Melissa Chan v Lth Pty Ltd T/A Lth Manufacturing Jewellers

[2012] FWA 7106

[2012] FWA 7106

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Melissa Chan
v
LTH Pty Ltd T/A LTH Manufacturing Jewellers
(U2012/5047)

COMMISSIONER BISSETT MELBOURNE, 31 AUGUST 2012

Application for unfair dismissal remedy - applicant dismissed from employment.

[1] This is an application by Ms Melissa Chan (the Applicant) for relief from unfair dismissal under s.394 of the Fair Work Act 2009 (the FW Act). Ms Chan was employed by LTH Pty Ltd t/as LTH Manufacturing Jewellers (LTH or the Respondent). She commenced employment on 1 December 2006 and she alleges that she was dismissed in early February 2012.

[2] The Respondent claims that Ms Chan’s employment has not been terminated but that the company gave her notice on 7 February 2012 that it no longer had enough work to continue to employ her on a full-time basis and that from 13 February 2012 she would be offered part-time work working 1.00pm - 5.00pm Monday to Friday.

[3] LTH is a jewellery manufacturer. It is a small business employing around five people. The establishment from which LTH operates consists of a customer area, a wax injection area, a CAD room, a 3D computer room, a casting room and a moulding room.

[4] The company was originally owned by Mr Loi Nguyen, Mr Peter Tong and another person. In 2005 Mr Nguyen returned to Vietnam with his family and Mr Tong ran the Melbourne business. In early 2011 Mr Nguyen and his family returned to Australia and he became active in running the business. Mr Nguyen’s wife, Ms Hoang Ngoc (Sarah) Tran was also employed in the business from this time. Sometime in early 2011 Mr Tong left the business.

Evidence

[5] Evidence was given by Ms Melissa Chan and Mr Robert Lakat for the Applicant and by Mr Loi Nguyen, Ms Sarah Tran, Mr Trung Le and Mr Si Nguyen for the Respondent.

Ms Melissa Chan

[6] Ms Chan submitted a written witness statement. 1 Ms Chan’s evidence is that she was employed by the Respondent in December 2006 and, from that time until 2011, her duties included customer service, banking, MYOB input, receiving delivery of goods, printing invoices and other administrative tasks. She says that she sometimes assisted in the wax injection room when things were really busy but her primary job was in administration.

[7] Ms Chan says that when Mr Loi Nguyen and Ms Tran returned to Australia Ms Tran took over the administrative tasks of the business and Ms Chan was required to work in the wax injection room although she was constantly required to assist Ms Tran, answer the phones, deal with irate customers etc. Ms Chan says that until about June 2011 she continued to do administrative work but from that time Ms Tran started following up with customers and Ms Tran received daily advice on gold prices from March 2011. Overall Ms Chan says that the changes in her job and her location into the wax injection room did not occur until July 2011.

[8] Ms Chan also says that she was given menial tasks such as sweeping the floor, emptying heavy rubbish bins (weighing up to 15 kgs) and carrying bags of rice to the office from a car parked downstairs although she admitted that this was done using a trolley she was asked to bring down from the business premises.

[9] Ms Chan says that only she and Henry (who left the company in October 2011) shared jobs.

[10] Ms Chan says that on Monday 6 February 2012 Ms Tran told her that her hours were to be reduced to 20 hours per week, working from 1.00pm - 5.00pm Monday to Friday. 2 Ms Chan requested the proposal be put in writing. The next day Ms Tran gave her a letter setting out the decision to reduce her hours. The letter said this would commence on 13 February 2012. Ms Chan said to Ms Tran that this was not fair.

[11] The following day (Wednesday) Ms Chan called in ill, went to the doctor and was given a medical certificate for three days off work. Whilst she was off ill Ms Chan consulted a lawyer. In consultation with her lawyer she wrote a letter to her employer dated 9 February 2012 (Thursday). On 11 February (a Saturday) her partner left the letter dated 9 February 2012 in the letter box at the Respondent’s premises. In this letter Ms Chan says she understands that she has been dismissed from her full-time position, that she rejects this and does not accept the part-time position offered to her. She requests confirmation that she will be reinstated to her full-time position. 3

[12] Ms Chan says she did not receive a response to her letter of 9 February 2012 and on 15 February 2012 she lodged an application for unfair dismissal.

Mr Robert Lakat

[13] Mr Lakat is a jeweller who uses the services of LTH and has an office just down the hallway from LTH. He knew Ms Chan as an employee of LTH, where he says she worked as a receptionist. He says that when he walked past the LTH office to go to the lift or the toilets he saw Ms Chan sitting at the reception desk.

[14] Mr Lakat gave evidence that not long after Mr Loi Nguyen and Ms Tran returned from Vietnam in 2011 Ms Chan was no longer working at the front desk, that there was a transition to Ms Tran and he would see Ms Chan at the front desk occasionally.

