Meshelle Wheare v Houndstooth Pty Ltd T/A the Palladeum Hair
[2016] FWC 4599
•15 JULY 2016
| [2016] FWC 4599 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394—Unfair dismissal
Meshelle Wheare
v
Houndstooth Pty Ltd T/A The Palladeum Hair
(U2016/4609)
COMMISSIONER PLATT | ADELAIDE, 15 JULY 2016 |
Application for relief from unfair dismissal – minimum employment period – application of Small Business Fair Dismissal Code – no valid reason – dismissal unfair - compensation awarded.
Background
[1] Ms Meshelle Wheare was employed on 1 June 2011, as a hairdresser by her father, Mr David Wheare as trustee for the Queen Street Palladeum Trust (Palladeum). The Trust operated a business which traded as “The Palladeum Hair on Queen Street.”
[2] On 30 June 2015, that business was sold to Houndstooth Project Pty Ltd. The terms of the sale were recorded in a written business sale agreement dated 26 June 2015 (Sale Agreement). Ms Melanie Ashford and Mr Daniel Lepore executed the Sale Agreement as directors on behalf of Houndstooth and in their personal capacity.
[3] Ms Wheare commenced working with the Houndstooth Project Pty Ltd T/A The Palladeum Hair (Houndstooth) as an employee on 1 July 2015.
[4] In addition to her employment relationship, Ms Wheare negotiated an arrangement with Mr Lepore whereby she could ‘rent-a-chair.’ The rent-a-chair arrangement is common in the hair dressing industry and involved Ms Wheare using the Houndstooth facilities and basic consumables for a fixed daily rate and retaining the fees paid by clients. This occurred once every fortnight.
[5] On 17 February 2016, Ms Ashford and Mr Lepore in their role as directors of Houndstooth dismissed Ms Wheare. At the time of the dismissal, Ms Wheare’s average weekly income was $667.95 per week.
[6] On 17 February 2016, Ms Wheare lodged an application for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (the Act).
[7] A conciliation conference was scheduled but did not proceed as a result of a jurisdictional objection raised by Houndstooth. The matter was then allocated to me.
[8] On 13 April 2016, I conducted a directions conference by telephone. Ms Wheare represented herself; Ms Ashford appeared on behalf of Houndstooth. At the conference, Ms Ashford raised two jurisdictional objections and sought that they be dealt with prior to the merits. I indicated that my preference was to hear all of the matters together but advised Ms Ashford that I would consider any further submissions prior to issuing formal directions.
[9] The directions issued required Houndstooth to file any jurisdictional objections and a proposal to have the jurisdictional issues determined separately from the merits by 7 May 2016. In addition, Ms Wheare was required to file and serve her material by 14 May 2016 and Houndstooth to file and serve its material by 21 May 2016. The hearing was scheduled for 10.00 am on 30 May 2016.
[10] On 14 April 2016, Ms Ashford provided further information about the jurisdictional objection. Ms Ashford advised that Houndstooth was a small business and accepted that Ms Wheare was a transferring employee. Ms Ashford contended that the provisions of cl.8.2(d) of the Sale Agreement which was signed by Ms Wheare, satisfied the requirements of s.384(2)(b)(iii) of the Act and as a result the minimum employment period had not been completed.
[11] On 14 April 2016, Ms Wheare filed a written submission concerning the jurisdictional objections foreshadowed by Houndstooth at the directions conference. The submission rejected Houndstooth’s contention that the Sale Agreement constituted a notification in writing for the purpose of s.384(2(b)(iii) and referred to the decision of Harland v Paradigm Cleaning and Professional Services Pty Ltd 1 and Gregory v Shaver Shop.2
[12] I determined that the jurisdictional matters would not be dealt with separately and formal written directions in the terms previously advised were issued on 20 April 2016.
[13] A conciliation conference was conducted on 9 May 2016 by Senior Deputy President O’Callaghan but did not resolve the matter.
[14] On 14 May 2016, Ms Wheare lodged her submissions and statement with the Commission. Ms Ashford was not sent a copy.
[15] At 12.56 pm on 20 May 2016, Ms Ashford emailed the Commission and advised that she had not received a copy of Ms Wheare’s submissions by the date required in the directions. The Commission forwarded a copy of Ms Wheare’s submission by email at 2.51 pm on that day.
