Mr Carlos Sotelo v Creative Events (Vic) Pty Ltd T/A Eltham Tea House

[2014] FWC 6350

[2014] FWC 6350

FAIR WORK COMMISSION

DECISION

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

Mr Carlos Sotelo
v
Creative Events (Vic) Pty Ltd T/A Eltham Tea House
(U2014/6729)

COMMISSIONER ROE MELBOURNE, 11 SEPTEMBER 2014

Termination of employment – small business code - summary dismissal.

[1] Mr Sotelo was employed as a chef by Eltham Tea House from 22 January 2013 until his dismissal by text message on 13 April 2014. Mr Sotelo is seeking to be compensated because he says that there was no valid reason for his dismissal and because the termination was procedurally unfair and harsh. Mr Sotelo says he was not warned or given a proper opportunity to respond to allegations about his conduct and performance.

[2] I am satisfied of the following matters which are not contested.

1. The Applicant had been employed as head chef for a continuous period of more than 12 months at the time of the termination.

2. The Respondent is a national system employer as it is a limited liability company.

3. The Applicant was dismissed by the employer by text message for alleged misconduct on and from 13 April 2014.

4. The dismissal was not for reasons of redundancy.

5. The Application for unfair dismissal remedy was made on 23 April 2014 which is within 21 days of the dismissal.

6. The Respondent claims that it employed 14 persons at the time of the termination and the Applicant is one of those 14 persons. If this is established then the Respondent is a small business employer for the purposes of the Fair Work Act 2009.

7. The Respondent says that the termination was a summary dismissal in accordance with the summary dismissal section of the small business fair dismissal code. The Applicant was however paid two weeks in lieu of notice.

8. The Applicant’s employment was covered by a modern award, the Restaurant Industry Award 2010.

[3] The parties agreed that the initial issues to be resolved are:

1. How many persons were employed by Eltham Tea House on 13 April 2014, including Mr Sotelo?

2. Are there any employees of an associated entity?

3. If Eltham Tea House is a small business, was the small business code in respect to summary dismissal followed?

[4] To resolve the third issued I am satisfied that the following matters need to be considered.

3(a) What is required to satisfy the small business code in a case of summary dismissal?

3(b) Did Eltham Tea House hold the belief that the conduct was sufficient to justify immediate dismissal?

3(c) What was the conduct which Eltham Tea House believed justified immediate dismissal?

3(d) Was that belief based on reasonable grounds including a reasonable investigation?

[5] If I am satisfied that Eltham Tea House is not a small business or if I am satisfied that the small business code in respect to summary dismissal was not followed then there will be further proceedings on 15 September 2014 to determine whether or not the termination was unfair.

1. How many persons were employed by Eltham Tea House on 13 April 2014, including Mr Sotelo?

[6] Eltham Tea House provided payroll records for the three months leading up to the termination. These records reveal that there were 14 persons employed on a regular and systematic basis at the time of the termination.

[7] I have considered the evidence about whether or not the bookkeeper and the directors and owners of the company were employees. The Eltham Tea House is managed by Ms Belinda Asta. She is responsible for the day to day management of the staff and the business. Her parents, Mr Gino Asta and Ms Carolyn Asta, are the sole directors and owners of the company. I am satisfied that the bookkeeper was not an employee of Eltham Tea House. The directors did some regular work on weekends in the tea house. However, they did not receive any payment from the company for that work. I am not satisfied that they were employees.

2. Are there any employees of an associated entity?

[8] Mr Gino Asta is a director of a building company which was established some time before the Eltham Tea House. Ms Carolyn Asta does some work for that company. It is not possible to conclude that the building company is a parent company which can exercise effective control of the Eltham Tea House. Based upon the limited evidence before me I am unable to conclude that there are any employees of an associated entity.

[9] I am therefore satisfied that the Eltham Tea House was a small business when Mr Sotelo was dismissed.

3. Was the small business code in respect to summary dismissal followed?

3(a). What is required to satisfy the small business code in a case of summary dismissal?

[10] The relevant section of the small business code is as follows:

“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.”