[15] Mr Lakat also gave evidence that he has had few dealings with LTH this year as there has been reduced client demand for casting.

Mr Loi Nguyen

[16] Mr Loi Nguyen gave evidence of the establishment of the business and his role in it prior to moving back to Vietnam with his family in 2005.

[17] Mr Loi Nguyen produced documents from 2006 that he says show Ms Chan was paid as a machinist under the (then) Metals, Engineering and Associated Industries Award 1996. 4 He says she was paid at the C13 level as an unqualified worker. These documents were on the work computer and had been created by Mr Tong.

[18] Mr Loi Nguyen’s evidence is that in 2011 he returned to Australia with his family. He became active in running the business and Ms Tran took over administrative duties from Mr Tong, who was happy to pass these duties to Ms Tran. Mr Loi Nguyen says that Ms Chan’s duties were primarily in the wax injection room although, because of the work schedule, there was not always a lot to do in this area in the mornings. He explained that the moulds were made in the afternoon, they would then be ‘fired’ overnight and the next morning the metal casting would be done from the mould. Because the firing process took over eight hours it was done overnight so it was better that the injection process be done in the afternoon.

[19] Mr Loi Nguyen said that the business was small and everyone was expected to help out wherever needed.

[20] In May 2006 Mr Loi Nguyen purchased a 3D drawing computer. The use of this equipment reduced the need for the wax injection and moulding process and hence affected the amount of work done in the wax injection room. Mr Nguyen also gave evidence that the general economic climate last year reduced the demand for jewellery and this impacted on his business.

[21] Mr Loi Nguyen’s evidence of what occurred on 6 and 7 February was relayed to him by Ms Tran. He says that he told Ms Tran in Vietnamese what to put in the letter of 6 February 2012 and that she then wrote it in English.

[22] Mr Loi Nguyen says he received Ms Chan’s letter dated 9 February on 14 February when he collected it from the letter box. He says he does not know why he would not have retrieved it on 13 February 2012 if it was put there on 11 February 2012 because he collects the mail every day as this is how his customers contact him. He says he did not recognise the return address on the envelope, found the tone of the letter very confronting and did not believe it had been signed by Ms Chan. For these reasons he did nothing about the letter. He thought Ms Chan might return to work the next day (15 February 2012) so the matter could be discussed then.

Ms Sarah Tran

[23] Ms Tran is the wife of Mr Loi Nguyen. Her involvement in the company commenced when they returned to Australia in early 2011. She has however kept the books for her husband’s previous businesses. Ms Tran completed an Enterprise Training Course in 1992 covering topics including business planning, record keeping, managing finances and credit control.

[24] Her evidence is that on returning to the company in early 2011 Mr Tong gave her the cheque book and showed her how to do internet banking, payments and payroll. Ms Tran wrote her first cheque on 19 January 2011 and processed pays on 21 January 2011. 5 Ms Tran says that from when she started she dealt with customers but if she was not available Ms Chan, Mr Le or Mr Si Nguyen dealt with them. Attached to Ms Tran’s witness statement6 is a copy of an email addressed to Ms Tran dated 4 February 2011 detailing the daily price of gold. Ms Tran says this is evidence that she, and not Ms Chan, was responsible for the administrative side of the business from early February 2011.

[25] Ms Tran says that in the lead up to Christmas 2011 Ms Tuyen worked as a casual employee as this was a busy time. Ms Tuyen did not work in the period after Christmas. In February Ms Trinh was trained to work as a casual employee.

[26] Ms Tran spoke to Ms Chan about the reduction in her hours on 6 February after Mr Loi Nguyen had spoken to her about it. It was decided that she should speak to Ms Chan as it is easier for women to talk to each other. Ms Tran says that when Ms Chan was told there was not enough work and her hours would have to be reduced, she agreed and asked to be given her start time in writing. Ms Chan agreed that it was quiet in the business and there was not much work to do.

[27] Ms Tran put the proposal in writing that day but Ms Chan had left for the day. The letter was left at her work station.

[28] On 7 February 2012 Ms Chan arrived at work and Ms Tran handed her the letter. Ms Chan put the letter in her bag.

[29] On 8 February 2012 Ms Chan rang in and said she was unwell. She was sick for the remainder of the week. A medical certificate was faxed in on Friday 10 February 2012.

[30] The following Monday Ms Chan did not come to work. Ms Tran did not call her as she thought she might still be ill and did not want to disturb her.

[31] Ms Tran was surprised at the letter received on 14 February 2012. She did not recognise the address on the envelope and did not think the signature on the letter was Ms Chan’s. She thought that if Ms Chan had sent the letter and Ms Tran did not call her in a couple of days then Ms Chan would call her. Because Ms Chan did not call she assumed that she had not sent the letter. She thought that if Ms Chan had written the letter she would call. She did not receive a call from Ms Chan until 29 February when Ms Chan rang requesting some information for the Child Support Agency.