[16] Houndstooth’s submissions and statements were originally due by 21 May 2016. In light of the late provision of Ms Wheare’s material to Houndstooth, the Commission did not follow up on the non-submission of Houndstooth’s material until Friday 27 May 2015. The Commission attempted to contact Ms Ashford by telephone and email concerning the non-lodgment of the material required to be filed.
Request for hearing to be adjourned
[17] At 4.14 pm on Friday 27 May 2016, Ms Ashford emailed the Commission and Ms Wheare and advised as follows:
“Unfortunately, I am not in a position to forward my submissions today. It is with sincere regret, I am forced to request an adjournment of Monday’s hearing.
Please find my reasons below:
- The Applicant’s submissions were provided on 20 May 2016, 6 days later than directed.
- It would’ve been impossible for me to provide my submissions by the following day, 21 May 2016.
- I have a neurological sleep disorder which severely impacts my ability to perform any task in a timely manner. In hindsight, it was unrealistic to expect I could provide my response within 7 days of receiving the Applicant’s submission.
- It is extremely likely that the Applicant’s submission was prepared by a solicitor, which I believe puts me at a significant disadvantage.
- I have requested but not yet received documents from a third party which are integral to my case.
- I am also intending to request and obtain documents, which may assist the Commissioner to determine the outcome of our jurisdictional objection.
I would sincerely appreciate an adjournment of at least two weeks, if possible. I have made every attempt to ensure the hearing would proceed by making this matter my priority, however it will not be possible under my current circumstances. I can provide a letter from my doctor, should you require evidence.
Furthermore, I am having trouble making and receiving calls on my mobile at the moment, therefore it would be appreciated if you could please respond by email or by leaving a message at [Phone number].”
[18] At 8.44 am on Monday 30 May 2016, my Associate advised Ms Ashford that she would need to make an application for an adjournment in person, at the commencement of the hearing that day.
[19] At the hearing on 30 May 2016, Ms Wheare represented herself and Houndstooth was represented by Ms Ashford.
[20] Ms Ashford sought that the hearing be adjourned for at least two weeks. In addition to the information detailed above, Ms Ashford in support of her request submitted that:
- she did not read the directions until a week prior to the hearing;
- her medical condition prevented her from running the case unless she was very prepared; and
- she would not be prepared for another two weeks.
[21] No supporting medical information was submitted.
[22] Ms Wheare opposed the application, submitting that Mr Lepore could assist Ms Ashford if she was not sufficiently prepared to conduct the hearing herself.
[23] Both Ms Wheare and Ms Ashford were verbally advised of the hearing date and the material required to be prepared in a telephone conference held 7 weeks prior to the hearing. Ms Ashford was able to provide a two page written submission in respect of the jurisdictional arguments on the day following the directions conference. This indicates that Ms Ashford understood the verbal directions and was capable of organising and documenting Houndstooth’s position in a short space of time. It is inconsistent with her submission that her medical condition prevents her from performing tasks in a timely manner.
[24] The formal written directions were issued 40 days prior to the hearing date. It is evident that Ms Ashford was aware of these directions at least 10 days prior to the hearing, as she had contacted chambers to complain that Ms Wheare had not served her material on Houndstooth.
[25] In my view, Houndstooth was provided with ample time to allow it to adequately prepare for the hearing. In light of the objection by Ms Wheare, the last minute nature of the adjournment request and the lack of evidence to substantiate the request for an adjournment, the adjournment was denied. I do not accept that the reasons given by Ms Ashford justified the adjournment of the hearing and the consequent delay of the determination of the matter. Having refused the adjournment, I allowed Ms Ashford a brief adjournment to seek advice and/or prepare for the hearing.
[26] At the conclusion of the brief adjournment, Ms Ashford advised that she had not been able to contact a lawyer and repeated her request for the hearing to be adjourned to a later date. Ms Ashford then advised the Commission that she would not participate in the hearing. It appeared to me that Ms Ashford had not considered the possibility that her application could be refused. Ms Ashford then sought an adjournment of two hours so she could collect her documents. This application was refused on the basis that such an adjournment would unnecessarily delay the hearing and may have resulted in the matter not being completed within the time allocated.
