2, that the dismissal was a case of genuine redundancy, yet it indicated that the dismissal was said to be consistent with the Code.

[40] Further, the employer’s F3 response document made mention of three performance and conduct matters which represented the reasons for the dismissal of the applicant. These matters involved; (a) the applicant allegedly giving substantial discounts to customers; (b) the applicant not taking deposits on layby’s; and, (c) the applicant bullying the director on a number of occasions. These matters appeared to have somehow evaporated from the mind of the employer in the period between completing the F3 response document and the Hearing.

[41] In the absence of any contradictory evidence, the Commission has been persuaded that the dismissal of the applicant was likely to have been motivated by some perceived concerns regarding the performance and/or conduct of the applicant. These were matters that were identified in point 3.1 of the employer’s F3 response document. There may have also been an issue involving the applicant’s insistence upon being paid sick leave. However, in the absence of any evidence to support the performance and/or conduct concerns, these matters cannot be held to be valid reason for dismissal of the applicant related to her capacity or conduct.

[42] Upon analysis, the dismissal of the applicant was not for valid reason related to her capacity or conduct. Nevertheless, further consideration of the other elements contained in s. 387 of the Act must also be undertaken.

387 (b) - Notification of reason for dismissal

[43] The employer did not provide any written notification of the reason for the applicant's dismissal.

387 (c) - Opportunity to respond to any reason related to capacity or conduct

[44] The employer’s abrupt approach in the manner in which it dismissed the applicant, denied any opportunity for the applicant to make any responses or representations about whatever may have been the true reasons for her dismissal. It also denied the applicant any opportunity to make suggestions about arrangements that might have avoided or mitigated the circumstances which gave rise to the alleged redundancy.

[45] The applicant was not provided with a proper opportunity to respond to the matters which represented either the true basis or the purported reason for her dismissal.

387 (d) - Unreasonable refusal to allow a support person to assist

[46] The employer’s abrupt approach ensured that the applicant was effectively not permitted to have a support person present during the meeting on 12 October 2015, at which she was advised of her dismissal.

387 (e) - Warning about unsatisfactory performance

[47] There was no evidence that the applicant had been provided with any warning about any unsatisfactory aspect of her work performance or conduct.

387 (f) - Size of enterprise likely to impact on procedures

[48] The Commission has recognised that the employer is a small business, and accommodation should be made for significant informality in respect to employment matters. However, accommodation for informality in the small business context does not provide justification for the absence of what might be described as common decency.

387 (g) - Absence of management specialists or expertise likely to impact on procedures

[49] Although the employer is a small business which did not have dedicated employee relations management specialists, it is obliged to treat its employees with honesty and respect. Unfortunately, in this instance it appeared that the employer sought to disguise the real reasons for the dismissal of the applicant, and rather than deal with those matters by providing the applicant with proper opportunity to be heard, it instead abruptly terminated the employment, and subsequently sought to construct an alternative reason for the dismissal.

387 (h) - Other relevant matters

[50] It appeared that the applicant also had legitimate complaint about various underpayments including superannuation. In the circumstances, these are not matters which impact on the primary determination of the unfair dismissal claim. However, it would appear that the failure to pay all due entitlements to the applicant upon termination or within a reasonable period following termination, may have rendered the dismissal as unlawful.

Conclusion

[51] In this instance, the applicant was dismissed on the basis of an alleged genuine redundancy. The employer has asserted that as a small business the dismissal of the applicant complied with the Code, and as the dismissal was allegedly a case of genuine redundancy, it could not be held to be unfair dismissal.

[52] The Commission has undertaken a careful consideration of all of the evidence regarding the somewhat unfortunate circumstances surrounding the dismissal of the applicant. It was regrettable that the employer did not seek to introduce any substantial evidence in support of the position that it adopted at the Hearing.

[53] The evidence has firmly established that the dismissal of the applicant was not consistent with the Code, nor was it a case of genuine redundancy.

[54] The Commission has had particular regard for the curious discrepancies that existed with the material provided by the employer in its F3 employer’s response document, as compared with the assertions that it sought to rely upon at the Hearing.