Mr Si Nguyen

[32] Mr Si Nguyen commenced employment with the Respondent in November 2011. He worked in the CAD room.

[33] His evidence is that Ms Tran deals with customers, does invoicing, makes payments and answers the phone. When she is not there they all answer the phones.

[34] He says that Ms Chan and Ms Tran were friendly.

Mr Trung Le

[35] Mr Le’s evidence (through an interpreter) is that Ms Chan’s job at LTH was to pump wax (in the wax injection room). She commenced work at 9.30 am and would start pumping wax at about 12.30 pm. He says that when she was not working in the wax injecting room Ms Chan would help by sweeping or cleaning, she would accept deliveries and answer the phone. He says that he also accepted deliveries and answered the phone.

[36] Mr Le says that greeting customers, billing, buying supplies and receiving gold were done by Ms Tran.

[37] Mr Le says that usually he and Loi Nguyen or Si Nguyen would empty the bins. Ms Chan might pull a smaller bin out to the larger bins but she would have assistance with lifting the heavy bins to empty them into a larger bin.

[38] On 7 February, Mr Le says he saw Ms Chan angry and upset. He advised her to do as asked by Ms Tran and told her that when work picked up she would get her job back.

Submissions

Applicant

[39] The Applicant’s submission is that Ms Chan was:

• dismissed from her position as administrative assistant on 7 February 2012 upon receipt of the letter from the Respondent dated 6 February 2012;



• alternatively she was dismissed from her employment when the Respondent failed to respond to her letter of 9 February 2012;



• alternatively she was constructively dismissed from her position as administrative assistant by the Respondent gradually forcing her out of her position during 2011;



• alternatively she was dismissed by reason of being demoted to the wax injection moulder during 2011 and receiving notice of a substantial reduction in remuneration and duties on 7 February 2012.

[40] The Applicant says that Ms Tran only took over administrative functions from 1 July 2011 and until that time she, Ms Chan, undertook the administrative work which involved accepting deliveries, making payments, invoicing etc. From 1 July 2011 she was moved into the wax injection room but she effectively did two jobs - wax injection and covering the front desk. The Applicant submits that the evidence of Mr Lakat supports that she was the receptionist for the Respondent.

[41] The Applicant also submits that she was required to cover the front desk each afternoon from September 2011 when Ms Tran left to collect her children from school.

[42] Although Ms Chan’s administrative role was eroded during 2011, when she returned from holidays over the Christmas period in January 2012 she continued to undertake the administrative duties in Ms Tran’s absence including the ‘less satisfying aspects of the role, including bank deposits, processing mail and orders and answering the phones. On 17 January 2012, for example, she performed all front office duties’. 7

Respondent

[43] The Respondent submits that the Applicant was employed as a wax injector with some incidental miscellaneous office duties. From early 2011 (but at worst from July 2011) the administrative duties for the Respondent were undertaken by Ms Tran.

[44] The Respondent submits that on 6 February 2012, following a conversation with Mr Loi Nguyen, Ms Tran had a conversation with the Applicant to ask if she would be prepared to work part-time. Ms Chan agreed that business was slow and agreed to the proposal to reduce her hours and requested that her start times be put in writing.

[45] The letter of 6 February 2012 8 was an offer to the Applicant to work part-time. The terms of the letter suggest that the offer was open until 13 February 2012 and, if accepted, the part-time hours would commence on 13 February 2012. The offer was open to a counter proposal by the Applicant and further discussion with the Respondent.

[46] The Respondent submits that the motives of the Applicant are open to question because she proceeded to consult a lawyer and decided her interests were best served by not negotiating the offer with the Respondent but in seeking a legal remedy.

[47] That the letter of 6 February 2012 was an ‘offer’ is confirmed by the Applicant’s letter dated 9 February 2012 which refers to the ‘offer’ of part-time employment. It was open to the Applicant to say no to the offer of part-time employment in which case she would have continued to be employed on a full-time basis.

[48] The Respondent says that the obligation was on the Applicant to contact the Respondent on 13 February 2012 when she had heard nothing from the Respondent in response to her letter dated 9 February 2012 (received by the Respondent on 14 February 2012). It was reasonable that the Respondent did not contact the Applicant on 14 February 2012 when Mr Loi Nguyen received the letter as he and Ms Tran truly thought the letter was a trap.

[49] There was no termination of Ms Chan’s employment by the Respondent, rather she abandoned her employment and chose to pursue a legal remedy. Further, there is no evidence of any conspiracy by the Respondent to get rid of the Applicant.