Submissions and evidence before the Commission
[27] Ms Wheare gave evidence on her own behalf and tendered a witness statement. Ms Wheare also tendered a copy of the Sale Agreement and emails and text messages exchanged between her and Ms Ashford from 15 February 2016 to the time of dismissal.
[28] Ms Ashford remained at the bar table during Ms Wheare’s examination-in-chief. At the conclusion of Ms Wheare’s examination-in-chief, I invited Ms Ashford to ask any questions of Ms Wheare. At this point, Ms Ashford collected her things and left the hearing room. Ms Ashford did not take the opportunity to challenge Ms Wheare’s evidence.
[29] Ms Wheare concluded her evidence at about 12.30 pm, the matter was then adjourned until 2.00 pm and Ms Ashford was invited to return to the Commission. Ms Ashford advised the Registry that she was returning however, she did not arrive before the hearing resumed at 2.00 pm. Ms Wheare concluded her submissions in the absence of Ms Ashford. The case concluded at about 2.15 pm. My Associate contacted Ms Ashford by telephone at 2.20 pm and advised her that the matter had concluded. Ms Ashford had not yet commenced travelling to the Commission.
[30] Whilst Houndstooth did not file any material, I have had regard to the information contained in the Employer Response and an email containing submissions on the jurisdictional issue dated 14 April 2016.
[31] Houndstooth’s representative chose not to cross examine Ms Wheare despite having the opportunity to do so. In the interests of fairness, the Commission put what it understood to be Houndstooth’s case to Ms Wheare and insofar as possible tested the evidence given by Ms Wheare.
Jurisdictional objections raised by Houndstooth
[32] Houndstooth raised two jurisdictional objections, submitting that Ms Wheare:
- had not satisfied the minimum employment pursuant to s.383 of the Act, as the Sale Agreement included a provision that satisfied the requirements of s.384(2)(b) of the Act; and
- was dismissed for serious misconduct in accordance with the Small Business Fair Dismissal Code (Code).
[33] Ms Wheare submitted that the Commission had jurisdiction to hear her claim for the following reasons:
- her prior service with Palladeum formed part of her service with Houndstooth as she was a transferring employee and the notification required under s.384(2)(b)was not provided; and
- the dismissal was inconsistent with the Code.
[34] The correspondence indicates that Houndstooth and Ms Wheare are also in dispute over the alleged non-payment of wages and the ownership of property. These disputes are not relevant to the matter before me and this information has not been considered in my determination of the unfair dismissal claim.
The evidence of Ms Wheare
[35] Ms Wheare’s evidence is summarised as follows:
- Ms Wheare commenced employment on 1 June 2011 and was a transferring employee as a result of the sale of the business to Houndstooth;
- the Sale Agreement did not contain a provision which advised her that her previous service with Palladeum would not be recognised by Houndstooth and therefore, Ms Wheare had more than 12 months service satisfying the minimum employment period requirement;
- it was agreed between Ms Wheare and Mr Lepore that she could operate a ‘rent-a-chair’ arrangement for friends and relatives and that the salon would provide basic hair products and she would be responsible for providing hair treatments (e.g. hair colour). Ms Wheare operated in this manner once per fortnight and paid a fixed amount per day to Houndstooth. Ms Wheare advised that basic items like shampoo, conditioner and styling products were provided free of charge to salons by product manufactures as part of their marketing strategy and she was entitled to use those items without charge. Other products used such as ‘colours’ were paid for. Ms Wheare said that another employee was also renting a chair on the same basis;
- Ms Wheare rejected the contention that she encouraged or directed Houndstooth clients to attend on days she was using the ‘rent-a-chair’ arrangements;
- Ms Wheare denied using products that belonged to the salon without paying for them and asserted that those concerns has not been raised with her until the day before the dismissal;
- Ms Wheare agreed that she had a conviction for dishonestly dealing with documents but stated that this occurred prior to the purchase of the business by Houndstooth, was general knowledge at the salon, was a result of her involvement in her ex-husband’s business and did not impact on her capacity to work as a hairdresser;
- Ms Wheare tendered a pay slip for the week ending 7 February 2016 which indicated she was engaged as a Senior Hairdresser and worked 29 hours per week for a gross wage of $667.95. This accords with the information provided in the Employer Response.
