Mr Anthony Cavanagh v Hills Golf Academy and Hills Educational Foundation Ltd

[2020] FWC 6936

[2020] FWC 6936

FAIR WORK COMMISSION

DECISION

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

Mr Anthony Cavanagh
v
Hills Golf Academy and
Hills Educational Foundation Ltd
(U2019/3010)

DEPUTY PRESIDENT ASBURY BRISBANE, 21 DECEMBER 2020

Application for an unfair dismissal remedy.

Background

[1] Mr Anthony Cavanagh (the Applicant) applies under s.394 of the Fair Work Act 2009 (the Act) for an unfair dismissal remedy. In his Form F2 Application, the Applicant alleged that his employer was Hills Golf Academy (the Respondent). The Respondent is an entity under Hills Educational Foundation Ltd an Australian public company limited by guarantee and registered with the Australian Charities and Not-for-profits Commission (the ACNC) as a not-for-profit organization.

[2] The Applicant contends he was employed by the Respondent from 1 November 2016 until 28 February 2019 and was responsible for running the Respondent’s business at Lion Lake Country Club in Guangdong Province, China.

[3] After the application was filed, the Hills Golf Academy corresponded with the Commission stating that the Applicant was employed by Qingyuan Hills Golf Academy, a registered company under the governing laws of the People’s Republic of China and that this Company “did not come under the jurisdiction of Australian laws”. The Respondent refused to attend a conciliation conference in relation to the application, on the grounds that it asserted it was not the Applicant’s employer.

[4] The matter was allocated to me for determination and Directions were issued requiring the filing of material in relation to the jurisdictional objection on the basis that the Applicant was not an employee of the Respondent and a Hearing was conducted. At that hearing, Mr Berndt, who stated that he is a consultant for the Hills Educational Foundation Ltd, appeared on behalf of that entity. During proceedings, evidence was tendered by both parties establishing that:

•  The Applicant was interviewed for his position by Mr Berndt at the Hills Golf Academy at Jimboomba in Queensland;

•  At that time, Mr Berndt was the Director of Golf for the Hills Golf Academy;

•  When the Applicant was employed he signed a contract with Hills Golf Academy China; and

•  At the time the Applicant signed the contract the Hills Golf Academy China or any other Chinese based entity had not been registered by the Respondent and the Hills Golf Academy China had no status under Chinese law or any other law.

[5] Further, the Applicant tendered a letter written by the Director of the Hills Educational Foundation Ltd addressed to the Consulate General of the People’s Republic of China setting out Mr Cavanagh’s passport details and date of birth and stating:

“This is an official confirmation letter to verify that Cavanagh, Anthony Edward Scott is currently employed under Hills Golf Academy as the Director of Academy as of November 2016.

He will be visiting China to observe and survey the operations of International Schools in the Shanghai and Guangdong Province.”

[6] During the hearing in relation to the jurisdictional objection, I advised the parties that my provisional view was that the Applicant was employed in Australia by an Australian Company and the Fair Work Commission had jurisdiction to deal with an application for an unfair dismissal remedy in respect of the termination of that employment. I also stated that if the Respondent wished to press the jurisdictional objection it could do so and I would continue to hear the matter. Mr Berndt conceded that on the basis of the matters I had identified, it was not appropriate to press the jurisdictional objection. Accordingly, I dismissed the jurisdictional objection.

[7] After dismissing the jurisdictional objection, I issued further Directions for filing of material in relation to the substantive application. At the Hearing held on 25 June 2020, the Applicant gave evidence on his own behalf. Evidence for the Respondent was given by Mr Thomas Berndt, Director of Golf, who also represented the Respondent at the Hearing.

[8] Having found that the Applicant was not employed by a Chinese Company, I received little assistance from the parties about the identity of the employer of Mr Cavanagh. It is unclear whether the Hills Golf Academy has a separate legal status or whether the employing entity was the Hills Educational Foundation Ltd, with both parties stating that Hills Golf Academy was an entity operating under the auspices of the Hills Educational Foundation Ltd. I am satisfied and find that the Applicant was employed by one or the other of these entities at the time he was dismissed.

[9] Section 396 of the Act requires that four specified matters must be decided before the merits of the application may be considered. With the exception of the jurisdictional objection that the Applicant was not a person protected from unfair dismissal as he was not an employee of the Respondent, there was no contest between the parties about any of those matters. I find that:

(a) the application was made within the period required by s.394(2);

(b) the Applicant was a person protected from unfair dismissal;

(c) the Respondent was not a “small business employer” as defined in s.23 of the FW Act; and

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

[10] I have considered all the evidence and submissions and summarise below that which is relevant to the issues for determination. Those issues are whether the Applicant was unfairly dismissed and if so whether he should have a remedy for his unfair dismissal.

EVIDENCE

[11] The Applicant’s evidence was that in or around August 2016, he responded to a job advertisement on the Professional Golfers Association of Australia website. The advertisement, tendered by the Applicant stated that the Hills Golf Academy is opening a golf academy at Lion Lake Resort in Guangzhou China, and is seeking a teaching professional to head the Academy. The remuneration offered was equivalent to AU$60,000 plus a return airfare each year, subsidised accommodation and incentive bonuses on coaching and retail. Mr Berndt was listed as the contact person for the position.

[12] The Applicant said that he had a meeting with Mr Berndt at the Respondent’s Jimboomba facility, about entering into an employment contract with the Respondent for the Applicant to run the first Hills Golf Academy in China. In late September or early October, the Applicant was informed that he was being offered the position and that the Respondent wanted him to start in China on 28 October 2016. The Applicant travelled to China and commenced employment on 1 November 2016, without having signed a contract. On 13 November 2016, the Applicant was sent a contract by email. The covering email from Mr Berndt states that the contract package is a base of 300,000RMB plus 10% superannuation, accommodation, vehicle and expenses.