[11] This section of the code relates to serious misconduct. Section 123 of the Fair Work Act 2009 (the Act) provides that notice does not apply to an employee “terminated because of serious misconduct”. Serious misconduct is defined for the purposes of the Act in the Fair Work Regulations 2009 as follows:

“1.07 Meaning of serious misconduct

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

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

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

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

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

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

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

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

(i) theft; or

(ii) fraud; or

(iii) assault;

(b) the employee being intoxicated at work;

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

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

[12] The Full Bench decision in Pinawin v Domingo, sets out the approach to be taken to the summary dismissal section of the code:

“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.” 1

3(b). Did the employer hold the belief that the conduct was sufficient to justify immediate dismissal?

[13] Ms Carolyn Asta, Mr Gino Asta and Ms Belinda Asta were involved in the decision to terminate Mr Sotelo. Ms Belinda Asta sent the text message terminating Mr Sotelo after consultation with the owners of the business. Ms Carolyn Asta and Ms Belinda Asta gave evidence. At least one of them expressed some doubt over whether or not the employer was able to justify immediate dismissal and that this explained why two weeks in lieu of notice was paid. However, considering the evidence as a whole and in context I am satisfied that the employer did believe that the conduct was so serious as to justify immediate dismissal.

3(c). What was the conduct which Eltham Tea House believed justified immediate dismissal?

[14] In a text message on 12 April 2014 the following allegations were raised by Ms Belinda Asta with Mr Sotelo:

● Bullying: Several kitchen staff members have complained of constant swearing, yelling, and name calling. Also staff members complain of being intimidated to hide the truth about what Mr Sotelo does in the kitchen.
● Adding garlic to the high tea sandwich filling despite earlier instructions not to do this.
● Cutting corners in the kitchen.
● Being uncooperative and aggressive towards the manager.

[15] Mr Sotelo responded that:

“As you know I am not well today but thanks for pointing it out we can talk about this on Tuesday as the doctor has given me two days. And for your info there is no garlic in the sandwich you can get them tested if you like. Also I have never been accused of bullying in my life. These accusation are inaccurate.”

[16] The next day, Sunday 13 April 2014, the dismissal text message said:

“Carlos after several warning and requests to correct your behaviour and performance as a chef you have failed to do so. I have given you more than enough time to acknowledge all of the issues we are concerned with and you have ignored and denied your constant unprofessional behaviour.”

[17] There had been an incident on 3 December 2013. Ms Belinda Asta texted Mr Sotelo:

“Hi Carlos I didn’t appreciate the way you yelled at me today in front of my staff. I should be able to ask you anything about my business and make a request of you without you reacting the way you do. We need to be able to work together. Thanks see you tomorrow.”

[18] Mr Sotelo responded by text message:

“It seems to me you are always looking over my shoulder like you don’t trust me you can ask anything as long as ask in a correct Manner I don’t bust my ass for you because I don’t give a shit if I upset you I’m sorry wasn’t my intention.”

[19] I read a comma between the words “shit” and “if”.

[20] On 7 April 2014 Ms Riana Asta complained that Mr Sotelo had yelled and sworn at her in the kitchen on 4 April 2014.

[21] On 9 April 2014 Ms Belinda Asta says that there was a confrontation between Mr Sotelo and herself. She says that both participants told the other to shut their face. Ms Asta says that immediately after the incident she met with Mr Sotelo and explained her concerns. She says that Mr Sotelo was concerned that he was being dismissed and she assured him that this was not the case. At the end of the conversation Ms Asta felt that the issues had been resolved and that they were starting with a “clean slate”.

[22] On 10 April 2014 Ms Belinda Asta says that another employee, Steph, ran out of tomatoes for side salads but Mr Sotelo allegedly insisted on sending out the meals anyway. Steph also told Ms Asta that she was told to use wilted rocket. When Ms Asta confronted Mr Sotelo about this matter she says that Mr Sotelo tried to shift the blame onto Steph. Steph complained that following this incident Mr Sotelo said to Steph “I hope you weren’t the one who told her”. In proceedings it was accepted that another chef, Hari, generally did the salads. However, Ms Asta said that as the head chef Mr Sotelo was responsible for supervising other employees and for ensuring the quality of the work produced in the kitchen.

[23] On the evening of 10 April 2014 Ms Belinda Asta noticed a review on Urbanspoon about Eltham Tea House had been posted by “Cathy”:

“10/04/14 Likes it

Amazing food great chefs keep it up service ok lacking in detail for the price we paid coffee had better over all the food is the only thing outstanding.”