Findings

[50] Arising from the evidence and submissions the following findings of fact arise as are necessary for the determination of the application. I have not made findings in relation to a number of issues as I do not consider these necessary for the determination of the matter.

[51] Ms Chan was employed by the Respondent commencing in late 2006. Her role included administrative duties and wax injecting. Her rate of pay at the time she commenced employment was $488.00 per week. How she got the job in 2006 is not relevant to the matter I must determine. The rate of pay is not referable to any rate applicable at the time pursuant to the Metal, Engineering and Associated Industries Award 1998 9 or the Clerical and Administrative Employees (Victoria) Award 1999.10 I find that the question of the rate of pay, so far as it may be indicative of the Applicant’s job, is not necessary for me to determine.

[52] I find that Ms Chan did some of the administrative work for the business prior to 2011 when Mr Loi Nguyen and Ms Tran returned. I do not accept that she only did administrative work in this period. The evidence of Mr Loi Nguyen suggests that Mr Tong did not relish doing the administrative work and I consider it is reasonable that he had Ms Chan provide substantial assistance to him in this. His willingness to hand responsibility for this work to Ms Tran on her return would support a proposition that he was responsible for the administrative tasks. I find that Ms Chan worked primarily in the wax injection room from February 2011. I do not accept that she did the majority of the administrative work up until July 2011. If she did it would make no sense for Mr Tong to hand this work to Ms Tran immediately upon her return from Vietnam. In this respect I prefer the evidence of Mr Loi Nguyen and Ms Tran over that of Ms Chan, particularly with respect to the conversations with Mr Tong and the request he made to Ms Tran to take over the administrative tasks and the training he provided to her. The evidence of cheques written, payroll and receipt of gold prices all by Ms Tran support this conclusion.

[53] Mr Loi Nguyen and Ms Tran returned from Vietnam in early 2011 and Mr Loi Nguyen took over the running of the business.

[54] From early 2011 Ms Tran was engaged to undertake the administrative duties of the business. From this time she was responsible for paying bills, payroll, receiving gold prices etc. From at least early 2011 Ms Chan worked in the wax injection room, assisted as required with administrative tasks and assisted with other work such as casting. It is not necessary for me to determine the work done by the Applicant prior to 2011. At least from July 2011 but, in all probability from early 2011, she worked primarily in the wax injection room. The weight of evidence from all of the witnesses leads to this conclusion.

[55] I reject Ms Chan’s assertion that she was given menial work to do. In particular I reject her claims that she was required to carry rice (she was asked to bring a trolley down, which she did) and that she was required by herself to lift heavy rubbish bins. I accept that all employees in the business helped where necessary. This included sweeping the floor.

[56] I accept that the business was a small business where everyone helped out where they could in answering the phones, attending to reception and generally assisting where help was needed.

[57] I find that wax injection work is carried out primarily in the afternoon with the casting done in the morning. Customers generally collect completed casts around noon each day and at this time leave any further work for moulding, wax injection and casting. This evidence was not disputed.

[58] I find that there was a downturn in demand for services provided by the Respondent in 2011 and that this was caused by a general downturn in the economy and an increase in gold prices. I accept that Ms Tuyen was employed as a casual employee for a short period in late 2011 to help with the pre-Christmas orders. Whilst Ms Trinh was trained to assist at LTH I find that she did little if any work for the company prior to the Applicant leaving the company. Following this Ms Trinh worked in the wax injection room as a casual employee.

[59] As to the conversation between Ms Chan and Ms Tran on 6 February 2012 I find that Ms Tran did ask Ms Chan if she would reduce her hours at the same time as explaining the slowdown in business. The evidence does not help me in deciding which request or information Ms Chan acquiesced to. Mr Le’s observation of and conversation with the Applicant supports a conclusion that Ms Chan was not happy with the proposal put to her by Ms Tran.

[60] I find that Ms Chan did not indicate acceptance of the part-time proposal when asked by Ms Tran and that she asked for the information to be provided to her in writing. I do not accept that Ms Chan should have understood the letter of 6 February 2012 as an offer to work part-time that, if she refused, would mean she could continue to work full-time. The evidence of the letter suggests that there was no longer a full-time position available to Ms Chan.

[61] I find that on 11 February 2012 Ms Chan’s partner left her letter dated 9 February 2012 in the mail box at LTH. I also find that Ms Tran and Mr Loi Nguyen did not receive this letter until 14 February 2012. Whilst there are unexplained gaps in the delivery and receipt of the letter these are not critical to the determination of this matter and I make no findings about this.

[62] I reject the evidence of Ms Chan as to the gold holdings of the Respondent and what this means. I have no evidence of the accuracy of the information she provided or as to its meaning in any true or relative sense. I also reject the submission of the Respondent as to what I should infer from how she may have come about the information. Not enough evidence was provided as the security of the information or reliable evidence as to who had access to it. To the extent it goes to the credit of the witness I reject it.