[13] The contract was for the Applicant to perform work for Hills Golf Academy China. As previously noted, that entity did not exist at the time the contract was signed and Mr Berndt’s evidence was that it was an intended company name to be lodged with the Chinese Government, which was subsequently not allowed. The minimum terms and conditions of employment in the contract were in accordance with those set down by the Professional Golfers Association of Australia. The duties were to be performed in the Guandong Province China, or elsewhere as reasonably directed by the Respondent. The Applicant said that he returned to Australia in December 2016 to get a new visa and met with Mr Berndt and Mr Paul Warfield, the Registrar/Marketing Manager of Hills Educational Foundation Ltd. The Applicant signed the contract on 10 January 2017. He said that this is the only contract he signed during his employment.

[14] The Applicant said that his duties included:

•  managing the total teaching programs;

•  taking personal responsibility for delivering profitable coaching program that is of a high standard and meets and exceeds the needs expectations of the members and customers;

•  responsibility for the full management of teaching/assistant professionals and their development;

•  overseeing the management of the driving range and its business;

•  assisting in the sales and marketing of both the golf academy and the driving range; and

•  managing the club fitting and repair services for the golf academy and driving range.

[15] The salary under the contract was 25,000RMB per month. The Applicant said that during the two years and four months he worked for the Respondent, he was required to get visas to be in China. The visa requirements included a letter stating the Applicant’s employment status. The Applicant tendered four letters dated 2 December 2016, 8 December 2017, 4 July 2018 and 8 August 20198. The first three letters state that the Applicant “is currently employed under Hills Golf Academy as the Director of Academy as of November 2016” and that he is visiting China to observe and survey the operations of International Schools in the Shanghai and Guangdong Province. The letter of 8 August 2018 states that the Applicant is “currently employed under our business partner Hills Golf Academy as Director of Academy” and will be joined by his fiancée as a tourist. That letter also states that the Applicant and his fiancée will be sponsored by the Qingyuan Hills Golf Academy.

[16] On 6 August 2018, the Applicant signed a nine-page document which was written entirely in Chinese (the second contract). The Applicant’s signature and fingerprint are on the signature page of the document. At the hearing, the Applicant agreed that he had signed and fingerprinted the document. Mr Berndt’s evidence was that this document was a contract of employment for Qingyuan Hills Golf Academy, a Chinese company, and said that Mr Cavanagh signed this document and accepted the contract. The Applicant denied that he knew what the contract was and said he did not accept the contract. His evidence was that the document was presented to him by Ms Goh, an agent of the Respondent, and that he was told it was required by the accountant and if he did not sign, then he would not receive his salary that month. 1 The Applicant said he was getting married in September 2018 and needed his salary paid on time, so he signed the document.

[17] The Applicant said that at the time he signed the document, it was one page with two sentences. He said that the remaining pages were attached later and were all in Chinese as a work contract. The Applicant said the contract was not a legal document in China or Australia as all pages were not signed and fingerprinted, which he contended is required by Chinese law. The Applicant also said that each page of the contract was not initialled as required under Australian law. The Applicant also said that the contract was not witnessed, and that the English translation provided to the Commission was not signed or witnessed. Mr Berndt conceded that the English translation of the contract was prepared for the proceedings before the Commission and was not appended to the contract when the Applicant signed it.

[18] On 22 November 2018, the Applicant was sent a further employment contract between the Applicant and the Qingyuan Hills Golf Academy (the third contract). The third contract was for the position of Qingyuan Hills Golf Academy Head Coach. The Applicant maintained that there has never been a Company by the name of Hills Golf Academy China nor a Company by the name of Qingyuan Hills Golf Academy. According to the Applicant, the registered name of the Company that Mr Berndt had in China is Qingyuan City Hills Consulting Limited which was started on 25 September 2017. The Applicant said that this Company was not permitted to employ any foreigners until a year later as it was not set up correctly. The Applicant said that even though he did not get the contract until 22 November 2018, Mr Berndt changed his monthly salary in accordance with the terms of the third contract.

[19] The Applicant’s evidence was that he wanted to speak to Mr Berndt about the third contract, but Mr Berndt was on holidays in Scotland at the time. The Applicant said that Mr Berndt then had to deal with a personal situation involving the death of a family member, and the Applicant and Mr Berndt agreed to postpone the meeting until 20 January 2019. The Applicant returned to Australia and met with Mr Berndt and discussed the contract.

[20] The Applicant said that at the meeting, he was told by Mr Berndt that the Respondent wanted to change the salary he was receiving. The Applicant said he raised several clauses which he had concerns with, including clauses providing that if he was dismissed any outstanding fees would not be payable, and the option for the employer to dismiss the Applicant if he requested sick leave for more than 7 days. The Applicant said that he and Mr Berndt agreed that the contract would be changed to address the Applicant’s concerns.

[21] The Applicant asked for a copy of the third contract as a word document so that he could make changes to it. The Applicant said that when he received the word document it was different to the document he had discussed with Mr Berndt, which confused him. The Applicant made changes to the contract and sent it to Mr Berndt on 26 January 2019. Mr Berndt responded on 31 January 2019, by email in the following terms:

“Hi Tony,

I have had a lot of thought about your contract. I must say I was a little disappointed that you really didn’t come back to me with anything different than what we were discussing when I was at Lion Lake. You had made your points about lessons sold and I made my points about lessons delivered.

