Lucia McCormick v The Vineyard Wine and Tapas Bar Pty Ltd

[2020] FWC 5946

[2020] FWC 5946

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Lucia McCormick
v
The Vineyard Wine and Tapas Bar Pty Ltd
(U2020/8464)

DEPUTY PRESIDENT LAKE BRISBANE, 9 NOVEMBER 2020

Application for an unfair dismissal remedy – Small Business Fair Dismissal Code – whether genuine redundancy – failure to consult – not a genuine redundancy – Small Business Fair Dismissal Code not relevant – dismissal not unfair – redundancy constitutes valid reason.

Introduction

[1] On 18 June 2020, Ms Lucia McCormick (Applicant) lodged an application for unfair dismissal with the Fair Work Commission (Commission). The Applicant alleges that she was dismissed from her employment with The Vineyard Wine and Tapas Bar (Respondent) on 8 June 2020, and that this dismissal was unfair within the meaning of Part 3-2 of the Fair Work Act 2009 (Act).

[2] The Respondent lodged an F3 form on the 10 July 2020 disputing that the Applicant’s dismissal was unfair and claiming that the Respondent was a small business employer that had complied with the Small Business Fair Dismissal Code.

[3] On the 26 August 2020, I held a Hearing (by telephone) to determine the Applicant’s claim. The parties were self-represented. The Applicant appeared for herself and Ms Angela McGuigan (Chief Financial Officer) appeared for the Respondent.

[4] Having considered the submissions of the parties, and the evidence I have determined that the Applicant’s dismissal by the Respondent was not unfair, and the application must be dismissed. My reasons for this decision follow.

Procedural Background

[5] On 26 July 2020, the matter was allocated to my Chambers. On 29 July 2020, I held a Directions conference by telephone and issued directions to the parties regarding the timetabling of submissions, witness statements, and evidence (Directions).

[6] The Applicant filed a Statement and attached a series of text message screen shots.

[7] The Respondent filed a witness statement from Ms McGuigan, the Small Business Fair Dismissal Code Checklist, and attachments with the Applicant’s contract of employment and position description. At the hearing, Ms Rebecca Cushway, the accountant for the Respondent, also gave evidence.

Applicant’s Evidence

[8] The Applicant’s evidence-in-chief was as follows:

(a) On 28 October 2015, the Applicant was employed as a permanent part time employee working Wednesday, Thursday and Friday for 4 hours each day during the lunchtime shift. There was also some weekend work and she stated that she was working over 20 hours per week.

(b) The Applicant took a period of maternity parental leave and returned to work the same roster pattern, three days a week for the lunchtime shift.

(c) On the 23 September 2019 the Applicant by agreement moved to a casual contract and worked the same hours with occasional weekend hours.

(d) On the 25 March 2020, staff of the facility were stood down as a result of the COVID-19 pandemic.

(e) The employer did participate in the JobKeeper package offered by the government and the Applicant undertook cleaning and maintenance work as required.

(f) On 8 June 2020, the Applicant was informed that they no longer required the Applicant to work for them and terminated the Applicant’s employment.

(g) The Applicant claims that there were ongoing requirements for work and that the employer was able to continue to receive the JobKeeper benefit to maintain her employment.

(h) The Applicant believes that her dismissal was prompted by her insistence at being included in JobKeeper and providing information from the Government website on eligibility and requirements of participation. She contends that the Respondent wanted her out of the organisation and further proposes that as she was unavailable for a number of shifts due to illness and caring responsibilities, that this factor weighed in the mind of the Respondent as a reason to terminate her employment.

Respondent’s Evidence

[9] The first witness for the Respondent. Ms Rebecca Cushway, provided evidence on the pay rates that had been a point of confusion early on in the employment period however she gave evidence that they had taken advice on the pay rate and overtime and had corrected the matter. She further gave evidence of the hours worked by the Applicant and the request by the Applicant to shift to a casual employment contract which suited the Applicant.

[10] The second witness, Ms Angela McGuigan, gave evidence on the stand down that occurred immediately the pandemic started to all staff at the restaurant. Following this, the business did identify work that could be undertaken. The Applicant was offered this work and the business successfully applied for the JobKeeper subsidy. Once the work of cleaning and maintenance work ran out, the manager and owner of the business made a decision to terminate two employees, one of which was the Applicant.

[11] Ms McGuigan stated that they had hoped that the business situation would improve and they might have reopened within a short timeframe; however, when it was clear that the pandemic was ongoing and there was no opportunity to reopen in the immediate future, Mr Mark Blackberry, the Director of the Respondent, decided to end the employment of two of the employees, noting that the Applicant was a casual employee at the time of termination.

