[2021] FWC 5935

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Lucy Morris
v
YPT Group T/A Smiths Gully Cafe

(U2021/6115)

COMMISSIONER MIRABELLA

MELBOURNE, 21 SEPTEMBER 2021

Application for an unfair dismissal remedy – jurisdictional objection - Small Business Fair Dismissal Code – application dismissed.

[1] This decision concerns an application made by Ms Lucy Morris under s. 394 of the Fair Work Act 2009 (Cth)(the Act) for an unfair dismissal remedy.

[2] From 1 May 2020 until her dismissal on 30 June 2021, Ms Morris was employed on a part-time basis as a Manager/Cook by YPT Group Pty Ltd trading as the Smiths Gully Post Office Cafe (YPT).

[3] Several allegations of serious misconduct were made against Ms Morris and this resulted in her being stood down whilst investigations were conducted.

[4] Ms Morris’ employment was terminated on 30 June 2021, effective that day. 1 She was not paid in lieu of notice. The employer’s reason for dismissing Ms Morris was that it had found she had engaged in serious misconduct.

[5] Miss Morris contends her dismissal was unfair. She seeks, amongst other things, compensation rather than reinstatement.

Preliminary matters

[6] Section 396 of the Act requires that I decide four matters before considering the merits of Ms Morris’ application. There is no dispute between the parties, and I am satisfied, of the three matters referred to in s. 396(a), (b) and (d), as follows.

[7] First, Ms Morris’ application was made within the 21 day time limit required by s. 394(2) of the Act.

[8] Secondly, Ms Morris was a person protected from unfair dismissal, as she earned less than the high-income threshold. 2

[9] Thirdly, Ms Morris’ dismissal was not a case of genuine redundancy.

[10] The fourth matter that I must consider before proceeding to the merits of the application is whether Ms Morris’ dismissal was consistent with the Small Business Fair Dismissal Code (the Code).

[11] If I find that YPT complied with the Code, the result will be that the dismissal was not unfair and the application will be dismissed. If the dismissal was not consistent with the Code, it will be necessary to consider whether the dismissal was harsh, unjust or unreasonable. YPT claims that the dismissal was consistent with the Code. Ms Morris contends otherwise.

Small Business Fair Dismissal Code

[12] The dismissal of an employee will not be unfair if it was consistent with the Code. 3 Section 388(2) of the Act provides:

“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] There is no dispute that YPT is a “small business employer” as defined in s. 23 of the Act as at the relevant time it employed 11 employees.

[14] The Code declared by the Minister pursuant to section 388(1) of the Act is in the following terms:

“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.”

[15] A checklist to accompany the Code is published on the Fair Work Commission website and acts as an aide to assist small businesses in complying with the Code. Questions 4 and 5 of that checklist ask the following:

“4. Do any of the following statements apply?

I dismissed the employee because I believed on reasonable grounds that:

a. The employee was stealing money or goods from the business.

b. The employee defrauded the business.

c. The employee threatened me or other employees, or clients, with violence, or actually carried out violence in the workplace.

d. The employee committed a serious breach of occupational health and safety procedures.

5. Did you dismiss the employee for some other form of serious misconduct?

If Yes, what was the reason?”

[16] The Act further defines serious misconduct 4 by reference to the definition in the Fair Work Regulations 2009 (the Regulations):

“1.07 Meaning of serious misconduct

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

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

(a) wilful or deliberate behaviour by an employee that is inconsistent with the continuation of the contract of employment;

(b) conduct that causes serious and imminent risk to:

(i) the health or safety of a person; or

(ii) the reputation, viability or profitability of the employer’s business.

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

(a) the employee, in the course of the employee’s employment, engaging in:

(i) theft; or

(ii) fraud; or

(iii) assault; or

(iv) sexual harassment;

(b) the employee being intoxicated at work;

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

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

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

[17] In Pinawin v Domingo, 5 the Full Bench considered summary dismissal and compliance with the Code:

“[29] … 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.”

[18] In Ryman v Thrash Pty Ltd, 6 the Full Bench explained how the summary dismissal provisions of the Code operate:

“[41] In summary, drawing on the conclusions stated above and the ratio in Pinawin, we consider that the “Summary dismissal” section of the Code operates in the following way:

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

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

Events leading up to the termination

[19] YPT refers to several incidents which led to the summary dismissal of Ms Morris.

[20] On 8 June 2021, Ms Morris was stood down on full pay whilst investigations were conducted into various allegations. These allegations were later particularised by YPT in a ‘show cause’ letter dated 25 June 2021.

[21] On 22 June 2021, two weeks after Ms Morris was stood down, a meeting was held between Ms Morris and her employer to discuss various allegations. Ms Morris attended with her support person, her mother, Robyn Morris. The matters were not resolved and, on 25 June 2021, through its solicitor, YPT sent Ms Morris the ‘show cause’ letter inviting her to respond in writing to allegations of misconduct, including to allegations of serious misconduct.