[63] A number of letters from clients of LTH were tabled by both the Applicant and Respondent. These letters variously state that the Applicant was the person at LTH the writer dealt with or that Ms Tran was the person the writer dealt with. I have given no weight to these letters. The authors of the letters give no evidence and the basis on which the letters were solicited is not clear. In any case they add nothing to the evidentiary basis on which this matter must be determined.

Preliminary matters

[64] On the basis of the claims of the Applicant the first matter to be determined is if, in fact, the Applicant was dismissed from her employment. If she was dismissed then some preliminary matters specified in s.396 of the FW Act must be considered prior to any consideration of whether the dismissal was unfair. If Ms Chan was not dismissed from her employment there is no jurisdiction for Fair Work Australia (FWA) to consider the claims of the Applicant.

[65] The FW Act provides:

385 What is an unfair dismissal

A person has been unfairly dismissed if FWA 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.

386 Meaning of dismissed

(1) A person has been dismissed if:

(a) the person’s employment with his or her employer has been terminated on the employer’s initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.

(2) However, a person has not been dismissed if:

(a) the person was employed under a contract of employment for a specified period of time, for a specified task, or for the duration of a specified season, and the employment has terminated at the end of the period, on completion of the task, or at the end of the season; or

(b) the person was an employee:

(i) to whom a training arrangement applied; and

(ii) whose employment was for a specified period of time or was, for any reason, limited to the duration of the training arrangement;

and the employment has terminated at the end of the training arrangement; or

(c) the person was demoted in employment but:

(i) the demotion does not involve a significant reduction in his or her remuneration or duties; and

(ii) he or she remains employed with the employer that effected the demotion.

(3) Subsection (2) does not apply to a person employed under a contract of a kind referred to in paragraph (2)(a) if a substantial purpose of the employment of the person under a contract of that kind is, or was at the time of the person’s employment, to avoid the employer’s obligations under this Part.

[66] The Applicant was given a letter dated 6 February 2012 (but delivered on 7 February) stating:

Dear: Ms Mellisa Chan [sic]

Due to a very quiet time, the company doesn’t have enough work for a full-time job and I have re-organized the need of company.

I would like to offer you a part-time position and this will commence on 13-Feb-2012.

Time: Monday to Friday from 1:00 pm to 5:00 pm.

Thank you very much.

Best regards

Loi Nguyen

Director

[67] Prior to the receipt of this letter she worked on a full-time basis.

[68] Ms Chan indicated orally on 7 February 2012 and in writing on 9 February 2012 that she did not accept the change in hours.

[69] In Mohazab v Dick Smith Electronics Pty Ltd (No 2) 11the Full Court of the Federal Court found that

it is unnecessary and undesirable to endeavour to formulate an exhaustive description of what is termination at the initiative of the employer but plainly an important feature is that the act of the employer results directly or consequentially in the termination of the employment and the employment relationship is not voluntarily left by the employee. That is, had the employer not taken the action it did, the employee would have remained in the employment relationship. 12

[70] In Marwa Elgammal v BlackRange Wealth Management Pty Ltd ACN 092 38-0 348 T/A Commonwealth Financial Planning 13 a Full Bench of FWA found that

It is adequate for us to indicate that we accept that when considering whether an employer has repudiated the contract the test is not the employer’s actual intention, judged subjectively, but whether the conduct of the employer, judged objectively by reference to the effect on a reasonable person evinced an intention to no longer be bound by the contract. 14

[71] There is no doubt that the Applicant had been employed on a full-time basis prior to February 2011. The actions of the Respondent in advising the Applicant that from 13 February 2012 she would be employed on a part-time basis was a fundamental change to the contract of employment the Applicant had with the Respondent. The Applicant did not request the change and, in her advice to the Respondent on 9 February, she clearly indicated that she did not accept the change in her working arrangements.

[72] Viewed objectively there can be no doubt that the effect of the action of the Respondent shows an intention to no longer be bound by the original contract of employment. Had the Respondent not taken the action it did to reduce the Applicant’s hours the Applicant would still be employed by the Respondent.

[73] I therefore find that the Applicant was dismissed by the Respondent and that the date of dismissal was 13 February 2012 (the day the part-time work was to commence).

[74] Having found that the Applicant was dismissed it is necessary to consider some initial matters set out in s.396 of the FW Act prior to considering the merits of the Applicant’s claim.

396 Initial matters to be considered before merits

FWA must decide the following matters relating to an application for an order under Division 4 before considering the merits of the application:

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

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

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

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

Was the application made within the required period (s.396(a))

[75] I have found the date of dismissal of the Applicant to be 13 February 2012. The application for relief from unfair dismissal was made on 15 February 2012, within the 14 day statutory time period. The application was therefore made within the time period required in subsection 394(2) of the FW Act.