Relevant Law

[12] Section 388 of the Act sets out the legislative basis for the Small Business Fair Dismissal Code:

388 The Small Business Fair Dismissal Code

(1) The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.

(2) 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.

[13] The Small Business Fair Dismissal Code provides:

Small Business Fair Dismissal Code

Commencement

The Small Business Fair Dismissal Code comes into operation on 1 July 2009.

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.

[14] It is not in dispute that the Respondent is a small business. The question is whether the Respondent can rely upon the provisions of the Small Business Fair Dismissal Code as a basis for contending that the Applicant was not unfairly dismissed.

[15] Vice President Watson in Iannello v Motor Solutions Australia Pty Ltd stated: 1

The Code itself does not appear to me to deal with terminations on the ground of redundancy. Although little may turn on this distinction, I am unable to conclude that the termination was covered by the Code and was consistent with it.

[16] This was subsequently quoted and applied by Deputy President Asbury in Toyvision, where the Deputy President elaborated: 2

[33] The effect of s.385(d) of the Act is that when a dismissal is consistent with the Small Business Fair Dismissal Code, it is not an unfair dismissal and that is the end of an unfair dismissal claim. If the dismissal is not consistent with the Code, the Commission must then consider whether the dismissal is unfair on the basis of the general criteria in s. 387 of the Act. The Small Business Fair Dismissal Code deals with “summary dismissal” on the ground of serious misconduct and “other dismissal” on the basis of the employee’s conduct or capacity to do the job.

[34] In circumstances where a small business employer dismisses an employee on the basis of the employee’s conduct or capacity, the small business employer must give the employee a reason why he or she is at risk of dismissal, and that reason must be a valid reason based on the employee’s conduct or capacity to do the job.

[35] The terms of the Small Business Fair Dismissal Code make it clear that to effect a dismissal that is consistent with the Code, the small business employer must nominate the reason for the dismissal in advance of the dismissal and give that reason to the employee. The employee must be warned verbally or preferably in writing, that he or she is at risk of being dismissed if there is no improvement, and be given an opportunity to respond to the warning and rectify the problem.

[36] In short, the small business employer seeking to establish consistency with Code is stuck with the reason given to the employee. Validity and the other procedural requirements are assessed in the context of the reason given by the employer. The employer cannot rely on a reason not given to the employee at the point the dismissal is put in train. This can be contrasted with the provisions in s. 387(a) where the employer can rely on facts in existence at the time of the dismissal to establish a valid reason, notwithstanding that that reason was not the reason given to the employee at the time the dismissal was effected.

[37] In Iannello v Motor Solutions Australia Pty Ltd, Vice President Watson held that the Small Business Fair Dismissal Code does not deal with termination on the ground of redundancy. In the present case, the reason given for Ms Grozsek’s dismissal was that her position was no longer required. The dismissal letter refers to reduced sales but does not indicate that this reduction is because of Ms Grozsek’s conduct or capacity to do the job. There is also a reference to higher freight costs as a reason for ceasing operations in Queensland.

[38] Toyvision has not lead any evidence of specific compliance with the Code; there is no evidence that Toyvision was aware that the Code existed at the time of the dismissal. The evidence given on behalf of Toyvision about compliance with the Code is also essentially the same evidence the Company relies upon to establish that the dismissal was a case of genuine redundancy. The Respondent’s evidence is that they held several discussions with the Applicant over an extended period about the level of sales being achieved in Queensland. On the one hand the Respondent relies upon these discussions as consultation with Ms Groszek in relation to impending redundancy of her position, and on the other, as evidence of discussions in relation to unsatisfactory performance.

[39] On balance I am not satisfied that the reason for Ms Grozsek’s dismissal related to her conduct or capacity and accordingly, the Small Business Fair Dismissal Code does not apply to the dismissal. I dismiss the objection of Toyvision to Ms Grozsek’s dismissal on this ground and turn to consideration of whether the dismissal was unfair by reference to the criteria in s. 387 of the Act.

[17] There was no reference as to the Applicant’s capacity or conduct being the reason for dismissal. As the reason for termination of employment was given as there being no work available, the Code does not readily apply. The Code only provides two options: serious misconduct or conduct and/or capacity of the employee. Neither of these two options fit with the circumstances in this matter.

[18] The actual reason for termination would fit squarely within the grounds of a genuine redundancy. As the Respondent was self-represented they perhaps were unaware of this. I note that in the Small Business Fair Dismissal Code Checklist provided by the Respondent that question 3 (Changes to operational requirements of the business) was marked ‘No’. However, despite this notation, in order to comply with s.385 I must consider this whether the dismissal was a genuine redundancy.