Hills Golf Academy cannot consider paying you commission on lessons not delivered. If you decide to leave at any time, then we have already paid you for those lessons and we are exposed to have to deliver them. That just doesn't work.

Looking at our business operation and trying to make projections and future planning, it is quite obvious that the structure that we had you on in the first two years was not sustainable. You certainly helped us establish the basic concept of the academy but we have not been able to get much traction within the coaching business as yet.

I have put together a more simple contract which puts you on a small retainer and allowance and a much bigger percentage of lesson commission. This way, the more you coach, the bigger your earn will be. Looking at what other ranges do for the expats, they are putting them on a small retainer and somewhere between 40% to 50% of lessons delivered.

I have tried to be as fair and reasonable as possible with this and so I have put you on a slightly higher retainer than other places I have researched and havegiven you 50% of the lessons delivered.

Please have a look at the contract as this is the model I am wanting to adopt. If you accept this contract, please sign it and send it back to me. 1 will need confirmation of your acceptance within 7 days. I don't believe there is a lot of wriggle room in the contract, however, I will be open to any other options you might put forward. This will need to be done urgently as I want to put to bed the contract within the week.

Thanking you for your consideration.

Regards
Tom”

[22] The Applicant started a period of leave on 1 February and travelled to Cambodia for a golf tournament, returning to China on 10 February 2019. On 11 February the Applicant became ill and was diagnosed with kidney stones. The Applicant messaged Ms Goh informing her that he was sick and was going to hospital. He sought emergency medical care in China but because he had no health cover, the Applicant flew to Brisbane to seek medical treatment. The Applicant underwent surgery and was in hospital on 14 and 15 February and was told to recuperate for a week upon his release. The Applicant returned to China on 22 February 2019. Upon his return, the Applicant read the contract sent to him on 31 January 2019.

[23] On 22 February, the Applicant wrote to Mr Berndt rejecting the contract and outlining his view in relation to the commission structure and remuneration. The Applicant also informed Mr Berndt that he would not enter into a Chinese contract until his entitlements under his Australian contract were paid out. The Applicant said that he then had to leave China to travel to the Philippines for the birth of his son. This leave had been approved by Ms Goh. The Applicant also said that he was still suffering from the effects of his surgery.

[24] On 22 February 2019, Mr Berndt replied by email in the following terms:

“Hi Tony

It is true that you came into the project with a degree of uncertainty and so we paid you more than normal to entice you to help set up the Academy. You did a respectable job in getting the Academy going. Now that things have settled down, we now have a little more certainty on how the business has to be conducted moving forward.

When we had our meeting in January 2019, I made it very clear that the numbers were not stacking up and that we needed to adjust your contract. The original contract I presented to you was paying you commission on lessons delivered. You disagreed with that as you wanted commission on lessons sold.

I made it quite clear that this would not be considered and so I asked you to look at the contract and come up with an alternative.

You came back with exactly the same idea. Commission on lessons sold. This was very disappointing as it meant that you didn't consider any other way around it. This prompted me to bite the bullet and create a brand new contract which is what you have in front of you. This was discussed at length with our accountant and it is in line with many ex-pats working in China. In fact, the retainer is a little more than everyone else.

As for the contract for 2017/2018, we have paid you the commission on the Range sales. What is left to be paid is your commission on lessons delivered. This is where we disagree on how to calculate the hours. It was always the intent of the lesson hours as being a lesson/hour and not spending extra time delivering a lesson and then wanting that time to be included.

You have asked for 40000 commission and I calculated it to be considerably less than that. I offered a compromise of 20000 which you didn't respond to.

For the month of February, you will have only been at Lion Lake for about 2 days. This is a major concern as we have lost several chances to sell lesson packages and the existing clients are annoyed that you have not been available. Your choice to go to the Philippines is disappointing given the circumstances.

If you feel that you cannot continue with us, then let me know. Our Academy business must get moving again with or without you. Time is becoming urgent for us to make a decision on this for both parties. I need a response within 7 days. If you don't respond, then I will be forced to offer the contract to another Professional.”

[25] The Applicant responded on 26 February 2019 as follows:

“Hi Tom, I made it clear to you that I reject your illegal Chinese contract you have sent to me.

On the 1st of November 2018 my original contract came back into force for a third year and you and your partners are bound by that contract and all of the entitlement including salary, super, allowances and bonus.

As for your new contract as usual your maths are flawed. You say you are offering me 50 % but it is only 50 % of lessons delivered which is all bias towards you. Maths using last years numbers for your new Chinese contract.

My Lesson Sales 580 000rmb
Lessons delivered 377 000rmb
50% = 188 000rmb that is only 32% of what I sold, you get 78% 393 000rmb. How is that fair?

Because all the lesson are past their expiry date you get all the funds, there is no comeback or refunds on you as you try to imply, unless you don't sign and process the contracts correctly, (as has been happening at the moment at the academy).

You tried with the first contract to make it bias but that backfired when I was able to reach the targets you set. Now this is what you are saying. (Tom's words ..... This is where we disagree on how to calculate the hours. It was always the intent of the lesson hours as being a lesson/hour and not spending extra time delivering a lesson and then wanting that time to be included.

You have asked for 40000 commission and I calculated it to be considerably less than that. I offered a compromise of 20000 which you didn't respond to.) That statement Tom that is a lie (Laura worked out the lesson bonus) I deliver the exact number of hours as per the contracts with the students and that is all that is used to calculate the bonus. which it states in the contract bonus appendix per hour. Yes I do many extra hours with the students but none of that is included in the bonus calculations and by the way the supervised practice and on course coaching should be included. But was not included in Laura calculation if you want to argue this I will include them in my calculations.