- Ms Wheare advised that after the dismissal she obtained employment for a lesser number of hours and also rented a chair. She was without income (other than Centrelink benefits) for 4 weeks after the dismissal and that she earned about half her former wage in the following 4 weeks. Reinstatement was not sought. On that basis her loss was $4007.70.
Is Ms Wheare protected from unfair dismissal?
[36] Section 382 of the Act details when a person is protected from Unfair Dismissal.
“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.”
Minimum period of employment
[37] The evidence before me indicates that at the time of the dismissal, Houndstooth employed less than 15 employees and accordingly, I find that it was small business employer within the meaning of s.23 of the Act. On that basis s.383 of the Act provides that the minimum employment period for a person employed by a small business employer is 12 months.
[38] There is no dispute that Ms Wheare was a transferring employee within the meaning of s.311(2) of the Act.
[39] Although Ms Wheare commenced employment with Houndstooth on 1 July 2015, by virtue of s.384(2)(b) of the Act, as a transferring employee, Ms Wheare’s prior service will count towards the minimum employment period, unless Houndstooth informed Ms Wheare in writing, prior to her commencement, that the period of service with Palladeum would not be recognised.
[40] Houndstooth contended that the following provision contained in the Sale Agreement met this requirement.
“8. Employees
8.1 The Purchaser will offer employment to the Employees of the Vendor;
8.2 In respect of the Employees who accept the offer of employment by the Purchaser (Transferring Employees):
(a) the Vendor must terminate their services effective at Completion;
(b) the Vendor must pay to the Employees all wages, salary, commission, bonuses payable to those Employees in respect of their employment by the Vendor;
(c) the Vendor will pay to the Purchaser an amount equal to 3 week’s wages for the Employee Danielle Hartland being the amount of her accrued and unpaid personal leave;
(d) the Vendor will pay to MW all accrued but unpaid personal leave and long service leave due to her at Completion and the Purchaser will not have any liability for these amounts after Completion.
8.3 The Vendor must be responsible for and keep the Purchaser indemnified against claims by those employees for salary, wages, bonuses and commissions accumulated by the Transferring Employees during their employment with the Vendor before Completion.
8.4 From the Completion Date the Purchaser will employ the Transferring Employees and indemnify the Vendor against all claims for employee remuneration which accrues to the Transferring Employees in respect of their employment by the Purchaser after the Completion Date.”
[41] I find that clause 8 of the Sale Agreement does not inform Ms Wheare that her prior service would not be recognised. In the absence of any other evidence, I find that Ms Wheare’s service has met the requirements of the s.382(a) of the Act.
[42] I also find that the work performed by Ms Wheare is covered by the Hair and Beauty Industry Award 2010 and Ms Wheare’s remuneration was less than the high income threshold.
[43] On the basis of these findings, Ms Wheare is a person protected from unfair dismissal pursuant to Section 382 of the Act.
Did Houndstooth comply with the Small Business Fair Dismissal Code?
[44] Section 385 of the Act defines unfair dismissal, stating that:
“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.”
[45] I am satisfied that Ms Wheare was dismissed and that it was not a case of genuine redundancy. It is therefore, relevant to consider the Code.
[46] Section 388 of the Act states:
“388 The Small Business Fair Dismissal Code
The Minister may, by legislative instrument, declare a Small Business Fair Dismissal Code.
(1) 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.”
[47] The Code as declared is set out as follows:
“The Code
Summary Dismissal
It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.
Other Dismissal
In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.
The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.
The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.
Procedural Matters
In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.
A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.”
[48] The letter of termination emailed to Ms Wheare at 1.20 am on 18 February 2016 indicates that Ms Wheare was dismissed with immediate effect, as a result of Houndstooth’s belief that she had engaged in serious misconduct.
[49] A two-step test to determine whether an employer has complied with the summary dismissal aspect of the Code was set out by the Full Bench in, Pinawin v Edwin Domingo. 3It states:
“[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.
…
[38] Normally in order to hold a belief on reasonable grounds it will be necessary to have a discussion with the employee about the perceived serious misconduct and pay regard to the explanations and views given by the employee. ….