[19] Section 385 of the Act qualifies a claim for unfair dismissal:

385 What is an unfair dismissal

A person has been unfairly dismissed if the FWC is satisfied that:

(a) the person has been dismissed; and

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

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

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

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

[20] As is made clear from the above provisions of the Act I must determine whether the termination of the Applicant was a genuine redundancy before considering the merits.

[21] Section 389 provides:

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.

[22] The test I must consider when determining whether there has been a reorganisation or redistribution of duties is whether the employee has any duties left to discharge. 3 Where there is no longer any function or duty to be performed by an employee, his or her position becomes redundant even where aspects of that employee’s duties are still being performed by other employees.4

[23] This test was considered in Kekeris which established the question is whether the previous job has survived the restructure or downsizing, rather than a question as to whether the duties have survived in some form. 5 In Ulan Coal Mines Limited v Howarth and others [2010] FWAFB 3488, the Full Bench considered and applied the decision of Ryan J in Jones v Department of Energy and Minerals (1995) 60 IR 304 and said:

[17] It is noted that the reference in the statutory expression is to a person’s “job” no longer being required to be performed. As Ryan J observed in Jones v Department of Energy and Minerals (1995) 60 IR 304 a job involves “a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employees’ organisation, to a particular employee” (at p. 308). His Honour in that case considered a set of circumstances where an employer might rearrange the organisational structure by breaking up the collection of functions, duties and responsibilities attached to a single position and distributing them among the holders of other positions, including newly-created positions. In these circumstances, it was said that:

“What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the re-organisation, any duties left to discharge. If there is no longer any function or duty to be performed by that person, his or her position becomes redundant…” (at p.308)”

This does not mean that if any aspect of the employee’s duties is still to be performed by somebody, he or she cannot be redundant (see Dibb v Commissioner of Taxation (2004) FCR 388 at 404-405). The examples given in the Explanatory Memorandum illustrate circumstances where tasks and duties of a particular employee continue to be performed by other employees but nevertheless the “job” of that employee no longer exists.

[24] It is clear from the evidence of both parties that the restaurant was not operational and in fact is still not open. There is no work for the Applicant and one other employee has also been terminated from employment. The Applicant was advised that the reason for her termination was a lack of work and on face this is a credible and rational reason. There were no other options open to the Respondent. They had exhausted the maintenance work that could be performed, and the only conclusion would be then to end the employment of the two employees. The Applicant suggested that as the JobKeeper subsidy was available to the employer that they should maintain the Applicant on the books at no cost to the employer.

[25] However, the employer is not obliged to maintain an employee on their payroll in order that the employee receive a benefit. Further, if there is no foreseeable opening of the business, then the employer has to make a decision on what the future of the business may be. In this case, the Respondent elected to finish the employment of two employees that it could not see being able to be employed in a viable business opportunity in the short to medium term. I am satisfied that the Respondent no longer required the work done by the Applicant to be done by anyone because of the changes in operational requirements of the enterprise.

[26] I now follow to examine the obligations under the relevant Award to consult about the redundancy. The relevant Award is the Hospitality Industry General Award 2020 (Award) and the relevant clause is:

38. Consultation about major workplace change

38.1 If an employer makes a definite decision to make major changes in production, program, organisation, structure or technology that are likely to have significant effects on employees, the employer must:

(a) give notice of the changes to all employees who may be affected by them and their representatives (if any); and

(b) discuss with affected employees and their representatives (if any):

(i) the introduction of the changes; and

(ii) their likely effect on employees; and

(iii) measures to avoid or reduce the adverse effects of the changes on employees; and

(c) commence discussions as soon as practicable after a definite decision has been made.

38.2 For the purposes of the discussion under clause 38.1(b), the employer must give in writing to the affected employees and their representatives (if any) all relevant information about the changes including:

(a) their nature; and

(b) their expected effect on employees; and

(c) any other matters likely to affect employees.

38.3 Clause 38.2 does not require an employer to disclose any confidential information if its disclosure would be contrary to the employer’s interests.

38.4 The employer must promptly consider any matters raised by the employees or their representatives about the changes in the course of the discussion under clause 38.1(b).

38.5 In clause 38 significant effects, on employees, includes any of the following:

(a) termination of employment; or

(b) major changes in the composition, operation or size of the employer’s workforce or in the skills required; or

(c) loss of, or reduction in, job or promotion opportunities; or

(d) loss of, or reduction in, job tenure; or

(e) alteration of hours of work; or

(f) the need for employees to be retrained or transferred to other work or locations; or

(g) job restructuring.