I don't understand you. I Delivered a functioning profitable golf academy which is what you asked of me, you however promised to deliver students and a 400 student international school which would be where students would come to the academy from. You have failed to deliver your end of the business plan as described to me. Also your strategy to get local schools on board has backfired because you tried to over charged them and now you have no students from the local schools. I advised you these problems but you listen to others who have sent you in the wrong direction.

So now you have decided to cut my salary and commissions and use your new Chinese company as a way of not paying super and other entitlements that you would have to under a Australian contract law.

Your next statement Tom is full of mistruths (For the month of February, you will have only been at lion Lake for about 2 days. This is a major concern as we have lost several chances to sell lesson packages and the existing clients are annoyed that you have not been available. Your choice to go to the Philippines is disappointing given the circumstances.)

February is Chinese New Year. The whole country shuts down, you even closed the range for 4 days. But lets get to the bottom of the BS you are being feed. 1. Laura and May were also away most of this month also. 2. There has been nobody looking for new packages whoever is telling you this info (why can't they sell the package if this is true) the weather has been rain every day since the return from CNY speaking with my translator she has told me there was nobody looking for packages that she has seen at the range. Just BS from one trouble maker MAY. I had a medical emergency that forced me to return to Australia for treatment as you know and I will have to go again next month for another procedure to fix the problem. But Tom I am owed more than 30 days and if I need to use them for my health or family reasons I will.

The academy Is in trouble because of your choices and policy changes over the last 5 months. I take no responsibility for your changes to what was a working functional golf academy.

In conclusion I was employed and work for an Australian company and would need to be terminated and re employed after all my entitlements have been paid in full. I will not accept anything less than what i was getting in my Australian contract

Regards Anthony Cavanagh”

[26] On 28 February 2019, the Applicant received a termination letter, on Hills Golf Academy letterhead, which read:

“Dear Anthony,

Hills Golf Academy China wish to advise you that we no longer require your services and this is a termination notice to end your contract. Under the agreement, we hereby terminate you immediately and will pay you out as per the contract.

Please indicate to Laura Goh, when you will come to remove your personal belongings and equipment from our premises. You will not be permitted to engage with our clients and the Golf Academy will become off limits after this point in time.

Laura Goh, our manager, will liaise with our accountants to finalize what is owed to you.

Yours Sincerely,

Tom Berndt
President
Hills Golf Academy China”

[27] The Applicant said that he had not received three weeks’ notice which he was entitled to under his contract of employment. Mr Berndt’s evidence was that upon termination, the Applicant was paid three weeks in lieu of notice per his employment contract, and that all commissions had been paid.

[28] I put to the Applicant that the notice could have been paid to his bank account in China, which he said he could not access. The Applicant said the Respondent had not provided proof they had made the payment of his notice. 2

[29] At the hearing, the Applicant said he was prepared to accept the head coach contract as initially offered, but did not want to accept the further amended contract which he considered was significantly less favourable in terms of remuneration and conditions:

“THE DEPUTY PRESIDENT: So by now you're - you can agree or disagree with this, Mr Cavanagh, you're pretty unhappy?---Yes, but I've already - yes, I'm not happy with them trying to reduce me down from - originally they promised me $100,000, they paid me about $80-90,000 the first couple of years, and now the first contract the gave me, the version 1, it was going to be around $72,000 and I'd accepted that.  I understood what Tom had told me that, you know, I'd built the academy and that was all done and now I was just going to be the coach.  So I was okay with that.  We'd agreed and I was happy to move to that contract, with just a couple of alterations, but then, all of a sudden, he changed directions, when I'd agreed to that, changed direction again, on that - in version 3, and that contract works out at about $62,000, but I had a new child, I was bringing my son, my 12-year-old son, I'd set up schooling, I'd done visas, so - and I knew it was difficult to get another job in what I do, because building golf academy's and doing jobs like that, so I knew it was going to take some time.  So, as I said, I was acceptant of the fact that I was having a downgrade in money and I was looking around.  If a job came up in the next six months or year I certainly would have taken it and moved on.  But at the time there was no job so I had to accept what I was getting.  But I was trying to get through to Mr Berndt, because I don't think he realised how low he had gone.  Because 50 per cent of 580,000 of the sales against 50 per cent of the delivered lessons meant I only got - it brought it down to like a 3$7,000 commission and $24,000 with the retainer meant I'd only get $61,000 and it could be less, because it was commission based.” 3

[30] Mr Berndt said that the Applicant was aware that as soon as a registered Chinese Company became operational, the next step was for him to have a work visa and work permit. Mr Berndt said that when the Applicant signed the second contract on 6 August 2018 it permitted him to apply for a work visa and to have his wife reside with him in China. Mr Berndt said that the termination of the Applicant’s employment was as a result of a breakdown in negotiations regarding setting up a new contract and there was no malice towards the Applicant as a result of the birth of his son or his illness. Mr Berndt also said that the business could not sustain paying the Applicant under the original arrangement. Further, Mr Berndt said that when he asked the Applicant to come back to him with an alternative proposition, the Applicant did not do so. When Mr Berndt sent the final contract he received the email of 16 February 2019, which Mr Berndt described as: “a scathing email attacking me on several fronts.” Mr Berndt also described the email as aggressive, condescending and abusive and said that it was clear that a decent working relationship with the Applicant could not be continued and consequently, sent the termination letter to the Applicant.