[24] Ms Asta concluded that this was a negative review which had been posted by Mr Sotelo. She noted that Mr Sotelo’s wife is called Cathy, that there had been six previous positive reviews of the Eltham Tea House by Cathy which focused particularly on the quality of the food and that Cathy had also placed one review of Foodoo Cafe which is a place where Mr Sotelo had previously been employed.

[25] One hour before the start of work on Saturday 12 April Mr Sotelo sent a text message that he was unable to come to work because he was ill. Ms Asta concluded that Mr Sotelo was “falsely taking sick leave” and that he “deliberately called in sick 1 hour before to muck us up for our busy weekend out of spite.” 2 Ms Asta came to this conclusion because she was told by another chef, Hari, that Mr Sotelo had already ordered extra food and that Mr Sotelo had taken home his knife and his shoes which he always left at work.

[26] In the proceedings it was established that Mr Sotelo had not previously taken any sick leave, Mr Sotelo provided a medical certificate for the time off, there was no reason to doubt the certificate, it was likely that the knife had not been at work for some time, and that Mr Sotelo had ordered extra food in the past.

[27] On Saturday 12 April 2014 it was discovered that the chicken sandwich mix smelled strongly of garlic. Ms Asta said that she was concerned that customers were allergic to garlic but in proceedings Ms Asta conceded that no customers had ever alleged that they were allergic to garlic. Ms Asta said that she had previously told Mr Sotelo not to add garlic to food.

[28] On Sunday 13 April 2014 Ms Asta found undated and unlabelled food in the fridges. There was no clear evidence that she had previously raised an allegation with Mr Sotelo that Mr Sotelo had failed to properly label and date food. The other chef and the other staff had access to the fridges and were required to put food in the fridges. There was no evidence that Mr Sotelo was directly responsible for the failure to date or label food. However, Ms Asta said that as head chef he was responsible for supervising the behaviour of others in this regard.

[29] Ms Carolyn Asta gave evidence that she partly completed the small business fair dismissal code check list on the day of the dismissal, 13 April 2014, and then completed it on 14 April 2014. Some parts of the answers on the form are typed and some are handwritten. She says that she completed the typed parts on 13 April 2014.

[30] The form alleges that one of the grounds for termination was “the employee threatened me or other employees, or clients, with violence or actually carried out violence in the workplace.” Ms Asta says that this is a reference to what Mr Sotelo is alleged to have said to Steph on 10 April 2014, in particular: “I hope you weren’t the one who told her”.

[31] The form alleges that “the employee committed a serious breach of occupational health and safety procedures”. Ms Asta says that this is a reference to the threat to food safety caused by the unlabeled or undated food and the garlic in the sandwich mix. It was conceded that neither of these matters are breaches of occupational health and safety procedures.

[32] The form alleges that the serious misconduct related to the allegations concerning abusing and threatening other staff and the matter of garlic in meals despite earlier instructions.

[33] In respect to other reasons the form refers to the undated and unlabelled food discovered on the day of the termination and to the reviews on Urbanspoon.

3.(d). Was that belief based on reasonable grounds including a reasonable investigation?

[34] I am satisfied that there were some deficiencies and inconsistencies in the evidence of Belinda and Carolyn Asta. I referred to some of these matters earlier. Both witnesses gave evidence that they had never heard the Applicant swear yet they were both present on many occasions. Mr Sotelo worked in an open kitchen so those who worked serving customers in the cafe could see and hear what was going on in the kitchen. Yet one of the reasons for the termination was alleged constant yelling, abuse and swearing. The accusation about falsely taking sick leave had no reasonable basis and the witnesses accepted that they had no reason to doubt the medical certificate produced at the time. The accusation that Mr Sotelo was not intending to return to work had no reasonable basis. These matters illustrate a tendency to exaggerate and base conclusions without adequate evidence to support them. I consider that this was a consistent problem with the evidence.

[35] The matters concerning yelling and abuse were generally resolved by the meeting of 9 April 2014. Of course these matters do form background within which other allegations can be considered. However, in themselves they could not be the basis for termination without notice.