Did Houndstooth hold a belief that Wheare’s conduct was sufficiently serious to warrant immediate dismissal?
[50] It appears that Houndstooth terminated Ms Wheare’s employment for two reasons. It believed that:
- Ms Wheare was suggesting to Houndstooth clients that they should attend on the days when she was ‘renting-a-chair,’ so she would profit rather than the business; and
- Ms Wheare was using Houndstooth products to service ‘rent-a-chair’ customers without paying for them.
Was this belief based on reasonable grounds?
[51] There is no evidence before the Commission as to how Houndstooth came to the conclusion that Ms Wheare was seeing clients on rent-a-chair days, whether Ms Wheare was using products owned by Houndstooth or how serious Houndstooth considered these acts to be. There is however, evidence regarding how Houndstooth handled the investigation of the allegations and the subsequent termination.
[52] Houndstooth’s investigation consisted of putting the allegations to Ms Wheare by email and suggesting that the alleged conduct constituted serious misconduct.
[53] Ms Wheare rejected the allegations, offered to vary the ‘rent-a-chair’ arrangement and sought to discuss Houndstooth’s concerns. Ms Ashford refused to meet Ms Wheare in person and restricted all future correspondence to writing.
[54] I find that the investigation conducted by Houndstooth was superficial (even after allowance for the fact that Houndstooth was a small business and did not appear to have had access to Human Resources support) and ignored Ms Wheare’s denials and offer to discuss their concerns. I therefore, find that the investigation was not reasonable.
[55] The evidence before me is that Houndstooth agreed that Ms Wheare could service relatives and friends using the ‘rent-a-chair’ arrangements. There is no evidence to support the allegation that Ms Wheare was influencing Houndstooth clients to become ‘rent-a-chair’ clients. With respect to the use of Houndstooth products, I accept Ms Wheare’s evidence that the product used was provided free of charge by the hair product manufacturers and Houndstooth did not own the product and/or suffer any loss as a result of its use by Ms Wheare in servicing ‘rent-a-chair’ clients. I accept Ms Wheare’s evidence that when other products (e.g. colours) were used she paid Houndstooth. I accept that the approach was consistent with the ‘rent-a-chair’ arrangements agreed to with Mr Lepore. On the evidence before me, Ms Wheare had adequately explained the concerns raised. In the circumstances, a reasonable person would not have been able to conclude that Ms Wheare had engaged in dishonest behaviour.
[56] Had Ms Ashford met with Ms Wheare and considered the information provided at the hearing, she would have been able to properly consider the matter and come to a reasoned decision.
[57] I find that the dismissal was inconsistent with the Code.
What the dismissal harsh unjust or unreasonable?
[58] Pursuant to s.387 of the Act, in considering whether it is satisfied that a dismissal was harsh, unjust or unreasonable, the Commission 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.”
[59] Access to a support person and warnings relative to unsatisfactory performance are not relevant in this matter. I have considered each of the remaining factors below.
Valid reason - s.387(a)
[60] Notwithstanding its formulation under a different legislative environment, I have adopted the definition of a valid reason set out by Northrop J in Selvachandran v Peteron Plastics Pty Ltd4which requires the reason for termination to be “sound, defensible or well founded.”
[61] Houndstooth asserts that Ms Wheare conducted her ‘rent-a-chair’ arrangements in a manner inconsistent with her obligations as an employee by diverting Houndstooth clients to her personal ‘rent-a-chair’ arrangement and not paying for the use of salon products.
[62] I confirm my earlier finding that:
• the products used by Ms Wheare in serving ‘rent-a-chair’ clients were provided free of charge by the hair product manufacturers and Houndstooth did not suffer any loss as a result of its use. I accept Ms Wheare’s evidence that when other products (e.g. colours) were used she paid Houndstooth. I accept that approach was consistent with the ‘rent-a-chair’ arrangements agreed with Mr Lepore; and
• that Houndstooth agreed that Ms Wheare could service relatives and friends using the ‘rent-a-chair’ arrangement and there is no evidence to support the allegation that Ms Wheare was influencing Houndstooth clients to become ‘rent-a-chair’ clients.