[31] In response to some of the matters raised in the Applicant’s evidence, Mr Berndt said that his remuneration was altered in November because it was discovered that the Applicant was being paid a car allowance that he was no longer entitled to. Mr Berndt also disputed that contracts in China have to be signed on all pages, and in relation to the second contract said that the Applicant was aware that his base salary was going to be reduced the rest reimbursed as travel allowance to assist the Applicant to reduce tax exposure in China. Mr Berndt accepted that he agreed to some modifications to the contract during negotiations but because clauses were not required rather than that they were not consistent with Chinese labour laws. In relation to the contract offered to the Applicant, Mr Berndt said that it was similar to what is being typically offered to other expatriate golf coaches. Mr Berndt also said that it was clear that some of the Applicant’s original duties had become “redundant”. Further, Mr Berndt said that the Cambodian trip undertaken by the Applicant in February 2019 was not part of his official duties with the Respondent and the Applicant had been allowed flexibility to undertake other money-making activities.

[32] In relation to the Applicant’s evidence about his hospitalisation and travel to the Philippines in February 2019, Mr Berndt said that although the Applicant was ill, he was discharged from hospital on 16 February 2019 and did not return to China until 21 February 2019 and did not think that it was important enough to read emails and check the impending updated contract. Mr Berndt also said that while the Applicant’s commissions were in dispute this matter had been resolved. In relation to the birth of the Applicant’s son, Mr Berndt said that his wife was scheduled to give birth in early March and he expressed disappointment that the Applicant had decided to travel to the Philippines earlier, prior to the Applicant’s wife asking him to do so. Mr Berndt also said that the timing of these events was very unfortunate.

[33] Mr Berndt also raised other issues about the Applicant’s conduct and work performance that he had found out about after the Applicant’s dismissal including the Applicant’s involvement in a vehicle accident when he had no license and had been drinking. Mr Berndt said that the Applicant asked Ms Goh to negotiate a payout figure for the other driver so that the police would not be involved. Mr Berndt tendered an extract from a “we chat” conversation in which the Applicant asks Ms Goh to get May to help with this situation and concedes that he has no license and that this is a problem. Mr Berndt also tendered correspondence from the General Manager of a partner golf club in China, the Lion Lake Country Club, raising issues with the Applicant’s conduct and work performance.

[34] In oral evidence at the hearing Mr Berndt said that it had become apparent that the business structure in relation to the Applicant’s employment was not sustainable, and the Respondent decided to enter into negotiations around the Applicant’s contract. 4 Mr Berndt said that the issue of commission on lessons sold and lessons delivered was the main sticking point5 and that negotiations were breaking down as the Respondent could not continue under the type of contract the Applicant was working under.6

[35] Mr Berndt said that the Applicant’s role had changed dramatically, and his original job had become redundant because a lot of the tasks he was doing had been taken away from him and given to Ms Goh. 7 Mr Berndt disputed that the proposed head coach contract was less favourable or paid less, and said that the Applicant could have made a similar result through performance and lessons delivered.8 Mr Berndt and I had the following exchange during the hearing:

“MR BERNDT: It became apparent that at the end of - coming into the third year of operation that we now had some historical figures and we could start to look at how we were going to operate.  It was pretty apparent that how we had structured the original plan with Tony, we couldn't sustain it with any longevity so we had to go into negotiation with him to try to rework that contract.  It was a difficult process.  We went, as we said, we went through several emails, we moved from one to another.  Clearly there was some changes that had to be made and we accommodated that.  But the main sticking point, always, was lessons sold and lessons delivered.  That was always a very difficult point for us.

The negotiations were breaking down.  We couldn't continue on under that type of contract and negotiations had pretty much - it had become an impasse for us so we thought - I did a fair bit of research in the lead up to even before we set up the company, before 2016, and the expats that were working over in China at the time were pretty much all on the same deal where they were paid a very low retainer but a higher lesson commission and that provided an acceptable way to go forward.

We looked at it initially and we thought we wanted to offer Tony something a bit differently than that, so we did.  But as it turned, we just couldn't sustain the business the way it was going to be and so his role had changed dramatically.  His original job had become redundant because there was no - a lot of the tasks that he was doing, that he was assigned to do at the start was now taken away from him, via Laura.

THE DEPUTY PRESIDENT: Careful, Mr Berndt, because if his job became redundant where's his redundancy pay?---Well, it was apparent that that's what - it was leading into that direction that's why we had to - had to negotiate a new payment or new structure.  That's where we finished up with Mr Cavanagh sending an email that was very argumentative and looked to me that we just couldn't continue to negotiate the contract and couldn't - - -

THE DEPUTY PRESIDENT: You were cutting his pay - his explanation for that, and you can disagree or agree with this.  Put yourself in his position, he's just had a new baby, he's travelled - which Laura Goh knew, he's travelled to, you know, barely made it in time for the birth of his baby and he's thought he'd got to a position where there'd been - he was happy with a minimal kind of reduction to his pay but he raised issues with a few clauses, which, arguably, were completely unreasonable clauses to have put in a contract of employment and he thought that's there the negotiations were and you'd come back to him on the issues he'd raised with the clauses and next minute he gets a totally different contract, which is less than what you'd previously offered?---I disagree that it was less.  You know, Tony will argue that, but I felt that, performance wise, and the amount of lessons that he would deliver, he could have easily made a similar - a similar result.