[36] I can understand why there was a suspicion that Mr Sotelo was responsible for the Urbanspoon entry. The entry of concern was perhaps unfortunate but it was not very critical. However, given that there was no actual basis for concluding Mr Sotelo was responsible there was no reasonable ground for such a conclusion, particularly when the matter was never put to Mr Sotelo.

[37] I am satisfied that there are some other matters where it was not possible to have made a reasonable inquiry without actually putting the matter to the Applicant. There is a very big difference between an accusation that an employee has failed to label food and an accusation that other employees have failed to label food and that as head chef Mr Sotelo should have ensured that this did not happen. The first matter could form the basis for serious misconduct if there had been appropriate prior warnings but the second matter would generally be a performance matter which would be unlikely to be the basis for serious misconduct. There was no evidentiary basis for a conclusion that the Applicant had directly failed to label and date food. The food was discovered on Sunday 13 April 2014 and so it is clear that the matter was never put to Mr Sotelo. I was not convinced by the evidence given in proceedings that Ms Belinda Asta made weekly checks of the fridge. If this had revealed a consistent problem about unlabelled food I cannot image that she would have tolerated the situation.

[38] Similar considerations apply to the accusation that Mr Sotelo had directed or allowed food to be served which did not meet appropriate standards. The allegation relates to the wilted rocket and the missing tomato on 10 April 2014. There was a failure to investigate whether Mr Sotelo was directly responsible or whether this was a case of inadequate supervision of the work of others.

[39] I accept that there was a reasonable basis for Ms Asta to allege that Mr Sotelo had been responsible for the garlic in the sandwich mix. The issue of the garlic was put to the Applicant and he denied it.

[40] Although it was not mentioned in the statements and submissions provided in the proceedings Ms Asta said that she asked the other chef if he had prepared the sandwich mix and he denied this. I was not satisfied by this evidence. The matter of the garlic in the sandwich mix was the matter which attracted the most passion from the employer. I consider that it was probably the catalyst for the decision to terminate. Ms Asta froze the mixture in question and brought it to the proceedings. In these circumstances I consider that if the possibility that someone else might have been responsible had been seriously considered then the fact that the other chef had been questioned would have been included in the submissions and the statement.

[41] I was not satisfied that Mr Sotelo had been clearly warned that failure to follow the instruction not to add garlic to food could result in termination of his employment. I do not consider that there was a reasonable basis for Ms Asta to conclude that Mr Sotelo had refused to carry out a lawful and reasonable instruction in circumstances where that made employment during the period of notice unreasonable. There was no reasonable basis for the employer to conclude that there was an imminent risk to occupational health and safety. There is no reasonable basis to conclude that garlic posed an immediate risk to customers.

[42] There was no credible basis for a conclusion that any of the matters alleged constituted theft, fraud or threat of assault or violence. Considered in context, there was no reasonable basis for concluding that the words, “I hope you weren’t the one who told her”, constituted a threat of assault or violence.

[43] There was no credible basis for a conclusion that the conduct or continued employment posed an immediate or imminent risk to the reputation or viability of the business. Of course the alleged conduct might pose some risk to the reputation of the business in the medium term but there was no reasonable basis for a conclusion that it was an immediate or imminent risk.

[44] Generally the evidence showed that Eltham Tea House did not make reasonable inquiries into the alleged matters before concluding that it was justified to summarily terminate Mr Sotelo for serious misconduct. This is illustrated by the failure to particularise all of the allegations which were relied upon to Mr Sotelo and the use of text messaging which by its very nature is not considered and detailed. This is reinforced by the failure to leave any reasonable time for Mr Sotelo to respond given that he was ill and when he specifically requested that the matters be discussed on the next occasion he was to be at work a few days later. There was nothing unreasonable or unsustainable about Mr Sotelo’s request.

[45] I am not satisfied that the employer’s belief that conduct had occurred which justified summary dismissal for serious misconduct was based on reasonable grounds including reasonable investigation.

[46] The matter will now proceed to further hearing on 15 September 2014 to consider if the dismissal was fair or unfair.

COMMISSIONER

Appearances:

Mr G Dircks appeared for the Applicant.

Mr B Shaw appeared for the Respondent.

Hearing details:

2014

Melbourne

September 8

 1   [2012] FWAFB 1359.

 2   Statement of Ms Belinda Asta of 12 August 2014 at paragraph 8.

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