[63] The remaining reason for termination was the allegation that Ms Wheare had pleaded guilty to an offence of dishonesty. Ms Wheare gave evidence that this matter occurred prior to her employment with Houndstooth and was common knowledge at the salon. There was no suggestion by Houndstooth that this matter was contrary to an inherent requirement of Ms Wheare’s role. This matter was not raised until after Ms Wheare’s unfair dismissal claim was lodged.
[64] I find that the reasons relied upon by Houndstooth were not sound, defensible or well founded and accordingly Houndstooth did not have a valid reason to dismiss Ms Wheare.
Notification of valid reason - s.387(b)
[65] An employee protected from unfair dismissal must be advised of a valid reason for termination prior to the decision being made.5
[66] On 15 February 2016, Houndstooth advised Ms Wheare by email of their concerns in relation to her conduct in the provision of services to clients of Houndstooth. Houndstooth advised Ms Wheare that in its view, profiting for personal gain and the use of the Houndstooth products without payment amounted to serious misconduct. Ms Wheare was not advised of any concerns in relation to any dishonesty offence.
Opportunity to respond - s.387(c)
[67] Ms Wheare was invited to respond to the allegation that she conducted her ‘rent-a-chair’ arrangements in a manner inconsistent with her obligations as an employee.
[68] Ms Wheare was not invited to respond to the allegation that she had entered a guilty plea to a dishonesty offence. There is no evidence before me as to when Houndstooth became aware of the dishonesty matter. An employee protected from unfair dismissal must be given an opportunity to respond to all of the reasons for termination prior to a decision to terminate being made.6 If Houndstooth were aware of the dishonesty offence prior to the dismissal, they failed to give Ms Wheare an opportunity to respond to all matters alleged against her. If Houndstooth was not aware until after the dismissal, they have complied with this requirement.
Impact of the size of the employer’s enterprise on the procedure followed - s.387(f) and absence of dedicated human resource support on the procedure followed – s.387(g)
Houndstooth is a small business employer and does not appear to have had dedicated human resources support. Whilst no submission was made that the process taken was impacted by the size of the business, I have made allowances in my judgement of their processes in this regard.
Other matters considered relevant - s.387(h)
[69] There were no other relevant matters.
Conclusion
[70] The Explanatory Memorandum to the Fair Work Act7 explains the approach of the Commission in considering the elements of section 387:
“FWA must consider all of the above factors in totality. It is intended that FWA will weigh up all the factors in coming to a decision about whether a dismissal was harsh, unjust or unreasonable and no factor alone will necessarily be determinative.”
[71] In Byrne and Frew v Australian Airlines Pty Ltd, 8 the following observations made by McHugh and Gummow JJ are relevant to my conclusion:
“It may be that the termination is harsh but not unreasonable, unjust but not harsh or unreasonable, or unreasonable but not harsh or unjust. In many cases the concepts will overlap. Thus, the one termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided upon inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.”
[72] Having considered each of the factors detailed in s.387 of the Act, I have concluded that the termination of Ms Wheare’s employment was harsh, unjust or unreasonable.
Remedy
[73] The relevant provisions of Division 4 of Part 3-2 of the Act state:
“Division 4—Remedies for unfair dismissal
“390 When the FWC may order remedy for unfair dismissal
(1) Subject to subsection (3), the FWC may order a person’s reinstatement, or the payment of compensation to a person, if:
(a) the FWC 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) The FWC may make the order only if the person has made an application under section 394.
(3) The FWC must not order the payment of compensation to the person unless:
(a) the FWC is satisfied that reinstatement of the person is inappropriate; and
(b) the FWC considers an order for payment of compensation is appropriate in all the circumstances of the case.
Note: Division 5 deals with procedural matters such as applications for remedies.”
…
“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), the FWC 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 the FWC considers relevant.
Misconduct reduces amount
(3) If the FWC is satisfied that misconduct of a person contributed to the employer’s decision to dismiss the person, the FWC 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 the FWC 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 the FWC 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.
(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.”
[74] The prerequisites contained in ss.390(1) and (2) have been met in this case.
[75] Ms Wheare did not seek reinstatement and I am satisfied that it is not appropriate in this case.
[76] Section 390 of the Act makes it clear that compensation is only to be awarded as a remedy where the Commission is satisfied that reinstatement is inappropriate.