He was - in my view he was not delivering all the lessons that he should have been able to deliver in the period of time that he was working in the past, so we needed to review that to make it more productive for everyone.” 9

LEGISLATIVE PROVISIONS CONCERNING UNFAIR DISMISSAL

[36] In deciding whether a dismissal was unfair on the grounds that it was harsh, unjust or unreasonable, the Commission must consider the criteria in s.387 of the Act which are:

(a) whether there was a valid reason for the dismissal related to the person’s capacity or conduct (including its effect on the safety and welfare of other employees); and

(b) whether the person was notified of that reason; and

(c) whether the person was given an opportunity to respond to any reason related to the capacity or conduct of the person; and

(d) any unreasonable refusal by the employer to allow the person to have a support person present to assist at any discussions relating to dismissal; and

(e) if the dismissal related to unsatisfactory performance by the person—whether the person had been warned about that unsatisfactory performance before the dismissal; and

(f) the degree to which the size of the employer’s enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(g) the degree to which the absence of dedicated human resource management specialists or expertise in the enterprise would be likely to impact on the procedures followed in effecting the dismissal; and

(h) any other matters that the FWC considers relevant.”

[37] The matters in s.387 go to both substantive and procedural fairness and it is necessary to weigh each of those matters in any given case, and decide whether on balance, a dismissal is harsh, unjust or unreasonable. A dismissal may be:

Harsh - because of its consequences for the personal and economic situation of the employee, or because it is disproportionate to the gravity of the misconduct;

Unjust - because the employee was not guilty of the misconduct on which the employer acted; and/or

Unreasonable - because it was decided on inferences that could not reasonably have been drawn from the material before the employer.¹⁰

[38] I turn now to consider the evidence and submissions in relation to the dismissal of the Applicant.

CONSIDERATION

[39] Notwithstanding that the Respondent raised issues with the Applicant’s conduct at the hearing, these were not the reasons for his dismissal. The Applicant was not dismissed for any reason related to his capacity or conduct. Accordingly, the criteria in s. 387(a) is not relevant to the question of whether the Applicant was unfairly dismissed. Given that the reason for dismissal did not relate to capacity or conduct, the consideration in s. 387(b) and s. 387(c) is not relevant. Although there were discussions about the renegotiation of his employment contract, there were no discussions about the Applicant’s dismissal and the Applicant did not request a support person so that s. 387(d) is also not relevant. Further, the dismissal did not relate to unsatisfactory performance and the question of whether the Applicant was warned is not relevant to the question of whether his dismissal was unfair and accordingly the consideration in s. 387(e) is not relevant.

[40] With respect to s. 387(f) and (g), the Respondent employed 80 staff under the auspices of the Hills Education Foundation Ltd. Mr Berndt stated that the Respondent does have a staff member who is responsible for human resource management issues. Mr Berndt did not provide any explanation as to why that person was not involved in the Respondent’s dealings with the Applicant, including the decision to dismiss him. If the Respondent did have a human resources manager, it is regrettable that advice was not sought from that person at the point the Applicant was employed, much less when he was dismissed. The manner in which the Respondent dealt with the Applicant left much to be desired.

[41] I accept that the Respondent was entitled to attempt to alter the Applicant’s contract of employment. The Respondent was also entitled to restructure the Applicant’s position. However, the manner in which the Respondent went about this process was unfair for the following reasons. The Applicant was working in a foreign country. He had taken steps to relocate his family to China including his wife and infant son, and another son who was of school age. As a result of his dismissal, the Applicant was required to move his wife, his newborn child and 12 year old son back to Australia.

[42] The changes to the Applicant’s contract would have resulted in a reduction to the income he had earned for the two years of his employment. The Respondent had numerous drafting attempts and a number of versions contained provisions which the Respondent accepts were unnecessary. I am also of the view that some of the provisions sought by the Respondent were unreasonable and the Applicant was within his rights to object to those provisions. In particular, the fact that a contract in the Chinese language was put to the Applicant without a translation being provided, was inappropriate.

[43] At the time he was dismissed the Applicant had suffered a serious health issue which required him to travel to Brisbane to seek hospital treatment. Given the seriousness of his condition and the fact that he did not have health cover in China, it was entirely reasonable for the Applicant to return to Brisbane for his treatment. It was reasonable for the Applicant to put the contract negotiations on the back burner while he attended to his health condition and his recovery from surgery. Also at the time he was dismissed, the Applicant was required to travel to the Philippines for the birth of his child.

[44] While the Respondent may have been eager to finalise negotiations with the Applicant, it was not reasonable to put the time frame on those negotiations that was imposed. In my view the Applicant had insufficient time to consider significant changes to his terms and conditions of employment. Further, no consideration was given to whether the Applicant was in a position – due to his personal circumstances – to properly consider all of his options. Mr Berndt conceded – in my view correctly – that the timing of the events that led to the Applicant’s dismissal was unfortunate. In all of the circumstances, it was reasonable for the Applicant to have taken a dim view of the manner in which he had been treated and to have objected to the various draft contracts that were put to him by the Respondent.

CONCLUSION IN RELATION TO UNFAIR DISMISSAL

[45] In all of the circumstances, I am satisfied and find that the Applicant was unfairly dismissed. The dismissal was harsh because of its impact on the Applicant’s economic circumstances and because it failed to have proper regard to his personal circumstances.

REMEDY

[46] Having found that the Applicant was protected from unfair dismissal, and that his dismissal was unfair, it is necessary to consider what, if any, remedy should be granted to him. The Applicant said that he was willing to be appointed to a position with an associated entity of the Respondent within Australia, on terms and conditions no less favourable than those on which he was employed before his dismissal and further sought an order to restore lost pay.