[55] On a balanced and objective analysis of all of the evidence and filed material, the Commission has concluded that the reason asserted for the applicant's dismissal at the Hearing was false, and that the true reasons for the dismissal of the applicant related to certain performance and conduct matters which were not appropriately addressed by the employer. Therefore, upon analysis, the dismissal of the applicant was without valid reason relating to her capacity or conduct.

[56] The abrupt processes that the employer adopted for dealing with the dismissal of the applicant was severely flawed, such that the applicant was denied any opportunity to respond to either the asserted or true reasons for her dismissal. Further, the applicant was not provided with any written reasons for her dismissal. The employer completely failed to deal with the dismissal of the applicant in any fundamentally fair manner.

[57] The dismissal of the applicant was harsh, unjust and unreasonable. It was harsh and unreasonable primarily because the applicant was not provided with the true reason or reasons for her dismissal. Further, the dismissal of the applicant was unjust and unreasonable primarily because it was without sound or defensible reason. In addition, the dismissal of the applicant was unjust because it was implemented in a manner which denied the applicant any opportunity to provide any response to the alleged or true reasons for her dismissal. Consequently, the application for unfair dismissal remedy has met the legislative requirements, and it is granted.

Remedy

[58] The applicant has not sought reinstatement as remedy for her unfair dismissal. Instead, she has sought remedy in the form of payment of an amount of monetary compensation.

[59] I have decided that compensation would be an appropriate remedy for the applicant’s unfair dismissal, and I turn to the factors which involve the quantification of any amount of compensation.

[60] Section 392 of the Act prescribes certain matters that deal with compensation as a remedy for unfair dismissal. I have approached the question of compensation having regard for the guidelines that have been established in the Full Bench Decision in Sprigg v Paul’s Licensed Festival Supermarket 2 and as commented upon in the subsequent Full Bench Decision in Smith and Ors v Moore Paragon Australia Ltd 3.

[61] Firstly, I confirm that an Order for payment of compensation to the applicant will be made against the employer in lieu of reinstatement of the applicant.

[62] Secondly, in determining the amount of compensation that I Order, I have taken into account all of the circumstances of the matter, including the factors set out in paragraphs (a) to (g) of subsection 392 (2) of the Act.

[63] There was no convincing evidence that an Order of compensation would impact on the viability of the employer’s enterprise.

[64] The applicant had almost five years’ service with the employer. The applicant would have been likely to have received remuneration of approximately $700.00 per week if she had not been unfairly dismissed. There was significant prospect that the employment of the applicant may have endured for a number of years, but for the unfair dismissal.

[65] Following the dismissal, the applicant made efforts to mitigate the loss suffered because of the dismissal. The applicant has secured only limited alternative employment which provided approximately $1,000.00 in remuneration.

[66] Thirdly, in this instance there was no misconduct which contributed to the employer's decision to dismiss.

[67] Fourthly, I confirm that any amount Ordered does not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt caused to the applicant by the manner of the dismissal.

[68] In respect to the determination of the quantum of compensation to be provided to the applicant, I have had regard for the loss of non-transferable employment credits associated with employment of almost five years’ duration.

[69] Consequently, for the reasons outlined above, I have decided that an amount approximating with 25 weeks remuneration should be Ordered as compensation to the applicant. That amount is $17,500.00. Accordingly, separate Orders [PR580688] providing for remedy in these terms will be issued.

COMMISSIONER

Appearances:

Ms L Tarbuck, appearing unrepresented.

Mr F Vrachas of Rothsay Chartered Accountants, and Mr J Sobol appeared for the employer.

Hearing details:

2016.

Sydney:

February, 11.

 1   Exhibit 2.

 2 Sprigg v Paul’s Licensed Festival Supermarket, (Munro J, Duncan DP and Jones C), (1998) 88IR 21.

 3   Smith and Ors v Moore Paragon Australia Ltd, (Lawler VP, Kaufman SDP and Mansfield C), (2004) PR942856.

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