[77] I now turn to the consideration of compensation.
[78] A recent Full Bench decision in McCulloch v Calvary Health Care Adelaide9 confirmed, in general terms, the approach to the assessment of compensation as undertaken in cases such as Sprigg v Paul’s Licensed Festival Supermarket10 remains appropriate.
[79] Section 392(2) of the Act requires the Commission to take into account all of the circumstances of the case including the factors that are listed in paragraphs (a) to (g). Without detracting from the overall assessment required by the Act,11 it is convenient to discuss the identified considerations under the various matters raised by each of the provisions.
The effect of the order on the viability of Houndstooth - s.392(a)
[80] Nothing has been put to me on this issue.
The length of Ms Wheare’s service with Houndstooth - s.392(b)
[81] Ms Wheare was employed for about 4.5 years. The period of service is relevant to my assessment of the remuneration that Ms Wheare would likely have received if not for the dismissal.
The remuneration Ms Wheare would have received, or would have been likely to receive if she had not been dismissed - s.392(c)
[82] This involves, in part, a consideration of the likely duration of Ms Wheare’s employment in the absence of what I have found to be an unfair dismissal.
[83] In the circumstances, it is reasonable to assess compensation in this matter on the basis that Ms Wheare would, on the balance of probabilities, have remained in employment for a lengthy period given that there were no valid concerns regarding her work performance. That estimate is subject to the later consideration of contingencies.
The efforts of Ms Wheare to mitigate the loss suffered by her because of the dismissal - s.392(d)
[84] Ms Wheare secured alternative employment 4 weeks after the dismissal. No discount to the award is warranted on this basis.
Remuneration earned by Ms Wheare during the period between the dismissal and the making of the order for compensation and the amount of any income likely to be earned by Ms Wheare during the period between the making of the order for compensation and the actual compensation - ss.392(e) and (f)
[85] Ms Wheare obtained alternative employment 4 weeks after the dismissal, and for the first 4 weeks of that employment, Ms Wheare’s income was about half of her earnings at Houndstooth. I have taken into account the cessation of any financial loss after 8 weeks. On that basis Ms Wheare’s loss of wages is equivalent to 6 weeks wages.
Any other matter that the FWC considers relevant and the remaining statutory parameters - s.392(g)
[86] There are no other relevant matters
[87] In accordance with s.392(4) of the Act, I make no allowance for any shock, distress or humiliation that may have been caused by the dismissal.
[88] The maximum compensation limit in this case would be the lesser of 26 weeks remuneration or $68,350.12 The amount of compensation awarded is less than that limit.
[89] Taxation is to be paid on the amount determined.
[90] The compensation confirmed below is also appropriate having regard to all of the circumstances of this matter and the considerations specified by the Act.13
[91] I award compensation in the amount of $4007.70. Recognising the size of the business I extend the time for payment from 14 days to 28 days from the date of this decision.
[92] An Order14 reflecting this decision will be issued.
COMMISSIONER
Appearances:
M Wheare on her own behalf.
M Ashford on behalf of the Respondent.
Hearing details:
2016.
Adelaide:
May 30.
1 [2015] FWC 8425.
2 [2016] FWC 1323.
3 [2012] FWAFB 1359.
4 Selvachandran v Peteron Plastics Pty Ltd (1995) 62 IR 371 at 373.
5 Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137.
6 RMIT v Asher (2010) 194 IR 1 [26]-[30]; Crozier v Palazzo Corporation Pty Ltd (2000) 98 IR 137 at [75].
7 Explanatory Memorandum to the Fair Work Bill 2008.
8Byrne and Frew v Australian Airlines Pty Ltd [1995] HCA 24.
9 [2015] FWCFB 873.
10 (1998) 88 IR 21. See also Bowden v Ottrey Homes Cobram and District Retirement Villages Inc T/A Ottrey Lodge[2013] FWCFB 431.
11 Smith and Others v Moore Paragon Australia Ltd (2004) 130 IR 446.
12 Section 392(5) of the Act.
13 Smith and Others v Moore Paragon Australia Ltd (2004) 130 IR 446 at par [32].
14 PR582589.
<Price code C, PR582588>
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