[47] The Applicant further submitted that he had not been able to find any similar positions and that he has limited work opportunities. The Applicant said that since dismissal, over the last 12 months he had contacted many Chinese facilities and contacts looking for work opportunities in China and Vietnam and had been unsuccessful. The Applicant submitted that COVID-19 meant that returning to China was not an option in the near future, and further that his golf tour business had stalled due to customer fears regarding COVID-19. The Applicant said he had a part time job offer his home town which started at the end of April 2020. In the alternative, the Applicant sought compensation for his unfair dismissal.

[48] The Respondent did not directly address remedy in its submissions or at the Hearing. At the hearing, the Respondent submitted that its attempts to negotiate a contract with the Applicant had stalled. The Respondent submitted that under the Applicant’s management, the Respondent and its stakeholders had lost money over the years since the Academy was founded, and that it had been a disaster for everyone. The Applicant disputed that it was his fault that the business had lost money.

[49] Section 390(3)(b) of the Act provides the Commission may only issue an order for compensation if it is appropriate in all the circumstances. The remedy of compensation is designed to compensate an unfairly dismissed employee in lieu of reinstatement, for losses reasonably attributable to the unfair dismissal, within the bounds of the statutory cap on compensation that is to be applied. 11

[50] I have considered the Applicant’s request for reinstatement and determined it is not appropriate to reinstate the Applicant. The heart of the matter is that the Applicant and Respondent were at loggerheads in renegotiating a new contract, and no meeting of the minds regarding a further contract of employment appears likely. In my view this stalemate made termination inevitable, a matter to which I will return.

[51] Further, there are practical difficulties with reinstating the Applicant to his former position. It is not possible to reinstate the Applicant to the same job at the same location and under the same working conditions. 12With the ongoing impact of COVID-19 restricting travel significantly between Australia and China, and further the downturn in the Respondent’s business and the absorption of many of the Applicant’s duties into the role of Ms Goh, it seems impractical, if not impossible, to reinstate the Applicant to his previous job.

[52] Having regard to all the circumstances of the case, including the fact that the Applicant has suffered financial loss as a result of his unfair dismissal, I consider that an order for payment of compensation to him is appropriate. Accordingly, it is necessary to assess the amount of compensation that should be ordered to be paid to the Applicant. In assessing compensation I am required to take into account the circumstances of the case including the matters in s. 392(2) as follows:

“(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.”

[53] The established approach to the assessment of compensation was set out by a Full Bench of the Commission in Sprigg v Paul Licensed Festival Supermarket. 13 That approach has been consistently applied in the context of the current legislative provisions by Full Benches of the Commission in a number of cases.14 The approach to calculating compensation in accordance with these authorities is as follows:

Step 1: Estimate the remuneration the employee would have received, or have been likely to have received, if the employer had not terminated the employment (remuneration lost).

Step 2: Deduct monies earned since termination.

Step 3: Discount the remaining amount for contingencies.

Step 4: Calculate the impact of taxation to ensure that the employee receives the actual amount he or she would have received if they had continued in their employment.

Step 5: Apply the legislative cap on compensation.

[54] I therefore now to the particular criteria I am required to consider in deciding the amount of compensation to be awarded to the Applicant for his unfair dismissal.

The effect of the order on the viability of the Respondent – s.392(2)(a)

[55] The Respondent has as part of their case advanced the proposition that the business has suffered a reduction in business due to COVID-19. The Respondent did not lead any direct evidence that there had been a downturn in business such that any order of compensation would impact on the viability of its business.

[56] There is no evidence that the order I propose to make will have an effect on the viability of the Respondent. I consider this a neutral factor.

Length of the Applicant’s service – s.392(2)(b)

[57] The Applicant had been employed by the Respondent for a period of two years, three months, three weeks and six days. This is a relatively short length of time. I consider this factor as neutral in calculating the appropriate compensation.

Remuneration the Applicant would have or would likely have received – s.392(2)(c)

[58] There is an element of speculation in determining an employee’s anticipated period of employment because the task involves an assessment of what would have been likely to happen in the future had the employee not been dismissed. 15

[59] I am satisfied on the balance of probabilities that if the Applicant had not been dismissed on 9 April 2019, he would have remained employed by the Respondent for no more a period of 8 weeks. The Applicant and Respondent were in significant dispute regarding the Applicant’s employment contract. The Respondent was bent on renegotiating the contract and the Applicant was resisting such attempts. The Applicant’s email correspondence with Mr Berndt, particularly the Applicant’s email to Mr Berndt of 16 February 2019, displayed a lack of trust and confidence necessary for the continuation of an employment relationship and it is highly improbable that an outcome satisfactory to both parties could have been negotiated on the basis of their radically different positions about the contract. In my view, it was inevitable that the employment contract would come to an end in a relatively short space of time. I am also of the view that given the Applicant’s personal circumstances, negotiations would have concluded – albeit unsuccessfully – within an 8 week period.

[60] The Applicant submitted that he was paid a gross monthly amount of 31,125RMB or $6,225.00 AUD, which on a weekly basis is an amount of 7,182RMB or $1,436.00 AUD. The Applicant relied on the wage reconciliations performed by Ms Goh and entered into evidence, as well as statements by Mr Berndt that the Applicant was paid 31,125RMB each month.

[61] The Respondent submitted the Applicant was paid a monthly salary of 16,125RMG ($3,225.00 AUD) per month plus allowances in the amount of 14,210RMB ($2,482.00) paid for air travel, accommodation, phone and miscellaneous expenses. These figures added together, and multiplied by 12 months then divided by 52 weeks of the year, equals a weekly pay of $1,317.00 AUD. As evidence, the Respondent provided a document in Chinese outlining amounts paid on a monthly basis. These amounts vary from month to month.