Is the Applicant protected from unfair dismissal? (s.396(b))

[76] The FW Act states

382 When a person is protected from unfair dismissal

A person is protected from unfair dismissal at a time if, at that time:

(a) the person is an employee who has completed a period of employment with his or her employer of at least the minimum employment period; and

(b) one or more of the following apply:

(i) a modern award covers the person;

(ii) an enterprise agreement applies to the person in relation to the employment;

(iii) the sum of the person’s annual rate of earnings, and such other amounts (if any) worked out in relation to the person in accordance with the regulations, is less than the high income threshold.

Note: High income threshold indexed to $118,100 from 1 July 2011

[77] Ms Chan has completed over six years’ employment with the Respondent and her employment was covered by a modern award. 15

[78] I therefore find that Ms Chan is protected from unfair dismissal.

Is the dismissal consistent with the small business fair dismissal code? (s.396(c))

[79] The Small Business Fair Dismissal Code (the Code) states:

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.

[80] The circumstances of this case do not fit within the summary dismissal provisions of the Code. There is no suggestion that that the employee engaged in conduct justifying summary dismissal.

[81] There is no evidence of any discussion between the Applicant and the Respondent as to the reason for the dismissal such that the Code (with respect to ‘other dismissal’) would apply to this matter.

[82] I therefore find that the dismissal was not consistent with the Small Business Fair Dismissal Code.

Was the dismissal a genuine redundancy?(s.396(d))

[83] The FW Act states:

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.

[84] Even if the Applicant was redundant there is no evidence that the Respondent complied with the obligation to consult the Applicant in accordance with the Clerks - Private Sector Award 2010 or any other award such that it could be a genuine redundancy as defined in the FW Act.

Was the Applicant unfairly dismissed?

[85] The FW Act states:

385 What is an unfair dismissal

A person has been unfairly dismissed if FWA 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.

[86] I have already found that the Applicant was dismissed, that the dismissal was not consistent with the Small Business Fair Dismissal Code and that the termination of the Applicant’s employment was not a case of genuine redundancy. In determining if the Applicant was unfairly dismissed I must decide if the dismissal was harsh, unjust or unreasonable.

Was the dismissal harsh, unjust or unreasonable?

[87] In determining if the dismissal was harsh, unjust or unreasonable, the FW Act provides:

387 Criteria for considering harshness etc.

In considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, FWA 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 FWA considers relevant.

[88] I now turn to consider each of these criteria.

(a) valid reason related to capacity or conduct

[89] The dismissal was not for a reason relating to the Applicant’s capacity or conduct. There is, therefore, no valid reason for the dismissal related to the Applicant’s capacity or conduct. This is not to say there may not have been a valid reason for her dismissal but, if there was, it was not related to her capacity or conduct.

(b) was the person notified of that reason

[90] The Applicant was notified only that, as a result of a quiet time in the business, her hours would be reduced to 20 hours per week. This was not related to her capacity or conduct. The Applicant therefore was not notified of any reason for the termination of her employment related to her capacity or conduct.

(c) an opportunity to respond

[91] As the Applicant was not given a reason relating to her capacity or conduct this criterion is not relevant.

(d) unreasonable refusal to have a support person

[92] It is not evident that a meeting was held with the Applicant to discuss the changes proposed. The opportunity to have a support person present did therefore not arise.

(e) dismissal related to unsatisfactory performance

[93] This criterion is not relevant.

(f) the degree to which the size of the business would impact on the procedures followed in effecting the dismissal

[94] The Respondent is a small business of five employees (at the time of the dismissal). The Respondent maintains that it did not dismiss the Applicant and makes no submissions on this matter.

[95] The evidence of Mr Loi Nguyen is that the size of the employer’s business and the absence of HR expertise did affect the manner in which the termination took place. Mr Nguyen said in his evidence that if he terminated someone’s employment he would give them four weeks’ notice but if it was a part-time person maybe one or two weeks would be enough and perhaps with a friend it did not need to be so formal. In addition he agreed that his wife did not know the law so if the process was really formal he would ask his lawyer to do it.

[96] The evidence shows that the Respondent is a small business where everyone is treated as ‘family’. Ms Tran cooked lunch for everyone and they ate lunch together. Everyone contributed to topping up the rice. When Ms Tran had no-one to pick up her children from school she trusted Mr Le to do so for a period of time. It is unfortunate, and has been observed by the tribunal, that the treatment of employees as ‘friends’ or ‘family’ rarely has a satisfactory conclusion when dismissal occurs or the needs of the business are put before the needs of the employee ‘friend’.