38.6 Where this award makes provision for alteration of any of the matters defined at clause 38.5, such alteration is taken not to have significant effect.

[27] The Respondent did not provide any notice to the Applicant about the decision to make her redundant. The situation to the Applicant would have been clear: there was no work for her in the capacity she was hired and that the employer had been utilising her to clean and maintain the restaurant but this could not go on forever. However, this does not ameliorate the requirement of consultation required under the Award.

[28] The evidence provided by the Respondent makes it apparent that there was no alternative work or positions that the Applicant could be deployed into. The Respondent had exhausted the alternatives that might be available and so any consultation that might have occurred would have been perfunctory and not change the outcome. The Respondent did not comply with the consultation requirements under the Award and therefore, this is not a case of genuine redundancy under s.389 of the Act.

[29] I must now consider whether the Applicant’s dismissal was harsh, unjust or unreasonable.

[30] Section 387 of the Act provides what matters must be taken into account in determining whether a dismissal was harsh, unjust or unreasonable:

387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the FWC 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.

[31] I turn to consider these factors.

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

[32] In order to be a valid reason, the reason for the dismissal should be “sound, defensible or well founded”, and should not be “capricious, fanciful, spiteful or prejudiced”. 6 Further, the Commission will not stand in the shoes of an employer and determine what the Commission would do if it was in the position of the employer.7

[33] Based upon the evidence provided I am satisfied that the reason for the termination was that the business had no more work, it was as simple as that. There were no customers and the restaurant was closed and when the facility might reopen was an open question. Thus there was a valid reason for the dismissal.

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

[34] The Applicant was provided the reason – that there was no more work available.

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

[35] This criterion is not relevant.

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?

[36] This factor was not an issue in this matter.

Section 387(e): Was the Applicant warned about unsatisfactory performance before the dismissal?

[37] This factor was not relevant.

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

[38] The organisation is on the small side of small business and I give some latitude in this factor to favour the Respondent.

Section 387(h): What other matters are relevant?

[39] The Applicant suggested that there were reasons for her dismissal other than that there was no work. Whilst sympathising with the Applicant, the Respondent simply had a restaurant that was closed and no customers. They would be unable to secure her any further work to do. The reason for her termination was done on rationale basis. This I find was a valid reason.

[40] The lack of consultation is a serious matter and the Respondent did not consult as per the requirements of the Award. However, the outcome of any consultation would not have varied the outcome. In a situation as dire as that facing the Respondent, I cannot reasonably envisage a series of facts that would have been capable of altering the decision to make the Applicant redundant – the internecine nature of the pandemic rendered the Respondent with little in the way of an alternative. In this case then the lack of consultation does not render the dismissal unfair.

[41] Had the Respondent properly consulted, there may have been a period before the dismissal took effect where the Applicant would have remained employed. Given the size of the employer, I do not consider that this time would have been particularly lengthy – it would likely have been hours, but not days. Further, given the casual nature of the employment relationship, it is not clear whether the Applicant would have been rostered in that consultative period, or at all, given the lack of available work. For these reasons, I do not consider there was any loss incurred due to the failure to consult.

Conclusion

[42] Due to the failure to consult, the redundancy cannot properly be considered genuine, within the definition of s.389 of the Act. While the process may have been procedurally perfunctory, it does not follow that the dismissal is correctly characterised as unfair. The dismissal was not harsh, unjust or unreasonable and was a soundly based and a rational decision.

[43] The application is dismissed. I Order accordingly.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

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 1   Iannello v Motor Solutions Australia Pty Ltd[2010] FWA 3125.

 2   Ms Paula Groszek v Toyvision International Pty Ltd[2015] FWC 697, [33]-[39].

 3   Jones v Department of Energy and Minerals [1995] IRCA 292 (16 June 1995), [(1995) 60 IR 304 at p. 308 (Ryan J)]; cited with approval in Ulan Coal Mines Limited v Howarth and others [2010] FWAFB 3488 (Boulton J, Drake SDP, McKenna C, 10 May 2010) at para. 17, [(2010) 196 IR 32].

 4   Ibid.

 5   Kekeris v A. Hartrodt Australia Pty Ltd T/A a.hartrodt[2010] FWA 674 (Kekeris).

 6   Selverchandron v Peteron Plastics Pty Ltd (1995) 62 IR 371, 373.

 7   Miller v University of New South Wales [2003] FCAFC 180 (14 August 2003), [64]; (2003) 132 FCR 147.