[62] I prefer the Applicant’s figures in calculating the amount he was paid. The Applicant refers to the reconciliation of wages performed by Ms Goh in calculating notice to be paid to the Applicant upon termination. I consider this to be the most accurate set of figures in evidence.

[63] On that basis, I consider the Applicant would have received at most an amount of $11,488.00 for the eight week period I have estimated that he would have remained in employment.

The Applicant’s efforts to mitigate loss – s.392(2)(d)

[64] The Applicant’s evidence and submission was that he had attempted to obtain other employment but had been unable to do so. The Applicant submitted he had found part time employment but did not provide evidence in relation to his earnings from that job. Given the circumstances the Applicant was in at the time he was dismissed – suffering from the effects of surgery and with a newborn child and being required to relocate his family – I am of the view that the Applicant took reasonable steps to mitigate the loss of his employment and no deduction should be made in this regard.

The amount of any remuneration earned since dismissal – s.392(2)(e)

[65] The Applicant obtained some part-time employment but given his circumstances I do not intend to make a deduction for such amounts.

The amount of any income reasonably likely to be earned during the period between the making of the order for compensation and the actual compensation – s. 392(2)(f)

[66] Given the anticipated period of employment I have determined, this matter is not relevant.

Any other matter that the FWC considers relevant – s.392(2)(g)

[67] There is an ongoing dispute in relation to whether the Applicant was paid three weeks in lieu of notice as required under his contract of employment. The Respondent asserts that a final payment of 16,516 RMB ($3,303.00) has been paid to the Applicant’s bank account in China. The Applicant disputes that this amount was paid in lieu of his notice period and asserts that the amount actually represents accumulated “days” owed to him. The Respondent referred to payroll records which are in Chinese and show that this amount was paid on 15 April 2019, but provided no further evidence demonstrating what this amount was calculated on.

[68] Regardless of whether or not notice has been paid, I would not have deducted this amount on the basis that if the Applicant’s dismissal was conducted in a fair and reasonable manner, he would have been paid this amount in any event. I also draw no conclusion as to whether this amount was paid. If the Applicant maintains that he has not received an entitlement under his contract of employment, he should pursue that matter in a court of competent jurisdiction. There are no other matters I consider relevant to the calculation of compensation.

Misconduct – s.392(3)

[69] There was no misconduct on the Applicant’s part. The conduct the Respondent referred to was historical and was never raised with the Applicant. I make no deduction on this basis.

Shock, distress or humiliation, or other analogous hurt – s.392(4))

[70] In accordance with s 392(4) of the Act, the amount of compensation calculated does not include a component for shock, humiliation, or distress.

Compensation cap – s.392(5)-(6)

[71] The amount of $11,488.00 is less than half the amount of the high income threshold immediately before the dismissal. It is also less than the total amount of remuneration to which the Applicant was entitled in his employment with the Respondent during the 26 weeks immediately before his dismissal. In those circumstances, my view is that there is no basis to reduce that amount by reason of s. 392(5) of the Act.

Instalments – s.393

[72] No application has been made to date by the Respondent for any amount of compensation awarded to be paid in the form of instalments.

Conclusion on compensation

[73] In my view, the application of the Sprigg formula does not, in this case, yield an amount that is clearly excessive or clearly inadequate. Accordingly, my view is that there is no basis for me to reassess the assumptions made in reaching the amount of $11,488.00. 16

[74] For the reasons I have given, my view is that a remedy of compensation in the sum of $11,488.00 (less taxation as required by law) in favour of the Applicant is appropriate in the circumstances of this case. An Order will issue requiring that the Respondent pay compensation to the Applicant in the amount of $11,488.00 in gross wages, to be taxed according to law, and superannuation contributions in the amount of $1,148.80 within 21 days of the date of release of this Decision.

[75] In all of the circumstances I have determined that the Order will be made jointly and severally against both Hills Educational Foundation Ltd and Hills Golf Academy, and will be satisfied if one or the other or both entities pays the amount of compensation to Mr Cavanagh.

DEPUTY PRESIDENT

Appearances:

The Applicant on his own behalf.

Mr T Berndt for the Respondent.

Hearing details:

25 June.

2020.

By Video – Microsoft Teams.

Final written submissions:

Applicant – 25 September 2020.

Respondent – 25 September 2020.

Printed by authority of the Commonwealth Government Printer

<PR725689>

 1   Witness Statement of Anthony Edward Scott Cavanagh at page 7

 2   Ibid, PN 399-401

 3   Transcript, PN151

 4   Transcript, PN322

 5   Ibid, PN322

 6   Ibid, PN323

 7   Ibid, PN324

 8   Ibid, PN327

 9   Transcript, PN322-327

10 Stewart v University of Melbourne (U No 30073 of 1999 Print S2535) Per Ross VP citing Byrne v Australian Airlines (1995) 185 CLR 410 at 465-8 per McHugh and Gummow JJ.

 11   Kable v Bozelle, Michael Keith T/A Matilda Greenbank [2015] FWCFB 3512 at [17]

 12   Blackadder v Ramsey Butchering Services Pty Ltd [2005] HCA 22 (27 April 2005) at para 14, [(2005) 221 CLR 539

 13 (1998) 88 IR 21

 14   Tabro Meat Pty Ltd v Heffernan [2011] FWAFB 1080; Read v Golden Square Child Care Centre [2013] FWCFB 762; Bowden v Ottrey Homes Cobram [2013] FWCFB 431

 15   Double N Equipment Hire Pty Ltd v Humphries[2016] FWCFB 7206 at [16]-[17]

 16   Smith v Moore Paragon Australia Ltd (2004) 130 IR 446 at [32]