[97] The Respondent clearly had little knowledge of how to manage a downturn in business and a resulting need to reduce staffing levels. Cultural issues may have played some part in how the decision to reduce the Ms Chan’s hours was managed.

[98] Overall I find that the size of the business did negatively impact on the procedures followed by the Respondent in dealing with the need to reduce staff.

(g) the degree to which the absence of HR expertise might be expected to impact on the procedures

[99] This criterion is closely linked to the one immediately above. The size of the business and lack of access to HR expertise often go hand in hand. It is not unusual to find a small business with no access to HR expertise. Lack of access to HR expertise is no excuse for ignorance of the rights and obligations of both parties. The comments above apply equally to this matter.

(h) other matters

[100] The business is a small business. It is reasonable in such a business that employees help out with tasks in various parts of the business - particularly when these are tasks that do not require specific qualifications.

[101] It is not critical to the disposition of this matter to determine what Ms Chan’s role might have been between 2006 and 2010. From early February 2011 when Ms Tran and Mr Loi Nguyen returned, she was working primarily in the wax injection room. She also assisted in other parts of the business including undertaking administrative tasks as required. That she may have performed all of the administrative tasks required on a day when Ms Tran was absent does not mean that her role was the administrative position in the business.

[102] Even if her role had previously been that of administration she accepted through 2011, by undertaking the work, that her position was in the wax injection room.

[103] It is evident that the workload of the business had reduced over 2011. Mr Lakat said he had dealt with the Respondent company in the past but not so much in 2011 as client demand for casting (the service provided by LTH) had dropped off. Ms Tran and Mr Loi Nguyen said demand had fallen, caused in part by the price of gold and by changes in the economy. Ms Tran opined that young people do not spend as much on jewellery now.

[104] A slow down in work meant that the Respondent could no longer employ the Applicant on a full-time basis. The solution, from the Respondent’s perspective, was to reduce the Applicant’s hours of work until the workload increased again. The Respondent had a valid reason for reducing the Applicant’s hours of work in that it no longer required the work she had been doing to be done by anyone. It could only usefully employ her in the wax injection room for part of the week. In this respect the Respondent had a sound and defensible reason for terminating the Applicant’s employment.

[105] In making a decision to reduce the Applicant’s hours of work however the Respondent failed to discuss the change with her or provide her with suitable notice.

Conclusion

[106] In all of these circumstances I must decide if the dismissal of Ms Chan was harsh, unjust or unreasonable.

[107] I find that the termination was not unreasonable on the basis that the Respondent was reacting to a change in its operational requirements. Business had been quieter than normal due to a general economic malaise. New equipment meant a reduced demand for the work done by Ms Chan in the wax injection area. The Respondent thought it was doing the right thing in continuing to offer the Applicant work, albeit on reduced hours.

[108] I find that the decision was not unjust. Given the change in demand and the operational needs of the business and given that the wax injection was done in the afternoons of each day only, it was justified in deciding to reduce the Applicant’s hours as it did.

[109] I do however find that the decision was harsh. The Respondent made a decision without any consultation or discussion with Ms Chan or other employees on how to manage the reduction in demand. The decision to reduce the Applicant’s hours, had it been accepted by the Applicant, would have resulted in the halving of her salary. After six years’ service to the Respondent she was given less than one week’s notice of the change and not offered any compensation for the loss of income. Whilst I accept that Ms Tran told Ms Chan that once business improved she could return to full-time hours I also accept that Ms Chan was given little choice in the matter. When Ms Chan voiced her concern and ultimately wrote to the Respondent this was ignored.

[110] I do accept that in this case the Respondent did not consider that it was dismissing the Applicant. The Respondent says that, in providing the letter to the Applicant on 7 February, it sought her feedback and that this was an opportunity for her to discuss the matter.

[111] The Applicant, on receipt of the letter advising of a reduction in hours, went on sick leave although she did reply to the Respondent in a letter dated 9 February (but delivered on the following Saturday, 11 February). It is not clear to me why the Applicant waited until Saturday to leave her response at the Respondent’s place of business. I accept that she knew the premises would be closed on a Saturday and that at best the Respondent would not receive the letter until 13 February, the day she was expected to start her adjusted hours of work.

[112] The Respondent claims the letter was not seen until 14 February 2012 but in any event decided not to respond to the letter. I find the lack of action by the Respondent curious in this regard. It is submitted for the Respondent that the letter of 9 February 2012 was an invitation to discuss the changes that were to occur but then, on receipt of a reply by the Applicant (albeit late) it chose to ignore that letter.

[113] In consideration of all of the matters outlined above and, having found that the termination of the Applicant’s employment was harsh, I therefore find that the Applicant was unfairly dismissed.