[22] The allegations of misconduct included that Ms Morris:

• Without authorisation, accessed business information, specifically the roster details of another co-worker, Percy, who was subject to a customer complaint. That she refused to work those same shifts as Percy and provided relevant details of the roster to the complaining customer;

• Against a direction from Mr Cameron Heap, a director of YPT, she did not desist from trying to involve herself in an investigation regarding the complaint against Percy. That she interfered and advocated on behalf of the customer who had complained. Further, that the behaviour above contributed to Percy’s fear of reprisal from the customer, collapse at the workplace and filing an application for an interim intervention order against the complaining customer;

• Spread rumours that Mr Heap was having an unlawful relationship with another employee who was a minor;

• Told other employees and/or third parties that the business would be bankrupted if she did not work there. Further, that she wanted the business to be bankrupted, so that she could run it instead;

• Discussed and complained about the remuneration of other staff to third parties and/or employees.

[23] Ms Morris’ response of 29 June was to deny the allegations. The next day she received a termination letter effective that day. 7

[24] In the Small Business Fair Dismissal Code Checklist completed by YPT, it submitted that after investigating the allegations, receiving written statements from staff members, meeting with Ms Morris and reviewing her response to the show cause letter, it formed the view that Ms Morris had engaged in serious misconduct by:

• Accessing and forwarding confidential information about the roster details of a staff member to a member of the public who had complained about this staff member. It found that this had ‘resulted in a serious and imminent risk to the health and safety of a particular employee, causing the employee to collapse at the workplace (in front of staff, Management & customers) in fear and distress. The employee had to be escorted home, required time off work and resulted in an emergency intervention order against a third party and anyone acting on behalf of the third party’; 8 and

• Spreading rumours that Mr Heap was engaged in an unlawful relationship with an employee who was a minor and that ‘[t]his conduct was wilful and malicious and causes serious and imminent risk to the reputation, viability and profitability of the employer’s business. The incident caused considerable distress to the young female employee (who is already dealing with mental health issues) and her family. Unfortunately Lucy (after her dismissal) has again contacted this young employee and the resultant harassment had the employee admitted to hospital for self-harm and further mental health issues.’ 9

Consideration

[25] YPT dismissed Ms Morris under the summary dismissal provision of the Code, that is, without notice.

[26] She was dismissed by correspondence dated 30 June 2021, effective that day. Ms Morris had been stood down on full pay on 8 June whilst YPT investigated allegations made against her. On 25 June 2021 Ms Morris had received a ‘show cause’ letter detailing allegations made against her and inviting her to respond, which effectively was a warning that the employer was considering its position. It was not a warning that a repeat of the conduct could result in dismissal. In my view, Ms Morris was dismissed ‘without notice or warning.’

[27] The next question is whether YPT believed, ‘on reasonable grounds’, that Ms Morris’ conduct was ‘sufficiently serious to justify immediate dismissal’.The Code deems it sufficient, for summary dismissal, that a small business has reasonable grounds to believe that the conduct was sufficiently serious. It is not necessary to determine whether the serious misconduct did in fact occur or that the employer was correct in the belief that it held.

[28] YPT submits that Ms Morris’ conduct constituted serious misconduct as defined at Regulation 1.07 of the Regulations in that the conduct ‘resulted in a serious and imminent risk to the health and safety of a particular employee… was wilful and malicious and causes serious and imminent risk to the reputation, viability and profitability of the employer’s business’. 10

[29] YPT stood Ms Morris down with full pay on 8 June 2021 in order to conduct an investigation into the allegations against her. It provided her an opportunity in a meeting on 22 June to respond to these allegations and also invited her to respond in writing. 11

[30] I accept that YPT held a genuine belief that Ms Morris’ conduct was wilful and sufficiently serious to justify summary dismissal based on statements and evidence by other staff, evidence from one of its directors, and an application for an interim intervention order.

[31] The risk to the health and safety of other staff and the accusation that a director of the employer company was having an unlawful relationship with an employee who was a minor, are not matters that are consistent with the continuation of an employment contract. This would be particularly the case for a small business operating in a small locality like Smith’s Gully with only 369 residents. 12

[32] In all the circumstances, including consideration of the experience and resources of YPT, and that it carried out a staged process of investigating the allegations, I find that the investigation was reasonable, both in the way it was conducted and its outcome.

Conclusion

[33] I am satisfied that YPT complied with the summary dismissal provision of the Code in that it dismissed Ms Morris ‘without notice or warning’, as it ’believed on reasonable grounds’ that her conduct was ‘sufficiently serious to justify immediate dismissal’.

[34] As I have found that Ms Morris’ dismissal by YPT complied with the Code, it follows that Ms Morris was not unfairly dismissed.

[35] Ms Morris’ application for an unfair dismissal remedy is therefore dismissed.

COMMISSIONER

Appearances:

Lucy Morris, Applicant.
Lydia Heap for the Respondent.

Hearing details:

2021
Melbourne (by video)
September 13.

Printed by authority of the Commonwealth Government Printer

1 Exhibit R1 Respondent’s Outline of Argument.

2 Fair Work Act 2009 (Cth) s 382.

3 Ibid. s 385.

4 Ibid. s 12.

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

6 Jeremy Ryman v Thrash Pty Ltd t/a Wisharts Automotive Services[2015] FWCFB 5264, [41].

7 Exhibit R2 Respondent’s Submissions in Reply to Applicant’s Outline of Argument.

8 Exhibit R1 Respondent’s Outline of Argument.

9 Exhibit R1 Respondent’s Outline of Argument.

10 Exhibit R1 Respondent’s Outline of Argument.

11 Exhibit R1 Respondent’s Outline of Argument.

12 Australian Bureau of Statistics, ‘2016 Census QuickStats’, <

Lucy Morris v YPT Group T/A Smiths Gully Cafe