Remedy

[114] The FW Act states:

390 When FWA may order remedy for unfair dismissal

(1) Subject to subsection (3), FWA may order a person’s reinstatement, or the payment of compensation to a person, if:

(a) FWA is satisfied that the person was protected from unfair dismissal (see Division 2) at the time of being dismissed; and

(b) the person has been unfairly dismissed (see Division 3).

(2) FWA may make the order only if the person has made an application under section 394.

(3) FWA must not order the payment of compensation to the person unless:

(a) FWA is satisfied that reinstatement of the person is inappropriate; and

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

[115] The Applicant does not seek reinstatement and I do not consider reinstatement appropriate. This is a small business with a downturn in business. Reinstatement is not an appropriate remedy.

[116] I do consider, in all of the circumstances, that compensation is appropriate.

[117] Section 392 of the FW Act sets out those matters to be considered in determining compensation:

392 Remedy—compensation

Compensation

(1) An order for the payment of compensation to a person must be an order that the person’s employer at the time of the dismissal pay compensation to the person in lieu of reinstatement.

Criteria for deciding amounts

(2) In determining an amount for the purposes of an order under subsection (1), FWA must take into account all the circumstances of the case including:

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

(b) the length of the person’s service with the employer; and

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

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

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

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

(g) any other matter that FWA considers relevant.

Misconduct reduces amount

(3) If FWA is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, FWA must reduce the amount it would otherwise order under subsection (1) by an appropriate amount on account of the misconduct.

Shock, distress etc. disregarded

(4) The amount ordered by FWA to be paid to a person under subsection (1) must not include a component by way of compensation for shock, distress or humiliation, or other analogous hurt, caused to the person by the manner of the person’s dismissal.

Compensation cap

(5) The amount ordered by FWA to be paid to a person under subsection (1) must not exceed the lesser of:

(a) the amount worked out under subsection (6); and

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

Note: subsection 395(5) indexed to $59,050 from 1 July 2011

(6) The amount is the total of the following amounts:

(a) the total amount of remuneration:

(i) received by the person; or

(ii) to which the person was entitled;

(whichever is higher) for any period of employment with the employer during the 26 weeks immediately before the dismissal; and

(b) if the employee was on leave without pay or without full pay while so employed during any part of that period—the amount of remuneration taken to have been received by the employee for the period of leave in accordance with the regulations.

[118] Had the Applicant’s employment not been terminated on 13 February 2012 as it was by the Respondent the Applicant would have worked for a further four weeks. She had worked for the Respondent for six years. The downturn in business suggests that, not being prepared to work part-time, her employment would not continue.

[119] Mr Loi Nguyen indicated that if a (dismissal) process was formal he would consult his lawyer on how to do it properly. I estimate that it would take him about four weeks to gain the advice and act on it. This period does not detract from any notice the Applicant is legally entitled to and the appropriate notice must be paid to the Applicant.

[120] In determining the amount of compensation I consider that the Applicant would only have been employed for a further four weeks at which point her employment would be terminated either with notice of with payment in lieu of notice. Given the Applicant’s period of employment she is entitled to four weeks’ notice.

[121] Had her employment not been terminated as found above the Applicant would have received $2,209.60 16 gross pay plus a 9% superannuation contribution plus four weeks’ pay in lieu of notice.

[122] There is no evidence that the Applicant has received any remuneration in the immediate period following the termination of her employment. Given my view that her employment would only have continued for the four week period I do not find it necessary to consider any remuneration the Applicant may have received from the time of the making of the order and actual compensation received. I do not consider it necessary to reduce the amount for any contingencies. No consideration of misconduct is required.

[123] Whilst I accept that LTH is a small business I do not consider that the amount awarded will adversely affect the business. The Respondent said in its submissions that if Ms Chan had rejected the part-time employment offer she would have continued to work on a full-time basis. This indicates some resilience in the finances of the Respondent.

[124] In all of the circumstances I consider it reasonable to award the Applicant compensation of $2,209.60 plus 9% superannuation. Any payments due to her in lieu of notice should be paid in addition to this amount.

COMMISSIONER

Appearances:

B Clemens, solicitor, for the Applicant.

J Fetter, of counsel, for the Respondent.

Hearing details:

2012.

Melbourne:

July 3, 4, 24.

 1  

Exhibit A1.

 2   Exhibit A2.

 3   Exhibit A8.

 4   Exhibit R3.

 5   Exhibit R10.

 6   Exhibit R7.

 7   Exhibit A13, paragraph 18.

 8   Exhibit A2.

 9   AT789529CRV.

 10   AT773032CRV.

 11 (1995) 62 IR 200.

 12 (1995) 62 IR 200 at 205.

 13   [2011] FWAFB 4038.

 14   [2011] FWAFB 4038, [13].

 15   Whilst the precise award was not agreed there was no dispute that the work was award covered.

 16  It was agreed that her weekly salary was $552.40.

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